SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

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

                  For the fiscal year ended September 30, 2003

                                       OR

|_|  TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from                      to
                                    --------------------    --------------------

     Commission File No. 333-02302

                        ALLBRITTON COMMUNICATIONS COMPANY
             (Exact name of registrant as specified in its charter)

              Delaware                                      74-1803105
   (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                          Identification No.)

808 Seventeenth Street, N.W., Suite 300
          Washington, D.C.                                  20006-3910
(Address of principal executive offices)                    (Zip Code)

   Registrant's telephone number,
        including area code:                                (202) 789-2130

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

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

                                       |X|

Indicate by check mark whether this registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                                YES |_| NO |X| (1)

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                YES |_| NO |X|

The aggregate market value of the registrant's Common Stock held by
non-affiliates is zero. As of December 12, 2003, there were 20,000 shares of
Common Stock, par value $.05 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None

_________
(1)   The Company has filed all reports required to be filed by Section 15(d) of
      the Securities Exchange Act of 1934 during the preceding 12 months,
      including this Annual Report on Form 10-K for the fiscal year ended
      September 30, 2003. Pursuant to Section 15(d) of the Securities Exchange
      Act of 1934, the Company's duty to file reports became automatically
      suspended as of October 1, 2003 as a result of having fewer than 300
      holders of record of each class of its debt securities outstanding as of
      that date, but the Company has agreed under the terms of certain long-term
      debt to continue these filings in the future.
<PAGE>

As used herein, the terms "Allbritton," "our," "us,""we" or the "Company" refer
to Allbritton Communications Company and its subsidiaries, and "ACC" refers
solely to Allbritton Communications Company. Depending on the context in which
they are used, the following "call letters" refer either to the corporate owner
of the station indicated or to the station itself: "WJLA" and "NewsChannel 8 "
together refer to WJLA-TV/NewsChannel 8, a division of ACC (operator of WJLA-TV
and NewsChannel 8, Washington, D.C.); "WHTM" refers to Harrisburg Television,
Inc. (licensee of WHTM-TV, Harrisburg, Pennsylvania); "KATV" refers to KATV, LLC
(licensee of KATV, Little Rock, Arkansas); "KTUL" refers to KTUL, LLC (licensee
of KTUL, Tulsa, Oklahoma); "WCIV" refers to WCIV, LLC (licensee of WCIV,
Charleston, South Carolina); "WSET" refers to WSET, Incorporated (licensee of
WSET-TV, Lynchburg, Virginia); "WCFT," "WBMA" and "WJSU" refer to TV Alabama,
Inc. (licensee of WCFT-TV, Tuscaloosa, Alabama, WBMA-LP, Birmingham, Alabama and
WJSU-TV, Anniston, Alabama). The term "ACCLI" refers to ACC Licensee, Inc.
(licensee of WJLA and NewsChannel 8). The term "ATP" refers to Allbritton
Television Productions, Inc. and the term "Perpetual" refers to Perpetual
Corporation, which is controlled by Joe L. Allbritton, Chairman of the Executive
Committee of the Board of Directors of ACC. "AGI" refers to Allbritton Group,
Inc., which is controlled by Perpetual and is ACC's parent. "Allfinco" refers to
Allfinco, Inc., a wholly-owned subsidiary of ACC. "Harrisburg Television" refers
to Harrisburg Television, Inc., an 80%-owned subsidiary of Allfinco. "TV
Alabama" refers to TV Alabama, Inc., an 80%-owned subsidiary of Allfinco that
owns WCFT, WJSU and WBMA. "Allnewsco" refers to ALLNEWSCO, Inc., an affiliate of
ACC that is a 99%-owned subsidiary of Perpetual. "RLA Trust" refers to the
Robert Lewis Allbritton 1984 Trust for the benefit of Robert L. Allbritton,
Chairman of the Board of Directors and Chief Executive Officer of ACC, that is a
minority owner of Allnewsco. "RLA Revocable Trust" refers to the trust of the
same name that owns 20% of each of Harrisburg Television and TV Alabama.

<PAGE>

                                TABLE OF CONTENTS


                                                                            Page
                                                                            ----
Part I

   Item 1.   Business.....................................................     1
   Item 2.   Properties...................................................    17
   Item 3.   Legal Proceedings............................................    19
   Item 4.   Submission of Matters to a Vote of Security Holders..........    19

Part II

   Item 5.   Market for Registrant's Common Equity and Related Stockholder
                Matters...................................................    19
   Item 6.   Selected Consolidated Financial Data.........................    20
   Item 7.   Management's Discussion and Analysis of Financial Condition
                and Results of Operations.................................    23
   Item 7A.  Quantitative and Qualitative Disclosures About Market Risk...    43
   Item 8.   Consolidated Financial Statements and Supplementary Data.....    43
   Item 9.   Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure..................................    43
   Item 9A.  Controls and Procedures......................................    43

Part III

   Item 10.  Directors and Executive Officers of the Registrant...........    44
   Item 11.  Executive Compensation.......................................    47
   Item 12.  Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters................    48
   Item 13.  Certain Relationships and Related Transactions...............    48
   Item 14.  Principal Accounting Fees and Services.......................    51

Part IV

   Item 15.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K..................................................    51


<PAGE>

      THIS ANNUAL REPORT ON FORM 10-K, INCLUDING ITEM 7 "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT ARE NOT HISTORICAL FACTS AND INVOLVE A
NUMBER OF RISKS AND UNCERTAINTIES. THERE ARE A NUMBER OF FACTORS THAT COULD
CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN SUCH
FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, WITHOUT LIMITATION, OUR
OUTSTANDING INDEBTEDNESS AND OUR HIGH DEGREE OF LEVERAGE; THE RESTRICTIONS
IMPOSED ON US BY THE TERMS OF OUR INDEBTEDNESS; THE HIGH DEGREE OF COMPETITION
FROM BOTH OVER-THE-AIR BROADCAST STATIONS AND PROGRAMMING ALTERNATIVES SUCH AS
CABLE TELEVISION, WIRELESS CABLE, IN-HOME SATELLITE DISTRIBUTION SERVICE,
PAY-PER-VIEW SERVICES AND HOME VIDEO AND ENTERTAINMENT SERVICES; THE IMPACT OF
NEW TECHNOLOGIES; CHANGES IN FEDERAL COMMUNICATIONS COMMISSION ("FCC")
REGULATIONS; DECREASES IN THE DEMAND FOR ADVERTISING DUE TO WEAKNESS IN THE
ECONOMY; THE VARIABILITY OF OUR QUARTERLY RESULTS AND OUR SEASONALITY; AND OUR
ABILITY TO REALIZE THE EXPECTED OPERATIONAL EFFICIENCIES FROM THE ALLNEWSCO
ACQUISITION.

      ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY
ARE EXPRESSLY QUALIFIED BY THE FOREGOING CAUTIONARY STATEMENTS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS WHICH
REFLECT MANAGEMENT'S VIEW ONLY AS OF THE DATE HEREOF.

                                     PART I

                              ITEM 1. OUR BUSINESS

The Company

      We own and operate ABC network-affiliated television stations serving
seven geographic markets: WJLA in Washington, D.C.; WCFT in Tuscaloosa, Alabama,
WJSU in Anniston, Alabama and WBMA-LP, a low power television station licensed
to Birmingham, Alabama (we operate WCFT and WJSU in tandem with WBMA-LP serving
the viewers of the Birmingham, Tuscaloosa and Anniston market as a single
programming source); WHTM in Harrisburg, Pennsylvania; KATV in Little Rock,
Arkansas; KTUL in Tulsa, Oklahoma; WSET in Lynchburg, Virginia; and WCIV in
Charleston, South Carolina. Our owned and operated stations broadcast to the
8th, 40th, 47th, 56th, 60th, 66th and 104th largest national media markets in
the United States, respectively, as defined by Nielsen Media Research, Inc.
("Nielsen"), and reach approximately 4.9% of United States television
households. We also own NewsChannel 8, which provides 24-hour per day basic
cable television programming primarily focused on regional and local news for
the Washington, D.C. metropolitan area. The operations of NewsChannel 8 are
integrated with WJLA.


                                       1
<PAGE>

      Our stations are owned and operated by ACC (WJLA-TV/NewsChannel 8),
Harrisburg Television, Inc. (WHTM), KATV, LLC (KATV), KTUL, LLC (KTUL), WSET,
Incorporated (WSET), WCIV, LLC (WCIV) and TV Alabama, Inc. (WCFT, WJSU and
WBMA). Each company other than ACC is a wholly-owned subsidiary of ACC, except
Harrisburg Television and TV Alabama, each of which is an indirect 80%-owned
subsidiary of ACC. The Company was founded in 1974 and is a subsidiary of
Allbritton Group, Inc. ("AGI"), which is controlled by Perpetual Corporation,
which in turn is controlled by Mr. Joe L. Allbritton, ACC's Chairman of the
Executive Committee of the Board of Directors. ACC and its subsidiaries are
Delaware corporations or limited liability companies. Our corporate headquarters
are located at 808 Seventeenth Street, N.W., Suite 300, Washington, D.C.
20006-3910, and our telephone number at that address is (202) 789-2130.

Television Industry Background

      Commercial television broadcasting began in the United States on a regular
basis in the 1940s. Currently, there is a limited number of channels available
for broadcasting in any one geographic area, and the license to operate a
broadcast television station is granted by the FCC. Television stations that
broadcast over the VHF band (channels 2-13) of the spectrum generally have some
competitive advantage over television stations that broadcast over the UHF band
(channels 14-69) of the spectrum because VHF channels usually have better signal
coverage and operate at a lower transmission cost. However, the improvement of
UHF transmitters and receivers, the complete elimination from the marketplace of
VHF-only receivers and the expansion of cable television systems have reduced
the competitive advantage of television stations broadcasting over the VHF band.

      Television station revenues are primarily derived from local, regional and
national advertisers and, to a much lesser extent, from networks and program
syndicators for the broadcast of programming and from other broadcast-related
activities. Advertising rates are set based upon a variety of factors, including
the size and demographic makeup of the market served by the station, a program's
popularity among viewers whom an advertiser wishes to attract, the number of
advertisers competing for the available time, the availability of alternative
advertising media in the market area, a station's overall ability to attract
viewers in its market area and the station's ability to attract viewers among
particular demographic groups that an advertiser may be targeting. Advertising
rates are also affected by an aggressive and knowledgeable sales force and the
development of projects, features and programs that tie advertiser messages to
programming. Because broadcast television stations rely on advertising revenues,
they are sensitive to cyclical changes in the economy. The size of advertisers'
budgets, which are affected by broad economic trends, affect both the broadcast
industry in general and the revenues of individual broadcast television
stations.

      United States television stations are grouped by Nielsen into 210
generally recognized television market areas that are ranked in size according
to various formulae based upon actual or potential audience. Each market area is
designated as an exclusive geographic area consisting of all counties in which
the home-market commercial stations receive the greatest percentage of total
viewing hours. The specific geographic markets are called Designated Market
Areas, or DMAs.

                                       2
<PAGE>

      Nielsen, which provides audience-measuring services, periodically
publishes data on estimated audiences for television stations in the various
DMAs throughout the country. These estimates are expressed in terms of both the
percentage of the total potential audience in the DMA viewing a station (the
station's "rating") and the percentage of the audience actually watching
television (the station's "share"). Nielsen provides such data on the basis of
total television households and selected demographic groupings in the DMA.
Nielsen uses two methods of determining a station's ratings and share. In larger
DMAs, ratings are determined by a combination of meters connected directly to
selected household television sets and weekly viewer-completed diaries of
television viewing, while in smaller markets ratings are determined by weekly
diaries only. Of the market areas in which we conduct business, Washington, D.C.
and Birmingham, Alabama are metered markets while the remaining markets are
weekly diary markets. Nielsen has announced that beginning in April 2004, the
Tulsa market will become a metered market. While we are in discussions with
Nielsen, no agreement has yet been reached as to whether or not we will purchase
the metered service for KTUL.

      Historically, three major broadcast networks--ABC, NBC and CBS--dominated
broadcast television. In recent years, FOX has evolved into the fourth major
network, although the hours of network programming produced by FOX for its
affiliates are fewer than those produced by the other three major networks. In
addition, UPN, WB and recently PAX TV have been launched as new broadcast
television networks, along with specialized networks, Telemundo, Univision and
TV Azteca.

      The affiliation by a station with one of the four major networks has a
significant impact on the composition of the station's programming, revenues,
expenses and operations. A typical affiliate station receives approximately 9 to
13 hours of each day's programming from the network. This programming, along
with cash payments ("network compensation"), is provided to the affiliate by the
network in exchange for a substantial majority of the advertising time sold
during the airing of network programs. The network then sells this advertising
time for its own account. The affiliate retains the revenues from time sold
during breaks in and between network programs and during programs produced by
the affiliate or purchased from non-network sources. In acquiring programming to
supplement network programming, network affiliates compete primarily with
affiliates of other networks and independent stations in their market areas.
Cable systems generally do not compete with local stations for programming,
although various national cable networks from time to time have acquired
programs that would have otherwise been offered to local television stations. In
addition, a television station may acquire programming through barter
arrangements. Under barter arrangements, which have become increasingly popular
with both network affiliates and independents, a national program distributor
can receive advertising time in exchange for the programming it supplies, with
the station paying no fee or a reduced fee for such programming.

      An affiliate of UPN, WB or PAX TV receives a smaller portion of each day's
programming from its network compared to an affiliate of ABC, CBS, NBC or FOX.
As a result, affiliates of UPN, WB or PAX TV must purchase or produce a greater
amount of their programming, resulting in generally higher programming costs.
These stations, however, retain a larger portion of the inventory of advertising
time and the revenues obtained therefrom compared to stations affiliated with
the major networks, which may partially offset their higher programming costs.


                                       3
<PAGE>

      In contrast to a network affiliated station, an independent station
purchases or produces all of the programming that it broadcasts, generally
resulting in higher programming costs, although the independent station is, in
theory, able to retain its entire inventory of advertising time and all of the
revenue obtained from the sale of such time. Barter and cash-plus-barter
arrangements, however, have become increasingly popular among all stations.

      Public broadcasting outlets in most communities compete with commercial
broadcasters for viewers but not directly for advertising dollars.

      Broadcast television stations compete for advertising revenues primarily
with other broadcast television stations and, to a lesser extent, with radio
stations, cable system operators and programmers and newspapers serving the same
market. Traditional network programming generally achieves higher audience
levels than syndicated programs aired by independent stations. However, as
greater amounts of advertising time become available for sale by independent
stations and FOX affiliates in syndicated programs, those stations typically
achieve a share of the television market advertising revenues greater than their
share of the market area's audience. Consolidation of cable system ownership in
discrete markets (so-called "clustering") has enabled some cable operators to
more efficiently sell time to local advertisers.

      Through the 1970s, network television broadcasting enjoyed virtual
dominance in viewership and television advertising revenues because
network-affiliated stations only competed with each other in local markets.
Beginning in the 1980s, this level of dominance began to change as the FCC
authorized more local stations and marketplace choices expanded with the growth
of independent stations and cable television services.

      Cable television systems were first constructed in significant numbers in
the 1970s and were initially used to retransmit broadcast television programming
to paying subscribers in areas with poor broadcast signal reception. In the
aggregate, cable-originated programming has emerged as a significant competitor
for viewers of broadcast television programming, although no single cable
programming network regularly attains audience levels amounting to more than a
small fraction of any of the major broadcast networks. The advertising share of
cable networks increased during the 1970s and 1980s as a result of the growth in
cable penetration (the percentage of television households that are connected to
a cable system). Notwithstanding such increases in cable viewership and
advertising, over-the-air broadcasting remains the dominant distribution system
for mass market television advertising.

      In the 1990's direct broadcast satellite ("DBS") service was introduced as
a new competitive distribution method. Home users purchase or lease satellite
dish receiving equipment and subscribe to a monthly service of programming
options. Legislation was enacted in November 1999 that permits local stations,
under specified conditions, to be carried on satellite which will retransmit
those signals back to the originating market. As DBS providers expand their
facilities, an increasing number of local stations will be carried as
"local-to-local" signals, aided by a legal requirement that mandates the
carriage of all local broadcast signals if one is retransmitted. Of our
stations, WJLA, WHTM, WBMA/WCFT/WJSU, KATV, KTUL and WSET are currently carried
on DBS systems, transmitting to the Washington, D.C., Harrisburg, Birmingham,
Little Rock, Tulsa and Roanoke-Lynchburg markets, respectively.


                                       4
<PAGE>

      We believe that the market shares of television stations affiliated with
ABC, NBC and CBS declined during the 1980s and 1990s because of the emergence of
FOX and certain strong independent stations and because of increased cable
penetration. Independent stations have emerged as viable competitors for
television viewership share, particularly as a result of the availability of
first-run, network-quality and regional sports programming. In addition, there
has been substantial growth in the number of home satellite dish receivers and
video cassette recorders, which has further expanded the number of programming
alternatives available to household audiences.

      Terrestrially-distributed television broadcast stations use analog
transmission technology. Recent advances in digital transmission technology
formats have enabled broadcasters to begin migration from analog to digital
broadcasting. Digital technologies provide cleaner video and audio signals as
well as the ability to transmit "high definition television" with theatre screen
aspect ratios, higher resolution video and "noise-free" sound. Digital
transmission also permits dividing the transmission frequency into multiple
discrete channels of standard definition television. The FCC has authorized a
transition plan to convert existing analog stations to digital by temporarily
offering a second channel to transmit programming digitally with the return of
the analog channel after the transition period. See "Legislation and
Regulation--Digital Television." Of our stations, WJLA, KATV, KTUL, WSET and
WCIV broadcast with both an analog and digital signal at this time.





                                       5
<PAGE>

Station Information

      The following table sets forth general information for each of our owned
stations as of May 2003:
<TABLE>
<CAPTION>
                                                                                  Total
                                                                      Market   Commercial                Rank
                                                Analog     Digital     Rank    Competitors   Station      in
  Designated                       Network     Channel     Channel    or DMA    in Market   Audience    Market  Acquisition
  Market Area        Station     Affiliation  Frequency   Allocation   <F1>       <F2>      Share<F3>    <F4>       Date
  -----------        -------     -----------  ---------   ----------  ------   -----------  ---------   ------  -----------

<S>               <C>                <C>        <C>           <C>      <C>           <C>       <C>        <C>    <C>
Washington, D.C.       WJLA          ABC         7/VHF        39         8           6         19%         4     01/29/76
Birmingham
  (Anniston and
  Tuscaloosa),
  AL (5)          WBMA/WCFT/WJSU     ABC            --        --        40           6         24%         2         --
   Birmingham          WBMA          ABC        58/UHF        --        --          --         --         --     08/01/97
   Anniston            WJSU          ABC        40/UHF        58        --          --         --         --     03/22/00<F6>
   Tuscaloosa          WCFT          ABC        33/UHF         5        --          --         --         --     03/15/96
Harrisburg-
  Lancaster-
  York-Lebanon,
  PA                   WHTM          ABC        27/UHF        10        47           4         22%         2     03/01/96
Little Rock, AR        KATV          ABC         7/VHF        22        56           5         32%         2     04/06/83
Tulsa, OK              KTUL          ABC         8/VHF        10        60           6         29%         2     04/06/83
Roanoke-
  Lynchburg, VA        WSET          ABC        13/VHF        34        66           4         23%         3     01/29/76<F7>
Charleston, SC         WCIV          ABC         4/VHF        34       104           5         15%         3     01/29/76<F7>

<FN>
__________
<F1> Represents market rank based on the Nielsen Station Index published
     September 2003.
<F2> Represents the total number of commercial broadcast television stations in
     the DMA with an audience share of at least 1% in the 6:00 a.m. to 2:00
     a.m., Sunday through Saturday, time period.
<F3> Represents the station's share of total viewing of commercial broadcast
     television stations in the DMA for the time period of 6:00 a.m. to 2:00
     a.m., Sunday through Saturday.
<F4> Represents the station's rank in the DMA based on its share of total
     viewing of commercial broadcast television stations in the DMA for the time
     period of 6:00 a.m. to 2:00 a.m., Sunday through Saturday.
<F5> TV Alabama serves the Birmingham market by simultaneously broadcasting
     identical programming over WBMA, WCFT and WJSU. The stations are listed on
     a combined basis by Nielsen as WBMA+, the call sign of the low power
     television station.
<F6> We began programming WJSU pursuant to a local marketing agreement in
     December 1995. In connection with the local marketing agreement, we entered
     into an option to purchase the assets of WJSU. We exercised our option to
     acquire WJSU and completed our acquisition of WJSU on March 22, 2000. See
     "Owned Stations--WBMA/WCFT/WJSU: Birmingham (Anniston and Tuscaloosa),
     Alabama."
<F7> WSET and WCIV have been indirectly owned and operated by Joe L. Allbritton
     since 1976. On March 1, 1996, WSET and WCIV became wholly-owned
     subsidiaries of ACC.

</FN>
</TABLE>

                                       6
<PAGE>

Business and Operating Strategy

      Our business strategy is to focus on building net operating revenues and
net cash provided by operating activities. We intend to pursue selective
acquisition opportunities as they arise. Our acquisition strategy is to target
network-affiliated television stations where we believe we can successfully
apply our operating strategy and where such stations can be acquired on
attractive terms. Targets include stations in midsized growth markets with what
we believe to be advantageous business climates. Although we continue to review
strategic investment and acquisition opportunities, no agreements or
understandings are currently in place regarding any material investments or
acquisitions.

      In addition, we constantly seek to enhance net operating revenues at a
marginal incremental cost through our use of existing personnel and programming
capabilities. For example, KATV operates the Arkansas Razorback Sports Network
("ARSN"), which provides University of Arkansas sports programming to a network
of 61 radio stations in three states. Certain broadcast television, cable
pay-per-view and home video rights are also controlled by ARSN.

      On September 16, 2002, ACC completed its acquisition of certain of the
assets of Allnewsco, constituting the operations of NewsChannel 8, which
provides 24-hour per day basic cable television programming primarily focused on
regional and local news for the Washington, D.C. metropolitan area. The
operations of NewsChannel 8 have been integrated with those of WJLA in a new
studio and office facility, creating the first newsgathering duopoly in the
Nation's Capital. The combination of these two operations allows for certain
operational efficiencies, primarily in the areas of newsgathering,
administration, finance, operations, promotions and human resources. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - General Factors Affecting Our Business."

      Our operating strategy focuses on four key elements:

      Local News and Community Leadership. Our stations strive to be local news
leaders to exploit the revenue potential associated with local news leadership.
Since the acquisition of each station, we have focused on building that
station's local news programming franchise as the foundation for building
significant audience share. In each of our market areas, we develop additional
information-oriented programming designed to expand the stations' hours of
commercially valuable local news and other programming with relatively small
incremental increases in operating expenses. Local news programming is
commercially valuable because of its high viewership level, the attractiveness
to advertisers of the demographic characteristics of the typical news audience
(allowing stations to charge higher rates for advertising time) and the enhanced
ratings of other programming in time periods adjacent to the news. In addition,
we believe strong local news product has helped differentiate local broadcast
stations from the increasing number of cable programming competitors that
generally do not provide this material.

      High Quality Non-Network Programming. Our stations are committed to
attracting viewers through an array of syndicated and locally-produced
programming to fill those periods of the broadcast day not programmed by the
network. This programming is selected by us based on its ability to attract
audiences highly valued in terms of demographic makeup on a cost-


                                       7
<PAGE>

effective basis and reflects a focused strategy to migrate and hold audiences
from program to program throughout dayparts. Audiences highly valued in terms of
demographic makeup include women aged 18-49 and all adults aged 25-54. These
demographic groups are perceived by advertisers as the groups with the majority
of buying authority and decision-making in product selection.

      Local Sales Development Efforts. We believe that television stations with
a strong local presence and active community relations can realize additional
revenue from advertisers through the development and promotion of special
programming and marketing events. Each of our stations has developed such
additional products, including high quality programming of local interest (such
as University of Arkansas football and basketball games) and sponsored community
events. These sponsored events have included health fairs, contests, job fairs,
parades and athletic events and have provided advertisers, who are offered
participation in such events, an opportunity to direct a marketing program to
targeted audiences. These additional products have proven successful in
attracting incremental advertising revenues. The stations also seek to maximize
their local sales efforts through the use of extensive research and targeted
demographic studies.

      Cost Control. We believe that controlling costs is an essential factor in
achieving and maintaining the profitability of our stations. We believe that by
delivering highly targeted audience levels and controlling programming and
operating costs, our stations can achieve increased levels of revenue and
operating cash flow. Each station rigorously manages its expenses through a
budgetary control process and project accounting, which include an analysis of
revenue and programming costs by daypart. Moreover, each of the stations closely
monitors its staffing levels.

Owned Stations

   WJLA/NewsChannel 8:    Washington, D.C.

      Acquired by ACC in 1976, WJLA is an ABC network affiliate pursuant to an
affiliation agreement that expires on October 1, 2005. The station's FCC license
(held by ACCLI) expires on October 1, 2004. Washington, D.C. is the eighth
largest DMA, with approximately 2,224,000 television households. We believe that
stations in this market generally earn higher advertising rates than stations in
smaller markets because many national advertising campaigns concentrate their
spending in the top ten media markets and on issue-oriented advertising in
Washington, D.C. The Washington, D.C. market is served by six commercial
television stations.

      On September 16, 2002, ACC completed its acquisition of certain of the
assets of Allnewsco, constituting the operations of NewsChannel 8, which
provides 24-hour per day basic cable television programming primarily focused on
regional and local news for the Washington, D.C. metropolitan area. The
operations of NewsChannel 8 have been integrated with those of WJLA in a new
studio and office facility, creating the first newsgathering duopoly in the
Nation's Capital. The combination of these two operations allows for certain
operational efficiencies, primarily in the areas of newsgathering,
administration, finance, operations,


                                       8
<PAGE>

promotions and human resources. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--General Factors Affecting Our
Business."

   WBMA/WCFT/WJSU:    Birmingham (Anniston and Tuscaloosa), Alabama

      We acquired WCFT in March 1996 and commenced programming WJSU, licensed to
Anniston (Birmingham), Alabama, under a ten-year Time Brokerage Agreement
(referred to herein as the Anniston LMA) effective December 29, 1995. Under the
Anniston LMA, we supplied program services to WJSU and retained all revenues
from advertising sales. In exchange, we paid all station operating expenses and
certain management fees to the station's owner. In connection with the Anniston
LMA, we entered into an option to purchase the assets of WJSU. We exercised our
option to acquire WJSU on September 14, 1999 and completed the acquisition on
March 22, 2000. We also own a low power television station licensed to
Birmingham, Alabama (WBMA). In October 1998, Nielsen collapsed the Tuscaloosa
DMA and the Anniston DMA into the Birmingham DMA creating the 40th largest DMA
with approximately 698,000 television households. The Birmingham DMA is served
by six commercial television stations.

      We serve the Birmingham market by simultaneously transmitting identical
programming from our studio in Birmingham over WCFT, WJSU and WBMA. The stations
are listed on a combined basis by Nielsen as WBMA+. TV Alabama maintains studio
facilities in Birmingham for the operation of the stations. We have retained a
news and sales presence in both Tuscaloosa and Anniston, while at the same time
maintaining our primary news and sales presence in Birmingham. The ABC network
affiliation is based upon carriage on both WCFT and WJSU and expires on
September 1, 2006. The FCC licenses for the three stations expire on April 1,
2005.

   WHTM:    Harrisburg-Lancaster-York-Lebanon, Pennsylvania

      Acquired by us in 1996, WHTM is an ABC network affiliate pursuant to an
affiliation agreement that expires on January 1, 2005. The station's FCC license
expires August 1, 2007. The Harrisburg-Lancaster-York-Lebanon market, which
consists of nine contiguous counties located in central Pennsylvania, is the
47th largest DMA, reaching approximately 637,000 television households.
Harrisburg is the capital of Pennsylvania, and the government represents the
area's largest employer. The Harrisburg market is served by four commercial
television stations, one of which is a VHF station.

   KATV:    Little Rock, Arkansas

      Acquired by us in 1983, KATV is an ABC network affiliate pursuant to an
affiliation agreement that expires on July 31, 2005. The station's FCC license
expires on June 1, 2005. The Little Rock market is the 56th largest DMA, with
approximately 524,000 television households. The Little Rock market has a
diversified economy, both serving as the seat of state and local government and
home to commercial businesses. The Little Rock market is served by five
commercial television stations.


                                       9
<PAGE>

      Capitalizing on its exclusive rights to the University of Arkansas
basketball and football schedules through the year 2005, KATV launched ARSN in
Fiscal 1994 by entering into programming sublicense agreements with a network of
61 radio stations in three states. Certain broadcast television, cable
pay-per-view and home video rights are also controlled by ARSN.

   KTUL:    Tulsa, Oklahoma

      Acquired by us in 1983, KTUL is an ABC network affiliate pursuant to an
affiliation agreement that expires on July 31, 2005. The station's FCC license
expires on June 1, 2006. Tulsa, Oklahoma is the 60th largest DMA, with
approximately 505,000 television households. The Tulsa market is served by six
commercial television stations.

   WSET:    Roanoke-Lynchburg, Virginia

      Acquired by us in 1996, WSET has been indirectly owned and operated by Joe
L. Allbritton since 1976. The station is an ABC network affiliate pursuant to an
affiliation agreement that expires on July 31, 2005. WSET's FCC license expires
on October 1, 2004. The hyphenated central Virginia market comprised of
Lynchburg, Roanoke and Danville is the 66th largest DMA, with approximately
450,000 television households. The Lynchburg DMA is served by four commercial
television stations.

   WCIV:    Charleston, South Carolina

      Acquired by us in 1996, WCIV has been indirectly owned and operated by Joe
L. Allbritton since 1976. The station is an ABC affiliate pursuant to an
affiliation agreement that expires on August 20, 2006. WCIV's FCC license
expires on December 1, 2004. Charleston, South Carolina is the 104th largest
DMA, with approximately 270,000 television households. The Charleston DMA is
served by five commercial television stations.


Network Affiliation Agreements and Relationship

      Each of our stations is an ABC affiliate with affiliation agreement
expiration dates as follows:

               WHTM                       January 1, 2005
               KATV                       July 31, 2005
               KTUL                       July 31, 2005
               WSET                       July 31, 2005
               WJLA                       October 1, 2005
               WCIV                       August 20, 2006
               WBMA/WCFT/WJSU             September 1, 2006

      ABC has routinely renewed the affiliation agreements with stations;
however, we cannot assure you that these affiliation agreements will be renewed
in the future or under the same general terms. As one of the largest group
owners of ABC network affiliates in the nation, we believe that we enjoy
excellent relations with the ABC network.


                                       10
<PAGE>

      Generally, each affiliation agreement provides our stations with the right
to broadcast programs transmitted by the network that includes designated
advertising time the revenue from which the network retains. For every hour or
fraction thereof that the station elects to broadcast network programming, the
network pays the station compensation, as specified in each affiliation
agreement, or as agreed upon by the network and the stations. Typically,
prime-time programming generates the highest hourly rates. Under specified
conditions, rates are subject to increase or decrease by the network during the
term of each affiliation agreement, with provisions for advance notice and right
of termination on behalf of the station in the event of a reduction in rates.

      Effective August 11, 1999, our network affiliation agreements with ABC
were amended. Under the amendments, ABC, for a three-year period, provided our
stations with additional prime-time inventory, limited participation rights in a
new cable television "soap" channel, and enhanced program exclusivity and
commercial inventory guarantees in exchange for reduced annual network
compensation, the return of certain Saturday morning inventory from the
stations, and more flexibility in repurposing of ABC programming. Upon the July
31, 2002 expiration of this amendment, compensation rates and inventory
allocations reverted to their pre-modification levels. We routinely consult with
the network in relation to the levels of program clearances, preemptions,
compensation and inventory availabilities.

Competition

      Competition in the television industry, including each of the market areas
in which our stations compete, takes place on several levels: competition for
audience, competition for programming (including news) and competition for
advertisers. Additional factors material to a television station's competitive
position include signal coverage and assigned frequency. The television
broadcasting industry is continually faced with technological change and
innovation, the possible rise or fall in popularity of competing entertainment
and communications media and actions of federal regulatory bodies, including the
FCC, any of which could possibly have a material adverse effect on our
operations.

      Audience: Stations compete for audience on the basis of program
popularity, which has a direct effect on advertising rates. A substantial
portion of our daily programming at our stations is supplied by ABC. In those
periods, the stations are totally dependent upon the performance of the ABC
network programs in attracting viewers. Non-network time periods are programmed
by the station with a combination of self-produced news, public affairs and
entertainment programming, including news and syndicated programs purchased for
cash, cash and barter or barter-only. Independent stations, the number of which
has increased significantly over the past decade, have also emerged as viable
competitors for television viewership share, particularly as the result of the
availability of first-run network-quality programming from FOX.

      The development of methods of television transmission other than
over-the-air broadcasting and, in particular, the growth of cable television and
DBS have significantly altered competition for audience share in the television
industry. These alternative transmission methods can increase competition for a
broadcasting station both by bringing into its market area distant broadcasting
signals not otherwise available to the station's audience and by serving as a
distribution system


                                       11
<PAGE>

for programming originated on the cable or DBS systems. Although historically
cable operators have not sought to compete with broadcast stations for a share
of the local news audience, cable operators have made recent inroads to this
market as well, particularly in the area of local sports channels. Increased
competition for local audiences could have an adverse effect on our advertising
revenues.

      Other sources of competition include home entertainment systems (including
video cassette recorder and DVD playback systems, videodiscs and television game
devices), multipoint distribution systems, multichannel multipoint distribution
systems, wireless cable, satellite master antenna television systems and some
low-power services. Our television stations also face competition from
high-powered DBS services, such as DirecTV and Echostar, which transmit
programming directly to homes equipped with special receiving antennas. Local
broadcast stations themselves may now use excess capacity in their digital
television allocation to "multicast" discrete program offerings within the base
channel.

      Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now under development
for use with current cable channels, internet-relayed video and direct broadcast
satellites, are expected to reduce the bandwidth required for television signal
transmission. These compression techniques, as well as other technological
developments, are applicable to all video delivery systems, including
over-the-air broadcasting, and have the potential to provide vastly expanded
programming to highly targeted audiences. Reduction in the cost of creating
additional channel capacity could lower entry barriers for new channels and
encourage the development of increasingly specialized niche programming. This
ability to reach very defined audiences is expected to alter the competitive
dynamics for advertising expenditures. We are unable to predict the effect that
technological changes will have on the broadcast television industry or the
future results of our operations.

      Programming: Competition for programming involves negotiating with
national program distributors or syndicators which sell first-run and rerun
packages of programming. Our stations compete against in-market broadcast
station competitors for off-network reruns (such as "Frasier") and first-run
products (such as "The Oprah Winfrey Show") for exclusive access to those
programs. Cable systems generally do not compete with local stations for
programming; however, local cable operators are increasingly consolidating
ownership of systems within various markets, enabling them to bid on local
sports programming in competition with traditional broadcasters. In addition,
various national cable networks from time to time have acquired programs that
would have otherwise been offered to local television stations. Competition for
exclusive news stories and features is also endemic to the television industry.

      Advertising: Advertising rates are set based upon a variety of factors,
including the size and demographic makeup of the market served by the station, a
program's popularity among viewers whom an advertiser wishes to attract, the
number of advertisers competing for the available time, the availability of
alternative advertising media in the market area, a station's overall ability to
attract viewers in its market area and the station's ability to attract viewers
among particular demographic groups that an advertiser may be targeting.
Advertising rates are also affected by an aggressive and knowledgeable sales
force and the development of projects, features and programs that tie advertiser
messages to programming. Our television stations


                                       12
<PAGE>

compete for local and national advertising revenues with other television
stations in their respective markets as well as with other advertising media,
such as newspapers, radio, magazines, outdoor advertising, transit advertising,
yellow page directories, direct mail and local cable systems. Competition for
advertising dollars in the broadcasting industry occurs primarily in individual
market areas. Generally, a television broadcasting station in the market does
not compete with stations in other market areas. Our television stations are
located in highly competitive market areas.

Legislation and Regulation

      The ownership, operation and sale of television stations are subject to
the jurisdiction of the FCC under the Communications Act of 1934 (the
"Communications Act"). Matters subject to FCC oversight include the assignment
of frequency bands for broadcast television; the approval of a television
station's frequency, location and operating power; the issuance, renewal,
revocation or modification of a television station's FCC license; the approval
of changes in the ownership or control of a television station's licensee; the
regulation of equipment used by television stations; and the adoption and
implementation of regulations and policies concerning the ownership, operation,
programming and employment practices of television stations. The FCC has the
power to impose penalties, including fines or license revocations, upon a
licensee of a television station for violations of the FCC's rules and
regulations.

      The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies affecting
broadcast television. Reference should be made to the Communications Act, FCC
rules and the public notices and rulings of the FCC for further information
concerning the nature and extent of FCC regulation of broadcast television
stations.

      License Renewal: Broadcast television licenses are generally granted for
maximum terms of eight years. The main licenses are supported by various
"auxiliary" licenses for point-to-point microwave, remote location electronic
newsgathering and program distribution between the studio and transmitter
locations. License terms are subject to renewal upon application to the FCC, but
they may be renewed for a shorter period upon a finding by the FCC that the
"public interest, convenience and necessity" would be served thereby. Under the
Telecommunications Act of 1996 (the "Telecommunications Act"), the FCC must
grant a renewal application if it finds that the station has served the public
interest, there have been no serious violations of the Communications Act or FCC
rules, and there have been no other violations of the Communications Act or FCC
rules by the licensee that, taken together, would constitute a pattern of abuse.
If the licensee fails to meet these requirements, the FCC may either deny the
license or grant it on terms and conditions as are appropriate after notice and
opportunity for hearing.

      In the vast majority of cases, television broadcast licenses are renewed
by the FCC even when petitions to deny or competing applications are filed
against broadcast license renewal applications. However, we cannot assure that
each of our broadcast licenses will be renewed in the future. All of the
stations' existing licenses were renewed for full terms and are currently in
effect.


                                       13
<PAGE>

      Programming and Operation: The Communications Act requires broadcasters to
serve the "public interest." Since the late 1970s, the FCC gradually has relaxed
or eliminated many of the more formalized procedures it had developed to promote
the broadcast of certain types of programming responsive to the needs of a
station's community of license. However, broadcast station licensees must
continue to present programming that is responsive to local community problems,
needs and interests and to maintain certain records demonstrating such
responsiveness. Complaints from viewers concerning a station's programming often
will be considered by the FCC when it evaluates license renewal applications,
although such complaints may be filed at any time and generally may be
considered by the FCC at any time. Stations also must follow various FCC rules
that regulate, among other things, political advertising, sponsorship
identifications, the advertisements of contests and lotteries, obscene and
indecent broadcasts and technical operations, including limits on radio
frequency radiation. The FCC also has adopted rules that place additional
obligations on television station operators for closed-captioning of programming
for the hearing impaired, equal employment opportunity obligations, maximum
amounts of advertising and minimum amounts of programming specifically targeted
for children and special obligations relating to political candidate
advertising, as well as additional public information and reporting
requirements.

      Digital Television: The FCC has adopted rules for implementing digital
(including high-definition) television service in the United States.
Implementation of DTV is intended to improve the technical quality of
television. Under certain circumstances, however, conversion to DTV operations
may reduce a station's geographical coverage area. The FCC has allotted a second
broadcast channel to each full-power commercial television station for DTV
operation. The FCC's DTV allotment plan is based on the use of a "core" DTV
spectrum between channels 2 and 51. Under the FCC's rules, stations will be
required to phase-in their DTV operations on the second channel over a
transition period and to surrender their non-DTV channel later. This period is
designed to facilitate the supply of television receivers and cable demodulation
boxes that will operate with the new DTV frequencies. The FCC has adopted
standards for the transmission of DTV signals. These standards will serve as the
basis for the phased conversion to digital transmission.

      Our stations have been assigned the following digital channel allocations
by the FCC: WJLA-39, WCFT-5, WJSU-58, WHTM-10, KATV-22, KTUL-10, WSET-34 and
WCIV-34. Of these stations, WJLA, KATV, KTUL, WSET and WCIV are currently
operating on their assigned DTV channels. The FCC established May 1, 2002 as the
date by which all commercial television stations were to have implemented DTV
service. The FCC has recognized that, due to exigent circumstances relating to
tower construction, equipment availability and other factors, extensions of time
for construction of digital operations will be necessary, and the FCC has
adopted streamlined procedures to affect such extensions. Extension of time
requests for the construction of DTV facilities were granted for our unbuilt DTV
operations in order to accommodate requests for changed DTV frequencies and
other delaying factors beyond the control of the stations. Construction of DTV
facilities is currently underway at WCFT and WHTM with construction permits
extending through April 23, 2004 and October 23, 2004, respectively. WJSU has
requested a change from channel 58 to 9, and the FCC has initiated a proceeding
requesting comments. WJSU's construction timeline will be set upon the
completion


                                       14
<PAGE>

of this proceeding. We anticipate that implementation of DTV service will be
completed at WHTM, WCFT and WJSU during Fiscal 2004.

      Implementation of DTV service will impose substantial additional costs on
television stations providing the new service because of the need to purchase
additional equipment and because some stations will need to operate at higher
utility costs. The industry-wide transition from analog to digital delivery has
currently yielded only limited opportunities to generate incremental revenue
from the DTV service. Accordingly, we cannot assure you that our television
stations will be able to increase revenue to offset such costs. We are unable to
predict what future actions the FCC might take with respect to DTV service, nor
can we predict the effect of the FCC's present DTV implementation plan or such
future actions on our business. We will incur significant expense in the
conversion to DTV operations, and are unable to predict the extent or timing of
consumer demand for any such DTV services.

      Ownership Matters: The Communications Act in conjunction with various
antitrust statutes contain restrictions on the ownership and control of
broadcast licenses. Together with the FCC's rules, those laws place limitations
on alien ownership; common ownership of television, radio and newspaper
properties; and ownership by those persons not having the requisite "character"
qualifications and those persons holding "attributable" interests in the
license.

      On June 2, 2003, the FCC approved modifications to several of its media
ownership rules. Under the Commission's order, the national limits on the number
of stations that can be commonly owned was increased and restrictions on common
ownership of local television, radio and newspapers were relaxed in certain
markets under certain circumstances. Additional flexibility would be available
to allow owners of media properties, including ACC, to acquire additional media
outlets in some circumstances not previously permitted, if they so choose.
Numerous challenges were filed to the FCC's action, and the U.S. Court of
Appeals has stayed the effectiveness of the Commission's order pending the
appeal. There are also efforts underway in Congress to limit or repeal portions
of the FCC's actions.

      Prior to the FCC's action, the rules governing national ownership limits
generally permit ownership of attributable interests in stations reaching 35% of
the nation's television households. The rules governing local ownership
generally permitted a single entity to have an attributable interest in no more
than two television stations that serve the same DMA under limited
circumstances. Similar restrictions limited the number of radio stations that
could be co-owned with a television station in a market as well as common
newspaper/broadcast station ownership.

      An individual or entity that acquires an attributable interest in ACC may
violate the FCC's ownership rules if that acquirer also has an attributable
interest in other television or radio stations, or daily newspapers, depending
on the number and location of those radio or television stations, or daily
newspapers. Such an acquirer also may be restricted in the companies in which it
may invest, to the extent that those investments give rise to an attributable
interest. If an individual or entity with an attributable interest in ACC
violates any of these ownership rules, we may be unable to obtain from the FCC
the authorizations needed to conduct our television station business, may be
unable to obtain FCC consents for certain future acquisitions, may be unable to
obtain renewals of our licenses and may be subject to other material adverse
consequences.


                                       15
<PAGE>

      Additional Competition in the Video Services Industry: The
Telecommunications Act also eliminates the overall ban on telephone companies
offering video services and permits the ownership of cable television companies
by telephone companies in their service areas (or vice versa) in certain
circumstances. Telephone companies providing such video services will be
regulated according to the transmission technology they use. The
Telecommunications Act also permits telephone companies to hold an ownership
interest in the programming carried over such systems. Although we cannot
predict the effect of the removal of these barriers to telephone company
participation in the video services industry, it may have the effect of
increasing competition in the television broadcast industry in which we operate.

      Other Legislation: The foregoing does not purport to be a complete summary
of all the provisions of the Telecommunications Act or of the regulations and
policies of the FCC thereunder. Congress and the FCC have under consideration,
and in the future may consider and adopt, (i) other changes to existing laws,
regulations and policies or (ii) new laws, regulations and policies regarding a
wide variety of matters that could affect, directly or indirectly, the
operation, ownership and profitability of our broadcast stations. Also, certain
of the foregoing matters are now, or may become, the subject of court
litigation, and we cannot predict the outcome of any such litigation or the
impact on our business.

Employees

      As of September 30, 2003, we employed in full and part-time positions 936
persons, including 267 at WJLA/NewsChannel 8, 140 at KATV, 126 at KTUL, 110 at
WHTM, 109 at WBMA/WCFT/WJSU, 97 at WSET, 75 at WCIV and 12 in our corporate
office. Of the employees at WJLA/NewsChannel 8, 121 are represented by three
unions: the American Federation of Television and Radio Artists ("AFTRA"), the
Directors Guild of America ("DGA") or the National Association of Broadcast
Employees and Technicians/Communications Workers of America ("NABET/CWA"). The
NABET/CWA collective bargaining agreement expires January 31, 2005. The AFTRA
collective bargaining agreement expires September 30, 2006. The DGA collective
bargaining agreement expired January 16, 2000. Subsequent to the integration of
WJLA and NewsChannel 8, the NLRB conducted an election in which the combined
directors of WJLA and NewsChannel 8 elected representation by DGA. The parties
have been in negotiations for a collective bargaining agreement for the new
unit. No employees of our other owned stations are represented by unions. We
believe our relations with our employees are satisfactory.


                                       16
<PAGE>


                               ITEM 2. PROPERTIES

      We maintain our corporate headquarters in Washington, D.C., occupying
leased office space of approximately 9,300 square feet.

      The types of properties required to support each of the stations include
offices, studios, transmitter sites and antenna sites. The stations' studios are
co-located with their office space while transmitter sites and antenna sites are
generally located away from the studios in locations determined to provide
maximum market signal coverage.

      The following table describes the general characteristics of our principal
real property:


                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                                                                     Lease
                                                                                                   Expiration
Facility                  Market/Use                       Ownership      Approximate Size            Date
---------------------     -----------------------------    ------------   ----------------         ----------
<S>                       <C>                              <C>             <C>                       <C>
WJLA/News Channel 8       Rosslyn, VA
                          Office/Studio                    Leased          79,870 sq. ft.            6/30/17

                          Prince Georges, MD
                          Tower - Weather                  Leased          1 acre                    3/31/06

                          Washington, D.C.
                          Tower/Transmitter                Joint Venture   108,000 sq. ft.             N/A

WHTM                      Harrisburg, PA
                          Office/Studio                    Owned           14,000 sq. ft.              N/A
                          Adjacent Land                    Owned           59,337 sq. ft.              N/A
                          Tower/Transmitter                Owned           2,801 sq. ft.               N/A

                          York, PA
                          Office/Studio                    Leased          1,200 sq. ft.             7/01/06

KATV                      Little Rock, AR
                          Office/Studio                    Owned           20,500 sq. ft.              N/A
                          Office/Studio                    Leased          1,500 sq. ft.             1/31/06
                          Tower/Transmitter                Owned           188 acres                   N/A
                          Annex/Garage                     Owned           67,400 sq. ft.              N/A

KTUL                      Tulsa, OK
                          Office/Studio                    Owned           13,520 sq. ft.              N/A
                          Tower/Transmitter                Owned           160 acres                   N/A
                          Tower - Cushing                  Leased          1 acre                    6/30/05

WSET                      Lynchburg, VA
                          Office/Studio                    Owned           15,500 sq. ft.              N/A
                          Tower/Transmitter                Owned           2,700 sq. ft.               N/A

                          Danville, VA
                          Office/Studio                    Leased          2,150 sq. ft.             2/29/06

WCIV                      Mt. Pleasant, SC
                          Office/Studio                    Owned           21,700 sq. ft.              N/A
                          Tower/Transmitter                Leased          2,000 sq. ft.             8/31/06

WBMA/WCFT/WJSU            Birmingham, AL
                          Office/Studio/Dish Farm          Leased          26,357 sq. ft./0.5 acre   9/30/06
                          Tower/Relay-Pelham               Leased          .08 acres                10/31/06
                          Tower/Relay-Red Mtn.             Owned           .21 acres                   N/A

                          Tuscaloosa, AL
                          Office/Studio                    Owned           9,475 sq. ft.               N/A
                          Tower-Tuscaloosa                 Owned           10.5 acres                  N/A
                          Tower-AmSouth                    Leased          134.3 acres               4/30/06

                          Anniston, AL
                          Office/Studio                    Leased          6,100 sq. ft.              4/1/11
                          Tower-Blue Mtn.                  Owned           1.7 acres                   N/A
                          Tower-Bald Rock                  Leased          1 acre                    8/29/16

</TABLE>

                                                      18
<PAGE>

                            ITEM 3. LEGAL PROCEEDINGS

      We currently and from time to time are involved in litigation incidental
to the conduct of our business, including suits based on defamation and
employment activity. We are not currently a party to any lawsuit or proceeding
which, in our opinion, if decided adverse to us, would be likely to have a
material adverse effect on our consolidated financial condition, results of
operations or cash flows.


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

      Not Applicable.



                                     PART II

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

      Not Applicable.


                                       19
<PAGE>

                  ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
                             (dollars in thousands)

      The selected consolidated financial data for the fiscal years ended
September 30, 1999, 2000, 2001, 2002 and 2003 are derived from our consolidated
financial statements. The information in this table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and the
notes thereto included elsewhere herein. Please note that the data below reflect
the combined results for the Company and Allnewsco for all of the periods
presented. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--General Factors Affecting Our Business."
<TABLE>
<CAPTION>

                                                                               Fiscal Year Ended September 30,
                                                                               -------------------------------
                                                                1999          2000          2001          2002          2003
                                                                ----          ----          ----          ----          ----
<S>                                                          <C>           <C>           <C>           <C>           <C>
Statement of Operations Data:
Operating revenues, net..................................    $ 197,566     $ 216,495     $ 202,541     $ 196,169     $ 202,590
Television operating expenses, excluding depreciation and
   amortization..........................................      120,301       124,727       124,597       126,001       125,224
Depreciation and amortization<F1>........................       18,552        16,624        15,045        13,310        10,785
Corporate expenses.......................................        4,339         4,873         5,641         6,004         6,379
Operating income.........................................       54,374        70,271        57,258        50,854        60,202
Interest expense.........................................       42,154        42,212        41,682        41,561        40,647
Interest expense-related party...........................        3,623         3,891         4,064           785          --
Interest income..........................................          280           331           321            94           343
Interest income-related party............................          226           303           213            92            88
Loss on early repayment of debt..........................         --            --            --            --          23,194
Income (loss) before cumulative effect of change in
   accounting principle..................................        4,007        12,811         6,354         3,514        (2,951)
Cumulative effect of change in accounting principle<F1>..         --            --            --            --           2,973
Net income (loss)........................................        4,007        12,811         6,354         3,514        (5,924)


                                                                                     As of September 30,
                                                                                     -------------------
                                                                1999          2000          2001          2002          2003
                                                                ----          ----          ----          ----          ----
Balance Sheet Data:
Total assets.............................................    $ 279,875     $ 273,645     $ 258,610     $ 268,994     $ 262,010
Total debt<F2>...........................................      429,629       427,729       426,860       440,443       467,688
Stockholder's investment.................................     (221,643)     (234,163)     (230,817)     (247,073)     (275,800)


                                                                               Fiscal Year Ended September 30,
                                                                               -------------------------------
                                                                1999          2000          2001          2002          2003
                                                                ----          ----          ----          ----          ----
Cash Flow Data<F3>:
Cash flow from operating activities......................    $  25,218     $  30,626     $  25,156     $  28,020     $  23,938
Cash flow from investing activities......................      (10,568)       (8,466)       (5,782)      (46,458)       (7,634)
Cash flow from financing activities......................      (14,350)      (24,666)      (23,626)       16,908       (19,325)

Financial Ratios and Other Data:
Operating income margin..................................         27.5%         32.5%         28.3%         25.9%         29.7%
Operating Cash Flow<F4>..................................    $  72,926     $  86,895     $  72,303     $  64,164     $  70,987
Operating Cash Flow Margin<F5>...........................         36.9%         40.1%         35.7%         32.7%         35.0%
Capital expenditures.....................................       12,140         5,167         6,560        26,332         7,700

<FN>

                                                                                                  (Footnotes on following page)

                                                              20
<PAGE>

Footnotes

<F1> As required by generally accepted accounting principles, effective
     October 1, 2002 we changed our method of accounting for intangible assets.
     As a result, we ceased amortization of our broadcast license intangible
     assets effective October 1, 2002. In addition, we recorded a non-cash,
     after-tax impairment charge of $2,973 relating to the carrying value of our
     broadcast licenses. See "Consolidated Financial Statements--Notes to
     Consolidated Financial Statements--Note 5." The following table adjusts
     reported depreciation and amortization for each year prior to the adoption
     of SFAS No. 142 to exclude amortization of our broadcast license intangible
     assets:

                                          Fiscal Year Ended September 30,
                                          -------------------------------
                                     1999        2000        2001        2002
                                     ----        ----        ----        ----

Depreciation and amortization,
   as reported...................  $ 18,552    $ 16,624    $ 15,045    $ 13,310
Less:
Amortization of broadcast
   licenses......................    (3,768)     (4,012)     (4,088)     (4,088)
                                   --------    --------    --------    --------
Depreciation and amortization,
   adjusted for the adoption of
   SFAS No. 142..................  $ 14,784    $ 12,612    $ 10,957    $  9,222
                                   ========    ========    ========    ========


<F2> Total debt is defined as long-term debt (including the current portion
     thereof, and net of discount) and capital lease obligations.
<F3> Cash flows from operating, investing and financing activities were
     determined in accordance with generally accepted accounting principles. See
     "Consolidated Financial Statements--Consolidated Statements of Cash Flows."
<F4> We define "Operating Cash Flow" as operating income plus depreciation and
     amortization. Although Operating Cash Flow is not a measure of performance
     calculated in accordance with generally accepted accounting principles
     ("GAAP"), we believe it is useful for investors in our debt securities and
     users of our financial statements in understanding our results of
     operations. Management believes that Operating Cash Flow is useful because
     it is widely used in the broadcasting industry as a measure of operating
     performance and is used by investors and by analysts who report on the
     performance of broadcast companies. Operating Cash Flow also is generally
     recognized as a tool in applying valuation methodologies for companies in
     the media industry. In addition, management closely monitors Operating Cash
     Flow in determining our ability to maintain compliance with certain
     financial covenants of our indebtedness. Nevertheless, you should not
     consider Operating Cash Flow in isolation from or as a substitute for
     operating income, net income, cash flow from operating activities and other
     operations or cash flow statement data prepared in accordance with GAAP, or
     as a measure of performance or liquidity prepared in accordance with GAAP.
     Moreover, because Operating Cash Flow is not a measure calculated in
     accordance with GAAP, this performance measure is not necessarily
     comparable to similarly titled measures employed by other companies.

                                       21
<PAGE>

     The following table provides a reconciliation of Operating Cash Flow (a
     non-GAAP financial measure) to operating income (as presented in our
     statements of operations):

                                       Fiscal Year Ended September 30,
                                       -------------------------------
                              1999       2000       2001       2002       2003
                              ----       ----       ----       ----       ----

Operating income.........   $ 54,374   $ 70,271   $ 57,258   $ 50,854   $ 60,202
Add:
Depreciation and
   amortization..........     18,552     16,624     15,045     13,310     10,785
                            --------   --------   --------   --------   --------

Operating Cash Flow......   $ 72,926   $ 86,895   $ 72,303   $ 64,164   $ 70,987
                            ========   ========   ========   ========   ========


<F5> We define "Operating Cash Flow Margin" as Operating Cash Flow as a
     percentage of operating revenues, net.
</FN>
</TABLE>


                                       22
<PAGE>



            ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
                             (dollars in thousands)

General Factors Affecting Our Business

   The Company

      We own ABC network-affiliated television stations serving seven geographic
markets: WJLA in Washington, D.C.; WCFT in Tuscaloosa, Alabama, WJSU in
Anniston, Alabama and WBMA-LP, a low power television station licensed to
Birmingham, Alabama (we operate WCFT and WJSU in tandem with WBMA-LP serving the
viewers of the Birmingham, Tuscaloosa and Anniston market as a single
programming source); WHTM in Harrisburg, Pennsylvania; KATV in Little Rock,
Arkansas; KTUL in Tulsa, Oklahoma; WSET in Lynchburg, Virginia; and WCIV in
Charleston, South Carolina. We also provide 24-hour per day basic cable
television programming to the Washington, D.C. market, through NewsChannel 8,
primarily focused on regional and local news for the Washington, D.C.
metropolitan area. The operations of NewsChannel 8 are integrated with WJLA.

   Acquisitions and Basis of Financial Presentation

      On September 16, 2002, ACC completed its acquisition of certain of the
assets of Allnewsco, in exchange for $20,000 in cash and the cancellation of a
$20,000 note receivable from Allnewsco. The assets acquired consisted primarily
of cable affiliation agreements and certain technical equipment and vehicles
related to the operations of NewsChannel 8, which provides 24-hour per day basic
cable television programming primarily focused on regional and local news for
the Washington, D.C. metropolitan area. The operations of NewsChannel 8 have
been integrated with those of WJLA in a new studio and office facility, creating
the first newsgathering duopoly in the Nation's Capital. Allnewsco has been
controlled since its inception by Perpetual, which also controls ACC. Because
both ACC and Allnewsco are controlled by Perpetual, ACC was required to account
for the acquisition as a transfer of assets within a group under common control.

      Under this accounting, the Company and Allnewsco were treated as if they
had always been combined for accounting and financial reporting purposes. As a
result, our consolidated financial statements for all periods prior to the asset
acquisition reflect the combined results of the Company and Allnewsco. In
addition to combining the separate historical results of the Company and
Allnewsco, the consolidated financial statements include all adjustments
necessary to conform accounting methods and presentation, to the extent they
were different, and to eliminate significant intercompany transactions. All
amounts for all periods presented, unless otherwise specified, in this
Management's Discussion and Analysis reflect the combined results of the Company
and Allnewsco.

      In addition, as ACC did not acquire all of the assets or assume all of the
liabilities of Allnewsco, certain expenses reported in the Fiscal 2001 and 2002
consolidated financial statements have not been incurred by ACC subsequent to
the acquisition. Specifically, ACC did

                                       23
<PAGE>

not acquire or assume amounts due from Allnewsco to Perpetual. The accompanying
consolidated financial statements include $4,064 and $785 of related party
interest expense incurred by Allnewsco relating to amounts due from Allnewsco to
Perpetual during the years ended September 30, 2001 and 2002, respectively. We
have not incurred such related party interest expense subsequent to the
acquisition date of September 16, 2002. Accordingly, no such related party
interest expense was incurred during the year ended September 30, 2003.

   Business

      Our operating revenues are derived from local and national advertisers
and, to a much lesser extent, the ABC network and program syndicators for the
broadcast of programming, cable operators and DBS providers in the form of
subscriber fees, and other broadcast-related activities. The primary operating
expenses involved in owning and operating television stations are employee
compensation, programming, newsgathering, production, promotion and the
solicitation of advertising.

      Television stations receive revenues for advertising sold for placement
within and adjoining locally originated and network programming. Advertising
rates are set based upon a variety of factors, including the size and
demographic makeup of the market served by the station, a program's popularity
among viewers whom an advertiser wishes to attract, the number of advertisers
competing for the available time, the availability of alternative advertising
media in the market area, a station's overall ability to attract viewers in its
market area and the station's ability to attract viewers among particular
demographic groups that an advertiser may be targeting. Advertising rates are
also affected by an aggressive and knowledgeable sales force and the development
of projects, features and programs that tie advertiser messages to programming.

      Our advertising revenues are generally highest in the first and third
quarters of each fiscal year, due in part to increases in retail advertising in
the period leading up to and including the holiday season and active advertising
in the spring. The fluctuation in our operating results is generally related to
fluctuations in the revenue cycle. In addition, advertising revenues are
generally higher during election years due to spending by political candidates,
which is typically heaviest during our first and fourth fiscal quarters. During
years in which Olympic Games are held, there is additional demand for
advertising time and, as a result, increased advertising revenue associated with
Olympic broadcasts. The 2002 Winter Olympic Games were broadcast by NBC in
February 2002 in connection with NBC's United States television rights to the
Olympic Games, which extend through 2012.

      Our cash flow from operations is also affected on a quarterly basis by the
timing of cash collections and interest payments on our debt. Cash receipts are
usually greater during the second and fourth fiscal quarters, as the collection
of advertising revenue typically lags the period in which such revenue is
recorded. Scheduled semi-annual interest payments on our long-term fixed
interest rate debt have been higher during the first and third fiscal quarters,
and as a result of the redemption of our 8 7/8% senior subordinated notes, will
now occur only in such quarters. As a result, our cash flows from operating
activities as reflected in our consolidated financial statements are generally
significantly higher during our second and fourth fiscal quarters, and

                                       24
<PAGE>

such quarters comprise a substantial majority of our cash flow from operating
activities for the full fiscal year.

      The broadcast television industry is cyclical in nature, being affected by
prevailing economic conditions. Because we rely on sales of advertising time for
substantially all of our revenues, our operating results are sensitive to
general economic conditions and regional conditions in each of the local market
areas in which our stations operate. For Fiscal 2001, 2002 and 2003, the
Washington, D.C. advertising market accounted for approximately one-half of our
total revenues. As a result, our results of operations are highly dependent on
WJLA/NewsChannel 8 and, in turn, the Washington, D.C. economy and, to a lesser
extent, on each of the other local economies in which our stations operate. We
are also dependent on automotive- related advertising. Approximately 26%, 28%
and 28% of our total broadcast revenues for the years ended September 30, 2001,
2002 and 2003, respectively, consisted of automotive-related advertising. A
significant decrease in such advertising in the future could materially and
adversely affect our operating results.

   Financing Transactions

      On December 20, 2002, we issued $275,000 principal amount of 7 3/4% senior
subordinated notes at par. As of January 21, 2003, we had used the net proceeds
from the offering, together with approximately $15,500 of borrowings under our
senior credit facility, to purchase and redeem all of our outstanding 9 3/4%
senior subordinated debentures as well as to pay the fees and expenses
associated with the offering of the 7 3/4% notes.

       On February 6, 2003, we issued an additional $180,000 principal amount of
our 7 3/4% notes at a price of 98.305%. We used the net proceeds to redeem our
existing 8 7/8% senior subordinated notes, fund the redemption premium for the
8 7/8% notes, pay the fees and expenses associated with the offering of the
additional 7 3/4% notes and repay borrowings outstanding under our senior credit
facility. On March 10, 2003, all of the 8 7/8% notes were redeemed.

      The issuance of the 7 3/4% notes and the related purchase and redemption
of the 9 3/4% debentures and the redemption of the 8 7/8% notes will reduce our
annual payments of interest on our debt by approximately $5,000. As a result of
the purchase and redemption of our 9 3/4% debentures and the redemption of the
8 7/8% notes, we recorded a pre-tax charge of $23,194 during the quarter ended
March 31, 2003. Such charge has been reflected as a nonoperating expense. See
"--Results of Operations--Fiscal 2003 Compared to Fiscal 2002--Loss on Early
Repayment of Debt."

      On February 14, 2003, we commenced a registered exchange offer of a new
series of 7 3/4% notes in exchange for the initial series of 7 3/4% notes issued
December 20, 2002 and consummated the exchange offer following its expiration on
March 17, 2003 by issuing the new series of notes in exchange for notes of the
initial series properly tendered. On June 17, 2003, we commenced a registered
exchange offer of the same new series of 7 3/4% notes in exchange for the
initial series of 7 3/4% notes issued February 6, 2003 and consummated the
exchange offer following its expiration on July 16, 2003 by issuing such new
series of notes in exchange for notes of the initial series properly tendered.
The terms of the exchange notes are substantially

                                       25
<PAGE>

identical to those of the initial notes in each case, except that transfer
restrictions and registration rights relating to initial notes do not apply to
the exchange notes.


Operating Revenues

      The following table depicts the principal types of operating revenues, net
of agency commissions, earned by us during each of the last three fiscal years
and the percentage contribution of each to our total broadcast revenues, before
fees.

<TABLE>
<CAPTION>
                                                               Fiscal Year Ended September 30,
                                                               -------------------------------
                                                   2001                     2002                     2003
                                            ------------------       ------------------       ------------------
                                            Dollars    Percent       Dollars    Percent       Dollars    Percent
                                            -------    -------       -------    -------       -------    -------
<S>                                       <C>           <C>        <C>           <C>        <C>           <C>
Local and national<F1>................    $ 179,962      86.1%     $ 173,909      86.1%     $ 176,195      84.9%
Political<F2>.........................        8,354       4.0%         7,371       3.7%         8,635       4.1%
Network compensation<F3>..............        2,975       1.4%         3,700       1.8%         5,747       2.8%
Trade and barter<F4>..................        7,760       3.7%         7,307       3.6%         7,010       3.4%
Other revenues<F5>....................        9,940       4.8%         9,604       4.8%        10,011       4.8%
                                          ---------     ------     ---------     ------     ---------     ------

Broadcast revenues....................      208,991     100.0%       201,891     100.0%       207,598     100.0%
                                                        ======                   ======                   ======
Fees<F6>..............................       (6,450)                  (5,722)                  (5,008)
                                          ---------                ---------                ---------

Operating revenues, net...............    $ 202,541                $ 196,169                $ 202,590
                                          =========                =========                =========
<FN>

___________
<F1> Represents sale of advertising time to local and national advertisers,
     either directly or through agencies representing such advertisers, net of
     agency commission.
<F2> Represents sale of advertising time to political advertisers.
<F3> Represents payment by networks for broadcasting or promoting network
     programming.
<F4> Represents value of commercial time exchanged for goods and services
     (trade) or syndicated programs (barter).
<F5> Represents other revenue, principally from cable and DBS subscriber fees,
     the sales of University of Arkansas sports programming to advertisers and
     radio stations as well as receipts from tower rental and production of
     commercials.
<F6> Represents fees paid to national sales representatives and fees paid for
     music licenses.
</FN>
</TABLE>

      Local and national advertising constitutes our largest category of
operating revenues, representing approximately 85% of our total broadcast
revenues in each of the last three fiscal years. Local and national advertising
revenues decreased 9.3% and 3.4% in Fiscal 2001 and 2002, respectively, and
increased 1.3% in Fiscal 2003. Each other individual category of revenues
represented less than 5.0% of our total revenues for each of the last three
fiscal years.


                                       26
<PAGE>

Results of Operations--Fiscal 2003 Compared to Fiscal 2002

      Set forth below are selected consolidated financial data for Fiscal 2002
and 2003, respectively, and the percentage change between the years.
<TABLE>
<CAPTION>


                                                                           Fiscal Year Ended      Percentage
                                                                             September 30,          Change
                                                                         ---------------------    ----------
                                                                          2002          2003
                                                                          ----          ----
<S>                                                                    <C>           <C>           <C>
Operating revenues, net............................................    $ 196,169     $ 202,590        3.3%
Total operating expenses...........................................      145,315       142,388       (2.0)%
                                                                       ---------     ---------

Operating income...................................................       50,854        60,202       18.4%
Nonoperating expenses, net.........................................       43,385        64,574       48.8%
Income tax provision (benefit).....................................        3,955        (1,421)    (135.9)%
                                                                       ---------     ---------
Income (loss) before cumulative effect of change
  in accounting principle..........................................        3,514        (2,951)    (184.0)%
                                                                       ---------     ---------
Cumulative effect of change in accounting principle,
  net of income tax benefit........................................         --           2,973       --
                                                                       ---------     ---------

Net income (loss)..................................................    $   3,514     $  (5,924)    (268.6)%
                                                                       =========     =========

Operating cash flow<F1>............................................    $  64,164     $  70,987       10.6%
                                                                       =========     =========
<FN>

_____________
<F1> Operating cash flow is not a measure of performance calculated in
     accordance with GAAP. For a definition of operating cash flow and a
     reconciliation of operating cash flow to operating income, please refer to
     footnote (4) under "Selected Consolidated Financial Data."
</FN>
</TABLE>

                                       27
<PAGE>

      The results above include the combined operations of the Company and
Allnewsco for both periods presented. The combining selected financial data for
Fiscal 2002 is as follows:
<TABLE>
<CAPTION>

                                                   Fiscal Year Ended September 30, 2002
                                                   ------------------------------------
                                           Company    Allnewsco<F1>  Adjustment<F2>   Combined
                                           -------    -------------  --------------   --------

<S>                                      <C>           <C>            <C>            <C>
Operating revenues, net...........       $ 185,944     $  10,225                     $ 196,169
Total operating expenses..........         133,803        11,512                       145,315
                                         ---------     ---------                     ---------

Operating income (loss)...........          52,141        (1,287)                       50,854
Nonoperating expenses, net........          39,908         3,477                        43,385
Income tax provision (benefit)....           5,765           --       $  (1,810)         3,955
                                         ---------     ---------      ---------      ---------

Net income (loss).................       $   6,468     $  (4,764)     $   1,810      $   3,514
                                         =========     =========      =========      =========

Operating cash flow<F3>...........       $  65,118     $    (954)                    $  64,164
                                         =========     =========                     =========

<FN>
____________
<F1> Allnewsco's results are for the period from October 1, 2001 through the
     acquisition date of September 16, 2002.
<F2> Adjustment represents the income tax benefit associated with combining the
     Company and Allnewsco. See "--Income Taxes."
<F3> Operating cash flow is not a measure of performance calculated in
     accordance with GAAP. For a definition of operating cash flow and a
     reconciliation of operating cash flow to operating income, please refer to
     footnote (4) under "Selected Consolidated Financial Data."
</FN>
</TABLE>


   Net Operating Revenues

      Net operating revenues for Fiscal 2003 totaled $202,590, an increase of
$6,421, or 3.3%, as compared to Fiscal 2002. This increase resulted principally
from increased local, national and political advertising revenue in most of our
markets as well as increased network compensation.

      Local and national advertising revenues increased $2,286, or 1.3%, from
Fiscal 2002. Local and national advertising revenues increased in most of our
markets during Fiscal 2003. Such increase was partially due to the broadcast of
the Super Bowl by the ABC network in January 2003 (broadcast by the Fox network
in 2002), but was limited by the displacement of local and national advertisers
during the peak political advertising month of October 2002, decreased demand
for advertising related to the war in Iraq and a slight reduction in the level
of prime-time inventory available for sale as discussed below related to network
compensation.

      Political advertising revenues increased by $1,264, or 17.1%, in Fiscal
2003 from Fiscal 2002. Political advertising revenue increased in the majority
of our markets during Fiscal 2003, primarily due to several high-profile local
political races affecting our markets for the November

                                       28
<PAGE>

2002 elections. This increase was partially offset by fourth quarter Fiscal 2002
advertising leading up to these November 2002 elections as well as by first
quarter Fiscal 2002 advertising leading up to the November 2001 local political
election affecting our Washington, D.C. and Lynchburg markets.

      Network compensation revenue increased $2,047, or 55.3%, during Fiscal
2003 as compared to the prior fiscal year. The increase was principally due to
the July 31, 2002 expiration of certain amendments to our network affiliation
agreements. Under these amendments, ABC, for a three-year period, provided our
stations with additional prime-time inventory, limited participation rights in a
new cable television "soap" channel, and enhanced program exclusivity and
commercial inventory guarantees in exchange for reduced annual network
compensation, the return of certain Saturday morning inventory from the
stations, and more flexibility in repurposing of ABC programming. Upon the
expiration of these amendments, compensation rates and inventory allocations
reverted to their pre-modification levels. We routinely consult with the network
in relation to the levels of program clearances, preemptions, compensation and
inventory availabilities.

      No individual advertiser accounted for more than 5% of our broadcast
revenues during Fiscal 2003 or 2002.

   Total Operating Expenses

      Total operating expenses in Fiscal 2003 were $142,388, a decrease of
$2,927 compared to total operating expenses of $145,315 in Fiscal 2002. This net
decrease consisted of a decrease in television operating expenses, excluding
depreciation and amortization, of $777, a decrease in depreciation and
amortization of $2,525 and an increase in corporate expenses of $375.

      Television operating expenses, excluding depreciation and amortization,
totaled $125,224 in Fiscal 2003, a decrease of $777, or 0.6%, when compared to
television operating expenses of $126,001 in Fiscal 2002. This decrease was due
primarily to a $750 charge during the third quarter of Fiscal 2002 for one-time
lease-related costs associated with the then-pending relocation of WJLA to new
studio and office space, our continuing focus on controlling programming and
operating costs and expense savings related to the integration of the operations
of WJLA and NewsChannel 8.

      Depreciation and amortization expense of $10,785 in Fiscal 2003 decreased
$2,525, or 19.0%, from $13,310 in Fiscal 2002. This decrease was principally the
result of our adoption of SFAS No. 142 effective October 1, 2002. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives are no
longer amortized but are subject to periodic impairment tests. Other intangible
assets continue to be amortized over their useful lives. The non-amortization
provisions of SFAS No. 142 resulted in a $4,088 decrease in amortization expense
during Fiscal 2003 as compared to the prior fiscal year. Assuming we had adopted
SFAS No. 142 at the beginning of Fiscal 2002, depreciation and amortization
expense for Fiscal 2002 would have been $9,222. This would have resulted in an
increase in depreciation and amortization expense during Fiscal 2003 of $1,563,
or 16.9%, due primarily to increased

                                       29
<PAGE>

depreciation expense associated with the buildout of studio and office space and
acquisition of technical equipment for the new WJLA/NewsChannel 8 facility.

      Corporate expenses in Fiscal 2003 increased $375, or 6.2%, from Fiscal
2002. The increase was primarily due to increased key-man life insurance
expenses.

   Operating Income

      Operating income of $60,202 in Fiscal 2003 increased $9,348, or 18.4%,
compared to operating income of $50,854 in Fiscal 2002. The operating income
margin in Fiscal 2003 increased to 29.7% from 25.9% for the prior fiscal year.

      Assuming we had adopted SFAS No. 142 at the beginning of Fiscal 2002,
operating income would have been $54,942 in Fiscal 2002, and operating margin
would have been 28.0% in Fiscal 2002. This would have resulted in an increase in
operating income of $5,260, or 9.6%, during Fiscal 2003 as compared to the prior
fiscal year. The increases in operating income and margin during Fiscal 2003
were primarily the result of increased net operating revenues as discussed
above.

   Operating Cash Flow

      Operating cash flow increased to $70,987 in Fiscal 2003 from $64,164 in
Fiscal 2002, an increase of $6,823, or 10.6%. This increase was primarily the
result of increased net operating revenues as discussed above. Operating cash
flow is not a measure of performance calculated in accordance with GAAP. For a
definition of operating cash flow and a reconciliation of operating cash flow to
operating income, please refer to footnote (4) under "Selected Consolidated
Financial Data."

   Nonoperating Expenses, Net

      Non-related party interest expense decreased by $914, or 2.2%, from
$41,561 in Fiscal 2002 to $40,647 in Fiscal 2003. The actual average balance of
debt outstanding, including capital lease obligations, for Fiscal 2003 was
$498,867, and the actual weighted average interest rate on debt during the year
was 8.03%. The decrease in non-related party interest expense was primarily the
result of the reduced weighted average interest rate on debt due to the two
financing transactions during the first half of Fiscal 2003, partially offset by
incremental interest expense associated with the two financing transactions.
Incremental interest expense was incurred related to carrying both the 7 3/4%
notes and the 9 3/4% debentures from December 20, 2002 through January 21, 2003
during the redemption notice period as well as carrying both the 7 3/4% notes
and the 8 7/8% notes from February 6, 2003 through March 10, 2003 during the
redemption notice period.

      Had we purchased or redeemed the 9 3/4% debentures on December 20, 2002
and the 8 7/8% notes on February 6, 2003, non-related party interest expense for
Fiscal 2003 would have been $38,087, resulting in a decrease of $3,474, or 8.4%,
as compared to Fiscal 2002. This reflects the lower weighted average interest
rate on debt, partially offset by higher average balances of

                                       30
<PAGE>

debt outstanding. The average balance of debt outstanding, including capital
lease obligations, for Fiscal 2003 would have been $470,186, and the weighted
average interest rate on debt during Fiscal 2003 would have been 7.95%. This
compares to an average balance of debt outstanding, including capital lease
obligations, for Fiscal 2002 of $449,125 and a weighted average interest rate on
debt during Fiscal 2002 of 9.20%.

      Perpetual historically advanced cash to Allnewsco in the form of unsecured
demand notes bearing interest at a rate of 7.5%. Related party interest expense
incurred by Allnewsco associated with these notes, and reported in our
consolidated financial statements, was $785 during the year ended September 30,
2002. As we did not acquire or assume amounts due from Allnewsco to Perpetual,
such related party interest expense incurred by Allnewsco was not incurred by us
subsequent to the acquisition date of September 16, 2002. Accordingly, there was
no related party interest expense during the year ended September 30, 2003.

    Loss on Early Repayment of Debt

      As a result of the purchase and redemption of our 9 3/4% debentures and
the redemption of our 8 7/8% notes during the second quarter of Fiscal 2003, we
recorded a pre-tax charge of $23,194. Such charge has been reflected as a
nonoperating expense rather than as an extraordinary item in accordance with our
adoption of SFAS No. 145, "Rescission of FASB Statements Nos. 4, 44 and 64,
Amendment of FASB Statement No. 13 and Technical Corrections," which became
effective during our Fiscal 2003. SFAS No. 145 generally requires any gains or
losses associated with early extinguishments of debt be recorded as a component
of income from continuing operations rather than as an extraordinary item.

   Income Taxes

      The benefit from income taxes in Fiscal 2003 totaled $1,421, a decrease of
$5,376 when compared to the provision for income taxes of $3,955 in Fiscal 2002.
The increase in income tax benefit during Fiscal 2003 was primarily due to the
$23,194 loss on early repayment of debt during the quarter ended March 31, 2003.

      Because Perpetual has historically filed consolidated federal and Virginia
state income tax returns including the operating results of both the Company and
Allnewsco, certain tax benefits were realized by Perpetual associated with
Allnewsco's net operating losses in the consolidated tax returns. In accordance
with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," the combined results of the Company and Allnewsco for Fiscal 2002
have been adjusted to reflect the historical tax benefits which would have been
recorded for financial reporting purposes by the combined entity.

    Cumulative Effect of Change in Accounting Principle

      Effective October 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 142 addresses the financial accounting and
reporting for acquired goodwill and other intangible assets. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives are no
longer amortized but are subject to periodic impairment tests. Our

                                       31
<PAGE>

indefinite lived intangible assets consist of broadcast licenses. Other
intangible assets continue to be amortized over their useful lives of 11 to 25
years.

      Upon adoption, we performed the first of the required impairment tests on
our indefinite lived intangible assets. The fair value of our broadcast licenses
was determined by applying an estimated market multiple to the broadcast cash
flow generated by the respective market. Market multiples were determined based
on recent transactions within the industry, information available regarding
publicly traded peer companies and the respective station's competitive position
within its market. Appropriate allocation was made to each of the station's
tangible and intangible assets in determining the fair value of the station's
broadcast licenses. As a result of these tests, we determined that one of our
broadcast licenses was impaired. Accordingly, we recorded a non-cash, after-tax
impairment charge of $2,973 related to the carrying value of our indefinite
lived intangible assets. This charge was recorded as a cumulative effect of a
change in accounting principle during the first quarter of Fiscal 2003.

   Net Income

      Net loss for Fiscal 2003 was $5,924, a decrease of $9,438 when compared to
net income of $3,514 in Fiscal 2002. The decrease in net income was due to the
factors discussed above.


Results of Operations--Fiscal 2002 Compared to Fiscal 2001

      Set forth below are selected consolidated financial data for Fiscal 2001
and 2002, respectively, and the percentage change between the years.
<TABLE>
<CAPTION>

                                                  Fiscal Year Ended
                                                    September 30,
                                                  -----------------        Percentage
                                                 2001           2002         Change
                                                 ----           ----       ----------

<S>                                           <C>            <C>            <C>
Operating revenues, net....................   $ 202,541      $ 196,169       (3.1)%
Total operating expenses...................     145,283        145,315        0.0%
                                              ---------      ---------

Operating income...........................      57,258         50,854      (11.2)%
Nonoperating expenses, net.................      46,272         43,385       (6.2)%
Income tax provision.......................       4,632          3,955      (14.6)%
                                              ---------      ---------

Net income.................................   $   6,354      $   3,514      (44.7)%
                                              =========      =========

Operating cash flow<F1>....................   $  72,303      $  64,164      (11.3)%
                                              =========      =========
<FN>

___________
<F1> Operating cash flow is not a measure of performance calculated in
     accordance with GAAP. For a definition of operating cash flow and a
     reconciliation of operating cash flow to operating income, please refer to
     footnote (4) under "Selected Consolidated Financial Data."
</FN>
</TABLE>

                                       32
<PAGE>

      The results above include the combined operations of the Company and
Allnewsco for both periods presented. The combining selected financial data for
Fiscal 2001 and 2002, respectively, are as follows:
<TABLE>
<CAPTION>


                             Fiscal Year Ended September 30, 2001                  Fiscal Year Ended September 30, 2002
                         ---------------------------------------------       --------------------------------------------------
                         Company   Allnewsco  Adjustment<F2>  Combined       Company    Allnewsco<F1>  Adjustment<F2>  Combined
                         -------   ---------  --------------  --------       -------    -------------  --------------  --------
<S>                    <C>         <C>          <C>          <C>           <C>          <C>            <C>            <C>
Operating
  revenues, net......  $ 190,618   $  11,923                 $ 202,541     $ 185,944    $  10,225                     $ 196,169
Total operating
  expenses...........    132,777      12,506                   145,283       133,803       11,512                       145,315
                        --------   ---------                 ---------     ---------    ---------                     ---------

Operating income
  (loss).............     57,841        (583)                   57,258        52,141       (1,287)                       50,854
Nonoperating
  expenses, net......     39,935       6,337                    46,272        39,908        3,477                        43,385
Income tax provision
  (benefit)..........      7,262         --     $  (2,630)       4,632         5,765          --       $  (1,810)         3,955
                        --------   ---------    ---------    ---------     ---------    ---------      ---------      ---------

Net income (loss)....  $  10,644   $  (6,920)   $   2,630    $   6,354     $   6,468    $  (4,764)     $   1,810      $   3,514
                       =========   =========    =========    =========     =========    =========      =========      =========

Operating cash
  flow<F3>...........  $  72,112   $     191                 $  72,303     $  65,118    $    (954)                    $  64,164
                       =========   =========                 =========     =========    =========                     =========

<FN>

__________
<F1> Allnewsco's results are for the period from October 1, 2001 through the
     acquisition date of September 16, 2002.
<F2> Adjustment represents the income tax benefit associated with combining the
     Company and Allnewsco. See "--Income Taxes."
<F3> Operating cash flow is not a measure of performance calculated in
     accordance with GAAP. For a definition of operating cash flow and a
     reconciliation of operating cash flow to operating income, please refer to
     footnote (4) under "Selected Consolidated Financial Data."
</FN>
</TABLE>


   Net Operating Revenues

      As compared to Fiscal 2001, our results of operations for Fiscal 2002
principally reflect a decrease in net operating revenues. Net operating revenues
for Fiscal 2002 totaled $196,169, a decrease of $6,372, or 3.1%, as compared to
Fiscal 2001. This decrease resulted principally from decreased local and
national advertising revenue in most of our markets.

      Local and national advertising revenues decreased $6,053, or 3.4%, from
Fiscal 2001. Local and national advertising revenues declined in most of our
markets during Fiscal 2002 due in large part to declining audience ratings for
ABC network prime-time programming across all of our markets. The general
weakness in television advertising which began during Fiscal 2001 also
contributed to this decline during the first nine months of Fiscal 2002, but
improved in the fourth fiscal quarter, with local and national advertising
revenues increasing by 6.4%. Fiscal 2002 local

                                       33
<PAGE>

and national advertising revenues were particularly affected in our Washington,
D.C. market related to the operations of WJLA and NewsChannel 8.

      Political advertising revenues decreased by $983, or 11.8%, in Fiscal 2002
from Fiscal 2001. This decrease was primarily due to the fact that a substantial
amount of the advertising related to the national presidential election and
certain high-profile local political races in November 2000 occurred during our
Fiscal 2001. This revenue was largely replaced in Fiscal 2002 by advertising
from a high-profile local election in our Washington, D.C. market in November
2001 and from advertising leading up to certain high-profile local elections in
November 2002, primarily in our Little Rock, Washington, D.C. and Harrisburg
markets.

      No individual advertiser accounted for more than 5% of our broadcast
revenues during Fiscal 2002 or 2001.

   Total Operating Expenses

      Total operating expenses in Fiscal 2002 were $145,315, an increase of $32
compared to total operating expenses of $145,283 in Fiscal 2001. This net
increase consisted of an increase in television operating expenses, excluding
depreciation and amortization, of $1,404, a decrease in depreciation and
amortization of $1,735 and an increase in corporate expenses of $363.

      Television operating expenses, excluding depreciation and amortization,
totaled $126,001 in Fiscal 2002, an increase of $1,404, or 1.1%, when compared
to television operating expenses of $124,597 in Fiscal 2001. This increase was
due primarily to a $750 charge during the third quarter of Fiscal 2002 for
one-time lease related costs associated with the relocation of WJLA to new
studio and office space as well as various costs associated with the physical
move and integration during the fourth quarter of Fiscal 2002. Additionally,
included in the Fiscal 2002 operating expenses of Allnewsco are severance and
related costs associated with the significant reduction in workforce done in
anticipation of the integration with WJLA. Such costs, while included in our
consolidated financial statements, were incurred by Allnewsco prior to the date
of acquisition by ACC and will not recur subsequent to the acquisition.

      Depreciation and amortization expense of $13,310 in Fiscal 2002 decreased
$1,735, or 11.5%, from $15,045 in Fiscal 2001. The decrease was primarily
attributable to decreased depreciation on assets acquired in Birmingham during
Fiscal 1996, partially offset by increased depreciation of assets placed in
service during the fourth quarter of Fiscal 2002 related to the buildout of
studio and office space and acquisition of technical equipment for the new
WJLA/NewsChannel 8 facility.

      Corporate expenses in Fiscal 2002 increased $363, or 6.4%, from Fiscal
2001. The increase was primarily due to personnel and various consulting and
legal costs, partially offset by decreases in key-man life insurance expense.


                                       34
<PAGE>

   Operating Income

      Operating income of $50,854 in Fiscal 2002 decreased $6,404, or 11.2%,
compared to operating income of $57,258 in Fiscal 2001. The operating income
margin in Fiscal 2002 decreased to 25.9% from 28.3% for the prior fiscal year.
The decreases in operating income and margin were primarily the result of
decreased net operating revenues as discussed above.

   Operating Cash Flow

      Operating cash flow decreased to $64,164 in Fiscal 2002 from $72,303 in
Fiscal 2001, a decrease of $8,139, or 11.3%. This decrease was primarily the
result of decreased net operating revenues as discussed above. Operating cash
flow is not a measure of performance calculated in accordance with GAAP. For a
definition of operating cash flow and a reconciliation of operating cash flow to
operating income, please refer to footnote (4) under "Selected Consolidated
Financial Data."

   Nonoperating Expenses, Net

      Non-related party interest expense decreased by $121, or 0.3%, from
$41,682 in Fiscal 2001 to $41,561 in Fiscal 2002. This decrease was principally
due to a decreased weighted average interest rate on debt outstanding during
Fiscal 2002, partially offset by an increased average balance of debt
outstanding during the same period. The average balance of debt outstanding,
including capital lease obligations, was $441,619 and $449,125 for Fiscal 2001
and 2002, respectively, and the weighted average interest rate on debt was 9.4%
and 9.2% for the years ended September 30, 2001 and 2002, respectively.

      Perpetual historically advanced cash to Allnewsco in the form of unsecured
demand notes bearing interest at a rate of 7.5%. Related party interest expense
incurred by Allnewsco associated with these notes, and reported in our
consolidated financial statements, was $4,064 and $785 during the years ended
September 30, 2001 and 2002, respectively. The decrease in interest expense
during Fiscal 2002 was due to the reclassification, effective September 28,
2001, of $46,291 from notes payable to equity, thus decreasing the level of
notes payable outstanding during Fiscal 2002. As we did not acquire or assume
amounts due from Allnewsco to Perpetual, such related party interest expense
incurred by Allnewsco will not be incurred by us subsequent to the acquisition
date of September 16, 2002.

   Income Taxes

      The provision for income taxes in Fiscal 2002 of $3,955 decreased by $677,
or 14.6%, when compared to the provision for income taxes of $4,632 in Fiscal
2001. The decrease was directly related to the $3,517, or 32.0%, decrease in our
income before income taxes, partially offset by the one-time recognition of a
tax benefit of approximately $950 during Fiscal 2001 as well as an increase in
our overall effective income tax rate in Fiscal 2002.

      Because Perpetual has historically filed consolidated federal and Virginia
state income tax returns including the operating results of both the Company and
Allnewsco, certain tax benefits

                                       35
<PAGE>

were realized by Perpetual associated with Allnewsco's net operating losses in
the consolidated tax returns. In accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," the combined
results of the Company and Allnewsco have been adjusted to reflect the
historical tax benefits which would have been recorded for financial reporting
purposes by the combined entity during each period presented.

   Net Income

      Net income for Fiscal 2002 of $3,514 decreased $2,840, or 44.7%, when
compared to net income of $6,354 in Fiscal 2001. The decrease in net income was
attributable to the decline in operating results for Fiscal 2002 as discussed
above.


Liquidity and Capital Resources

   Cash Provided by Operations

      Our principal source of working capital is cash flow from operations and
borrowings under our senior credit facility. As discussed above, our operating
results are cyclical in nature primarily as a result of seasonal fluctuations in
advertising revenues, which are generally highest in the first and third
quarters of each fiscal year. Our cash flow from operations is also impacted on
a quarterly basis by the timing of cash collections and interest payments on our
debt. Cash receipts are usually greater during the second and fourth fiscal
quarters as the collection of advertising revenue typically lags the period in
which such revenue is recorded. Scheduled semi-annual interest payments on our
long-term fixed interest rate debt have been higher during the first and third
fiscal quarters, and as a result of the redemption of our 8 7/8% notes, will now
occur only in such quarters. As a result, our cash flows from operating
activities as reflected in our consolidated financial statements are generally
significantly higher during our second and fourth fiscal quarters, and such
quarters comprise a substantial majority of our cash flows from operating
activities for the full fiscal year.

      As reported in our consolidated statements of cash flows, our net cash
provided by operating activities was $28,020 and $23,938 for Fiscal 2002 and
2003, respectively. The decrease in cash provided by operating activities of
$4,082, or 14.6%, during Fiscal 2003 was primarily due to the change in other
accrued expenses which more than offset the $5,260 increase in operating income
for the year (adjusted for the adoption of SFAS No. 142). Accrued expenses were
elevated at September 30, 2002 as a result of the relocation of WJLA into new
studio and office space during the fourth quarter of Fiscal 2002. Such accrued
expenses were paid during Fiscal 2003.

   Distributions to Related Parties

      We have periodically made advances in the form of distributions to
Perpetual. For Fiscal 2001 and 2003, we made cash advances net of repayments to
Perpetual of $23,580 and $13,846, respectively. During Fiscal 2002, we received
net repayments of distributions to owners of $48. The advances to Perpetual are
non-interest bearing and, as such, do not reflect market rates of

                                       36
<PAGE>

interest-bearing loans to unaffiliated third parties. No cash advances to
Perpetual were made during the second half of Fiscal 2003.

      At present, the primary sources of repayment of net advances is through
our ability to pay dividends or make other distributions, and there is no
immediate intent for the amounts to be repaid. Accordingly, these advances have
been treated as a reduction of stockholder's investment and are described as
"distributions" in our consolidated financial statements.

      During Fiscal 2003, we declared and paid cash dividends of $250 per common
share, or $5,000. We recorded these dividends in distributions to owners, net
when declared.

      Under the terms of the agreements relating to our indebtedness, future
advances, distributions and dividends to related parties are subject to certain
restrictions. We anticipate that, subject to such restrictions, applicable law
and payment obligations with respect to our indebtedness, we will make advances,
distributions or dividends to related parties in the future. Subsequent to
September 30, 2003 and through November 14, 2003, we made additional net
distributions to owners of $1,925.

      On September 16, 2002, ACC completed its acquisition of certain of the
assets of Allnewsco, in exchange for $20,000 in cash and the cancellation of a
$20,000 note receivable from Allnewsco. See "--General Factors Affecting Our
Business." The cash portion of the purchase price paid to Allnewsco was
subsequently repaid to us from Perpetual in the form of a repayment of
distributions to owners.

      During Fiscal 2001 and 2002, we were charged by Perpetual and made
payments to Perpetual for federal and state income taxes totaling $4,500 and
$186, respectively. During Fiscal 2003, we were not charged for federal and
statement income taxes, but rather, we recorded a benefit for federal and
Virginia state income taxes of $3,957. This benefit was effectively distributed
to Perpetual as such benefit will not be recognized in future years pursuant to
the terms of the tax sharing agreement between the companies.

      Additionally, because Perpetual has historically filed consolidated
federal and Virginia state income tax returns including the operating results of
both the Company and Allnewsco, certain tax benefits were realized by Perpetual
associated with Allnewsco's net operating losses in the consolidated tax
returns. In accordance with SFAS No. 109, the combined results of the Company
and Allnewsco for Fiscal 2001 and 2002 have been adjusted to reflect the
historical tax benefits which would have been recorded for financial reporting
purposes by the combined entity during the respective periods. The benefit
recorded during Fiscal 2001 and 2002 was $2,630 and $1,810, respectively. During
Fiscal 2002, our combined results reflect a combined benefit from federal income
taxes of $2,571. This benefit was effectively distributed to Perpetual as such
benefit will not be recognized in future years pursuant to the terms of the tax
sharing agreement between the companies.

      Perpetual historically advanced cash to Allnewsco in the form of unsecured
demand notes bearing interest at a rate of 7.5%. Notes issued during Fiscal 2001
and 2002 amounted to $2,493 and $3,895, respectively, with no cash repayments
during any of these years. Effective

                                       37
<PAGE>

September 28, 2001, Allnewsco authorized the issuance of 67,000 shares of common
stock to Perpetual in exchange for the reclassification of $46,291 and $20,709
from notes payable and accrued interest payable, respectively. The
reclassification resulted in an increase in capital in excess of par value in
our consolidated financial statements. The notes payable from Allnewsco to
Perpetual are included in distributions to owners in our consolidated financial
statements for Fiscal 2001 and 2002, conforming the presentation of cash
transactions between ACC, Allnewsco and Perpetual. As we did not acquire or
assume amounts due from Allnewsco to Perpetual, no amount was outstanding from
us under such notes at September 30, 2002 or 2003.

      During Fiscal 1991, we loaned $20,000 to Allnewsco. The $20,000, 11.06%
note receivable from Allnewsco was due in January 2008, with the principal
balance also due upon demand. Since our historical consolidated financial
statements have been restated to reflect the combined results of the Company and
Allnewsco as of the beginning of the earliest period presented, the loan amount
as well as the related interest income/expense have been eliminated as
intercompany transactions for all periods presented. At closing of the Allnewsco
transaction, we cancelled the $20,000 note as part of the consideration for the
acquisition.

   Indebtedness

      Our total debt, including the current portion of long-term debt, increased
from $440,443 at September 30, 2002 to $467,688 at September 30, 2003. This
debt, net of applicable discounts, consists of $452,086 of 7 3/4% senior
subordinated notes due December 15, 2012; $15,000 of draws under a senior credit
facility; and $602 of capital lease obligations. The increase of $27,245 in
total debt from September 30, 2002 to September 30, 2003 was primarily due to an
additional $30,000 in senior subordinated notes, which approximated the amount
of redemption premiums, fees and expenses associated with the issuance of the
new 7 3/4% notes, the purchase and redemption of the 9 3/4% debentures and the
redemption of the 8 7/8% notes.

      Our $70,000 senior credit facility is secured by the pledge of stock of
ACC and its subsidiaries and matures March 27, 2006. Interest is payable
quarterly at various rates from prime plus 0.25% or LIBOR plus 1.50% depending
on certain financial operating tests.

      Under the existing borrowing agreements, we are subject to restrictive
covenants that place limitations upon payments of cash dividends, issuance of
capital stock, investment transactions, incurrence of additional obligations and
transactions with affiliates. In addition, under the senior credit facility, we
must maintain compliance with certain financial covenants. Compliance with the
financial covenants is measured at the end of each quarter, and as of September
30, 2003, we were in compliance with those financial covenants. The senior
credit facility was amended as of December 10, 2003 to adjust a financial
covenant for the first half of the next fiscal year. We believe that the
amendment allows us sufficient operational flexibility to remain in compliance
with the financial covenants. We are also required to pay a commitment fee
ranging from 0.50% to 0.75% per annum based on the amount of any unused portion
of the senior credit facility.

      The indenture for our long-term debt provides that, whether or not
required by the rules and regulations of the SEC, so long as any senior notes
are outstanding, we, at our expense, will furnish to each holder (i) all
quarterly and annual financial information that would be required to

                                       38
<PAGE>

be contained in a filing with the SEC on Forms 10-Q and 10-K, if we were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual financial information only, a report thereon by our certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if we were required to file such reports. In addition, the
indenture also provides that, whether or not required by the rules and
regulations of the SEC, we will file a copy of all such information and reports
with the SEC for public availability (unless the SEC will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. Although our duty to file such reports with
the SEC was automatically suspended pursuant to Section 15(d) of the Securities
Exchange Act of 1934, effective October 1, 2003, we will continue to file such
reports in accordance with the indenture.

   Other Uses of Cash

      During Fiscal 2001, 2002 and 2003, we made $6,560, $26,332 and $7,700,
respectively, of capital expenditures, of which $750 and $24 were financed
through capital lease transactions during Fiscal 2001 and 2002, respectively.
The increased level of capital expenditures during Fiscal 2002 related primarily
to the buildout of studio and office space and acquisition of technical
equipment for WJLA/NewsChannel 8. At this time, we estimate that capital
expenditures for Fiscal 2004 will approximate $7,000 and will primarily be for
the implementation of DTV service in our two remaining markets (Birmingham and
Harrisburg) and the acquisition of technical equipment and vehicles to support
ongoing operations across our stations. We expect that the source of funds for
these anticipated capital expenditures will be cash provided by operations and
borrowings under the senior credit facility.

      We regularly enter into program contracts for the right to broadcast
television programs produced by others and program commitments for the right to
broadcast programs in the future. Such programming commitments are generally
made to replace expiring or canceled program rights. During Fiscal 2001, 2002
and 2003, we made cash payments of approximately $24,000, $22,100 and $21,500,
respectively, for rights to television programs. The fluctuations in cash
payments between the three years is primarily due to the timing of cash
payments. We anticipate cash payments for program rights will approximate
$21,000 during Fiscal 2004 and, based on our current contracts, we expect cash
payments for program rights to approximate $17,000 during Fiscal 2005 and
$15,000 per year for Fiscal 2006 through 2008. We currently intend to fund these
commitments with cash provided by operations.


                                       39
<PAGE>

      The following table presents the long-term debt maturities, required
payments under contractual agreements for broadcast rights, future minimum lease
payments under noncancellable leases and guaranteed payments under employment
contracts and deferred compensation agreements as of September 30, 2003:
<TABLE>
<CAPTION>


                                                     Fiscal Year Ending September 30,
                                         --------------------------------------------------------
                                         2004         2005         2006         2007         2008      Thereafter      Total
                                         ----         ----         ----         ----         ----      ----------      -----

<S>                                   <C>          <C>          <C>          <C>          <C>          <C>          <C>
Long-term debt....................    $     --     $     --     $  15,000    $     --     $     --     $ 455,000    $ 470,000
Programming contracts-- currently
   available......................       22,530        1,121          238           84          --           --        23,973
Programming contracts-- future
   commitments....................        3,433       14,173        9,673        8,350        7,427          334       43,390
Operating leases..................        3,805        3,691        3,656        2,922        2,820       27,739       44,633
Capital leases....................          268          180          180           30          --           --           658
Employment contracts..............        8,009        2,155        1,494        1,248        1,298           54       14,258
Deferred compensation.............          --           219          369          369          369          741        2,067
                                      ---------    ---------    ---------    ---------    ---------    ---------    ---------

      Total.......................    $  38,045    $  21,539    $  30,610    $  13,003    $  11,914    $ 483,868    $ 598,979
                                      =========    =========    =========    =========    =========    =========    =========

</TABLE>

      Based upon our current level of operations, we believe that available
cash, together with cash flows generated by operating activities and amounts
available under the senior credit facility, will be adequate to meet our
anticipated future requirements for working capital, capital expenditures and
scheduled payments of interest on our debt for the next twelve months.

      ACC's cash flow from operations and consequent ability to service its debt
is, in part, dependent upon the earnings of its subsidiaries and the
distribution (through dividends or otherwise) of those earnings to ACC, or upon
loans, advances or other payments of funds by those subsidiaries to ACC. As of
September 30, 2003, 70% of the assets of ACC were held by operating subsidiaries
and for Fiscal 2003, approximately 50% of ACC's net operating revenues were
derived from the operations of ACC's subsidiaries.

   Income Taxes

      Our operations are included in a consolidated federal income tax return
filed by Perpetual. In accordance with the terms of a tax sharing agreement
between ACC and Perpetual, we are required to pay to Perpetual our federal
income tax liability, computed based upon statutory federal income tax rates
applied to our consolidated taxable income. We file separate state income tax
returns with the exception of Virginia, which is included in a combined state
income tax return filed by Perpetual. In accordance with the terms of the tax
sharing agreement, we are required to pay to Perpetual our combined Virginia
income tax liability, computed based upon statutory Virginia income tax rates
applied to our combined Virginia net taxable income. Taxes payable to Perpetual
are not reduced by losses generated in prior years by us. In addition, the
amounts payable by us to Perpetual under the tax sharing agreement are not
reduced if losses of other members of the Perpetual group are utilized to offset
our taxable income for purposes of the Perpetual consolidated federal or
Virginia state income tax returns.

                                       40
<PAGE>


      The provision for income taxes is determined in accordance with SFAS No.
109, which requires that the consolidated amount of current and deferred income
tax expense for a group that files a consolidated income tax return be allocated
among members of the group when those members issue separate financial
statements. Perpetual allocates a portion of its consolidated current and
deferred income tax expense to us as if we and our subsidiaries were separate
taxpayers. We record deferred tax assets, to the extent it is considered more
likely than not that such assets will be realized in future periods, and
deferred tax liabilities for the tax effects of the differences between the
bases of our assets and liabilities for tax and financial reporting purposes. To
the extent a deferred tax asset would be recorded due to the incurrence of
losses for federal or Virginia state income tax purposes, any such benefit
recognized is effectively distributed to Perpetual as such benefit will not be
recognized in future years pursuant to the tax sharing agreement.

   Inflation

      The impact of inflation on our consolidated financial condition and
consolidated results of operations for each of the periods presented was not
material.


Critical Accounting Policies and Estimates

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make judgments
and estimations that affect the amounts reported in our consolidated financial
statements and accompanying notes. We base our estimates on historical
experience and assumptions we consider reasonable at the time of making those
estimates. We evaluate our estimates on an on-going basis. Actual results may
differ from these estimates under different circumstances or using different
assumptions. We consider the following accounting policies to be critical to our
business operations and the understanding of our financial condition and results
of operations.

   Allowance for Doubtful Accounts

      We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. If the
economy and/or the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make their payments, additional
allowances may be required.

   Intangible Assets

      Intangible assets consist of values assigned to broadcast licenses as well
as favorable terms on contracts and leases. The amounts originally assigned to
intangible assets were based on the results of independent valuations.
Intangible assets, net of accumulated amortization, were $128,150 and $122,982
as of September 30, 2002 and 2003, respectively. SFAS No. 142, "Goodwill and
Other Intangible Assets," was issued in June 2001 and became effective for our
fiscal year ended September 30, 2003. SFAS No. 142 addresses the financial
accounting and reporting for acquired goodwill and other intangible assets.
Under the new rules, goodwill and

                                       41
<PAGE>

intangible assets deemed to have indefinite lives are no longer amortized but
are subject to annual impairment tests. In testing for impairment, the fair
value of our broadcast licenses is determined by applying an estimated market
multiple to the broadcast cash flow generated by the respective market. Market
multiples are determined based on recent transactions within the industry,
information available regarding publicly traded peer companies and the
respective station's competitive position within its market. Appropriate
allocation is made to each of the station's tangible and intangible assets in
determining the fair value of the station's broadcast licenses.

      Other intangible assets continue to be amortized over their useful lives.
The recoverability of other intangible assets is assessed on an ongoing basis by
evaluating whether amounts can be recovered through undiscounted cash flows over
the remaining amortization period.

      The performance of impairment tests under SFAS No. 142 requires
significant management judgement. Future events affecting cash flows and market
conditions could result in an impairment loss. Any resulting impairment loss
could have a material adverse impact on our financial condition and results of
operations.

   Income Taxes

      We recognize deferred tax assets and liabilities based on the differences
between the financial statement carrying amounts and the tax bases of assets and
liabilities. We regularly review our deferred tax assets for recoverability and
establish a valuation allowance based on historical taxable income, projected
future taxable income and the expected timing of the reversals of existing
temporary differences. If we are unable to generate sufficient taxable income,
or if there is a material change in the actual effective tax rates or time
period within which the underlying temporary differences become taxable or
deductible, we could be required to establish a valuation allowance against all
or a significant portion of our deferred tax assets resulting in a substantial
increase in our effective tax rate and an adverse impact on our operating
results.


Off-Balance Sheet Arrangements

       We have no off-balance sheet arrangements as defined by Item 303 of
Regulation S-K.

                                       42
<PAGE>

             ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                                   MARKET RISK

      At September 30, 2003, we had other financial instruments consisting
primarily of long-term fixed interest rate debt. Such debt, with future
principal payments of $455,000, matures December 15, 2012. At September 30,
2003, the carrying value of such debt was $452,086, the fair value was
approximately $464,000 and the interest rate was 7 3/4%. The fair market value
of long-term fixed interest rate debt is subject to interest rate risk.
Generally, the fair market value of fixed interest rate debt will increase as
interest rates fall and decrease as interest rates rise. We estimate the fair
value of our long-term debt using either quoted market prices or by discounting
the required future cash flows under our debt using borrowing rates currently
available to us, as applicable. We actively monitor the capital markets in
analyzing our capital raising decisions.



                  ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND
                               SUPPLEMENTARY DATA

      See Index on page F-1.



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

      Not applicable.



                        ITEM 9A. CONTROLS AND PROCEDURES

      The Company has performed an evaluation of its disclosure controls and
procedures (as defined by Exchange Act rule 15d-15(e)) as of September 30, 2003.
Based on this evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the disclosure controls and procedures are
effective in providing reasonable assurances that material information required
to be in this Form 10-K is made known to them by others on a timely basis.

      There were no changes in the Company's internal control over financial
reporting during the quarter ended September 30, 2003 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

                                       43
<PAGE>

                                    PART III

           ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Executive Officers and Directors

      Executive officers and directors of ACC are as follows:

Name                    Age                     Title
---------------------   ---    -------------------------------------------------
Joe L. Allbritton        78    Chairman of the Executive Committee and Director

Barbara B. Allbritton    66    Executive Vice President and Director

Robert L. Allbritton     34    Chairman, Chief Executive Officer and Director

Lawrence I. Hebert       57    Vice Chairman and Director

Frederick J. Ryan, Jr.   48    Vice Chairman, President, Chief Operating Officer
                                  and Director

Jerald N. Fritz          52    Senior Vice President, Legal and Strategic
                                  Affairs, General Counsel

Stephen P. Gibson        38    Senior Vice President and Chief Financial Officer

____________

      JOE L. ALLBRITTON is the founder of ACC and was Chairman of the Board of
Directors from its inception in 1974 until 1998 when he became Chairman of its
Executive Committee. Through ACC and its various subsidiaries and affiliates
(including Perpetual), Mr. Allbritton has presided over the growth of the
television group, radio, cable news services, television production and
newspapers in large, medium and small markets. His corporate experience ranges
from media to financial institutions, insurance, property management,
cemetaries/mortuaries and the Internet. In addition to his position with ACC,
Mr. Allbritton has led Riggs National Corporation ("Riggs") (owner of banking
operations in Washington, D.C., Maryland, Virginia, Florida and internationally)
since 1981, first as its Chairman and CEO (1981-2001) and currently as its Vice
Chairman. He has served on the boards of and chaired numerous philanthropic
organizations including The Allbritton Foundation. Mr. Allbritton is the husband
of Barbara B. Allbritton and the father of Robert L. Allbritton. See "Certain
Relationships and Related Transactions."


                                       44
<PAGE>

      BARBARA B. ALLBRITTON has been a Director of ACC since its inception, Vice
President of ACC from 1980 to 2001 and Executive Vice President since 2001. She
currently serves as an officer and/or director of each of ACC's television
subsidiaries, as well as Perpetual, Riggs Bank N.A. and The Allbritton
Foundation. Mrs. Allbritton is the wife of Joe L. Allbritton and the mother of
Robert L. Allbritton. See "Certain Relationships and Related Transactions."

      ROBERT L. ALLBRITTON has been Chairman of the Board of Directors and Chief
Executive Officer of ACC since February 2001 and a Director of ACC since 1993.
He also serves as a member of the Executive Committee of the Board of Directors
of ACC. Mr. Allbritton was Executive Vice President and Chief Operating Officer
of ACC from 1994 to 1998 and President of ACC from 1998 to 2001. He is also an
officer and/or director of Perpetual, each of ACC's television subsidiaries and
The Allbritton Foundation. He has been involved in management of the television
properties at both the corporate and daily operational levels, including
financial, technical, strategic, programming, sales, news and promotion. In
addition to his positions with ACC, Mr. Allbritton has been the Chairman of the
Board of Directors and Chief Executive Officer of Riggs since February 2001 and
a Director of Riggs since 1994. Mr. Allbritton has served on the Board of
Directors of the Washington Hospital Center since August 2002 and the Lyndon B.
Johnson Foundation since May 2002. He has also served on the Board of Trustees
of The George Washington University since February 2002 and Wesleyan University
since May 2003. He is the son of Joe L. and Barbara B. Allbritton. See "Certain
Relationships and Related Transactions."

      LAWRENCE I. HEBERT has been involved with the Allbritton organizations
since 1970, including their various banking, insurance, newspaper, radio,
television and other operations. He has been Vice Chairman of the Board of ACC
since February 2001 and is a member of the Executive Committee of the Board of
Directors of ACC. Mr. Hebert has been a Director of ACC since 1981 and is the
former President (1984-1998), as well as Chairman and Chief Executive Officer
(1998-2001), of ACC. He has also been a Director of Perpetual since 1980 and its
President since 1981. In addition, Mr. Hebert has served as President and Chief
Executive Officer of Riggs Bank N.A. since February 2001, has been involved in
advisory or board positions with Riggs since 1981 and is currently serving as a
Director of Riggs. He is also a Director of Allied Capital Corporation (business
development company) and a Trustee of The Allbritton Foundation.

      FREDERICK J. RYAN, JR. has been President of ACC since February 2001,
Chief Operating Officer since 1998 and a Director and its Vice Chairman since
1995. He has served as Senior Vice President and Executive Vice President of ACC
and is an officer of each of its television subsidiaries. He previously served
as Chief of Staff to former President Ronald Reagan (1989-1995) and Assistant to
the President in the White House (1982-1989). Prior to his government service,
Mr. Ryan was an attorney with the Los Angeles firm of Hill, Farrer and Burrill.
Mr. Ryan presently serves as Chairman of the Ronald Reagan Presidential Library
Foundation, Vice Chairman of Ford's Theatre, Vice Chairman of the White House
Historical Association and Trustee of Ronald Reagan Institute of Emergency
Medicine at George Washington University. Mr. Ryan is a Director of Riggs Bank
N.A. and Chairman of its International Committee; a Director of Riggs Bank
Europe Ltd. in London; and was a member of the Board of Consultants for Riggs
Bank N.A. (1996-2000).

                                       45
<PAGE>

      JERALD N. FRITZ has been part of ACC's management since 1987, currently
serving as a Senior Vice President. He serves as its General Counsel and also
oversees strategic planning and governmental affairs. From 1981 to 1987, Mr.
Fritz held several positions with the FCC, including Chief of Staff and Legal
Counsel to the Chairman. Mr. Fritz was in private practice from 1978 to 1981,
specializing in communications law, and from 1980 to 1983 was on the adjunct
faculty of George Mason University Law School teaching communications law and
policy. Mr. Fritz began his career in broadcasting in 1973 with WGN-TV, Chicago.
He is a former director of the National Association of Broadcasters ("NAB") and
a director of the Communications Forum of the American Bar Association. He
serves on the Futures and Copyright Committees of the NAB and the Legislative
Committee of the ABC Affiliates Association.

      STEPHEN P. GIBSON has been a Senior Vice President of ACC since February
2001 and a Vice President since 1997. He has served as Chief Financial Officer
since 1998 and Controller from 1997, when he joined the Company, to 1998. He is
also Treasurer of The Allbritton Foundation and Vice President of Perpetual and
each of ACC's television subsidiaries. Prior to joining ACC, Mr. Gibson served
as Controller for COMSAT RSI Plexsys Wireless Systems, a provider of wireless
telecommunications equipment and services, from 1994 to 1997. From 1987 to 1994,
Mr. Gibson held various positions with the accounting firm of Price Waterhouse
LLP, the latest as Audit Manager. He currently serves as an elected director of
the Broadcast Cable Financial Management Association.


Code of Ethics for Senior Financial Officers

      Our Board of Directors has adopted a Code of Ethics for Senior Financial
Officers. A copy of the Code of Ethics is filed as an exhibit to this Annual
Report on Form 10-K.


Audit Committee Financial Expert

      As our Board of Directors has not designated an Audit Committee, our
entire Board of Directors constitutes the Audit Committee of the Board of
Directors under the Securities Exchange Act of 1934. The Board of Directors has
determined that it does have an "audit committee financial expert" as defined by
Item 401(h) of Regulation S-K. Our audit committee financial expert is Lawrence
I. Hebert. Mr. Hebert is not deemed to be "independent" under applicable rules
of the National Association of Securities Dealers.


                                       46
<PAGE>

                         ITEM 11. EXECUTIVE COMPENSATION

      The following table sets forth compensation paid to our Chief Executive
Officer and our four other most highly compensated executive officers for Fiscal
2003, 2002 and 2001:
<TABLE>
<CAPTION>

                            Summary Compensation Table<F1>

                                              Fiscal                           All Other
 Name and Principal Position                   Year     Salary      Bonus    Compensation
 ---------------------------                   ----     ------      -----    ------------
<S>                                            <C>    <C>         <C>        <C>
Joe L. Allbritton<F2>                          2003   $ 550,000        --    $ 115,600<F3>
    Chairman of the Executive                  2002     550,000        --      112,900<F3>
    Committee                                  2001     550,000        --      135,100<F3>

Robert L. Allbritton<F1><F4>                   2003     250,000   $ 75,000        --
    Chairman and                               2002     250,000     75,000        --
    Chief Executive Officer                    2001     250,000     75,000        --

Lawrence I. Hebert<F1><F4>                     2003     200,000     75,000        --
    Vice Chairman                              2002     200,000     75,000        --
                                               2001     200,000     75,000        --

Frederick J. Ryan, Jr.<F1><F5>                 2003     217,500     75,000       5,500<F6>
    President and Chief                        2002     217,500     75,000       5,100<F6>
    Operating Officer                          2001     217,500     75,000       5,400<F6>

Jerald N. Fritz<F7>                            2003     210,000     45,000       5,300<F6>
    Senior Vice President, Legal               2002     210,000     55,000       5,300<F6>
    And Strategic Affairs                      2001     200,000     55,000       5,500<F6>
<FN>

____________
<F1> In February 2001, Robert L. Allbritton was named Chairman and Chief
     Executive Officer of ACC, succeeding Lawrence I. Hebert, and Frederick J.
     Ryan, Jr. was named President of ACC, succeeding Robert L. Allbritton.
<F2> Salary consists of management fees paid by ACC.
<F3> Represents the imputed premium cost related to certain split dollar life
     insurance policies on the life of Mr. Joe L. Allbritton. The annual
     premiums on such policies are satisfied either by cash payment from ACC or
     by dividends accumulated under the policies. Upon the death of the insured,
     ACC will receive the cash value of the policies up to the amount of its
     investments, and the remaining proceeds will be paid to the insured's
     beneficiary. The imputed premium cost is calculated on the difference
     between the face value of the policy and the cash surrender value.
<F4> Robert L. Allbritton, Chairman and Chief Executive Officer of ACC, and
     Lawrence I. Hebert, Vice Chairman of ACC, are paid cash compensation by
     Perpetual for services to Perpetual and other interests of Joe L.
     Allbritton, including ACC. The portion of such compensation related to ACC
     is allocated to ACC and included as compensation above. In addition, Mr.
     Robert L. Allbritton is paid management fees directly by ACC which are also
     included as compensation above.
<F5> Frederick J. Ryan, Jr. receives additional compensation from Perpetual for
     services to Perpetual and other interests of Joe L. Allbritton, including
     ACC. This additional compensation is not allocated among these interests,
     and ACC does not reimburse Perpetual for any portion of this additional
     compensation to Mr. Ryan. The portion of the additional compensation paid
     by Perpetual to Mr. Ryan that may be attributable to his services to us has
     not been quantified. Such portion is not material to our consolidated
     financial condition or results of operations.
<F6> These amounts reflect annual contributions by ACC to our 401(k) Plan.
<F7> Jerald N. Fritz is paid compensation by ACC for services to us and
     Perpetual. Perpetual has reimbursed ACC for $34,000, $31,500 and $10,500 of
     the compensation shown in the table for Mr. Fritz in Fiscal 2001, 2002 and
     2003, respectively.
</FN>
</TABLE>

                                       47
<PAGE>

      We do not have a Compensation Committee of our Board of Directors.
Compensation of executive officers is determined by Joe L. Allbritton, Robert L.
Allbritton and Lawrence I. Hebert. Our directors are not separately compensated
for membership on the Board of Directors.


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

      The authorized capital stock of ACC consists of 20,000 shares of common
stock, par value $0.05 per share (the "ACC Common Stock"), all of which is
outstanding, and 1,000 shares of preferred stock, 200 shares of which have been
designated for issue as Series A Redeemable Preferred Stock, par value $1.00 per
share (the "Series A Preferred Stock"), no shares of which are issued and
outstanding.

ACC Common Stock

      Joe L. Allbritton controls Perpetual. Perpetual owns 100% of the
outstanding common stock of AGI, and AGI owns 100% of the outstanding ACC Common
Stock. There is no established public trading market for ACC Common Stock.

      Each share of ACC Common Stock has an equal and ratable right to receive
dividends when and as declared by the Board of Directors of ACC out of assets
legally available therefor.

      In the event of a liquidation, dissolution or winding up of ACC, holders
of ACC Common Stock are entitled to share ratably in assets available for
distribution after payments to creditors and to holders of any preferred stock
of ACC that may at the time be outstanding. The holders of ACC Common Stock have
no preemptive rights to subscribe to additional shares of capital stock of ACC.
Each share of ACC Common Stock is entitled to one vote in elections of directors
and all other matters submitted to a vote of ACC's stockholder.

Equity Compensation Plans

      ACC does not have any compensation plans or individual compensation
arrangements under which ACC Common Stock or Series A Preferred Stock are
authorized for issuance.


             ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                             (dollars in thousands)

Distributions to Related Parties

      ACC has periodically made advances in the form of distributions to
Perpetual. For Fiscal 2003, ACC made cash advances to Perpetual of $19,730 and
Perpetual made repayments on these cash advances of $5,884. The advances to
Perpetual are non-interest bearing and, as such, do not reflect market rates of
interest-bearing loans to unaffiliated third parties. No cash advances to
Perpetual were made during the second half of Fiscal 2003. In addition, ACC
recorded a benefit for federal and state income taxes in the amount of $3,957.
This benefit was

                                       48
<PAGE>

effectively distributed to Perpetual as such benefit will not be recognized in
future years pursuant to the terms of the tax sharing agreement between the
companies. As a result of making advances of tax payments in accordance with the
terms of the tax sharing agreement between ACC and Perpetual, we earned interest
income from Perpetual in the amount of $88. See "Income Taxes" below.

      At present, the primary source of repayment of net advances is through our
ability to pay dividends or make other distributions, and there is no immediate
intent for the amounts to be repaid. Accordingly, these advances have been
treated as a reduction of stockholder's investment and are described as
"distributions" in our consolidated financial statements.

      During Fiscal 2003, we declared and paid cash dividends of $250 per common
share, or $5,000. We recorded these dividends in distributions to owners, net
when declared.

      Under the terms of the agreements governing our indebtedness, future
advances, distributions and dividends to related parties are subject to certain
restrictions. We anticipate that, subject to such restrictions, applicable law
and payment obligations with respect to the notes and our other debt, ACC will
make advances, distributions or dividends to related parties in the future.
Subsequent to September 30, 2003 and through November 14, 2003, we made
additional net distributions to owners of $1,925.

Management Fees

      We paid management fees of $500 to Perpetual for Fiscal 2003. We also paid
executive compensation in the form of management fees to Joe L. Allbritton and
Robert L. Allbritton for Fiscal 2003 in the amount of $550 and $200,
respectively. We expect to pay management fees to Perpetual, Joe L. Allbritton
and Robert L. Allbritton during Fiscal 2004 of approximately $500, $550 and
$200, respectively. We believe that payments to Perpetual, Joe L. Allbritton and
Robert L. Allbritton will continue in the future and that the amount of the
management fees is at least as favorable to us as those prevailing for
comparable transactions with or involving unaffiliated parties.

Income Taxes

      Our operations are included in a consolidated federal income tax return
filed by Perpetual. In accordance with the terms of a tax sharing agreement
between ACC and Perpetual, ACC is required to pay to Perpetual its federal
income tax liability, computed based upon statutory federal income tax rates
applied to our consolidated taxable income. We file separate state income tax
returns with the exception of Virginia which is included in a combined state
income tax return filed by Perpetual. In accordance with the terms of the tax
sharing agreement, we are required to pay to Perpetual our combined Virginia
income tax liability, computed based upon statutory Virginia income tax rates
applied to our combined Virginia net taxable income. Taxes payable to Perpetual
are not reduced by losses generated in prior years by us. In addition, the
amounts payable by us to Perpetual under the tax sharing agreement are not
reduced if losses of other members of the Perpetual group are utilized to offset
our taxable income for purposes of the Perpetual consolidated federal or
Virginia state income tax returns.

                                       49
<PAGE>

      The provision for income taxes is determined in accordance with Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires that the consolidated amount of current and deferred income tax
expense for a group that files a consolidated income tax return be allocated
among members of the group when those members issue separate financial
statements. Perpetual allocates a portion of its consolidated current and
deferred income tax expense to us as if we and our subsidiaries were separate
taxpayers. We record deferred tax assets, to the extent it is considered more
likely than not that such assets will be realized in future periods, and
deferred tax liabilities for the tax effects of the differences between the
bases of its assets and liabilities for tax and financial reporting purposes. To
the extent a deferred tax asset would be recorded due to the incurrence of
losses for federal or Virginia state income tax purposes, any such benefit
recognized is effectively distributed to Perpetual as such benefit will not be
recognized in future years pursuant to the tax sharing agreement.

Office Space

      ACC leases corporate headquarters space from Riggs Bank which owns office
buildings in Washington, D.C. Riggs Bank is a wholly-owned subsidiary of Riggs.
According to the most recently filed Schedule 13D amendment, approximately 41.3%
of the common stock of Riggs is deemed to be beneficially owned by Riggs' Vice
Chairman, Joe L. Allbritton, and 7.2% of the common stock is deemed to be
beneficially owned by Riggs' director, Barbara B. Allbritton, including in each
case 7.1% of the common stock of which Mr. and Mrs. Allbritton share beneficial
ownership. During Fiscal 2003, ACC paid Riggs Bank $356 for the office space.
ACC expects to pay approximately $375 for such space during Fiscal 2004. We
believe that the terms of the lease are substantially the same or at least as
favorable to ACC as those prevailing for comparable leases involving
nonaffiliated companies.

         We lease certain office space to Irides, LLC ("Irides"). Irides is a
wholly-owned subsidiary of Allbritton New Media, Inc. ("ANMI") which in turn is
an 80%-owned subsidiary of Perpetual. The remaining 20% of ANMI is owned by Mr.
Robert L. Allbritton who has options to acquire up to a total of 80% ownership
of ANMI. Charges for this space totaled $125 for Fiscal 2003, and we expect to
receive $129 during Fiscal 2004. We believe that the terms of the lease are
substantially the same or at least as favorable to ACC as those prevailing for
comparable leases involving nonaffiliated companies.

Internet Services

      We have entered into various agreements with Irides to provide our
stations with web site design, hosting and maintenance services. We incurred
fees of $137 to Irides during Fiscal 2003, and we expect to pay fees to Irides
during Fiscal 2004 for services performed of approximately $175. We believe that
the terms and conditions of the agreements are substantially the same or at
least as favorable to us as those prevailing for comparable transactions with or
involving nonaffiliated companies.


                                       50
<PAGE>

                 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

      Not applicable.



                                     PART IV

    ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

           (1)  Consolidated Financial Statements

                 See Index on p. F-1 hereof.

            (2)  Financial Statement Schedule II--Valuation and Qualifying
                 Accounts and Reserves

                 See Index on p. F-1 hereof.

            (3)  Exhibits

                 See Index on p. A-1 hereof.

      (b) Reports on Form 8-K

                 No reports on Form 8-K were filed during the fourth quarter of
                 Fiscal 2003.


                                       51
<PAGE>




                        ALLBRITTON COMMUNICATIONS COMPANY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----
Report of Independent Auditors..........................................    F-2
Consolidated Balance Sheets as of September 30, 2002 and 2003...........    F-3
Consolidated Statements of Operations and Retained Earnings for Each
   of the Years Ended September 30, 2001, 2002 and 2003.................    F-4
Consolidated Statements of Cash Flows for Each of the Years Ended
   September 30, 2001, 2002 and 2003....................................    F-5
Notes to Consolidated Financial Statements..............................    F-6
Financial Statement Schedule for the Years Ended September 30, 2001,
   2002 and 2003
     II--Valuation and Qualifying Accounts and Reserves.................    F-23




All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or the notes
thereto.


                                      F-1
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS


To the Board of Directors and Stockholder
Allbritton Communications Company

In our opinion, the consolidated financial statements listed in the index on
page F-1 present fairly, in all material respects, the financial position of
Allbritton Communications Company (an indirectly wholly-owned subsidiary of
Perpetual Corporation) and its subsidiaries at September 30, 2002 and 2003, and
the results of their operations and their cash flows for each of the three years
in the period ended September 30, 2003, in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedule listed in the index on page F-1 presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 3 to the accompanying consolidated financial statements for
the year ended September 30, 2003, the Company changed its method of accounting
for intangible assets.

/s/ PRICEWATERHOUSECOOPERS LLP

Washington, D.C.
November 14, 2003

                                      F-2
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

                           CONSOLIDATED BALANCE SHEETS
                 (Dollars in thousands except share information)
<TABLE>
<CAPTION>


                                                                                                 September 30,
                                                                                              ------------------
                                                                                              2002          2003
                                                                                              ----          ----
<S>                                                                                        <C>           <C>
ASSETS
Current assets
      Cash and cash equivalents ........................................................   $   6,299     $   3,278
      Accounts receivable, less allowance for doubtful accounts of $1,047 and $1,194 ...      37,167        38,663
      Program rights ...................................................................      19,272        18,862
      Deferred income taxes ............................................................         807           842
      Other ............................................................................       2,140         2,140
                                                                                           ---------     ---------

            Total current assets .......................................................      65,685        63,785

Property, plant and equipment, net .....................................................      56,573        53,577
Intangible assets, net .................................................................     128,150       122,982
Deferred financing costs and other .....................................................       7,177        10,004
Cash surrender value of life insurance .................................................      10,362        10,848
Program rights .........................................................................       1,047           814
                                                                                           ---------     ---------

                                                                                           $ 268,994     $ 262,010
                                                                                           =========     =========

LIABILITIES AND STOCKHOLDER'S INVESTMENT
Current liabilities
      Current portion of long-term debt ................................................   $     574     $     237
      Accounts payable .................................................................       3,003         2,556
      Accrued interest payable .........................................................      11,313        10,553
      Program rights payable ...........................................................      22,993        22,530
      Accrued employee benefit expenses ................................................       4,906         4,579
      Other accrued expenses ...........................................................      10,370         5,400
                                                                                           ---------     ---------

            Total current liabilities ..................................................      53,159        45,855

Long-term debt .........................................................................     439,869       467,451
Program rights payable .................................................................       1,886         1,443
Deferred rent and other ................................................................       3,089         4,148
Accrued employee benefit expenses ......................................................       1,879         1,970
Deferred income taxes ..................................................................      16,185        16,943
                                                                                           ---------     ---------

            Total liabilities ..........................................................     516,067       537,810

Commitments and contingent liabilities (Note 10)
Stockholder's investment
      Preferred stock, $1 par value, 1,000 shares authorized, none issued ..............        --            --
      Common stock, $.05 par value, 20,000 shares authorized, issued and outstanding ...           1             1
      Capital in excess of par value ...................................................      49,631        49,631
      Retained earnings ................................................................       4,917        (4,964)
      Distributions to owners, net (Note 8) ............................................    (301,622)     (320,468)
                                                                                           ---------     ---------

            Total stockholder's investment .............................................    (247,073)     (275,800)
                                                                                           ---------     ---------

                                                                                           $ 268,994     $ 262,010
                                                                                           =========     =========

</TABLE>
                    See accompanying notes to consolidated financial statements.

                                             F-3
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

           CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                         Year Ended September 30,
                                                                                    ----------------------------------
                                                                                    2001           2002           2003
                                                                                    ----           ----           ----
<S>                                                                              <C>            <C>            <C>
Operating revenues, net .....................................................    $ 202,541      $ 196,169      $ 202,590
                                                                                 ---------      ---------      ---------

Television operating expenses, excluding depreciation and amortization ......      124,597        126,001        125,224
Depreciation and amortization ...............................................       15,045         13,310         10,785
Corporate expenses ..........................................................        5,641          6,004          6,379
                                                                                 ---------      ---------      ---------

                                                                                   145,283        145,315        142,388
                                                                                 ---------      ---------      ---------

Operating income ............................................................       57,258         50,854         60,202
Nonoperating income (expense)
      Interest income
            Related party ...................................................          213             92             88
            Other ...........................................................          321             94            343
      Interest expense
            Related party ...................................................       (4,064)          (785)          --
            Other ...........................................................      (41,682)       (41,561)       (40,647)
      Loss on early repayment of debt .......................................         --             --          (23,194)
      Other, net ............................................................       (1,060)        (1,225)        (1,164)
                                                                                 ---------      ---------      ---------
Income (loss) before income taxes and cumulative effect of change
        in accounting principle .............................................       10,986          7,469         (4,372)
Provision for (benefit from) income taxes ...................................        4,632          3,955         (1,421)
                                                                                 ---------      ---------      ---------
Income (loss) before cumulative effect of change in
        accounting principle ................................................        6,354          3,514         (2,951)
Cumulative effect of change in accounting principle, net of
        income tax benefit of $2,027 (Note 5) ...............................         --             --            2,973
                                                                                 ---------      ---------      ---------

Net income (loss) ...........................................................        6,354          3,514         (5,924)
Retained earnings, beginning of year ........................................       (2,380)         3,974          4,917
Tax benefit distributed .....................................................         --           (2,571)        (3,957)
                                                                                 ---------      ---------      ---------

Retained earnings, end of year ..............................................    $   3,974      $   4,917      $  (4,964)
                                                                                 =========      =========      =========
</TABLE>

                    See accompanying notes to consolidated financial statements.

                                              F-4
<PAGE>
                        ALLBRITTON COMMUNICATIONS COMPANY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                             Year Ended September 30,
                                                                                         --------------------------------
                                                                                         2001          2002          2003
                                                                                         ----          ----          ----
<S>                                                                                   <C>           <C>           <C>
Cash flows from operating activities:
      Net income (loss) ..........................................................    $   6,354     $   3,514     $  (5,924)
                                                                                      ---------     ---------     ---------
      Adjustments to reconcile net income (loss) to net cash provided by
        operating activities:
           Depreciation and amortization .........................................       15,045        13,310        10,785
           Cumulative effect of change in accounting principle ...................         --            --           2,973
           Other noncash charges .................................................        1,315         1,512         1,464
           Noncash tax benefits ..................................................       (2,630)       (2,571)       (3,957)
           Loss on early repayment of debt .......................................         --            --          23,194
           Provision for doubtful accounts .......................................          783           677           623
           Loss on disposal of assets ............................................           36           139            13
           Changes in assets and liabilities:
                 (Increase) decrease in assets:
                     Accounts receivable .........................................        2,735        (2,548)       (2,119)
                     Program rights ..............................................         (608)        1,161           643
                     Other current assets ........................................          127           218          --
                     Other noncurrent assets .....................................       (1,438)       (1,012)         (247)
                     Deferred income taxes .......................................          240           (80)          (35)
                 Increase (decrease) in liabilities:
                     Accounts payable ............................................         (728)          535          (447)
                     Accrued interest payable ....................................            5           (65)         (760)
                     Accrued interest payable--related parties ...................        3,263           552          --
                     Program rights payable ......................................       (1,120)         (826)         (906)
                     Accrued employee benefit expenses ...........................         (418)          243          (236)
                     Other accrued expenses ......................................          555         5,198        (4,970)
                     Deferred rent and other liabilities .........................         (592)        1,839         1,059
                     Deferred income taxes .......................................        2,232         6,224         2,785
                                                                                      ---------     ---------     ---------
                           Total adjustments .....................................       18,802        24,506        29,862
                                                                                      ---------     ---------     ---------
                           Net cash provided by operating activities .............       25,156        28,020        23,938
                                                                                      ---------     ---------     ---------
Cash flows from investing activities:
      Capital expenditures .......................................................       (5,810)      (26,308)       (7,700)
      Acquisition of certain assets of Allnewsco .................................         --         (20,213)         --
      Proceeds from disposal of assets ...........................................           28            63            66
                                                                                      ---------     ---------     ---------
                           Net cash used in investing activities .................       (5,782)      (46,458)       (7,634)
                                                                                      ---------     ---------     ---------
Cash flows from financing activities:
      Proceeds from issuance of debt .............................................         --            --         451,949
      Principal payments on long-term debt and capital leases ....................       (1,735)       (1,422)     (425,577)
      Draws under line of credit, net ............................................         --          14,864           136
      Redemption premiums and related costs of early repayment of debt ...........         --            --         (17,409)
      Deferred financing costs ...................................................         (804)         (291)       (9,578)
      Distributions to owners and dividends, net of certain charges ..............     (197,680)     (342,753)      (24,730)
      Repayments of distributions to owners ......................................      174,100       342,615         5,884
      Notes issued from Allnewsco to Perpetual ...................................        2,493         3,895          --
                                                                                      ---------     ---------     ---------
                           Net cash (used in) provided by financing activities ...      (23,626)       16,908       (19,325)
                                                                                      ---------     ---------     ---------

Net decrease in cash and cash equivalents ........................................       (4,252)       (1,530)       (3,021)
Cash and cash equivalents, beginning of year .....................................       12,081         7,829         6,299
                                                                                      ---------     ---------     ---------
Cash and cash equivalents, end of year ...........................................    $   7,829     $   6,299     $   3,278
                                                                                      =========     =========     =========

Supplemental disclosure of cash flow information:
           Cash paid for interest ................................................    $  41,484     $  41,420     $  41,129
                                                                                      =========     =========     =========
           Cash paid for interest to related parties .............................    $     800     $     233     $    --
                                                                                      =========     =========     =========
           Cash paid for state income taxes ......................................    $     911     $     624     $    --
                                                                                      =========     =========     =========
      Non-cash investing and financing activities:
           Equipment acquired under capital leases ...............................    $     750     $      24     $    --
                                                                                      =========     =========     =========
           Reclassification of notes payable to common stock .....................    $  46,291     $    --       $    --
                                                                                      =========     =========     =========
           Reclassification of accrued interest payable to common stock ..........    $  20,709     $    --       $    --
                                                                                      =========     =========     =========
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (Dollars in thousands except share information)

NOTE 1--THE COMPANY

      Allbritton Communications Company (ACC or the Company) is an indirectly
wholly-owned subsidiary of Perpetual Corporation (Perpetual), a Delaware
corporation, which is controlled by Mr. Joe L. Allbritton. The Company owns ABC
network-affiliated television stations serving seven geographic markets:


     Station                     Market
     -----------------           ------------------------
     WJLA                        Washington, D.C.
     WBMA/WCFT/WJSU              Birmingham (Anniston and Tuscaloosa), Alabama
     WHTM                        Harrisburg-Lancaster-York-Lebanon, Pennsylvania
     KATV                        Little Rock, Arkansas
     KTUL                        Tulsa, Oklahoma
     WSET                        Roanoke-Lynchburg, Virginia
     WCIV                        Charleston, South Carolina

      The Company also provides 24-hour per day basic cable television
programming to the Washington, D.C. market, through NewsChannel 8, primarily
focused on regional and local news for the Washington, D.C. metropolitan area.
The operations of NewsChannel 8 have been integrated with WJLA.

      Based upon regular assessments of its operations, the Company has
determined that the economic characteristics, services, production processes,
customer type and distribution methods for the Company's operations are
substantially similar and have therefore been aggregated as one reportable
segment.

NOTE 2--ACQUISITION OF ALLNEWSCO AND BASIS OF PRESENTATION

      On March 5, 2002, the Company entered into an asset purchase agreement
with ALLNEWSCO, Inc. (Allnewsco). The Company consummated the transaction on
September 16, 2002, acquiring certain of the assets of Allnewsco in exchange for
$20,000 in cash and the cancellation of a $20,000 note receivable from
Allnewsco. The assets acquired consisted primarily of cable affiliation
agreements and certain technical equipment and vehicles related to its
newsgathering and cable distribution operations. Allnewsco has been controlled
since its inception by Perpetual which also controls the Company. Because both
the Company and Allnewsco are controlled by Perpetual, the Company was required
to account for the acquisition as a transfer of assets within a group under
common control. Under this accounting, the Company and Allnewsco were treated as
if they have always been combined for accounting and financial reporting
purposes. As a result, the Company's consolidated financial statements for all
periods prior to the asset acquisition reflect the combined results of the
Company and Allnewsco. In addition to combining the separate historical results
of the Company and Allnewsco, the consolidated financial statements include all
adjustments necessary to conform accounting methods and presentation, to the
extent they were different, and to eliminate significant intercompany
transactions.

                                      F-6
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Selected combining financial data for the years ended September 30, 2001
and 2002 is as follows:
<TABLE>
<CAPTION>

                                                ACC      Allnewsco    Adjustment    Combined
                                                ---      ---------    ----------    --------

<S>                                         <C>          <C>          <C>          <C>
Year Ended September 30, 2001
      Net operating revenues..............  $ 190,618    $  11,923          --     $ 202,541
      Net income..........................     10,644       (6,920)   $   2,630        6,354

Year Ended September 30, 2002
      Net operating revenues..............    185,944       10,225          --       196,169
      Net income..........................      6,468       (4,764)       1,810        3,514
</TABLE>

      The operating results of Allnewsco presented above consist of the full
fiscal year ended September 30, 2001 and the period from October 1, 2001 through
the acquisition date by ACC of September 16, 2002.

      The adjustment to net income represents the income tax benefit associated
with combining ACC and Allnewsco. Because Perpetual has historically filed
consolidated federal and Virginia state income tax returns including the
operating results of both ACC and Allnewsco, certain tax benefits were realized
by Perpetual associated with Allnewsco's net operating losses in the
consolidated tax returns. In accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," the combined results of
ACC and Allnewsco have been adjusted to reflect the historical tax benefits
which would have been recorded for financial reporting purposes by the combined
entity during each period presented.

      As the Company did not acquire all of the assets or assume all of the
liabilities of Allnewsco, certain expenses reported in the consolidated
financial statements for the years ended September 30, 2001 and 2002 have not
been incurred subsequent to the asset acquisition. Specifically, the Company did
not acquire or assume amounts due from Allnewsco to Perpetual. The accompanying
consolidated financial statements include $4,064 and $785 of related party
interest expense relating to amounts due from Allnewsco to Perpetual during the
years ended September 30, 2001 and 2002, respectively, that do not recur
subsequent to the acquisition. The excess of the $40,000 purchase price over the
net book value of the Allnewsco assets and liabilities acquired by the Company
of $25,325 has been recorded as an adjustment to the Company's capital in excess
of par value upon consummation of the transaction.


NOTE 3--SIGNIFICANT ACCOUNTING POLICIES

      Consolidation--The consolidated financial statements include the accounts
of the Company and its wholly and majority-owned subsidiaries after elimination
of all significant intercompany accounts and transactions.

                                      F-7
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Use of estimates and assumptions--The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates and assumptions.

      Revenue recognition--Revenues are generated principally from sales of
commercial advertising and are recorded as the advertisements are broadcast net
of agency and national representative commissions and music license fees. For
certain program contracts which provide for the exchange of advertising time in
lieu of cash payments for the rights to such programming, revenue is recorded as
advertisements are broadcast at the estimated fair value of the advertising time
given in exchange for the program rights. Such barter revenue was $7,354, $6,664
and $6,541 for the years ended September 30, 2001, 2002 and 2003, respectively.
Subscriber fee revenues are recognized in the period during which programming is
provided, pursuant to affiliation agreements with cable television systems and
direct broadcast satellite service providers.

      Cash and cash equivalents--The Company considers all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents.

      Program rights--The Company has entered into contracts for the rights to
television programming. Payments related to such contracts are generally made in
installments over the contract period. Program rights which are currently
available and the liability for future payments under such contracts are
reflected in the consolidated balance sheets. Program rights are amortized
primarily using the straight-line method over the twelve month rental period.
Certain program rights with lives greater than one year are amortized using
accelerated methods. Program rights expected to be amortized in the succeeding
year and amounts payable within one year are classified as current assets and
liabilities, respectively. The program rights are reflected in the consolidated
balance sheets at the lower of unamortized cost or estimated net realizable
value based on management's expectation of the net future cash flows to be
generated by the programming.

      Property, plant and equipment--Property, plant and equipment are recorded
at cost and depreciated over the estimated useful lives of the assets.
Maintenance and repair expenditures are charged to expense as incurred and
expenditures for modifications and improvements which increase the expected
useful lives of the assets are capitalized. Depreciation expense is computed
using the straight-line method for buildings and straight-line and accelerated
methods for furniture, machinery and equipment. Leasehold improvements are
amortized using the straight-line method over the lesser of the term of the
related lease or the estimated useful lives of the assets.

                                      F-8
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


The useful lives of property, plant and equipment for purposes of computing
depreciation and amortization expense are:

Buildings..................................................  15-40 years
Leasehold improvements.....................................   5-32 years
Furniture, machinery and equipment and equipment
   under capital leases....................................   3-20 years

      Intangible assets--Intangible assets consist of values assigned to
broadcast licenses as well as favorable terms on contracts and leases. The
amounts originally assigned to intangible assets were based on the results of
independent valuations. SFAS No. 142, "Goodwill and Other Intangible Assets,"
was issued in June 2001. SFAS No. 142 addresses the financial accounting and
reporting for acquired goodwill and other intangible assets. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives are no
longer amortized but are subject to annual impairment tests. Other intangible
assets continue to be amortized over their useful lives. SFAS No. 142 became
effective for the Company's fiscal year ended September 30, 2003 (See Note 5).

      Prior to the adoption of SFAS No. 142, all intangible assets were
amortized on a straight-line basis over their estimated useful lives. Broadcast
licenses were amortized over 40 years and the premiums for favorable terms on
contracts and leases were amortized over the terms of the related contracts and
leases (11 to 25 years). The Company assessed the recoverability of intangible
assets on an ongoing basis by evaluating whether amounts could be recovered
through undiscounted cash flows over the remaining amortization period.

      Upon adoption of SFAS No. 142, the Company's indefinite lived intangible
assets, consisting of broadcast licenses, are no longer amortized but are
subject to periodic impairment tests. In testing for impairment, the fair value
of the broadcast licenses are determined by applying an estimated market
multiple to the broadcast cash flow generated by the respective market. Market
multiples are determined based on recent transactions within the industry,
information available regarding publicly traded peer companies and the
respective station's competitive position within its market. Appropriate
allocation is made to each of the station's tangible and intangible assets in
determining the fair value of the station's broadcast licenses. Other intangible
assets continue to be amortized over the terms of the related contracts and
leases, and the recoverability of these assets is assessed on an ongoing basis
by evaluating whether amounts can be recovered through undiscounted cash flows
over the remaining amortization period.

      Deferred financing costs--Costs incurred in connection with the issuance
of long-term debt are deferred and amortized to other nonoperating expense on a
straight-line basis over the term of the underlying financing agreement.

      Deferred rent--Rent concessions and scheduled rent increases in connection
with operating leases are recognized as adjustments to rental expense on a
straight-line basis over the associated lease term.

                                      F-9
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Concentration of credit risk--Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
certain cash and cash equivalents and receivables from advertisers. The Company
invests its excess cash with high-credit quality financial institutions and at
September 30, 2003 had an overnight repurchase agreement with a financial
institution for $1,652. Concentrations of credit risk with respect to
receivables from advertisers are limited as the Company's advertising base
consists of large national advertising agencies and high-credit quality local
advertisers. As is customary in the broadcasting industry, the Company does not
require collateral for its credit sales which are typically due within thirty
days.

      Income taxes--The operations of the Company are included in a consolidated
federal income tax return filed by Perpetual. In accordance with the terms of a
tax sharing agreement between the Company and Perpetual, the Company is required
to pay to Perpetual its federal income tax liability, computed based upon
statutory federal income tax rates applied to the Company's consolidated taxable
income. The Company files separate state income tax returns with the exception
of Virginia which is included in a combined state income tax return filed by
Perpetual. In accordance with the terms of the tax sharing agreement, the
Company is required to pay to Perpetual its combined Virginia income tax
liability, computed based upon statutory Virginia income tax rates applied to
the Company's combined Virginia net taxable income. Taxes payable to Perpetual
are not reduced by losses generated in prior years by the Company. In addition,
the amounts payable by the Company to Perpetual under the tax sharing agreement
are not reduced if losses of other members of the Perpetual group are utilized
to offset taxable income of the Company for purposes of the Perpetual
consolidated federal or Virginia income tax returns.

      The provision for income taxes is determined in accordance with SFAS No.
109, which requires that the consolidated amount of current and deferred income
tax expense for a group that files a consolidated income tax return be allocated
among members of the group when those members issue separate financial
statements. Perpetual allocates a portion of its consolidated current and
deferred income tax expense to the Company as if the Company and its
subsidiaries were separate taxpayers. The Company records deferred tax assets,
to the extent it is more likely than not that such assets will be realized in
future periods, and deferred tax liabilities for the tax effects of the
differences between the bases of its assets and liabilities for tax and
financial reporting purposes. To the extent a deferred tax asset would be
recorded due to the incurrence of net losses for federal or Virginia state
income tax purposes, any such benefit recognized is effectively distributed to
Perpetual as such benefit will not be recognized in future years pursuant to the
tax sharing agreement.

      Fair value of financial instruments--The carrying amount of the Company's
cash and cash equivalents, accounts receivable, accounts payable, accrued
expenses and program rights payable approximate fair value due to the short
maturity of those instruments. The Company estimates the fair value of its
long-term debt using either quoted market prices or by discounting the required
future cash flows under its debt using borrowing rates currently available to
the Company, as applicable.

                                      F-10
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Earnings per share--Earnings per share data are not presented since the
Company has only one shareholder.


NOTE 4--PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>

                                                            September 30,
                                                          -----------------
                                                          2002         2003
                                                          ----         ----
          <S>                                          <C>          <C>
          Buildings and leasehold improvements.......  $  30,257    $  30,815
          Furniture, machinery and equipment.........    135,240      138,783
          Equipment under capital leases.............      4,416        2,544
                                                       ---------    ---------
                                                         169,913      172,142
          Less accumulated depreciation..............   (116,829)    (122,320)
                                                       ---------    ---------
                                                          53,084       49,822
          Land.......................................      2,889        2,889
          Construction-in-progress...................        600          866
                                                       ---------    ---------
                                                       $  56,573    $  53,577
                                                       =========    =========
</TABLE>


      Depreciation and amortization expense was $10,541, $9,052 and $10,617 for
the years ended September 30, 2001, 2002 and 2003, respectively, which includes
amortization of equipment under capital leases.


NOTE 5--INTANGIBLE ASSETS

      Upon adoption of SFAS No. 142 on October 1, 2002, the Company performed
the first of the required impairment tests on its indefinite lived intangible
assets. The fair value of the Company's broadcast licenses was determined by
applying an estimated market multiple to the broadcast cash flow generated by
the respective market. Market multiples were determined based on recent
transactions within the industry, information available regarding publicly
traded peer companies and the respective station's competitive position within
its market. Appropriate allocation was made to each of the station's tangible
and intangible assets in determining the fair value of the station's broadcast
licenses. As a result of these tests, it was determined that one of the
Company's broadcast licenses was impaired. Accordingly, the Company recorded a
non-cash, after-tax impairment charge of $2,973 related to the carrying value of
its indefinite lived intangible assets. This charge was recorded as a cumulative
effect of a change in accounting principle during the three months ended
December 31, 2002. The carrying value of the

                                      F-11
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


Company's broadcast licenses at September 30, 2002 and 2003 was $127,290 and
$122,290, respectively, with the decrease representing the $5,000 pre-tax
impairment charge discussed above.

       Other intangible assets consist of the following:
<TABLE>
<CAPTION>

                                                            September 30,
                                                          -----------------
                                                          2002         2003
                                                          ----         ----

          <S>                                           <C>          <C>
          Gross carrying amount......................   $  6,174     $  6,174
          Less accumulated amortization..............     (5,314)      (5,482)
                                                        --------     --------
          Net carrying amount........................   $    860     $    692
                                                        ========     ========
</TABLE>

      Amortization expense was $4,504, $4,258 and $168 for the years ended
September 30, 2001, 2002 and 2003, respectively. Amortization expense is
expected to be $168 for each of the fiscal years ending September 30, 2004, 2005
and 2006, $151 for the year ending September 30, 2007 and $37 for the year
ending September 30, 2008.

      The following table adjusts reported income before cumulative effect of
change in accounting principle and reported net income for the years ended
September 30, 2001 and 2002 (prior to the adoption date of SFAS No. 142) to
exclude amortization of indefinite lived intangible assets:
<TABLE>
<CAPTION>

                                                        Income Before
                                                      Cumulative Effect
                                                         Of Change in
                                                         Accounting       Net
                                                          Principle      Income
                                                      -----------------  ------
          <S>                                              <C>          <C>
          Year Ended September 30, 2001
          -----------------------------
          As reported...................................   $ 6,354      $ 6,354
          Amortization of broadcast licenses,
             net of tax.................................     2,744        2,744
                                                           -------      -------
          Adjusted......................................   $ 9,098      $ 9,098
                                                           =======      =======

          Year Ended September 30, 2002
          -----------------------------
          As reported...................................   $ 3,514      $ 3,514
          Amortization of broadcast licenses,
             net of tax.................................     2,744        2,744
                                                           -------      -------
          Adjusted......................................   $ 6,258      $ 6,258
                                                           =======      =======
</TABLE>

                                      F-12
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


NOTE 6--LONG-TERM DEBT

      On December 20, 2002, the Company issued $275,000 principal amount of
7 3/4% Senior Subordinated Notes due 2012 (the "7 3/4% Notes") at par. The net
proceeds, together with borrowings under the Company's Revolving Credit
Agreement, were used to purchase and redeem the Company's $275,000 9 3/4% Senior
Subordinated Debentures due 2007 (the "9 3/4% Debentures") as well as to pay the
fees and expenses associated with the offering of the 7 3/4% Notes. As of
January 21, 2003, all of the 9 3/4% Debentures had been purchased or redeemed.

      On February 6, 2003, the Company issued an additional $180,000 principal
amount of its 7 3/4% Notes at a price of 98.305%. The net proceeds were used to
redeem the Company's $150,000 8 7/8% Senior Subordinated Notes due 2008 (the
"8 7/8% Notes"), fund the redemption premium for the 8 7/8% Notes, pay the fees
and expenses associated with the offering of the additional 7 3/4% Notes and
repay borrowings outstanding under the Company's Revolving Credit Agreement. On
March 10, 2003, all of the 8 7/8% Notes were redeemed.

      As a result of the purchase and redemption of its 9 3/4% Debentures as
well as the redemption of its 8 7/8% Notes, the Company recorded a pre-tax
charge of $23,194 during the quarter ended March 31, 2003. The charge was
recorded in income from continuing operations in accordance with the
requirements of SFAS No. 145, "Rescission of FASB Statements Nos. 4, 44 and 64,
Amendment of FASB Statement No. 13 and Technical Corrections," which became
effective for the Company's fiscal year ended September 30, 2003. SFAS No. 145
generally requires any gains or losses associated with early extinguishments of
debt be recorded as a component of income from continuing operations rather than
as an extraordinary item.

      On February 14, 2003, the Company commenced a registered exchange offer
of a new series of 7 3/4% Notes in exchange for the initial series of 7 3/4%
Notes issued December 20, 2002 and consummated the exchange offer following its
expiration on March 17, 2003 by issuing the new series of notes in exchange for
notes of the initial series properly tendered. On June 17, 2003, the Company
commenced a registered exchange offer of the same new series of 7 3/4% Notes in
exchange for the initial series of 7 3/4% Notes issued February 6, 2003 and
consummated the exchange offer following its expiration on July 16, 2003 by
issuing such new series of notes in exchange for notes of the initial series
properly tendered. The terms of the exchange notes are substantially identical
to those of the initial notes in each case, except that transfer restrictions
and registration rights relating to initial notes do not apply to the exchange
notes.

                                      F-13
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


       Outstanding debt consists of the following:
<TABLE>
<CAPTION>

                                                                            September 30,
                                                                         ------------------
                                                                         2002          2003
                                                                         ----          ----
<S>                                                                   <C>           <C>
Senior Subordinated Debentures, due November 30, 2007
   with interest payable semi-annually at 9 3/4%................      $ 275,000     $     --
Senior Subordinated Notes, due February 1, 2008 with
   interest payable semi-annually at 8 7/8%.....................        150,000           --
Senior Subordinated Notes, due December 15, 2012 with
   interest payable semi-annually at 7 3/4%.....................            --        455,000
Amended and Restated Revolving Credit Agreement, maximum
   amount of $70,000, expiring March 27, 2006, secured
   by the outstanding stock of the Company and its
   subsidiaries, interest payable quarterly at various
   rates from prime plus 0.25% or LIBOR plus 1.5%
   depending on certain financial operating tests (4.41%
   at September 30, 2003).......................................         14,864        15,000
Master Lease Finance Agreement, expired March 1, 2000
   for new acquisitions, secured by the assets acquired,
   interest payable monthly at variable rates as determined
   on the acquisition date for each asset purchased
   (7.34%-7.43% at September 30, 2003) (See Note 11)............            521            86
Master Equipment Lease Agreement, expired June 30, 2002
   for new acquisitions, secured by the assets acquired,
   interest payable monthly at variable rates as determined
   on the acquisition date for each asset purchased (6.45%
   at September 30, 2003) (See Note 11).........................            658           516
                                                                      ---------     ---------
                                                                        441,043       470,602
Less unamortized discount.......................................           (600)       (2,914)
                                                                      ---------     ---------
                                                                        440,443       467,688
Less current maturities.........................................           (574)         (237)
                                                                      ---------     ---------
                                                                      $ 439,869     $ 467,451
                                                                      =========     =========
</TABLE>

      Unamortized deferred financing costs of $6,376 and $9,442 at September 30,
2002 and 2003, respectively, are included in deferred financing costs and other
noncurrent assets in the accompanying consolidated balance sheets. Amortization
of the deferred financing costs for the years ended September 30, 2001, 2002 and
2003 was $1,190, $1,266 and $1,298, respectively, which is included in other
nonoperating expenses.


                                      F-14
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Under the existing financing agreements, the Company is subject to
restrictive covenants which place limitations upon payments of cash dividends,
issuance of capital stock, investment transactions, incurrence of additional
obligations and transactions with affiliates. In addition, under the Revolving
Credit Agreement, the Company must maintain compliance with certain financial
covenants. As of September 30, 2003, the Company was in compliance with such
covenants. The Company is also required to pay a commitment fee ranging from
0.5% to 0.75% per annum based on the amount of any unused portion of the
Revolving Credit Agreement.

      The Company estimates the fair value of its Senior Subordinated
Debentures and Senior Subordinated Notes to be approximately $436,000 and
$464,000 at September 30, 2002 and 2003, respectively. The carrying value of the
Company's Revolving Credit Agreement approximates fair value as borrowings bear
interest at market rates.


NOTE 7--INCOME TAXES

      The provision for (benefit from) income taxes consists of the following:
<TABLE>
<CAPTION>

                                              Years Ended September 30,
                                           ------------------------------
                                           2001         2002         2003
                                           ----         ----         ----
        <S>                             <C>          <C>          <C>
        Current
          Federal....................   $  1,909     $ (2,571)    $ (3,830)
          State......................        251          382         (341)
                                        --------     --------     --------
                                           2,160       (2,189)      (4,171)
                                        --------     --------     --------
        Deferred
          Federal....................      2,017        5,564        2,980
          State......................        455          580         (230)
                                        --------     --------     --------
                                           2,472        6,144        2,750
                                        --------     --------     --------

                                        $  4,632     $  3,955     $ (1,421)
                                        ========     ========     ========
</TABLE>


      The adoption of SFAS No. 142 on October 1, 2002 resulted in the Company
recording a $5,000 pre-tax impairment charge during the year ended September 30,
2003 (see Note 5). The charge was recorded as a cumulative effect of change in
accounting principle, net of income tax benefit of $2,027, in the accompanying
statement of operations and retained earnings. The $2,027 benefit for income
taxes represented a deferred tax benefit.

                                      F-15
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      The components of deferred income tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>

                                                                   September 30,
                                                                ------------------
                                                                2002          2003
                                                                ----          ----
<S>                                                         <C>           <C>
Deferred income tax assets:
      State and local operating loss carryforwards......    $   2,075     $   3,489
      Accrued employee benefits.........................        1,149         1,093
      Deferred rent.....................................          983         1,064
      Allowance for accounts receivable.................          410           457
      Other.............................................          132           949
                                                            ---------     ---------
                                                                4,749         7,052
      Less valuation allowance..........................       (1,993)       (2,623)
                                                            ---------     ---------
                                                                2,756         4,429
                                                            ---------     ---------
Deferred income tax liabilities:
      Depreciation and amortization.....................      (18,134)      (20,530)
                                                            ---------     ---------

Net deferred income tax liabilities.....................    $ (15,378)    $ (16,101)
                                                            =========     =========
</TABLE>

      The Company has approximately $77,400 in state and local operating loss
carryforwards in certain jurisdictions available for future use for state and
local income tax purposes which expire in various years from 2006 through 2018.
The change in the valuation allowance for deferred tax assets of ($584), $173
and $630 during the years ended September 30, 2001, 2002 and 2003, respectively,
principally resulted from management's evaluation of the recoverability of the
loss carryforwards.

      The following table reconciles the statutory federal income tax rate to
the Company's effective income tax rate for income (loss) before extraordinary
loss:
<TABLE>
<CAPTION>

                                                               Years ended September 30,
                                                               -------------------------
                                                               2001      2002      2003
                                                               ----      ----      ----
<S>                                                            <C>       <C>       <C>
Statutory federal income tax rate...........................   34.0%     34.0%     34.0%
State income taxes, net of federal income tax benefit.......    7.1       7.9      25.8
Non-deductible expenses, principally amortization of
   certain intangible assets, insurance premiums and
   meals and entertainment..................................    6.2       8.7     (12.9)
Change in valuation allowance...............................   (5.3)      2.3     (14.4)
Other, net..................................................    0.2       0.1       0.0
                                                               -----     -----     -----

Effective income tax rate...................................   42.2%     53.0%     32.5%
                                                               =====     =====     =====
</TABLE>

                                      F-16
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


NOTE 8--TRANSACTIONS WITH OWNERS AND RELATED PARTIES

Distributions to Owners, Net

      In the ordinary course of business, the Company makes cash advances in the
form of distributions to Perpetual. At present, the primary source of repayment
of the net advances from the Company is through the ability of the Company to
pay dividends or make other distributions. There is no immediate intent for
these amounts to be repaid. Accordingly, such amounts have been treated as a
reduction of stockholder's investment and described as "distributions" in the
accompanying consolidated balance sheets. The weighted average amount of
non-interest bearing advances outstanding was $303,785, $323,885 and $313,339
during Fiscal 2001, 2002 and 2003, respectively.

      During the year ended September 30, 2003, the Company declared and paid
cash dividends of $250 per common share, or $5,000. The Company recorded these
dividends in Distributions to owners, net when declared.

      Additionally, Perpetual historically advanced cash to Allnewsco in the
form of unsecured demand notes bearing interest at a rate of 7.5%. The notes
payable from Allnewsco to Perpetual are included in distributions to owners as
presented in the table below, conforming the presentation of cash transactions
between the Company, Allnewsco and Perpetual. Effective September 28, 2001,
Allnewsco authorized the issuance of 67,000 shares of common stock to Perpetual
in exchange for the reclassification of $46,291 and $20,709 from notes payable
and accrued interest payable, respectively. As ACC did not acquire or assume
amounts due from Allnewsco to Perpetual, no amount is outstanding from the
Company under such notes at September 30, 2002 or 2003.

      The operations of the Company are included in a consolidated federal
income tax return and a combined Virginia state income tax return filed by
Perpetual. The Company is charged by Perpetual and makes payments to Perpetual
for federal and Virginia state income taxes which are computed in accordance
with the terms of a tax sharing agreement between the Company and Perpetual.
Because Perpetual has historically filed consolidated federal and Virginia state
income tax returns including the operating results of both ACC and Allnewsco,
certain tax benefits were realized by Perpetual associated with Allnewsco's net
operating losses in the consolidated tax returns. In accordance with SFAS No.
109, the combined results of ACC and Allnewsco have been adjusted to reflect the
historical tax benefits which would have been recorded for financial reporting
purposes by the combined entity during each period presented. The cumulative
effect of the tax benefits associated with combining ACC and Allnewsco of
$17,772 has been reflected as a receivable which was not acquired upon
consummation of the Allnewsco transaction.


                                      F-17
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      The components of distributions to owners and the related activity during
Fiscal 2001, 2002 and 2003 consist of the following:
<TABLE>
<CAPTION>

                                                                               Federal and
                                                  ACC          Allnewsco      Virginia State       Net
                                             Distributions   Notes Payable      Income Tax    Distributions
                                               to Owners      to Perpetual      Receivable      to Owners
                                             -------------   -------------    --------------  -------------
<S>                                            <C>             <C>              <C>             <C>
Balance as of September 30, 2000............   $ 278,090       $  (53,306)      $  14,956       $ 239,740

Cash advances to Perpetual..................     197,680                                          197,680
Repayment of cash advances from
   Perpetual................................    (174,100)                                        (174,100)
Issuance of notes payable to Perpetual......                       (2,493)                         (2,493)
Reclassification of notes payable to
   equity in the common stock of
   Allnewsco................................                       46,291                          46,291
Charge for federal and state income
   taxes....................................                                       (4,500)         (4,500)
Payment of income taxes.....................                                        4,500           4,500
Tax benefit associated with combining
   ACC and Allnewsco........................                                        2,630           2,630
                                               ---------       ----------       ---------       ---------

Balance as of September 30, 2001............     301,670           (9,508)         17,586         309,748

Cash advances to Perpetual..................     342,567                                          342,567
Repayment of cash advances from
   Perpetual................................    (342,615)                                        (342,615)
Issuance of notes payable to Perpetual......                       (3,895)                         (3,895)
Benefit for federal and state income
   taxes, including tax benefit
   associated with combining ACC and
   Allnewsco of $1,810......................                                        2,571           2,571
Payment of income taxes.....................                                          186             186
Distribution of tax benefit.................                                       (2,571)         (2,571)
Allnewsco balances not acquired.............                       13,403         (17,772)         (4,369)
                                               ---------       ----------       ---------       ---------

Balance as of September 30, 2002............     301,622              --              --          301,622

Cash advances and dividends to Perpetual....      24,730                                           24,730
Repayment of cash advances from
   Perpetual................................      (5,884)                                          (5,884)
Benefit for federal and state income
   taxes....................................                                        3,957           3,957
Distribution of tax benefit.................                                       (3,957)         (3,957)
                                               ---------       ----------       ---------       ---------

Balance as of September 30, 2003............   $ 320,468       $      --        $     --        $ 320,468
                                               =========       ==========       =========       =========
</TABLE>

                                      F-18
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Subsequent to September 30, 2003 and through November 14, 2003, the
Company made additional net distributions to owners of $1,925.

Other Transactions with Related Parties

      During 1991, the Company loaned $20,000 to Allnewsco. The $20,000, 11.06%
note receivable from Allnewsco was due in January 2008, with the principal
balance also due upon demand. Since the historical consolidated financial
statements have been restated to reflect the combined results of the Company and
Allnewsco as of the beginning of the earliest period presented, the loan amount
as well as the related interest income/expense have been eliminated as
intercompany transactions for all periods presented. At closing of the Allnewsco
transaction on September 16, 2002, the Company cancelled the $20,000 note as
part of the consideration for the acquisition.

      During the years ended September 30, 2001, 2002 and 2003, the Company
earned interest income from Perpetual of $213, $92 and $88, respectively, as a
result of making advances of tax payments in accordance with the terms of the
tax sharing agreement between the Company and Perpetual.

      Management fees of $500, $600 and $500 were paid to Perpetual by the
Company for the years ended September 30, 2001, 2002 and 2003, respectively. The
Company also paid management fees to Mr. Joe L. Allbritton in the amount of $550
for each of the years ended September 30, 2001, 2002 and 2003 and to Mr. Robert
L. Allbritton in the amount of $200 for each of the years ended September 30,
2001, 2002 and 2003, respectively. Management fees are included in corporate
expenses in the consolidated statements of operations.

      During the year ended September 30, 2000, the Company entered into various
agreements with Irides, LLC (Irides) to provide the Company's stations with
certain web site design, hosting and maintenance services. Irides is an
affiliate of the Company which is controlled by Mr. Joe L. Allbritton. The
Company paid fees of $167, $110 and $137 to Irides during the years ended
September 30, 2001, 2002 and 2003, respectively. These fees are included in
television operating expenses in the consolidated statements of operations.
Effective October 1, 2002, Irides leased certain office space from the Company.
Charges for this space totaled $125 for the year ended September 30, 2003, and
such amount is included as an offset to television operating expenses in the
consolidated statements of operations.

      The Company maintains banking and advertising relationships with and
leases certain office space from Riggs Bank N.A. (Riggs Bank). Riggs is a
wholly-owned subsidiary of Riggs National Corporation (Riggs), of which Mr. Joe
L. Allbritton is the Vice Chairman of the Board of Directors and a significant
stockholder. The majority of the Company's cash and cash equivalents was on
deposit with Riggs Bank at September 30, 2002 and 2003. During the years ended
September 30, 2001 and 2002, the Company generated $191 and $44, respectively,
in advertising revenue from Riggs Bank. No advertising revenue was generated
during the year ended September 30, 2003. Additionally, the Company incurred
$297, $328 and $356 in rental

                                      F-19
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


expense related to office space leased from Riggs Bank for the years ended
September 30, 2001, 2002 and 2003, respectively. During the years ended
September 30, 2001 and 2002, Riggs utilized the Company's aircraft on several
occasions and was charged $20 and $27, respectively, for such usage. There was
no usage of the Company's aircraft by Riggs during the year ended September 30,
2003.


NOTE 9--RETIREMENT PLANS

      A defined contribution savings plan is maintained for eligible employees
of the Company and certain of its affiliates. Under the plan, employees may
contribute a portion of their compensation subject to Internal Revenue Service
limitations and the Company contributes an amount equal to 50% of the
contribution of the employee not to exceed 6% of the compensation of the
employee. The amounts contributed to the plan by the Company on behalf of its
employees totaled approximately $863, $1,039 and $865 for the years ended
September 30, 2001, 2002 and 2003, respectively.

      The Company also contributes to certain other multi-employer union pension
plans on behalf of certain of its union employees. The amounts contributed to
such plans totaled approximately $331, $360 and $530 for the years ended
September 30, 2001, 2002 and 2003, respectively.


NOTE 10--COMMITMENTS AND CONTINGENT LIABILITIES

      The Company leases office and studio facilities and machinery and
equipment under operating and capital leases expiring in various years through
2017. Certain leases contain provisions for renewal and extension.

                                      F-20
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      Future minimum lease payments under operating and capital leases which
have remaining noncancelable lease terms in excess of one year as of September
30, 2003 are as follows:
<TABLE>
<CAPTION>

                                                      Operating   Capital
                                                        Leases     Leases
                                                      ---------   -------
<S>                                                    <C>         <C>
Year ending September 30,
      2004.........................................    $  3,805    $  268
      2005.........................................       3,691       180
      2006.........................................       3,656       180
      2007.........................................       2,922        30
      2008.........................................       2,820       --
      2009 and thereafter..........................      27,739       --
                                                       --------    ------
                                                       $ 44,633       658
                                                       ========
Less amounts representing imputed interest.........                   (56)
                                                                   ------
                                                                      602
Less current portion...............................                  (237)
                                                                   ------
Long-term portion of capital lease obligations.....                $  365
                                                                   ======
</TABLE>


      Rental expense under operating leases aggregated approximately $3,300,
$3,800 and $3,900 for the years ended September 30, 2001, 2002 and 2003,
respectively.

      The Company has entered into contractual commitments in the ordinary
course of business for the rights to television programming which is not yet
available for broadcast as of September 30, 2003. Under these agreements, the
Company must make specific minimum payments approximating the following:

<TABLE>
<CAPTION>

      <S>                                          <C>
      Year ending September 30,
         2004..................................    $  3,433
         2005..................................      14,173
         2006..................................       9,673
         2007..................................       8,350
         2008..................................       7,427
         2009 and thereafter...................         334
                                                   --------
                                                   $ 43,390
                                                   ========
</TABLE>


                                      F-21
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                 (Dollars in thousands except share information)


      The Company has entered into various employment contracts. Future
guaranteed payments under such contracts as of September 30, 2003 approximate
the following:
<TABLE>
<CAPTION>

      <S>                                          <C>
      Year ending September 30,
         2004..................................    $  8,009
         2005..................................       2,155
         2006..................................       1,494
         2007..................................       1,248
         2008..................................       1,298
         2009..................................          54
                                                   --------
                                                   $ 14,258
                                                   ========
</TABLE>

      The Company has entered into various deferred compensation agreements with
certain employees. Under these agreements, the Company is required to make
payments aggregating approximately $2,067 during the years 2005 through 2012. At
September 30, 2002 and 2003, the Company has recorded a deferred compensation
liability of approximately $1,163 and $1,328, respectively, which is included as
a component of noncurrent accrued employee benefit expenses in the accompanying
consolidated balance sheets.

      The Company currently and from time to time is involved in litigation
incidental to the conduct of its business, including suits based on defamation.
The Company is not currently a party to any lawsuit or proceeding which, in the
opinion of management, if decided adverse to the Company, would be likely to
have a material adverse effect on the Company's consolidated financial
condition, results of operations or cash flows.





                                      F-22
<PAGE>
                                                                     SCHEDULE II

                        ALLBRITTON COMMUNICATIONS COMPANY

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                       Balance at       Charged       Charged to
                                      beginning of      to costs        other                      Balance at
Classification                            year        and expenses     accounts     Deductions     end of year
----------------------------------    ------------    ------------    ----------    ----------     -----------
<S>                                     <C>            <C>            <C>            <C>             <C>
Year ended September 30, 2001:
    Allowance for doubtful
       accounts                         $ 1,321        $   783            --         $  (930)<F2>    $ 1,174
                                        =======        =======        =======        =======         =======

    Valuation allowance for
       deferred income tax assets       $ 2,404        $   314<F1>        --         $  (898)<F3>    $ 1,820
                                        =======        =======        =======        =======         =======

Year ended September 30, 2002:
    Allowance for doubtful
       accounts                         $ 1,174        $   677        $  (191)<F4>   $  (613)<F2>    $ 1,047
                                        =======        =======        =======        =======         =======

    Valuation allowance for
       deferred income tax assets       $ 1,820        $   173<F1>        --         $   --          $ 1,993
                                        =======        =======        =======        =======         =======

Year ended September 30, 2003:
    Allowance for doubtful
       accounts                         $ 1,047        $   623            --         $  (476)<F2>    $ 1,194
                                        =======        =======        =======        =======         =======

    Valuation allowance for
       deferred income tax assets       $ 1,993        $   630<F1>        --         $   --          $ 2,623
                                        =======        =======        =======        =======         =======

<FN>

___________
<F1>  Represents valuation allowance established related to certain net
      operating loss carryforwards and other deferred tax assets for state
      income tax purposes.
<F2>  Write-off of uncollectible accounts, net of recoveries and collection
      fees.
<F3>  Represents reduction of valuation allowance relating to certain net
      operating loss carryforwards.
<F4>  Represents the Allnewsco allowance balance at September 16, 2002 which was
      not acquired by the Company.
</FN>
</TABLE>
                                      F-23
<PAGE>


                                   SIGNATURES

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

                                         ALLBRITTON COMMUNICATIONS COMPANY

                                         By:     /s/ ROBERT L. ALLBRITTON
                                            ------------------------------------
                                                    Robert L. Allbritton
                                            Chairman and Chief Executive Officer

                                                   Date: December 12, 2003

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

    /s/ JOE L. ALLBRITTON      Chairman of the Executive       December 12, 2003
----------------------------     Committee and Director
      Joe L. Allbritton

  /s/ BARBARA B. ALLBRITTON    Executive Vice President and    December 12, 2003
----------------------------     Director
    Barbara B. Allbritton

  /s/ ROBERT L. ALLBRITTON     Chairman, Chief Executive       December 12, 2003
----------------------------     Officer and Director
    Robert L. Allbritton         (principal executive officer)

   /s/ LAWRENCE I. HEBERT      Vice Chairman and Director      December 12, 2003
----------------------------
     Lawrence I. Hebert

 /s/ FREDERICK J. RYAN, JR.    Vice Chairman, President,       December 12, 2003
----------------------------     Chief Operating Officer
   Frederick J. Ryan, Jr.        and Director

    /s/ STEPHEN P. GIBSON      Senior Vice President and       December 12, 2003
----------------------------     Chief Financial Officer
      Stephen P. Gibson          (principal financial officer)

   /s/ ELIZABETH A. HALEY      Vice President and              December 12, 2003
----------------------------     Controller (principal
     Elizabeth A. Haley          accounting officer)


<PAGE>


                                  EXHIBIT INDEX

Exhibit                                                                     Page
  No.                        Description of Exhibit                          No.
-------   ---------------------------------------------------------------   ----

  1.1     Purchase Agreement dated December 6, 2002 by and among ACC,          *
            Deutsche Bank Securities Inc. and Fleet Securities, Inc.
            (Incorporated by reference to Exhibit 1 of the Company's Form
            10-K, No. 333-02302, dated December 17, 2002)

  1.2     Purchase Agreement dated January 28, 2003 by and among ACC,          *
            Deutsche Bank Securities Inc. and Fleet Securities, Inc.
            (Incorporated by reference to Exhibit 1.2 of the Company's
            Quarterly Report on Form 10-Q, No. 333-02302, dated February
            3, 2003)

  2.1     Asset Purchase Agreement between ALLNEWSCO, Inc. and Allbritton      *
            Communications Company, dated as of March 5, 2002.
            (Incorporated by reference to Exhibit 2.1 of the Company's
            Report on Form 8-K, No. 333-02302, dated March 5, 2002)

  3.1     Certificate of Incorporation of ACC. (Incorporated by reference      *
            to Exhibit 3.1 of Company's Registration Statement on Form
            S-4, No. 333-02302, dated March 12, 1996)

  3.2     Bylaws of ACC. (Incorporated by reference to Exhibit 3.2 of          *
            Registrant's Registration Statement on Form S-4, No.
            333-02302, dated March 12, 1996)

  4.1     Indenture dated as of December 20, 2002 between ACC and State        *
            Street Bank and Trust Company, as Trustee, relating to the
            7 3/4% Senior Subordinated Notes due 2012. (Incorporated by
            reference to Exhibit 4.1 of the Company's Report on Form 8-K,
            No. 333-02302, dated December 23, 2002)

  4.2     Supplemental Indenture dated as of February 6, 2003 between ACC      *
            and U.S. Bank National Association (successor-in-interest to
            State Street Bank and Trust Company), as Trustee, to the
            Indenture dated as of December 20, 2002 between ACC and State
            Street Bank and Trust Company, as Trustee, relating to the
            7 3/4% Senior Subordinated Notes due 2012. (Incorporated by
            reference to Exhibit 4.1 of the Company's Report on Form 8-K,
            No. 333-02302, dated February 6, 2003)

  4.3     Form of 7 3/4% Series B Senior Subordinated Notes due 2012.          *
            (Incorporated by reference to Exhibit 4.7 of the Company's
            Quarterly Report on Form 10-Q, No. 333-02302, dated February
            3, 2003)

                                       A-1
<PAGE>

Exhibit                                                                     Page
  No.                        Description of Exhibit                          No.
-------   ---------------------------------------------------------------   ----

  4.4     Amended and Restated Revolving Credit Agreement dated as of          *
            March 27, 2001 by and among Allbritton Communications
            Company, certain financial institutions, and Fleet National
            Bank, as Agent, and Deutsche Banc Alex. Brown Inc., as
            Documentation Agent. (Incorporated by reference to Exhibit
            4.4 of the Company's Quarterly Report on Form 10-Q, No.
            333-02302, dated May 10, 2001)

  4.5     First Amendment dated as of December 19, 2001 to the Amended         *
            and Restated Revolving Credit Agreement. (Incorporated by
            reference to Exhibit 4.5 of the Company's Form 10-K, No.
            333-02302, dated December 27, 2001)

  4.6     Second Amendment dated as of May 15, 2002 to the Amended and         *
            Restated Revolving Credit Agreement. (Incorporated by
            reference to Exhibit 4.6 of the Company's Quarterly Report
            on Form 10-Q, No. 333-02302, dated August 14, 2002)

  4.7     Third Amendment dated as of December 6, 2002 to the Amended and      *
            Restated Revolving Credit Agreement. (Incorporated by
            reference to Exhibit 4.6 of the Company's Form 10-K, No.
            333-02302, dated December 17, 2002)

  4.8     Fourth Amendment dated as of December 10, 2003 to the Amended
            and Restated Revolving Credit Agreement.

 10.1     Registration Rights Agreement by and among ACC, Deutsche Bank        *
            Securities Inc. and Fleet Securities Inc. dated December 20,
            2002. (Incorporated by reference to Exhibit 10.1 of the
            Company's Quarterly Report on Form 10-Q, No. 333-02302, dated
            February 3, 2003)

 10.2     Registration Rights Agreement by and among ACC, Deutsche Bank        *
            Securities Inc. and Fleet Securities Inc. dated February 6,
            2003. (Incorporated by reference to Exhibit 10.2 of the
            Company's Registration Statement on Form S-4, No. 333-02302,
            dated April 11, 2003)

 10.3     Network Affiliation Agreement (Harrisburg Television, Inc.).         *
            (Incorporated by reference to Exhibit 10.3 of Company's
            Pre-effective Amendment No. 1 to Registration Statement on
            Form S-4, dated April 22, 1996)

 10.4     Network Affiliation Agreement (First Charleston Corp.).              *
            (Incorporated by reference to Exhibit 10.4 of Company's
            Pre-effective Amendment No. 1 to Registration Statement on
            Form S-4, dated April 22, 1996)

 10.5     Network Affiliation Agreement (WSET, Incorporated).                  *
            (Incorporated by reference to Exhibit 10.5 of Company's
            Pre-effective Amendment No. 1 to Registration Statement on
            Form S-4, dated April 22, 1996)

                                      A-2
<PAGE>

Exhibit                                                                     Page
  No.                        Description of Exhibit                          No.
-------   ---------------------------------------------------------------   ----

 10.6     Network Affiliation Agreement (WJLA-TV). (Incorporated by            *
            reference to Exhibit 10.6 of Company's Pre-effective
            Amendment No. 1 to Registration Statement on Form S-4, dated
            April 22, 1996)

 10.7     Network Affiliation Agreement (KATV Television, Inc.).               *
            (Incorporated by reference to Exhibit 10.7 of Company's
            Pre-effective Amendment No. 1 to Registration Statement on
            Form S-4, dated April 22, 1996)

 10.8     Network Affiliation Agreement (KTUL Television, Inc.).               *
            (Incorporated by reference to Exhibit 10.8 of Company's
            Pre-effective Amendment No. 1 to Registration Statement on
            Form S-4, dated April 22, 1996)

 10.9     Network Affiliation Agreement (TV Alabama, Inc.). (Incorporated      *
            by reference to Exhibit 10.9 of Company's Pre-effective
            Amendment No. 1 to Registration Statement on Form S-4, dated
            April 22, 1996)

 10.10    Amendment to Network Affiliation Agreement (TV Alabama, Inc.)        *
            dated January 23, 1997. (Incorporated by reference to Exhibit
            10.15 of the Company's Quarterly Report on Form 10-Q, No.
            333-02302, dated February 14, 1997)

 10.11    Tax Sharing Agreement effective as of September 30, 1991 by and      *
            among Perpetual Corporation, ACC and ALLNEWSCO, Inc., amended
            as of October 29, 1993. (Incorporated by reference to Exhibit
            10.11 of Company's Registration Statement on Form S-4, No.
            333-02302, dated March 12, 1996)

 10.12    Second Amendment to Tax Sharing Agreement effective as of            *
            October 1, 1995 by and among Perpetual Corporation, ACC and
            ALLNEWSCO, Inc. (Incorporated by reference to Exhibit 10.9 of
            the Company's Form 10-K, No. 333-02302, dated December 22,
            1998)

 10.13    Master Lease Finance Agreement dated as of August 10, 1994           *
            between BancBoston Leasing, Inc. and ACC, as amended.
            (Incorporated by reference to Exhibit 10.16 of Company's
            Registration Statement on Form S-4, No. 333-02302, dated
            March 12, 1996)

 10.14    Master Equipment Lease Agreement dated as of November 22, 2000       *
            between Fleet Capital Corporation and ACC. (Incorporated by
            reference to Exhibit 10.19 of the Company's Form 10-K, No.
            333-02302, dated December 28, 2000)


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<PAGE>

Exhibit                                                                     Page
  No.                        Description of Exhibit                          No.
-------   ---------------------------------------------------------------   ----

 10.15    Amended and Restated Pledge Agreement dated as of March 27,          *
            2001 by and among ACC, Allbritton Group, Inc., Allfinco,
            Inc., and Fleet National Bank, as Agent. (Incorporated by
            reference to Exhibit 10.20 of the Company's Quarterly Report
            on Form 10-Q, No. 333-02302, dated May 10, 2001)

 10.16    Supplement No. 1 dated as of December 13, 2002 to the Amended        *
            and Restated Pledge Agreement dated as of March 27, 2001 by
            and among ACC, Allbritton Group, Inc., Allfinco, Inc. and
            Fleet National Bank, as Agent. (Incorporated by reference to
            Exhibit 10.15 of the Company's Quarterly Report on Form 10-Q,
            No. 333-02302, dated February 3, 2003)

 10.17    Joinder Agreement dated as of December 13, 2002 by ACC               *
            Licensee, Inc. to the Amended and Restated Pledge Agreement
            dated as of March 27, 2001 by and among ACC, Allbritton
            Group, Inc., Allfinco, Inc. and Fleet National Bank, as
            Agent. (Incorporated by reference to Exhibit 10.16 of the
            Company's Quarterly Report on Form 10-Q, No. 333-02302, dated
            February 3, 2003)

 14.      Code of Ethics for Senior Financial Officers.

 21.      Subsidiaries of Registrant.

 24.      Powers of Attorney.

 31.1     Certification of Chairman and Chief Executive Officer pursuant
            to Rule 15d-14(a) of the Securities and Exchange Act of 1934,
            as amended.

 31.2     Certification of Senior Vice President and Chief Financial
            Officer pursuant to Rule 15d-14(a) of the Securities and
            Exchange Act of 1934, as amended.

 32.1     Certification of Chairman and Chief Executive Officer pursuant
            to Rule 15d-14(b) of the Securities and Exchange Act of 1934,
            as amended, and 18 U.S.C. Section 1350.

 32.2     Certification of Senior Vice President and Chief Financial
            Officer pursuant to Rule 15d-14(b) of the Securities and
            Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

___________
*    Previously filed


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