UNITED STATES 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, 2007
                                       OR
|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

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

      Commission File 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.)

                        1000 Wilson Boulevard, Suite 2700
                               Arlington, VA 22209
                    (Address of principal executive offices)

                                 (703) 647-8700
              (Registrant's telephone number, including area code)

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 registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
                            YES    |_|    NO    |X|

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
                            YES    |X|    NO    |_|

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 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 the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer |_|   Accelerated filer |_|   Non-accelerated filer |X|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
                            YES    |_|    NO    |X|

The aggregate market value of the registrant's Common Stock held by
non-affiliates is zero.

As of December 12, 2007, there were 20,000 shares of Common Stock, par value
$.05 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
 None
______________
(1)   Although the Company has not been subject to such filing requirements for
      the past 90 days, it has filed all reports required to be filed by Section
      15(d) of the Securities Exchange Act of 1934 during the preceding 12
      months. Pursuant to Section 15(d) of the Securities Exchange Act of 1934,
      the Company's duty to file reports is automatically suspended as a result
      of having fewer than 300 holders of record of each class of its debt
      securities outstanding as of October 1, 2007, 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 "The Politico" refers to Capitol News
Company, LLC. The term "ACCLI" refers to ACC Licensee, Inc. (licensee of WJLA).
The term "ATP" refers to Allbritton Television Productions, Inc. and the term
"Perpetual" refers to Perpetual Corporation, which is controlled by Joe L.
Allbritton. "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 and parent company of Harrisburg Television, Inc.
and TV Alabama, Inc.

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----
Part I

  Item 1.     Business...................................................    1
  Item 1A.    Risk Factors...............................................   17
  Item 1B.    Unresolved Staff Comments..................................   22
  Item 2.     Properties.................................................   23
  Item 3.     Legal Proceedings..........................................   25
  Item 4.     Submission of Matters to a Vote of Security Holders........   25

Part II

  Item 5.     Market for Registrant's Common Equity, Related Stockholder
                Matters and Issuer Purchases of Equity Securities........   25
  Item 6.     Selected Consolidated Financial Data.......................   26
  Item 7.     Management's Discussion and Analysis of Financial
                Condition and Results of Operations......................   29
  Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.   47
  Item 8.     Consolidated Financial Statements and Supplementary Data...   47
  Item 9.     Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure.................................   47
  Item 9A.    Controls and Procedures....................................   47
  Item 9B.    Other Information..........................................   47

Part III

  Item 10.    Directors, Executive Officers and Corporate Governance.....   48
  Item 11.    Executive Compensation.....................................   50
  Item 12.    Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters...............   54
  Item 13.    Certain Relationships and Related Transactions, and
                Director Independence....................................   55
  Item 14.    Principal Accounting Fees and Services.....................   57

Part IV

  Item 15.    Exhibits, Financial Statement Schedules ...................   58

<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; FCC LICENSE RENEWAL REQUIREMENTS; DECREASES IN THE DEMAND FOR
ADVERTISING DUE TO WEAKNESS IN THE ECONOMY; AND THE VARIABILITY OF OUR QUARTERLY
RESULTS AND OUR SEASONALITY.

      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
9th, 40th, 41st, 57th, 60th, 67th and 100th 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

                                   1
<PAGE>

local news for the Washington, D.C. metropolitan area. Additionally, in January
2007 we launched The Politico, a specialized newspaper and Internet site
(politico.com) that serves Congress, congressional staffers and those interested
in the actions of our national legislature and the political electoral process.
The operations of NewsChannel 8 and The Politico are integrated with WJLA.

      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 either a directly or indirectly
wholly-owned subsidiary of ACC. The Company was founded in 1974 and is a
subsidiary of AGI, which is controlled by Perpetual Corporation, which in turn
is controlled by Mr. Joe L. Allbritton. ACC and its subsidiaries are Delaware
corporations or limited liability companies. Our corporate headquarters are
located at 1000 Wilson Boulevard, Suite 2700, Arlington, VA 22209, and our
telephone number at that address is (703) 647-8700.

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, including retransmission fees from multi-channel video providers
such as direct broadcast satellite ("DBS") providers. 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.

                                   2
<PAGE>


      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.

      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 three methods of determining a station's ratings and share. In most
larger DMAs, ratings are determined by a combination of meters connected
directly to selected household television sets and weekly viewer-completed paper
diaries of television viewing (so called "set meter" measurement), while in
smaller markets ratings are determined by weekly paper diaries only. A select
number of the largest markets are measured by people meter technology (so called
"local people meter" measurement). The local people meter records individual
viewing behavior in real time, producing viewer demographic data on a daily
basis. Of the market areas in which we conduct business, Birmingham, Alabama and
Tulsa, Oklahoma are set metered markets while Washington, D.C. is a local people
metered market. The remaining markets are weekly diary markets. In September
2007, Nielsen announced its intention to convert all set metered markets to
local people meter measurement by October 2011.

      Historically, three major broadcast networks--ABC, NBC and CBS--dominated
broadcast television. In the past two decades, 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, CW, ION and myNetworkTV 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") in some instances, 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

                                   3
<PAGE>

barter arrangements, 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 CW, myNetworkTV or ION network 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 CW, myNetworkTV or ION network 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.

      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 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, Internet/website, yellow page directories,
direct mail and local cable systems. In addition, our stations compete for
national advertising revenues with broadcast and cable television networks,
program syndicators and Internet websites. Traditional network programming
generally achieves higher audience levels than syndicated programs aired by
independent stations. However, as greater amounts of advertising time are
retained and available for sale by FOX affiliates, smaller network affiliates
and independent stations, 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 as well as to bid on local sports programming in
competition with traditional broadcasters.

      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

                                       4
<PAGE>

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.

      Cable system operators have traditionally enjoyed near monopoly status as
terrestrial distributors of multi-channel programming. "Overbuilders" (competing
local distributors in the same local franchise area) were rare based upon the
high costs associated with the cable system infrastructure. Recently, however,
some telephone companies have begun using their fiber optic facilities to begin
offering multi-channel programming in competition with the local franchised
cable systems. These telco operators seek program carriage arrangements with
local broadcasters and other national program distributors.

      In the 1990s, 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. Local stations, under
specified conditions, are carried on satellites which then retransmit those
signals back to the originating market. As DBS providers, such as DirecTV and
EchoStar, continue to 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. All of our stations are currently carried on DBS systems.

      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. Affiliates of the minor networks have emerged as viable competitors
for television viewership share, particularly as a result of the availability of
first-run, major network-quality and regional sports programming.

      In addition to cable and satellite programming, there has been substantial
growth in video recording technology and playback systems, television game
devices and new wireless/internet connected devices permitting "podcasting",
wireless video distribution systems, satellite master antenna television systems
and some low-power services. In addition, local broadcast stations themselves
may now use excess capacity within their digital television channel to
"multicast" discrete program offerings. This has further expanded the number of
programming alternatives available to household audiences, along with
non-broadcast alternatives, especially with respect to news, available over the
rapidly expanding Internet. Video programming via the Internet is now emerging
as an option for viewers who wish to see full-length episodes of broadcast shows
or brief clips of alternative fare on computers or other video devices. Each of
the major broadcast networks offer "video player" buttons on their websites or
those of broadcast affiliates. In addition, multiple Internet sites such as
YouTube.com offer alternative video programming. It is uncertain at this time
whether and to what extent those new services will be a measurable competitor to
us.

                                       5
<PAGE>

      Terrestrially-distributed television broadcast stations traditionally used
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." All of our full power stations broadcast with
both an analog and digital signal.



                                       6
<PAGE>

Station Information

      The following table sets forth general information for each of our owned
stations as of May 2007, unless otherwise indicated:
<TABLE>
<CAPTION>

                                                                           Market    Total
                                                                            Rank   Commercial
                                                   Analog      Digital       or    Competitors   Station    Rank in
   Designated                         Network      Channel     Channel      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          9         6          22%          2      01/29/76
Birmingham
  (Anniston and
  Tuscaloosa),
  AL<F5>             WBMA/WCFT/WJSU      ABC           --         --         40         6          25%          2         --
   Birmingham             WBMA           ABC        58/UHF        --         --         --         --          --      08/01/97
   Anniston               WJSU           ABC        40/UHF         9         --         --         --          --      03/22/00<F6>
   Tuscaloosa             WCFT           ABC        33/UHF         5         --         --         --          --      03/15/96
Harrisburg-
  Lancaster-York-
  Lebanon, PA             WHTM           ABC        27/UHF        10         41         4          23%          2      03/01/96
Little Rock, AR           KATV           ABC         7/VHF        22         57         5          33%          1      04/06/83
Tulsa, OK                 KTUL           ABC         8/VHF        10         60         6          23%          2      04/06/83
Roanoke-Lynchburg, VA     WSET           ABC        13/VHF        34         67         4          24%          2      01/29/76<F7>
Charleston, SC            WCIV           ABC         4/VHF        34        100         4          21%          3      01/29/76<F7>
<FN>

_______________
<F1> Represents market rank based on the U.S. Television Household Estimates
     published by Nielsen in September 2007.
<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, based on the Nielsen Station
     Index for May 2007.
<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, based on the Nielsen Station Index for May
     2007.
<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, based on the
     Nielsen Station Index for May 2007.
<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>

                                       7
<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 or other expansion 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 continually 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 55 radio stations in two states. Certain broadcast television, cable
pay-per-view and home video rights are also controlled by ARSN.

      The broadcast and cable news services of WJLA and NewsChannel 8 are fully
integrated along with The Politico. This combination represents the first and
only newsgathering triopoly in the Nation's Capital.

      We have also sought to make use of the excess capacity of our digital
broadcast channels. All but one of our stations operate local weather channels
using this digital spectrum, and WJLA has also just launched Local POINT TV
utilizing one of its digital subchannels. Local POINT TV generally consists of
short segments focusing on local talent and local interests to the Washington,
D.C. area as well as current news and entertainment information.

      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

                                       8
<PAGE>

on its ability to attract audiences highly valued in terms of demographic makeup
on a cost-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 community events as well as through expanded production of
regularly scheduled local news and information programming. Each of our stations
has developed such additional products, including high quality programming of
local interest and sponsored community events. Such 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 local interest programs and sponsored community events have proven
successful in attracting incremental local 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 station closely
monitors its staffing levels.


Owned Stations

   WJLA/NewsChannel 8/The Politico: Washington, D.C.
      Acquired by ACC in 1976, WJLA is an ABC network affiliate pursuant to an
affiliation agreement that expires on December 31, 2012. The station's FCC
license (held by ACCLI) expires on October 1, 2012. Washington, D.C. is the
ninth largest DMA, with approximately 2,308,000 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 acquired 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. NewsChannel
8 is party to affiliation agreements with cable operators and other terrestrial
multi-channel video program distributors

                                       9
<PAGE>

("MVPD's") for the carriage of its programming to subscribers. Each of the cable
operator affiliation agreements has an expiration date of December 31, 2011.

      In January 2007, we launched The Politico, a specialized newspaper and
Internet site (politico.com) that serves Congress, congressional staffers and
those interested in the actions of our national legislature and political
electoral process. The Politico is advertising supported, with free, targeted
distribution of over 25,000 print copies per issue. Publication is generally
three times per week when Congress is in session and once per week when Congress
is in recess. Print and other original content is continuously available without
charge on politico.com.

      The operations of NewsChannel 8 and The Politico are integrated with those
of WJLA in its studio and office facility, creating the first newsgathering
triopoly in the Nation's Capital. The combination of these three operations
allows for certain operational efficiencies, primarily in the areas of
newsgathering, administration, finance, operations, promotions and human
resources.

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

      We acquired WCFT in March 1996 and WJSU in March 2000 after previously
programming the station pursuant to a time brokerage agreement. We also own a
low power television station licensed to Birmingham, Alabama (WBMA).

      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 December
31, 2012. The FCC licenses for the three stations expire on April 1, 2013. In
October 1998, Nielsen collapsed the Tuscaloosa DMA and the Anniston DMA into the
Birmingham DMA creating what is now the 40th largest DMA with approximately
730,000 television households. The Birmingham DMA is served by six commercial
television stations.

   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 December 31, 2012. The station's FCC
license expired August 1, 2007. An application for license renewal has been
filed and is pending. The Harrisburg-Lancaster-York-Lebanon market, which
consists of ten contiguous counties located in central Pennsylvania, is the 41st
largest DMA, reaching approximately 724,000 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.

                                       10
<PAGE>

   KATV:    Little Rock, Arkansas

      Acquired by us in 1983, KATV is an ABC network affiliate pursuant to an
affiliation agreement that expires on December 31, 2012. The station's FCC
license expired on June 1, 2005. An application for license renewal has been
filed and is pending. The Little Rock market is the 57th largest DMA, with
approximately 552,000 television households. The Little Rock market has a
diversified economy, serving as the seat of both state and local government and
as home to numerous commercial businesses. The Little Rock market is served by
five commercial television stations.

      Capitalizing on its exclusive rights to the University of Arkansas
basketball and football schedules through the year 2011, KATV operates ARSN,
which provides University of Arkansas sports programming to a network of 55
radio stations in two 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 December 31, 2012. The station's FCC
license expires on June 1, 2014. Tulsa, Oklahoma is the 60th largest DMA, with
approximately 520,000 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 December 31, 2012. WSET's FCC license
expires on October 1, 2012. The hyphenated central Virginia market comprised of
Lynchburg, Roanoke and Danville is the 67th largest DMA, with approximately
452,000 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 December 31, 2012. WCIV's FCC license
expires on December 1, 2012. Charleston, South Carolina is the 100th largest
DMA, with approximately 294,000 television households. The Charleston DMA is
served by four commercial television stations.


Network Affiliation Agreements and Relationship

      Each of our stations is an ABC affiliate with affiliation agreements that
expire on December 31, 2012. ABC has routinely renewed the affiliation
agreements with our stations; however, we cannot assure you that these
affiliation agreements will be renewed in the future or under the

                                       11
<PAGE>

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.

      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 broadcasts 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.


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 the 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. Minor network 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 major network-quality programming.

      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 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 recording and playback systems, television game devices and new
wireless/internet connected devices permitting "podcasting"), wireless video
distribution systems, satellite master antenna

                                       12
<PAGE>

television systems and some low-power services. In addition, local broadcast
stations themselves may now use excess capacity within their digital television
channel to "multicast" discrete program offerings. Programming alternatives,
especially news, available on the Internet also provide non-broadcast
alternatives available to the potential broadcast television audience. Video
programming via the Internet is now also emerging as an option for viewers who
wish to see full-length episodes of broadcast shows or brief clips of
alternative fare on computers or other video devices. Each of the major
broadcast networks offer "video player" buttons on their websites or those of
broadcast affiliates. In addition, multiple Internet sites such as YouTube.com
offer alternative video programming.

      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 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. In addition, our stations compete for national
advertising revenues with broadcast and cable television networks, program
syndicators and Internet websites. Competition for

                                       13
<PAGE>

advertising dollars in the broadcasting industry occurs primarily in individual
market areas. Generally, a broadcast television station in one 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. License renewal
applications are currently pending for KATV and WHTM. These stations continue to
operate under their expired licenses until the FCC takes action on the renewal
applications. The licenses for WBMA/WCFT/WJSU and KTUL were renewed during
Fiscal 2007 for full terms and are currently in effect with expiration dates of
April 1, 2013 and June 1, 2014, respectively. The licenses for WSET and WCIV are
currently in effect with expiration dates of October 1, 2012 and December 1,
2012, respectively. WJLA's license was renewed on October 19, 2007 for a full
term and is currently in effect with an expiration date of October 1, 2012.

                                       14
<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. The end date for the
transition has been set as February 17, 2009.

      Our stations have been assigned the following digital channel allocations
by the FCC: WJLA-39, WCFT-5, WJSU-9, WHTM-10, KATV-22, KTUL-10, WSET-34 and
WCIV-34. All of these stations are currently operating on their assigned DTV
channels. Subsequent to the final transition to digital operations, our stations
will operate on the following channels: WJLA-7, WCFT-33, WJSU-9, WHTM-10,
KATV-22, KTUL-10, WSET-13 and WCIV-34.

      KATV is operating pursuant to special temporary authority at slightly
lower antenna height until the conversion to DTV takes place. At that time, it
will raise its antenna to the fully authorized height.

      Implementation of DTV service has imposed substantial additional costs on
television stations providing the new duplicative service because of the need to
purchase additional equipment and because some stations need to operate at
higher utility costs. Further, we are currently unable to predict how the
conversion to solely digital transmission will affect our

                                       15
<PAGE>

business after the elimination of analog service. While the industry-wide
transition from analog to digital delivery has currently yielded only limited
opportunities to generate incremental revenue from the DTV service, we have
sought to make use of the excess capacity of our digital broadcast channels. See
"Our Business - Business and Operating Strategy."

      Ownership Matters: The Communications Act, in conjunction with various
antitrust statutes, contains 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 FCC'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. The
U.S. Court of Appeals, however, reversed and remanded these rules to the FCC for
additional justification. The FCC is in the process of reevaluating the rules
and continues to operate under the prior regulations.

      FCC rules governing national ownership limits generally permit ownership
of attributable interests in stations reaching 39% of the nation's television
households. The rules governing local ownership generally permit 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 limit 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. The rule
prescribing common ownership of television stations and newspapers is not
applicable to WJLA and The Politico since, as a specialty newspaper, it does not
meet the definition of a "daily" newspaper or "general circulation" under FCC
Rules.

      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.

      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

                                       16
<PAGE>

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. Video programming via the
Internet is now emerging as an option for viewers who wish to see full-length
episodes of broadcast shows or brief clips of alternative fare on computers or
other video devices. Each of the major broadcast networks offer "video player"
buttons on their websites or those of broadcast affiliates. In addition,
multiple Internet sites such as YouTube.com offer alternative video programming.
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, the Communications 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 litigation, and we cannot predict the outcome of any such litigation
or the impact on our business.


Employees

      As of September 30, 2007, we employed in full and part-time positions
1,046 persons, including 338 at WJLA/NewsChannel 8/The Politico, 137 at KATV,
132 at KTUL, 118 at WHTM, 112 at WBMA/WCFT/WJSU, 110 at WSET, 85 at WCIV and 14
in our corporate office. Of the employees at WJLA/NewsChannel 8, 128 are
represented by one of 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 on
December 31, 2010. The AFTRA collective bargaining agreement expires on
September 30, 2009. The DGA collective bargaining agreement expires on January
27, 2009. No employees of our other owned stations are represented by unions. We
believe our relations with our employees are satisfactory.


                              ITEM 1A. RISK FACTORS
                             (dollars in thousands)

      The risks described below, together with the other information included in
this Form 10-K, should be carefully considered. We cannot identify nor can we
control all circumstances that could occur in the future that may adversely
affect our business and results of operations. If any of the following risks
actually occurs, our business, financial condition, operating results and
prospects could be materially affected.

                                       17
<PAGE>

Our substantial debt could adversely affect our financial condition and
operational flexibility.
      We have a substantial amount of debt. As of September 30, 2007, our total
debt, net of applicable discounts, consisted of $453,100 of 7 3/4% senior
subordinated notes due December 15, 2012 and $31,000 outstanding under our
$70,000 senior credit facility which matures August 23, 2011. Subject to the
limitations of our debt instruments, we could also incur additional debt in
certain circumstances.

      The degree to which we are leveraged could adversely affect us. For
      example, it could:

        o make it more difficult for us to satisfy our obligations with respect
          to our existing debt;
        o require us to dedicate a substantial portion of our cash flow from
          operations to payments on our debt, which will reduce amounts
          available for working capital, capital expenditures and other general
          corporate purposes;
        o result in the sale of one or more of our stations to reduce our debt
          service obligations;
        o limit our flexibility in planning for, or reacting to, changes in our
          business and the industry in which we operate;
        o increase our vulnerability to general adverse economic and industry
          conditions;
        o place us at a competitive disadvantage compared to our competitors
          with less debt; and
        o limit our ability to borrow additional funds.

      In addition, debt incurred under our senior credit facility bears interest
at variable rates. An increase in the interest rates on our debt will reduce the
funds available to repay our debt and for operations and future business
opportunities and will make us more vulnerable to the consequences of our
leveraged capital structure. The agreements governing our debt contain certain
restrictive financial and operating covenants. These covenants, among other
things, restrict our ability to incur additional debt and issue preferred stock,
pay dividends and make distributions, issue stock of subsidiaries, make certain
investments, repurchase stock or debt, create liens, enter into transactions
with affiliates, transfer and sell assets, and merge or consolidate. Any failure
to comply with these covenants could result in an event of default under the
applicable instrument, which could permit acceleration of the debt under such
instrument and in some cases acceleration of debt under other instruments that
contain cross-default or cross-acceleration provisions. If our indebtedness were
to be accelerated, we cannot assure you that we would be able to repay it.

To service our debt, we will require a significant amount of cash, which depends
on many factors beyond our control.
      Our ability to make payments on and to refinance our debt will depend on
our ability to generate cash in the future. This, to an extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. We cannot assure you that our business will
generate sufficient cash flow or that future borrowings will be available to us
in an amount sufficient to enable us to pay our debt or to fund our other
liquidity needs. If our future cash flow from operations and existing sources of
funds are insufficient to pay our obligations as they mature or to fund our
liquidity needs, we may be forced to reduce or delay our business activities and
capital expenditures, sell assets, obtain additional equity capital or
restructure or refinance all or a portion of our debt on or before maturity. We
cannot assure you that we will be able to refinance any of our debt on a timely
basis or on satisfactory terms, if

                                       18
<PAGE>

at all. In addition, the terms of our existing debt and other future debt may
limit our ability to pursue any of these alternatives. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

We operate in a very competitive business environment that could adversely
affect our operations.
      The television industry is highly competitive. Stations compete for
audience on the basis of program popularity, which has a direct effect on
advertising rates. Broadcast television stations 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, Internet/website, yellow page
directories, direct mail and local cable systems. In addition, our stations
compete for national advertising revenues with broadcast and cable television
networks, program syndicators and Internet websites. Some of our competitors are
subsidiaries of large national or regional companies that have greater
resources, including financial resources, than we do. Our television stations
are located in highly competitive markets. Accordingly, our results of
operations will be dependent upon the ability of each station to compete
successfully in its market, and there can be no assurance that any one of our
stations will be able to maintain or increase its current audience share or
revenue share. To the extent that certain of our competitors have or may, in the
future, obtain greater resources, our ability to compete successfully in our
broadcasting markets may be impeded.

We depend on advertising revenue, which can vary substantially from period to
period based on many factors beyond our control.
      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 markets
in which our stations operate. For Fiscal 2005, 2006 and 2007, 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/News Channel 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 28%, 26% and
23% of our total broadcast revenues for the fiscal years ended September 30,
2005, 2006 and 2007, respectively, consisted of automotive-related advertising.
A significant decrease in such advertising could adversely affect our operating
results.

Federal regulation of the broadcasting industry limits our operating
flexibility.
      The ownership, operation and sale of television stations are subject to
the jurisdiction of the FCC under 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,

                                       19
<PAGE>

including fines or license revocations, upon a licensee of a television station
for violations of the FCC's rules and regulations.

      License Renewal. Our business is dependent upon our continuing to hold
broadcasting licenses from the FCC that are issued for terms of eight years.
While in the vast majority of cases such licenses are renewed by the FCC even
when petitions to deny or competing applications are filed against broadcast
license renewal applications, we cannot assure you that our licenses will be
renewed upon their expiration dates. License renewal applications are currently
pending for KATV and WHTM, which are currently operating under expired licenses.
These stations will continue to operate under their expired licenses until the
FCC takes action on the renewal applications. The licenses for all other of our
stations are currently in effect with expiration dates ranging from October 1,
2012 to June 1, 2014. If we fail to renew any of our licenses, or renew them
with substantial conditions or modifications, it could prevent us from operating
the affected stations and generating revenues. See "Our Business--Legislation
and Regulation--License Renewal."

      Ownership Matters. The Communications Act, in conjunction with various
antitrust statutes, contains 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. We must comply with current FCC regulations and policies in the
ownership of our stations, and any future actions by Congress or the FCC with
respect to the ownership rules may adversely impact our business.

      Programming and Operation. Broadcast station licensees must present
programming that is responsive to local community problems, needs and interests
and to maintain certain records demonstrating such responsiveness. 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. In recent years, the FCC has also vigorously enforced a number of
rules, typically in connection with license renewals. Violations of these rules
could lead to fines and penalties which may adversely affect our business and
results of operations.

      Congress and the FCC may in the future adopt new laws, regulations or
policies regarding a wide variety of matters that could, directly or indirectly,
adversely affect the operation and ownership of our television stations. It is
impossible to predict the outcome of federal legislation or the potential effect
thereof on our business. See "Our Business--Legislation and Regulation."

                                       20
<PAGE>

We are dependent on our affiliation with the ABC television network.
      All of our television stations are affiliated with the ABC network. Our
television viewership levels, and ultimately advertising revenues, are in large
part dependent upon programming provided by ABC, and there can be no assurance
that such programming will achieve and maintain satisfactory viewership levels
in the future. Each of our television stations has entered into a long-term
affiliation agreement with the ABC network which expires on December 31, 2012.
Although ABC has continually renewed its affiliation with our television
stations for as long as we have owned them and we expect to continue to be able
to renew such affiliation agreements, we cannot assure you that such renewals
will be obtained or that they will reflect the same general terms. The
non-renewal or termination of one or more of our network affiliation agreements
or alteration of terms could have an adverse effect on our results of
operations.

NewsChannel 8 is dependent on cable operators for carriage of its programming.
      NewsChannel 8 is party to affiliation agreements with cable operators and
other terrestrial multi-channel video program distributors ("MVPD's") for the
carriage of its programming to subscribers. Each of the cable operator
affiliation agreements has an expiration date of December 31, 2011. The news
service operated by NewsChannel 8 is entirely dependent upon carriage by the
MVPD's. Although these agreements have been renewed by the MVPD's in the past,
there can be no assurance that these agreements will be renewed upon expiration
or whether the same general terms and conditions can be retained. The
non-renewal or termination of one or more of these affiliation agreements or
alteration of terms could adversely affect our results of operations.

Possible strategic initiatives may impact our business.
      We are evaluating, and will continue to evaluate, the nature and scope of
our operations and various short-term and long-term strategic considerations.
There are uncertainties and risks relating to strategic initiatives. For
example, acquisition opportunities may become more limited as a consequence of
the consolidation of ownership occurring in the television broadcast industry.
Also, prospective competitors may have greater financial resources than we do.
Future acquisitions may not be available on attractive terms, or at all. Also,
if we do make acquisitions, we may not be able to successfully integrate the
acquired stations or businesses. With respect to divestitures, we may experience
varying success in making such divestitures on favorable terms, if at all, or in
reducing fixed costs or transferring liabilities previously associated with the
divested television stations or businesses. Finally, any such acquisitions or
divestitures will be subject to FCC approval and FCC rules and regulations. Any
of these efforts would require varying levels of management resources, which may
divert our attention from other business operations. If we do not realize the
expected benefits or synergies of such transactions, there may be an adverse
effect on our financial condition and operating results.

Our controlling stockholder may have interests that conflict with holders of our
debt.
      Joe L. Allbritton controls our Company. Accordingly, Mr. Allbritton is
able to control our operations and policies, and the vote on all matters
submitted to a vote of our stockholder, including, but not limited to, electing
directors, adopting amendments to ACC's certificate of incorporation and
approving mergers or sales of substantially all of ACC's assets. Circumstances
may occur in which the interests of Mr. Allbritton, as the controlling equity
holder, could be in conflict with the interests of the holders of our debt. In
addition, Mr. Allbritton could pursue acquisitions, divestitures or other
transactions that, in his judgment, could enhance his equity

                                       21
<PAGE>

investment, even though such transactions might involve risks to the holders of
the notes. See "Ownership of Capital Stock-- ACC Common Stock" and "Certain
Relationships and Related Transactions."

We have paid dividends and made advances to related parties, and we expect to
continue to do so in the future.
      ACC has made advances to certain related parties. Because, at present,
such related parties' primary sources of repayment of the advances is through
our ability to pay dividends or to make other distributions, these advances have
been treated as reductions to stockholder's investment in our consolidated
balance sheets. The stockholder's deficit at September 30, 2006 and 2007 was
$327,770 and $366,527, respectively. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Certain Relationships and Related Transactions." Under our debt
instruments, future advances, loans, dividends and distributions by us are
subject to certain restrictions. We anticipate that, subject to such
restrictions, applicable law and payment obligations with respect to our debt,
ACC will make advances, distributions or dividends to related parties in the
future.

Our business may be negatively affected by work stoppages, slowdowns or strikes
by our employees.
      Currently, there are three bargaining agreements with unions representing
128 of our full and part-time employees at WJLA/NewsChannel 8. Although we have
reached agreements with all of these unions, we cannot assure you about the
results of negotiation of future collective bargaining agreements, whether
future collective bargaining agreements will be negotiated without interruptions
in our business, or the possible effect of future collective bargaining
agreements on our financial condition or results of operations. We also cannot
assure you that strikes will not occur in the future in connection with labor
negotiations or otherwise. Any prolonged strike or work stoppage could have an
adverse effect on our financial condition and results of operations. See "Our
Business - Employees."

Changes in accounting standards can significantly impact reported operating
results.
      Generally accepted accounting principles and accompanying pronouncements
and implementation guidelines for many aspects of our business, including those
related to intangible assets and income taxes, are complex and involve
significant judgments. Changes in these rules or their interpretation could
significantly change our reported operating results. See "Management's
Discussions and Analysis of Financial Condition and Results of Operations -
Critical Accounting Policies and Estimates."



                       ITEM 1B. UNRESOLVED STAFF COMMENTS

      Not Applicable.


                                       22
<PAGE>



                               ITEM 2. PROPERTIES

      We maintain our corporate headquarters in Arlington, Virginia, occupying
leased office space of approximately 14,200 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:

                                       23
<PAGE>
<TABLE>
<CAPTION>

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

                        Prince George's, MD
                        Tower - Weather                   Leased           1 acre                    3/31/11

                        Washington, D.C.
                        Tower/Transmitter                 Joint Venture    108,000 sq. ft.             N/A
                        Office                            Leased           1,500 sq. ft.             12/28/11

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
                        Office                            Leased           3,000 sq. ft.             10/31/08

KATV                    Little Rock, AR
                        Office/Studio                     Owned            20,500 sq. ft.              N/A
                        Office/Studio                     Leased           1,500 sq. ft.             1/31/09
                        Office/Studio                     Leased           1,570 sq. ft.             Monthly
                        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

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.             2/28/09

                        Roanoke, VA
                        Office/Studio                     Leased           2,688 sq. ft.             11/30/11

WCIV                    Mt. Pleasant, SC
                        Office/Studio                     Owned            21,700 sq. ft.              N/A
                        Tower/Transmitter                 Leased           2,000 sq. ft.             6/25/11

WBMA/WCFT/WJSU          Birmingham, AL
                        Office/Studio/Dish Farm           Leased           26,357 sq. ft./0.5 acre   9/30/21
                        Tower/Relay-Pelham                Leased           .08 acres                 10/31/11
                        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               4/30/11

                        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>

                                       24
<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, could reasonably be expected 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, RELATED STOCKHOLDER
               MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

      Not Applicable.


                                       25
<PAGE>

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

      The selected consolidated financial data for the fiscal years ended
September 30, 2003, 2004, 2005, 2006 and 2007 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.

<TABLE>
<CAPTION>

                                                                              Fiscal Year Ended September 30,
                                                            ------------------------------------------------------------------
                                                               2003          2004          2005          2006          2007
                                                            ----------    ----------    ----------    ----------    ----------
<S>                                                         <C>           <C>           <C>           <C>           <C>
Statement of Operations Data:
Operating revenues, net..................................   $  202,590    $  203,270    $  200,427    $  223,399    $  226,146
Television operating expenses, excluding depreciation
   and amortization......................................      125,224       127,586       124,082       124,871       138,588
Depreciation and amortization<F1>........................       10,785         9,908         9,170         8,666         8,712
Corporate expenses.......................................        6,379         4,908         6,012         5,000         6,106
Operating income.........................................       60,202        60,868        61,163        84,862        72,740
Interest expense.........................................       40,647        36,759        36,729        36,234        37,213
Interest income..........................................          343            24            71           147           208
Interest income-related party............................           88           162           262           226           430
Loss on early repayment of debt<F2>......................       23,194           --            --            --            --
(Loss) income before cumulative effect of change in
   accounting principle..................................       (2,951)       13,581        13,642        31,509        22,614
Cumulative effect of change in accounting
   principle<F1><F3>.....................................        2,973           --            --         48,728           --
Net (loss) income........................................       (5,924)       13,581        13,642       (17,219)       22,614


                                                                                    As of September 30,
                                                            ------------------------------------------------------------------
                                                               2003          2004          2005          2006          2007
                                                            ----------    ----------    ----------    ----------    ----------
Balance Sheet Data:
Total assets.............................................   $  262,010    $  253,978    $  241,744    $  176,021    $  169,049
Total debt<F4>...........................................      467,688       465,675       460,755       452,846       484,100
Stockholder's investment.................................     (275,800)     (281,176)     (287,414)     (327,770)     (366,527)


                                                                              Fiscal Year Ended September 30,
                                                            ------------------------------------------------------------------
                                                               2003          2004          2005          2006          2007
                                                            ----------    ----------    ----------    ----------    ----------
Cash Flow Data<F5>:
Cash flow from operating activities......................   $   23,938    $   30,959    $   27,266    $   41,374    $   31,092
Cash flow from investing activities......................       (7,634)       (5,712)       (4,593)       (6,670)       (5,889)
Cash flow from financing activities......................      (19,325)      (21,268)      (25,725)      (31,309)      (30,401)

Financial Ratios and Other Data:
Operating income margin..................................         29.7%         29.9%         30.5%         38.0%         32.2%
Capital expenditures.....................................        7,700         5,816         4,660         8,836         6,052

                                                                                                       (Footnotes on following page)

                                       26
<PAGE>
<FN>

Footnotes
(dollars in thousands)

<F1> Statement of Financial Accounting Standards ("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 SFAS No. 142, 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. As required, 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 performed the first of the
     required impairment tests on our indefinite lived intangible assets. 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 relating to the carrying value of our broadcast licenses. This
     charge was recorded as a cumulative effect of a change in accounting
     principle.

<F2> 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.

     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 was reflected
     as a nonoperating expense during Fiscal 2003.

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

                                       27
<PAGE>

<F3> In September 2004, the Securities Exchange Commission ("SEC") announced, in
     conjunction with the issuance of Emerging Issues Task Force ("EITF") Topic
     No. D-108, "Use of the Residual Method to Value Acquired Assets Other than
     Goodwill," that the "residual method" should no longer be used to value
     intangible assets other than goodwill. Rather, a "direct value method" is
     required to be used to determine the fair value of all intangible assets
     for purposes of impairment testing, including those assets previously
     valued using the residual method. Any impairment resulting from application
     of a direct value method should be reported as a cumulative effect of a
     change in accounting principle. Application of EITF Topic No. D-108 became
     effective at the beginning of our year ended September 30, 2006. As a
     result of the implementation of EITF Topic No. D-108, we recorded a
     non-cash, pre-tax impairment charge related to the carrying value of
     certain of our FCC licenses of $80,000. This charge was recorded, net of
     the related tax benefit of $31,272, as a cumulative effect of a change in
     accounting principle during the quarter ended December 31, 2005. See
     "Consolidated Financial Statements--Notes to Consolidated Financial
     Statements--Note 4."

<F4> Total debt is defined as long-term debt (including the current portion
     thereof, and net of discount) and capital lease obligations.

<F5> Cash flows from operating, investing and financing activities were
     determined in accordance with GAAP. See "Consolidated Financial
     Statements--Consolidated Statements of Cash Flows."
</FN>
</TABLE>

                                       28
<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. Additionally, in January 2007 we launched The Politico, a
specialized newspaper and Internet site (politico.com) that serves Congress,
congressional staffers and those interested in the actions of our national
legislature and political electoral process. The operations of NewsChannel 8 and
The Politico are integrated with WJLA.

      During the quarter ended March 31, 2007, Perpetual acquired from the
Robert Lewis Allbritton Revocable Trust its 20% ownership interests in TV
Alabama, Inc. and Harrisburg Television, Inc., our subsidiaries which operate
our television stations in the Birmingham and Harrisburg markets, respectively.
The 20% ownership interests were then contributed to us. As a result, we now own
100% of these and all other of our subsidiaries. As the entities involved in
these transactions are considered to be under common control, we were required
to account for this contribution at its book value. Since the book value of the
20% ownership interests acquired by Perpetual and then contributed to us was
zero, no amount has been recorded in the accompanying consolidated financial
statements related to the contribution.

   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

                                       29
<PAGE>

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 2006 Winter Olympic Games were broadcast by NBC in
February 2006 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 occur during the first and third fiscal 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 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 2005, 2006 and 2007, 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 28%, 26% and
23% of our total broadcast revenues for the years ended September 30, 2005, 2006
and 2007, respectively, consisted of automotive-related advertising. A
significant decrease in such advertising in the future could materially and
adversely affect our operating results.

                                       30
<PAGE>


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 operating revenues, before
fees.

<TABLE>
<CAPTION>

                                                               Fiscal Year Ended September 30,
                                            -----------------------------------------------------------------------
                                                   2005                     2006                      2007
                                            --------------------     --------------------      --------------------
                                            Dollars      Percent     Dollars      Percent      Dollars      Percent
                                            -------      -------     -------      -------      -------      -------

<S>                                       <C>            <C>       <C>            <C>        <C>            <C>
Local and national<F1>................    $ 179,043       87.5%    $ 197,334       86.5%     $ 194,662       84.3%
Political<F2>.........................        4,536        2.2%        8,180        3.6%         9,826        4.3%
Subscriber fees<F3>...................        8,375        4.1%        9,260        4.1%        10,410        4.5%
Network compensation<F4>..............        2,867        1.4%        2,796        1.2%         3,771        1.6%
Trade and barter<F5>..................        5,884        2.9%        5,628        2.5%         6,104        2.6%
Other revenues........................        3,888        1.9%        4,907        2.1%         6,120        2.7%
                                          ---------      ------    ---------      ------     ---------      ------
Operating revenues....................      204,593      100.0%      228,105      100.0%       230,893      100.0%
                                                         ======                   ======                    ======
Fees<F6>..............................       (4,166)                  (4,706)                   (4,747)
                                          ---------                ---------                 ---------
Operating revenues, net...............    $ 200,427                $ 223,399                 $ 226,146
                                          =========                =========                 =========
<FN>

______________
<F1>   Represents sale of advertising to local and national advertisers, either
       directly or through agencies representing such advertisers, net of agency
       commission.
<F2>   Represents sale of advertising to political advertisers.
<F3>   Represents subscriber fees earned from cable operators and DBS providers.
<F4>   Represents payment by network for broadcasting or promoting network
       programming.
<F5>   Represents value of commercial time exchanged for goods and services
       (trade) or syndicated programs (barter).
<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 84% to 88% of our total operating revenues in
each of the last three fiscal years. Local and national advertising revenues
decreased 0.2% in Fiscal 2005, increased 10.2% in Fiscal 2006, and decreased
1.4% in Fiscal 2007.


                                       31
<PAGE>

Results of Operations--Fiscal 2007 Compared to Fiscal 2006

      Set forth below are selected consolidated financial data for Fiscal 2006
and 2007, respectively, and the percentage change between the years.

<TABLE>
<CAPTION>

                                                        Fiscal Year Ended         Percentage
                                                          September 30,             Change
                                                    ------------------------      ----------
                                                       2006           2007
                                                    ---------      ---------
<S>                                                 <C>            <C>              <C>
Operating revenues, net.........................    $ 223,399      $ 226,146          1.2%
Total operating expenses........................      138,537        153,406         10.7%
                                                    ---------      ---------
Operating income................................       84,862         72,740        (14.3)%
Nonoperating expenses, net......................       35,011         36,309          3.7%
Income tax provision............................       18,342         13,817        (24.7)%
                                                    ---------      ---------
Income before cumulative effect of change
   in accounting principle......................       31,509         22,614        (28.2)%
Cumulative effect of change in accounting
   principle, net of income tax benefit.........       48,728            --           --
                                                    ---------      ---------
Net (loss) income...............................    $ (17,219)     $  22,614          --
                                                    =========      =========
</TABLE>


   Net Operating Revenues

      Net operating revenues for Fiscal 2007 totaled $226,146, an increase of
$2,747, or 1.2%, as compared to Fiscal 2006.

      Local and national advertising revenues decreased $2,672, or 1.4%, from
Fiscal 2006. The decrease in local and national advertising revenues primarily
reflected decreased demand for local and national advertising in our Washington,
D.C. market partially offset by increased local and national advertising
revenues from The Politico which launched on January 23, 2007. The decreased
local and national advertising revenues during Fiscal 2007 were also impacted by
displacement of local and national advertisers during the peak political
advertising period leading up to the November 7, 2006 elections as well as
incremental revenue generated in the prior year associated with the February
2006 broadcast of the Super Bowl by the ABC network (broadcast by the CBS
network in 2007).

      Political advertising revenues increased by $1,646, or 20.1%, in Fiscal
2007 from Fiscal 2006. Political advertising revenues increased due to various
high-profile local political elections in November 2006, which generated
substantial revenue in the first quarter of Fiscal 2007. This increase was
partially offset by advertising generated during the first quarter of Fiscal
2006 related to the November 2005 Virginia Governor's election, advertising
during the second and

                                       32
<PAGE>

third quarters of Fiscal 2006 related to local primary elections, and
advertising during the fourth quarter of Fiscal 2006 leading up to the November
2006 elections.

      Subscriber fees increased $1,150, or 12.4%, during Fiscal 2007 as compared
to the prior fiscal year. This increase was due to an increase in the overall
number of subscribers as well as various contractual increases in the monthly
per subscriber rates.

      Network compensation revenue increased $975, or 34.9%, during the year
ended September 30, 2007 versus Fiscal 2006. This increase was due primarily to
the July 31, 2006 expiration of certain provisions of ABC's National Football
League ("NFL") programming rights arrangement with its affiliates, which
principally involved the exchange of additional primetime inventory for reduced
network compensation, in conjunction with ABC's non-renewal of NFL programming
rights beyond the 2005 NFL season. This increase was partially offset by a
decreased rate of compensation in Fiscal 2007 as compared to Fiscal 2006
pursuant to our long-term affiliation agreement with ABC.

      No individual advertiser accounted for more than 5% of our operating
revenues during Fiscal 2007 or 2006.

   Total Operating Expenses

      Total operating expenses in Fiscal 2007 were $153,406, an increase of
$14,869, or 10.7%, compared to total operating expenses of $138,537 in Fiscal
2006. This net increase consisted of an increase in television operating
expenses, excluding depreciation and amortization, of $13,717, an increase in
depreciation and amortization of $46 and an increase in corporate expenses of
$1,106.

      Television operating expenses, excluding depreciation and amortization,
totaled $138,588 in Fiscal 2007, an increase of $13,717, or 11.0%, when compared
to television operating expenses of $124,871 in Fiscal 2006. This increase was
due primarily to an overall increase in employee compensation and benefits,
increased programming expense and new operating expenses for The Politico.
Employee compensation and benefits increased 11.0% during Fiscal 2007 as
compared to the prior fiscal year principally due to the hiring of additional
personnel leading up to and associated with the January 2007 launch of The
Politico. The increase in programming expense of 8.0% resulted primarily from
renewals of several existing programs as well as the replacement of certain
programming with new programming at higher rates. In addition to new personnel
as discussed above, operating expenses associated with producing and
distributing The Politico since its January 2007 launch also contributed to the
increase in overall operating expenses during Fiscal 2007.

      Corporate expenses in Fiscal 2007 increased $1,106, or 22.1%, from Fiscal
2006 due to a variety of increased expenses primarily including executive
compensation and related costs.

                                       33
<PAGE>

   Operating Income

      Operating income of $72,740 in Fiscal 2007 decreased $12,122, or 14.3%,
compared to operating income of $84,862 in Fiscal 2006. The operating income
margin in Fiscal 2007 decreased to 32.2% from 38.0% for the prior fiscal year.
The decreases in operating income and margin during Fiscal 2007 were primarily
the result of total operating expenses increasing by a greater amount than net
operating revenues, as discussed above.

   Nonoperating Expenses, Net

      Interest Expense. Interest expense increased by $979, or 2.7%, from
$36,234 in Fiscal 2006 to $37,213 in Fiscal 2007. The increase in interest
expense was primarily due to the increase in the average balance of debt
outstanding during Fiscal 2007 as compared to the prior fiscal year. The average
balance of debt outstanding, including capital lease obligations, for Fiscal
2006 and 2007 was $460,837 and $475,871, respectively, and the weighted average
interest rate on debt during each year was 7.7%.

       Other, Net. Other, net nonoperating income was $266 for Fiscal 2007 as
compared to $850 for the prior fiscal year. The difference of $584 primarily
resulted from a gain on the sale of our corporate aircraft during Fiscal 2006,
partially offset by a gain on the exchange of equipment with Sprint Nextel
Corporation ("Nextel") during Fiscal 2007 as discussed below.

      The FCC has granted to Nextel the right to reclaim a portion of the
spectrum in the 2 GHz band from broadcasters across the country. In order to
claim this spectrum, Nextel must replace all of the broadcasters' electronic
newsgathering equipment currently using this spectrum with digital equipment
capable of operating in the reformatted portion of the 2 GHz band retained by
the broadcasters. This exchange of equipment will be completed on a market by
market basis. As the equipment is exchanged and placed into service in each of
our markets, a gain will be recorded to the extent that the fair market value of
the equipment received exceeds the book value of the analog equipment exchanged.
Two of our markets have exchanged equipment with Nextel. During the year ended
September 30, 2007, the excess of fair market value as compared to book value of
equipment exchanged and placed into service of $1,256 was recorded as a non-cash
gain in other, net nonoperating income.

   Income Taxes

      The provision for income taxes in Fiscal 2007 totaled $13,817, a decrease
of $4,525, or 24.7%, when compared to the provision for income taxes of $18,342
in Fiscal 2006. The decrease in the provision for income taxes was primarily due
to the $13,420, or 26.9%, decrease in pre-tax income.

    Cumulative Effect of Change in Accounting Priniciple

      In September 2004, the SEC announced, in conjunction with the issuance of
EITF Topic No. D-108, "Use of the Residual Method to Value Acquired Assets Other
than Goodwill," that the "residual method" should no longer be used to value
intangible assets other than goodwill.

                                       34
<PAGE>

Rather, a "direct value method" is required to be used to determine the fair
value of all intangible assets for purposes of impairment testing, including
those assets previously valued using the residual method. Any impairment
resulting from application of a direct value method should be reported as a
cumulative effect of a change in accounting principle. Application of EITF Topic
No. D-108 was effective as of the beginning of our fiscal year ended September
30, 2006.

      We used the residual method to value our FCC licenses in conjunction with
acquisitions made in 1996 and 2000. Upon our implementation of EITF Topic No.
D-108 during the first quarter of the fiscal year ended September 30, 2006, we
performed an impairment test using a direct value method on our FCC licenses
previously valued using the residual method. The direct value method, which
differs markedly from the residual value method, requires us to value our FCC
licenses using an average market participant concept. This concept assumes that
cash flows associated with FCC licenses are limited to those cash flows that
could be expected by an average market participant. In contrast, the residual
value method formerly used by us included other elements of cash flows which
contributed to station value.

      As a result of the implementation of EITF Topic No. D-108, we recorded a
non-cash, pre-tax impairment charge related to the carrying value of certain of
our FCC licenses of $80,000. This charge was recorded, net of the related tax
benefit of $31,272, as a cumulative effect of a change in accounting principle
during the quarter ended December 31, 2005.

   Net Income

      For Fiscal 2007, the Company recorded net income of $22,614 as compared to
a net loss of $17,219 for Fiscal 2006. The increase in net income during Fiscal
2007 was primarily due to the cumulative effect of change in accounting
principle during the prior year, partially offset by decreased operating income,
as discussed above.

                                       35
<PAGE>

Results of Operations--Fiscal 2006 Compared to Fiscal 2005

      Set forth below are selected consolidated financial data for Fiscal 2005
and 2006, respectively, and the percentage change between the years.

<TABLE>
<CAPTION>

                                                        Fiscal Year Ended         Percentage
                                                          September 30,             Change
                                                    ------------------------      ----------
                                                       2005           2006
                                                    ---------      ---------

<S>                                                 <C>         <C>                 <C>
Operating revenues, net.........................    $ 200,427   $    223,399         11.5%
Total operating expenses........................      139,264        138,537         (0.5)%
                                                    ---------      ---------
Operating income................................       61,163         84,862         38.7%
Nonoperating expenses, net......................       38,100         35,011         (8.1)%
Income tax provision............................        9,421         18,342         94.7%
                                                    ---------      ---------
Income before cumulative effect of
   change in accounting principle...............       13,642         31,509        131.0%
Cumulative effect of change in accounting
   principle, net of income tax benefit.........          --          48,728          --
                                                    ---------      ---------
Net income (loss)...............................    $  13,642      $ (17,219)         --
                                                    =========      =========
</TABLE>

   Net Operating Revenues

      Net operating revenues for Fiscal 2006 totaled $223,399, an increase of
$22,972, or 11.5%, as compared to Fiscal 2005.

      Local and national advertising revenues increased $18,291, or 10.2%, from
Fiscal 2005. The increase in local and national advertising revenues reflected
increased local and national advertising revenues in a majority of our markets,
with particular growth in demand by local and national advertisers in our
Washington, D.C., Birmingham and Charleston markets. This increase in demand was
partially attributable to established increases in ratings for certain ABC
primetime programming during Fiscal 2006, the strength of our local news
franchises and our continued focus on new local business development.
Additionally, the increase reflected increased advertising revenue related to
the broadcast of the Super Bowl by the ABC network in February 2006 (broadcast
by the FOX network in 2005 and the CBS network in 2004).

      Political advertising revenues increased by $3,644, or 80.3%, in Fiscal
2006 from Fiscal 2005. Political advertising revenues increased in all but one
of our markets during the second half of Fiscal 2006 due to advertising leading
up to high-profile local elections in November 2006 with no comparable activity
during the same period of the prior year with the exception of the November 2005
election for Governor in Virginia. This increase of $4,929 during the second
half of Fiscal 2006 as compared to the second half of Fiscal 2005 was partially
offset by a

                                       36
<PAGE>

decrease in advertising during the first quarter of Fiscal 2006 related to the
national presidential election in November 2004, which generated substantial
political advertising revenue in the first quarter of Fiscal 2005.

      No individual advertiser accounted for more than 5% of our operating
revenues during Fiscal 2006 or 2005.

   Total Operating Expenses

      Total operating expenses in Fiscal 2006 were $138,537, a decrease of $727,
or 0.5%, compared to total operating expenses of $139,264 in Fiscal 2005. This
net decrease consisted of an increase in television operating expenses,
excluding depreciation and amortization, of $789, a decrease in depreciation and
amortization of $504 and a decrease in corporate expenses of $1,012.

      Television operating expenses, excluding depreciation and amortization,
totaled $124,871 in Fiscal 2006, an increase of $789, or 0.6%, when compared to
television operating expenses of $124,082 in Fiscal 2005. This increase was due
primarily to increased employee compensation and benefits, mitigated by reduced
syndicated programming costs. Employee compensation and benefits increased 6.8%
during Fiscal 2006 as compared to the prior fiscal year principally due to
increased local sales commissions associated with increased local advertising
revenues, an increased number of sales personnel related to our continued focus
on new business development and increased news personnel costs in several
markets, due in large part to increases in locally produced news and related
programming. The decrease in syndicated programming costs resulted from renewals
of several of our existing programs under more favorable terms, the conversion
of certain time periods from syndicated programming to local news or other
locally produced programming as well as non-recurring rights fees incurred
during the prior year associated with the airing of certain sporting events.

      Corporate expenses in Fiscal 2006 decreased $1,012, or 16.8%, from Fiscal
2005 due to a variety of decreased expenses including the cessation of
management fees to Joe L. Allbritton effective October 1, 2005, decreased
corporate aircraft costs as a result of the sale of our aircraft during the
first quarter of Fiscal 2006 (see "Nonoperating expenses, net") and elevated
costs related to Sarbanes-Oxley internal control compliance incurred during the
prior year.

   Operating Income

      Operating income of $84,862 in Fiscal 2006 increased $23,699, or 38.7%,
compared to operating income of $61,163 in Fiscal 2005. The operating income
margin in Fiscal 2006 increased to 38.0% from 30.5% for the prior fiscal year.
The increases in operating income and margin during Fiscal 2006 were primarily
the result of increased net operating revenues, as discussed above.

      Our operating income for Fiscal 2006 was a record high.

                                       37
<PAGE>

   Nonoperating Expenses, Net

      Interest Expense. Interest expense decreased by $495, or 1.3%, from
$36,729 in Fiscal 2005 to $36,234 in Fiscal 2006. The decrease in interest
expense was primarily due to the decrease in the average balance of debt
outstanding during Fiscal 2006 as compared to the previous fiscal year. The
average balance of debt outstanding, including capital lease obligations, for
Fiscal 2005 and 2006 was $466,092 and $460,837, respectively, and the weighted
average interest rate on debt during each year was 7.7%.

       Other, Net. Other, net nonoperating income was $850 for Fiscal 2006 as
compared to other, net nonoperating expense of $1,704 for the same period in the
prior year. The difference of $2,554 primarily resulted from a gain on the sale
of our corporate aircraft during the quarter ended December 31, 2005.

   Income Taxes

      The provision for income taxes in Fiscal 2006 totaled $18,342, an increase
of $8,921, or 94.7%, when compared to the provision for income taxes of $9,421
in Fiscal 2005. The increase in the provision for income taxes was primarily due
to the $26,788, or 116.2%, increase in pre-tax income.

    Cumulative Effect of Change in Accounting Priniciple

      In September 2004, the SEC announced, in conjunction with the issuance of
EITF Topic No. D-108, "Use of the Residual Method to Value Acquired Assets Other
than Goodwill," that the "residual method" should no longer be used to value
intangible assets other than goodwill. Rather, a "direct value method" is
required to be used to determine the fair value of all intangible assets for
purposes of impairment testing, including those assets previously valued using
the residual method. Any impairment resulting from application of a direct value
method should be reported as a cumulative effect of a change in accounting
principle. Application of EITF Topic No. D-108 was effective as of the beginning
of our fiscal year ended September 30, 2006.

      We used the residual method to value our FCC licenses in conjunction with
acquisitions made in 1996 and 2000. Upon our implementation of EITF Topic No.
D-108 during the first quarter of the fiscal year ended September 30, 2006, we
performed an impairment test using a direct value method on our FCC licenses
previously valued using the residual method. The direct value method, which
differs markedly from the residual value method, requires us to value our FCC
licenses using an average market participant concept. This concept assumes that
cash flows associated with FCC licenses are limited to those cash flows that
could be expected by an average market participant. In contrast, the residual
value method formerly used by us included other elements of cash flows which
contributed to station value.

      As a result of the implementation of EITF Topic No. D-108, we recorded a
non-cash, pre-tax impairment charge related to the carrying value of certain of
our FCC licenses of $80,000. This charge was recorded, net of the related tax
benefit of $31,272, as a cumulative effect of a change in accounting principle
during the quarter ended December 31, 2005.

                                       38
<PAGE>

   Net Income

      For Fiscal 2006, the Company recorded a net loss of $17,219 as compared to
net income of $13,642 for Fiscal 2005. The decrease in net income during Fiscal
2006 was primarily due to the cumulative effect of change in accounting
principle, partially offset by increased net operating revenues, as discussed
above.


Liquidity and Capital Resources

   Cash Provided by Operations

      Our principal sources of working capital are 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 occur during the first and third fiscal
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 $27,266, $41,374 and $31,092 for Fiscal
2005, 2006 and 2007, respectively. The increase in cash provided by operating
activities from Fiscal 2005 to Fiscal 2006 was the result of increased income
before cumulative effect of change in accounting principle (exclusive of the
gain on sale of our corporate aircraft) during Fiscal 2006. The decrease in cash
provided by operating activities from Fiscal 2006 to Fiscal 2007 was the result
of decreased income before cumulative effect of change in accounting principle
during Fiscal 2007.

   Distributions to Related Parties

      We have periodically made advances in the form of distributions to
Perpetual. For Fiscal 2005, 2006 and 2007, we made cash advances net of
repayments to Perpetual of $19,880, $23,137 and $61,371, respectively. The
advances to Perpetual are non-interest bearing and, as such, do not reflect
market rates of interest-bearing loans to unaffiliated third parties.

      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.

                                       39
<PAGE>

      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, 2007 and through December 12, 2007, we made additional net
distributions to owners of $8,995.

      During Fiscal 2005, 2006 and 2007, we were charged by Perpetual and made
payments under a tax sharing agreement with Perpetual for federal and state
income taxes totaling $6,853, $15,480 and $9,734, respectively.

      Stockholder's deficit amounted to $366,527 at September 30, 2007, an
increase of $38,757, or 11.8%, from the September 30, 2006 deficit of $327,770.
The increase was due to a net increase in distributions to owners of $61,371,
partially offset by net income of $22,614.

   Indebtedness

      Our total debt, including the current portion of long-term debt, increased
from $452,846 at September 30, 2006 to $484,100 at September 30, 2007. This
debt, net of applicable discounts, consists of $453,100 of 7 3/4% senior
subordinated notes due December 15, 2012 and $31,000 outstanding under our
senior credit facility. The increase of $31,254 in total debt from September 30,
2006 to September 30, 2007 was primarily due to net draws under the senior
credit facility of $31,000.

      Our $70,000 senior credit facility is secured by the pledge of stock of
ACC and its subsidiaries and matures August 23, 2011. Interest is payable
quarterly at various rates either from prime or from LIBOR plus 0.75% depending
on certain financial operating tests.

      Under our 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, 2007, we were in compliance with those financial covenants. We are also
required to pay a commitment fee ranging from 0.25% to 0.375% 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 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

                                       40
<PAGE>

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 2005, 2006 and 2007, we made $4,660, $8,836 and $6,052,
respectively, of capital expenditures. At this time, we estimate that capital
expenditures for Fiscal 2008 will be in the approximate range of $7,000 to
$9,000 and will primarily be for the acquisition of technical equipment and
vehicles to support ongoing operations across our stations, including the
conversion of WJLA/NewsChannel 8 to full high-definition local production during
the latter part of the fiscal year. 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 cancelled program rights. During Fiscal 2005, 2006
and 2007, we made cash payments of approximately $16,800, $11,600 and $10,800,
respectively, for rights to television programs. The decreases in cash paid for
programming during Fiscal 2006 and Fiscal 2007 as compared to Fiscal 2005 were
the result of renewals of certain syndicated programming contracts under more
favorable terms as well as the conversion of certain time periods from
syndicated programming to local news or other locally produced programming. We
anticipate cash payments for program rights will be in the approximate range of
$11,000 to $13,000 per year for Fiscal 2008 through 2012. We currently intend to
fund these commitments with cash provided by operations.

                                       41
<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, 2007:

<TABLE>
<CAPTION>

                                                   Fiscal Year Ending September 30,
                                      ----------------------------------------------------------
                                        2008        2009        2010         2011         2012      Thereafter      Total
                                      --------    --------    --------     --------     --------    ----------    ---------
<S>                                   <C>         <C>         <C>          <C>          <C>          <C>          <C>
Long-term debt....................    $    --     $    --     $    --      $ 31,000     $    --      $ 455,000    $ 486,000
Programming contracts --
   currently available............      12,476         620         623          385          --            --        14,104
Programming contracts --
   future commitments.............       2,536      12,346      11,904       10,882        4,071           --        41,739
Operating leases..................       4,582       4,464       4,350        4,296        4,191        23,729       45,612
Employment contracts..............      11,345       1,751         595           75          --            --        13,766
Deferred compensation.............         369         369         369          369          168            96        1,740
                                      --------    --------    --------     --------     --------     ---------    ---------
      Total.......................    $ 31,308    $ 19,550    $ 17,841     $ 47,007     $  8,430     $ 478,825    $ 602,961
                                      ========    ========    ========     ========     ========     =========    =========
</TABLE>


         We also have certain obligations and commitments under various
executory agreements to make future payments for goods and services. These
agreements secure the future rights to certain goods and services to be used in
the normal course of operations.

      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, 2007, 58% of the assets of ACC were held by operating subsidiaries
and for Fiscal 2007, 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

                                       42
<PAGE>

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.

      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 estimates 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. As is
customary in the broadcasting industry, we do not require collateral for our
credit sales, which are typically due within thirty days. 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.

                                       43
<PAGE>

   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 $42,486 and $42,327 as
of September 30, 2006 and 2007, 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 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 (11 to 25 years). SFAS No. 142 became effective for our
Fiscal 2003.

      In September 2004, the SEC announced, in conjunction with the issuance of
EITF Topic No. D-108, "Use of the Residual Method to Value Acquired Assets Other
than Goodwill," that the "residual method" should no longer be used to value
intangible assets other than goodwill. Rather, a "direct value method" is
required to be used to determine the fair value of all intangible assets for
purposes of impairment testing, including those assets previously valued using
the residual method. Any impairment resulting from application of a direct value
method should be reported as a cumulative effect of a change in accounting
principle. Application of EITF Topic No. D-108 became effective at the beginning
of our Fiscal 2006.

      Our indefinite lived intangible assets, consisting of broadcast licenses,
are subject to periodic impairment tests. Prior to the implementation of EITF
Topic No. D-108, we had used the residual method to determine the value of our
broadcast licenses for purposes of testing for impairment. Upon implementation
of EITF Topic No. D-108 during the first quarter of Fiscal 2006, we use the
direct value method. The direct value method, which differs markedly from the
residual value method, requires us to value our broadcast licenses using an
average market participant concept. This concept assumes that cash flows
associated with broadcast licenses are limited to those cash flows that could be
expected by an average market participant. In contrast, the residual value
method formerly used by us included other elements of cash flows which
contributed to station value.

      As a result of the implementation of EITF Topic No. D-108, we recorded a
non-cash, pre-tax impairment charge related to the carrying value of certain of
our broadcast licenses of $80,000. This charge was recorded, net of the related
tax benefit of $31,272, as a cumulative effect of a change in accounting
principle during the first quarter of Fiscal 2006.

      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.

      The performance of impairment tests under SFAS No. 142, including the new
requirements of EITF Topic No. D-108, requires significant management judgment.
Future events affecting

                                       44
<PAGE>

cash flows, market conditions or accounting standards could result in further
impairment losses. Any resulting impairment loss could have a material adverse
impact on our consolidated financial statements.

   Income Taxes

      We account for income taxes in accordance with SFAS No. 109, "Accounting
for 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 if it is more likely than not
that the deferred tax assets will not be realized. This assessment is 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.

      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 us 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 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 income tax
returns.

      SFAS No. 109 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 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 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.

                                       45
<PAGE>

      Our provision for income taxes and related deferred tax assets and
liabilities reflect our estimates of actual future taxes to be paid. Such
estimates are based on items reflected in the consolidated financial statements,
considering timing as well as the sustainability of our tax filing positions.
Actual income taxes paid could vary from our estimates as a result of future
changes in income tax law or reviews by federal or various state and local tax
authorities.

New Accounting Standards

      In June 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income
Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes by
prescribing a recognition threshold and measurement attribute for the financial
statement recognition and measurement of tax positions taken or expected to be
taken in a tax return. FIN 48 is effective for our fiscal year ending September
30, 2008. We are currently evaluating the impact, if any, that FIN 48 may have
on our financial position or results of operations.

      In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, "Fair Value Measurements." SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS No. 157 does not expand or require any new
fair value measures but is applicable whenever another accounting pronouncement
requires or permits assets and liabilities to be measured at fair value. SFAS
No. 157 is effective for our fiscal year ending September 30, 2009. We are
currently evaluating the impact, if any, that SFAS No. 157 may have on our
financial position or results of operations.

Off-Balance Sheet Arrangements

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

                                       46
<PAGE>

             ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                                   MARKET RISK
                             (dollars in thousands)

      At September 30, 2007, 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,
2007, the carrying value of such debt was $453,100, the fair value was
approximately $460,000 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, 2007.
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, 2007 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


                           ITEM 9B. OTHER INFORMATION

      None.

                                       47
<PAGE>

                                    PART III

         ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors

      Executive officers and directors of ACC are as follows:
<TABLE>
<CAPTION>

 Name                      Age                      Title
-----------------------    ---    ----------------------------------------------
<S>                         <C>   <C>
Barbara B. Allbritton       70    Executive Vice President and Director

Robert L. Allbritton        38    Chairman, Chief Executive Officer and Director

Frederick J. Ryan, Jr.      52    Vice Chairman, President, Chief Operating
                                    Officer and Director

Jerald N. Fritz             56    Senior Vice President, Legal and Strategic
                                    Affairs, General Counsel

Stephen P. Gibson           42    Senior Vice President and Chief Financial
                                    Officer

James C. Killen, Jr.        45    Vice President, Sales
</TABLE>

_____________

      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, The Allbritton Foundation and the Allbritton
Art Institute. She currently serves as a trustee of Baylor College of Medicine
and a director of Blair House Restoration Fund. She was formerly a director of
Riggs Bank N.A. and The Foundation for the National Archives. 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 subsidiaries, The Allbritton
Foundation and the Allbritton Art Institute. 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. He is also Publisher of The Politico, which launched in January 2007.
In addition to his positions with ACC, Mr. Allbritton was the Chairman of the
Board of Directors and Chief Executive Officer of Riggs National Corporation
("Riggs") from 2001 until 2005 and a Director of Riggs from 1994 until 2005. Mr.
Allbritton has served on the Board of Directors of the Washington Hospital
Center and the Lyndon B. Johnson Foundation since 2002. He has also served on
the Board of

                                       48
<PAGE>

Trustees of The George Washington University since 2002 and Wesleyan University
since 2003. He served on the Board of Directors of Juniper Content Corporation
from January to November 2007. He is the son of Joe L. and Barbara B.
Allbritton. See "Certain Relationships and Related Transactions."

      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 is also President
and Chief Executive Officer of The Politico, which launched in January 2007. 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 the White House
Historical Association, a trustee of Ford's Theatre, a trustee of Ronald Reagan
Institute of Emergency Medicine at George Washington University and a member of
the Board of Councilors of the Annenberg School of Communications at the
University of Southern California.

      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"). Mr.
Fritz is a former division chair of the Communications Forum of the American Bar
Association and currently serves on the NAB's Copyright Committee and Digital TV
Task Force as well as the Co-Chair of the Pre-Publication Committee of the Media
Law Resource Center.

      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 Assistant Treasurer of The Allbritton Foundation and Vice President of
Perpetual and each of ACC's 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 served as an elected director of
the Broadcast Cable Financial Management Association from 2002 until 2005.

      JAMES C. KILLEN, JR. joined ACC as Vice President, Sales in November 2004
to oversee, coordinate and support all aspects of advertising sales for the
Company. Prior to joining ACC, Mr. Killen held various sales positions with NBC
from 1992 until 2004, most recently Local Sales Manager and New York National
Sales Manager of NBC4 in Washington, D.C. His network experience included
several years as an NBC Account Manager selling the NBC owned and operated
stations.

                                       49
<PAGE>

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 incorporated by reference as an
exhibit to this Annual Report on Form 10-K.

Audit Committee Financial Expert

      The members of our Audit Committee are Robert L. Allbritton and Frederick
J. Ryan, Jr. The Board of Directors has determined that it does not currently
have an "audit committee financial expert" as defined by Item 401(h) of
Regulation S-K. As the Company is privately held, the Board of Directors is not
currently considering expanding its members in order to include an "audit
committee financial expert" as defined.


                         ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

      Overview and Objectives

      Our executive compensation program is designed to attract, retain and
reward qualified executives and encourage decisions and actions that have a
positive impact on Company performance. It is our objective to set total
executive compensation at a level that attracts and retains strong, competent
leadership for the Company. A further objective of the compensation program is
to provide incentives and rewards to each executive for their contribution to
the Company.

      The Company's compensation program, primarily consisting of salary and
bonus payments to the Company's executive officers, who are named in the Summary
Compensation Table appearing elsewhere in this Item and are referred to as the
"named executive officers," is a cash program. At this time, there are no stock
options, stock awards or any other equity-based programs as part of the
Company's compensation program.

      The Company's executives do not have employment agreements that might
include provisions for change in control, severance arrangements, equity or
security ownership, or other such matters.

      Compensation Process

      We do not have a compensation committee of our Board of Directors, and our
Board generally does not seek input from outside compensation consultants with
respect to annual compensation decisions.

                                       50
<PAGE>

      Our Chairman and Chief Executive Officer, with input from our President
and Chief Operating Officer, annually reviews the performance of each of the
named executive officers and determines their compensation levels. Compensation
levels for our Chairman and Chief Executive Officer and President and Chief
Operating Officer are established in the same manner as our other executive
officers in consultation with the third member of our Board of Directors.

      Elements of Compensation

      The principal elements of the Company's executive compensation consist of
the following:

        o Base Salary;
        o Annual Cash Bonuses;
        o Perquisites and Other Compensation; and
        o Health Benefits.

      Base Salary. The base salary component of the Company's executive
compensation program provides each named executive officer with a fixed minimum
amount of cash compensation throughout the year. Salaries are determined by
position, which takes into consideration the responsibilities and job
performance of each named executive officer and competitive market compensation
paid by other companies for similar positions. Base salary amounts are
determined in the first quarter of the fiscal year.

      Annual Cash Bonuses. The Company does not utilize defined formulas for
bonuses paid to its executive officers, including its named executive officers.
The payment of cash bonuses is made on a discretionary basis and is determined
based on an evaluation of each executive's individual performance. The annual
cash bonuses are intended to reward individuals based on their contributions to
the overall success of the Company. Bonuses are generally paid in the first
quarter following the end of the fiscal year for which performance is being
rewarded.

      Perquisites and Other Compensation. We also provide our named executive
officers with other benefits that we believe are reasonable and consistent with
the stated objectives of the Company's executive compensation program. Such
benefits include the following:

        o Company contributions to our defined contribution 401(k) savings plan;
        o Use of a Company-provided automobile or payment of an automobile
          allowance;
        o Company-paid parking; and
        o Reimbursement for membership in certain clubs.

      The Company provides all eligible employees a 50% matching contribution on
up to 6% of compensation deferred through an IRS qualified 401(k) savings plan.
Under the 401(k) plan, employees may contribute a portion of their compensation
subject to IRS limitations. The Company does not have a defined benefit pension
plan.

                                       51
<PAGE>

      Health Benefits. All full-time employees, including our named executive
officers, may participate in our group health benefit program, including
medical, dental and vision care coverage, disability insurance and life
insurance. In addition, our named executive officers are also covered under a
supplemental executive long-term disability insurance program.

      Determination of Fiscal 2007 Compensation

      Our goals for Fiscal 2007 were to provide an executive compensation
program that was equitable in a competitive marketplace and recognized and
rewarded individual achievements. To achieve such goals, we relied primarily on
base salaries, cash bonuses and other compensation for each of our named
executive officers. Compensation levels for each named executive officer were
determined based on the position and responsibility of such executive, his
impact on the operation and financial performance of the Company and the
knowledge and experience of such executive. These factors were considered as a
group, without particular weight given to any single factor, and were
necessarily subjective in nature.

                                       52
<PAGE>

Summary Compensation Table

      The following table sets forth certain compensation information for our
Chief Executive Officer, Chief Financial Officer and each of our three other
most highly compensated executive officers for the fiscal year ended September
30, 2007:

<TABLE>
<CAPTION>

                                      Fiscal                                     All Other
Name and Principal Position            Year         Salary         Bonus       Compensation<F5>     Total
--------------------------------      ------      ---------     ---------      ----------------   ---------
<S>                                    <C>        <C>           <C>               <C>             <C>
Robert L. Allbritton<F1>               2007       $ 550,000     $ 250,000         $    --         $ 800,000
    Chairman and
    Chief Executive Officer

Frederick J. Ryan, Jr.<F2>             2007         500,000       250,000           40,554          790,554
    President and Chief
    Operating Officer

Stephen P. Gibson<F3>                  2007         300,000       125,000           36,073          461,073
    Senior Vice President and
    Chief Financial Officer

James C. Killen, Jr.                   2007         300,000       110,000           38,956          448,956
    Vice President, Sales


Jerald N. Fritz<F4>                    2007         275,000       100,000           35,847          410,847
    Senior Vice President, Legal
    and Strategic Affairs
<FN>

______________
<F1> Robert L. Allbritton is 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 also
     included as compensation above.
<F2> Frederick J. Ryan, Jr. is paid cash compensation by ACC for services to
     ACC, which is included as compensation above. In addition, Mr. Ryan is also
     separately paid cash compensation by Perpetual for services to Perpetual
     and other interests of Joe L. Allbritton.
<F3> Stephen P. Gibson is paid cash compensation by ACC for services to ACC,
     which is included as compensation above. In addition, Mr. Gibson is also
     separately paid cash compensation by Perpetual for services to Perpetual
     and other interests of Joe L. Allbritton.
<F4> Jerald N. Fritz is paid cash compensation by ACC for services to ACC and
     Perpetual. Of the compensation shown in the table for Mr. Fritz, $11,000
     represents the portion of such compensation related to Perpetual, and has
     been allocated to Perpetual.
<F5> Amounts in this column consist of dollar values of perquisites and other
     benefits including amounts contributed by the Company on behalf of our
     named executive officers to our defined contribution 401(k) savings plan,
     use of a Company-provided automobile or an automobile allowance, premiums
     for group health and term life insurance and executive disability plans,
     parking and club membership reimbursements.

</FN>
</TABLE>

Compensation of Directors

      Our directors are not separately compensated for membership on the Board
of Directors.

                                       53
<PAGE>

Compensation Committee Interlocks and Insider Participation

      We do not have a compensation committee of our Board of Directors. Our
Chairman and Chief Executive Officer, with input from our President and Chief
Operating Officer, annually reviews the performance of each of the named
executive officers and determines their compensation levels. Compensation levels
for our Chairman and Chief Executive Officer and President and Chief Operating
Officer are established in the same manner as our other executive officers in
consultation with the third member of our Board of Directors, who is also an
Exective Officer of the Company.




Compensation Committee Report

      Our Board of Directors has reviewed and discussed with management the
Compensation Discussion and Analysis contained in this Form 10-K. Based on this
review and discussion, our Board of Directors recommends that the Compensation
Discussion and Analysis be included in this Form 10-K for the fiscal year ended
September 30, 2007.

                                                   Barbara B. Allbritton
                                                   Robert L. Allbritton
                                                   Frederick J. Ryan, Jr.



            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. Perpetual's address is 1000 Wilson Boulevard, Suite 2700, Arlington,
Virginia 22209. 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

                                       54
<PAGE>

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,
                           AND DIRECTOR INDEPENDENCE
                             (dollars in thousands)

Distributions to Related Parties

      ACC has periodically made advances in the form of distributions to
Perpetual. For Fiscal 2007, ACC made cash advances to Perpetual of $73,181 and
Perpetual made repayments on these cash advances of $11,810. The advances to
Perpetual are non-interest bearing and, as such, do not reflect market rates of
interest-bearing loans to unaffiliated third parties. In addition, ACC was
charged by Perpetual and made payments to Perpetual for federal and state income
taxes in the amount of $9,734. 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 $430. 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.

      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, 2007 and through December 12, 2007, we made
additional net distributions to owners of $8,995.

Management Fees

      We paid management fees of $750 to Perpetual for Fiscal 2007, and we
expect that management fees to be paid to Perpetual during Fiscal 2008 will
approximate the amount paid for Fiscal 2007. These management fees reflect the
compensation allocations referenced in the Executive Compensation Table as well
as the net allocation of other shared costs. We believe that payments to
Perpetual 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.

                                       55
<PAGE>

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.

      The provision for income taxes is determined in accordance with 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

      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 $141 for Fiscal 2007, and we expect to
receive $145 during Fiscal 2008. 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 $416 to Irides during Fiscal 2007, and we expect to pay fees to Irides
during Fiscal 2008 for services performed of approximately $550. 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.

                                       56
<PAGE>

Director Independence

      There are no independent members of our Board of Directors as each member
of our Board is also an executive officer of the Company. As the Company is
privately held, the Board of Directors is not currently considering expanding
its members in order to include independent directors.


Review and Approval of Transactions with Related Parties

      The Company is subject to various restrictive covenants covering
transactions with related parties under its existing debt agreements. Our
directors and executive officers are made aware of the Company's obligations to
identify, process, and disclose such transactions in order to comply with these
covenants. Our directors and executive officers are also expected to promptly
disclose to the Chairman and Chief Executive Officer or the President and Chief
Operating Officer, for review and approval, the material facts of any
transaction that could be considered a related party transaction that is
otherwise permissible under the terms of the Company's debt covenants.

      On an annual basis, each director and executive officer of the Company
must complete and certify to a Director and Officer Questionnaire that requires
disclosure of any transaction, arrangement or relationship with the Company
during the last fiscal year in which the director or executive officer, or any
member of his or her immediate family, had a direct or indirect material
interest. Any transaction, arrangement, or relationship disclosed in the
Director and Officer Questionnaire is reviewed and considered by our General
Counsel with respect to any conflicts of interest.



                 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
                             (dollars in thousands)

      PricewaterhouseCoopers LLP audited our consolidated financial statements
for the year ended September 30, 2007 and our Board of Directors has appointed
PricewaterhouseCoopers LLP as our independent registered public accounting firm
to audit our consolidated financial statements for the year ending September 30,
2008.

                                       57
<PAGE>

      The fees billed by PricewaterhouseCoopers LLP for 2006 and 2007 were as
follows:

<TABLE>
<CAPTION>

                                                 2006      2007
                                                -----     -----
      <S>                                       <C>       <C>
      Audit fees.............................   $ 298     $ 297
      Audit-related fees.....................      28        28
      Tax fees...............................     --        --
      All other fees.........................       5         5
                                                -----     -----
       Total.................................   $ 331     $ 330
                                                =====     =====
</TABLE>

      Fees for audit services included fees associated with the annual audit and
the reviews of our quarterly reports on Form 10-Q as well as any other documents
filed with the SEC. Audit-related fees consisted of fees associated with the
audit of our defined contribution savings plan. All other fees consisted of fees
associated with the compilation of advertising revenue information for the
Washington, D.C. market as well as the license of accounting research software.

      Our Board of Directors pre-approves all audit and permitted non-audit
services, including the fees and terms thereof.



                                     PART IV

               ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (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.


                                       58
<PAGE>


                        ALLBRITTON COMMUNICATIONS COMPANY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            Page



Report of Independent Registered Public Accounting Firm..................   F-2
Consolidated Balance Sheets as of September 30, 2006 and 2007............   F-3
Consolidated Statements of Operations and Retained Earnings
   for Each of the Years Ended September 30, 2005, 2006 and 2007.........   F-4
Consolidated Statements of Cash Flows for Each of the Years
   Ended September 30, 2005, 2006 and 2007...............................   F-5
Notes to Consolidated Financial Statements...............................   F-6
Financial Statement Schedule for the Years Ended September 30,
   2005, 2006 and 2007
     II--Valuation and Qualifying Accounts and Reserves..................   F-21

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 Registered Public Accounting Firm


To the Board of Directors and Stockholder
of 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, 2007 and 2006, and
the results of their operations and their cash flows for each of the three years
in the period ended September 30, 2007 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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.

/s/    PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP
McLean, VA
December 12, 2007


                                      F-2
<PAGE>

                                    ALLBRITTON COMMUNICATIONS COMPANY

                                       CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands except share information)

<TABLE>
<CAPTION>
                                                                                                September 30,
                                                                                           ---------------------
                                                                                             2006         2007
                                                                                           --------     --------
<S>                                                                                       <C>          <C>
ASSETS
Current assets
      Cash and cash equivalents .......................................................   $   7,600    $   2,402
      Accounts receivable, less allowance for doubtful accounts of $1,240 and $1,547 ..      41,293       44,048
      Program rights ..................................................................      10,113       10,610
      Deferred income taxes ...........................................................       1,319        1,441
      Other ...........................................................................       1,602        2,140
                                                                                          ---------    ---------
            Total current assets ......................................................      61,927       60,641

Property, plant and equipment, net ....................................................      45,145       43,863
Intangible assets, net ................................................................      42,486       42,327
Cash surrender value of life insurance ................................................      12,224       12,611
Program rights ........................................................................       1,469        1,262
Deferred income taxes .................................................................       5,925        2,643
Deferred financing costs and other ....................................................       6,845        5,702
                                                                                          ---------    ---------
                                                                                          $ 176,021    $ 169,049
                                                                                          =========    =========

LIABILITIES AND STOCKHOLDER'S INVESTMENT
Current liabilities
      Current portion of long-term debt ...............................................   $      30    $    --
      Accounts payable ................................................................       3,040        3,328
      Accrued interest payable ........................................................      10,383       10,595
      Program rights payable ..........................................................      12,154       12,476
      Accrued employee benefit expenses ...............................................       5,593        6,322
      Other accrued expenses ..........................................................       7,570        4,822
                                                                                          ---------    ---------
            Total current liabilities .................................................      38,770       37,543

Long-term debt ........................................................................     452,816      484,100
Program rights payable ................................................................       1,125        1,628
Accrued employee benefit expenses .....................................................       1,801        1,565
Deferred rent and other ...............................................................       9,279       10,740
                                                                                          ---------    ---------
            Total liabilities .........................................................     503,791      535,576
                                                                                          ---------    ---------

Commitments and contingent liabilities (Note 9)
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 ...............................................................       5,040       27,654
      Distributions to owners, net (Note 7) ...........................................    (382,442)    (443,813)
                                                                                          ---------    ---------
            Total stockholder's investment ............................................    (327,770)    (366,527)
                                                                                          ---------    ---------
                                                                                          $ 176,021    $ 169,049
                                                                                          =========    =========

</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,
                                                                             ----------------------------------
                                                                               2005         2006         2007
                                                                             --------     --------     --------

<S>                                                                         <C>          <C>          <C>
Operating revenues, net .................................................   $ 200,427    $ 223,399    $ 226,146
                                                                            ---------    ---------    ---------

Television operating expenses, excluding depreciation and amortization ..     124,082      124,871      138,588
Depreciation and amortization ...........................................       9,170        8,666        8,712
Corporate expenses ......................................................       6,012        5,000        6,106
                                                                            ---------    ---------    ---------
                                                                              139,264      138,537      153,406
                                                                            ---------    ---------    ---------
Operating income ........................................................      61,163       84,862       72,740

Nonoperating income (expense)
      Interest income
            Related party ...............................................         262          226          430
            Other .......................................................          71          147          208
      Interest expense ..................................................     (36,729)     (36,234)     (37,213)
      Other, net ........................................................      (1,704)         850          266
                                                                            ---------    ---------    ---------
Income before income taxes and cumulative effect of change
        in accounting principle .........................................      23,063       49,851       36,431
Provision for income taxes ..............................................       9,421       18,342       13,817
                                                                            ---------    ---------    ---------
Income before cumulative effect of change in
        accounting principle ............................................      13,642       31,509       22,614
Cumulative effect of change in accounting principle, net of
        income tax benefit of $31,272 (Note 4) ..........................        --         48,728         --
                                                                            ---------    ---------    ---------
Net income (loss) .......................................................      13,642      (17,219)      22,614
Retained earnings, beginning of year ....................................       8,617       22,259        5,040
                                                                            ---------    ---------    ---------
Retained earnings, end of year ..........................................   $  22,259    $   5,040    $  27,654
                                                                            =========    =========    =========

</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,
                                                                           --------------------------------
                                                                             2005        2006        2007
                                                                           --------    --------    --------
<S>                                                                        <C>         <C>         <C>
Cash flows from operating activities:
      Net income (loss) ................................................   $ 13,642    $(17,219)   $ 22,614
                                                                           --------    --------    --------
      Adjustments to reconcile net income (loss) to net cash provided by
        operating activities:
           Depreciation and amortization ...............................      9,170       8,666       8,712
           Cumulative effect of change in accounting principle .........       --        48,728        --
           Other noncash charges .......................................      1,746       1,304       1,326
           Provision for doubtful accounts .............................        599         587       1,265
           Loss (gain) on disposal of assets ...........................        133      (1,962)     (1,382)
           Changes in assets and liabilities:
                 (Increase) decrease in assets:
                     Accounts receivable ...............................     (1,382)     (4,916)     (4,020)
                     Program rights ....................................      5,208      (1,834)       (290)
                     Other current assets ..............................       (125)        365        (538)
                     Deferred income taxes .............................       (433)      1,293       3,160
                     Other noncurrent assets ...........................       (216)       (245)       (286)
                 Increase (decrease) in liabilities:
                     Accounts payable ..................................        378         688         288
                     Accrued interest payable ..........................         35         (53)        212
                     Program rights payable ............................     (5,966)        484         825
                     Accrued employee benefit expenses .................      1,000         296         493
                     Other accrued expenses ............................     (1,575)      1,929      (2,748)
                     Deferred income taxes .............................      2,408        --          --
                     Deferred rent and other liabilities ...............      2,644       3,263       1,461
                                                                           --------    --------    --------
                           Total adjustments ...........................     13,624      58,593       8,478
                                                                           --------    --------    --------
                           Net cash provided by operating activities ...     27,266      41,374      31,092
                                                                           --------    --------    --------

Cash flows from investing activities:
      Capital expenditures .............................................     (4,660)     (8,836)     (6,052)
      Proceeds from disposal of assets .................................         67       2,166         163
                                                                           --------    --------    --------
                           Net cash used in investing activities .......     (4,593)     (6,670)     (5,889)
                                                                           --------    --------    --------

Cash flows from financing activities:
      Principal payments on long-term debt and capital leases ..........       (162)       (172)        (30)
      (Repayments) draws under line of credit, net .....................     (5,000)     (8,000)     31,000
      Deferred financing costs .........................................       (683)       --          --
      Distributions to owners and dividends, net of certain charges ....    (35,505)    (36,472)    (73,181)
      Repayments of distributions to owners ............................     15,625      13,335      11,810
                                                                           --------    --------    --------
                           Net cash used in financing activities .......    (25,725)    (31,309)    (30,401)
                                                                           --------    --------    --------
Net (decrease) increase in cash and cash equivalents ...................     (3,052)      3,395      (5,198)
Cash and cash equivalents, beginning of year ...........................      7,257       4,205       7,600
                                                                           --------    --------    --------
Cash and cash equivalents, end of year .................................   $  4,205    $  7,600    $  2,402
                                                                           ========    ========    ========

Supplemental disclosure of cash flow information:

           Cash paid for interest ......................................   $ 36,328    $ 35,920    $ 36,620
                                                                           ========    ========    ========

           Cash paid for state income taxes ............................   $   --      $    207    $    217
                                                                           ========    ========    ========
</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.
Additionally, in January 2007 the Company launched The Politico, a specialized
newspaper and Internet site (politico.com) that serves Congress, congressional
staffers and those interested in the actions of the national legislature and
political electoral process. The operations of NewsChannel 8 and The Politico
are 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--SIGNIFICANT ACCOUNTING POLICIES

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

      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.

                                      F-6
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      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 $5,450, $5,133
and $5,579 for the years ended September 30, 2005, 2006 and 2007, 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. The vast majority of the Company's
program rights represent one-year contracts for first-run syndicated
programming. As each broadcast over the term of the contract generally provides
the same advertising value, such program rights are amortized on a straight-line
basis over the term. A limited number of multi-year program contracts
representing off-network syndicated programming are amortized on an accelerated
basis due to the generally higher advertising value of the early broadcasts.
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.

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

     Buildings.............................................   15-40 years
     Leasehold improvements................................   5-16 years
     Furniture, machinery and equipment and equipment
       under capital leases................................   3-20 years

                                      F-7
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      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. Statement of Financial Accounting Standards ("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 (11 to 25 years). SFAS No. 142 became effective for the
Company's fiscal year ended September 30, 2003.

      In September 2004, the Securities Exchange Commission ("SEC") announced,
in conjunction with the issuance of Emerging Issues Task Force ("EITF") Topic
No. D-108, "Use of the Residual Method to Value Acquired Assets Other than
Goodwill," that the "residual method" should no longer be used to value
intangible assets other than goodwill. Rather, a "direct value method" is
required to be used to determine the fair value of all intangible assets for
purposes of impairment testing, including those assets previously valued using
the residual method. Any impairment resulting from application of a direct value
method should be reported as a cumulative effect of a change in accounting
principle. Application of EITF Topic No. D-108 became effective at the beginning
of the Company's year ended September 30, 2006 (See Note 4).

      The Company's indefinite lived intangible assets, consisting of broadcast
licenses, are subject to periodic impairment tests. Prior to the implementation
of EITF Topic No. D-108, the Company had used the residual method to determine
the value of its broadcast licenses for purposes of testing for impairment. Upon
implementation of EITF Topic No. D-108 during the quarter ended December 31,
2005, the Company uses the direct value method. The direct value method, which
differs markedly from the residual value method, requires the broadcast licenses
to be valued using an average market participant concept. This concept assumes
that cash flows associated with broadcast licenses are limited to those cash
flows that could be expected by an average market participant. In contrast, the
residual method formerly used included other elements of cash flows which
contributed to station value.

      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.

                                      F-8
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      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.

      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, 2007 had an overnight repurchase agreement for $779.
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, "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 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

                                      F-9
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


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.

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

      New Accounting Standards-- In June 2006, the Financial Accounting
Standards Board ("FASB") issued FASB Interpretation ("FIN") No. 48, "Accounting
for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for
uncertainty in income taxes by prescribing a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
tax positions taken or expected to be taken in a tax return. FIN 48 is effective
for the Company's fiscal year ending September 30, 2008. The Company is
currently evaluating the impact, if any, that FIN 48 may have on its financial
position or results of operations.

      In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements." SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS No. 157 does not expand or require any new fair value measures but is
applicable whenever another accounting pronouncement requires or permits assets
and liabilities to be measured at fair value. SFAS No. 157 is effective for the
Company's fiscal year ending September 30, 2009. The Company is currently
evaluating the impact, if any, that SFAS No. 157 may have on its financial
position or results of operations.


NOTE 3--PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                        September 30,
                                                    ---------------------
                                                      2006         2007
                                                    --------     --------
          <S>                                      <C>          <C>
          Buildings and leasehold improvements ..  $  32,403    $  32,673
          Furniture, machinery and equipment .....   137,005      135,327
          Equipment under capital leases .........       773         --
                                                   ---------    ---------
                                                     170,181      168,000
          Less accumulated depreciation ..........  (131,110)    (128,506)
                                                   ---------    ---------
                                                      39,071       39,494
          Land ...................................     2,902        2,902
          Construction-in-progress ...............     3,172        1,467
                                                   ---------    ---------
                                                   $  45,145    $  43,863
                                                   =========    =========
</TABLE>


                                      F-10
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      Depreciation and amortization expense was $9,005, $8,502 and $8,553 for
the years ended September 30, 2005, 2006 and 2007, respectively, which includes
amortization of equipment under capital leases.

      The FCC has granted to Sprint Nextel Corporation ("Nextel") the right to
reclaim a portion of the spectrum in the 2 GHz band from broadcasters across the
country. In order to claim this spectrum, Nextel must replace all of the
broadcasters' electronic newsgathering equipment currently using this spectrum
with digital equipment capable of operating in the reformatted portion of the 2
GHz band retained by the broadcasters. This exchange of equipment will be
completed on a market by market basis. As the equipment is exchanged and placed
into service in each of the Company's markets, a gain will be recorded to the
extent that the fair market value of the equipment received exceeds the book
value of the analog equipment exchanged.

      During the year ended September 30, 2007, two of the Company's markets
have exchanged equipment with Nextel. The fair market value of the equipment
received and placed into service during the year ended September 30, 2007 was
$1,263. This amount has been recorded as an addition to property, plant and
equipment, but is not included in capital expenditures in the accompanying
consolidated statement of cash flows as no cash was involved in the exchange.
The excess of fair market value as compared to the book value of equipment
exchanged and placed into service of $1,256 was recorded as a non-cash gain in
other, net nonoperating income in the accompanying consolidated financial
statements.


NOTE 4--INTANGIBLE ASSETS

      In September 2004, the SEC announced, in conjunction with the issuance of
EITF Topic No. D-108, "Use of the Residual Method to Value Acquired Assets Other
than Goodwill," that the "residual method" should no longer be used to value
intangible assets other than goodwill. Rather, a "direct value method" is
required to be used to determine the fair value of all intangible assets for
purposes of impairment testing, including those assets previously valued using
the residual method. Any impairment resulting from application of a direct value
method should be reported as a cumulative effect of a change in accounting
principle. Application of EITF Topic No. D-108 became effective at the beginning
of the Company's year ended September 30, 2006.

      The Company had used the residual method to value its FCC licenses in
conjunction with acquisitions made in 1996 and 2000. Upon its implementation of
EITF Topic No. D-108 during the first quarter of the year ended September 30,
2006, the Company performed an impairment test using a direct value method on
its FCC licenses previously valued using the residual method. The direct value
method, which differs markedly from the residual value method, requires the
Company to value its FCC licenses using an average market participant concept.
This concept assumes that cash flows associated with FCC licenses are limited to
those cash flows that could be expected by an average market participant. In
contrast, the residual value method formerly used by the Company included other
elements of cash flows which contributed to station value.

                                      F-11
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      As a result of the implementation of EITF Topic No. D-108, the Company
recorded a non-cash, pre-tax impairment charge related to the carrying value of
certain of its FCC licenses of $80,000. This charge was recorded, net of the
related tax benefit of $31,272, as a cumulative effect of a change in accounting
principle during the quarter ended December 31, 2005.

      The carrying value of the Company's indefinite lived intangible assets,
consisting of its broadcast licenses, at September 30, 2006 and 2007 was
$42,290.

       The carrying value of the Company's other intangible assets, consisting
of favorable terms on contracts and leases, was as follows:

<TABLE>
<CAPTION>
                                                September 30,
                                              -----------------
                                               2006       2007
                                              ------     ------
          <S>                                <C>        <C>
          Gross carrying amount ..........   $ 6,174    $ 6,174
          Less accumulated amortization ..    (5,978)    (6,137)
                                             -------    -------
          Net carrying amount ............   $   196    $    37
                                             =======    =======
</TABLE>

      Amortization expense was $165, $164 and $159 for the years ended September
30, 2005, 2006 and 2007, respectively. Amortization expense is expected to be
$37 for the year ending September 30, 2008.


                                      F-12
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


NOTE 5--LONG-TERM DEBT

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

                                                                           September 30,
                                                                      -----------------------
                                                                        2006           2007
                                                                      --------       --------
<S>                                                                  <C>            <C>
Senior Subordinated Notes, due December 15, 2012 with interest
   payable semi-annually at 7 3/4%...............................    $ 455,000      $ 455,000
Credit Agreement, maximum amount of $70,000, expiring August 23,
   2011, secured by the outstanding stock of the Company and its
   subsidiaries, interest payable quarterly at various rates
   either from prime or from LIBOR plus 0.75% depending on
   certain financial operating tests (7.18% at September 30,
   2007).........................................................         --           31,000
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.................................           30           --
                                                                     ---------      ---------
                                                                       455,030        486,000
Less unamortized discount........................................       (2,184)        (1,900)
                                                                     ---------      ---------
                                                                       452,846        484,100
Less current maturities..........................................          (30)          --
                                                                     ---------      ---------
                                                                     $ 452,816      $ 484,100
                                                                     =========      =========
</TABLE>


      Unamortized deferred financing costs of $6,355 and $5,313 at September 30,
2006 and 2007, 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, 2005, 2006 and
2007 was $1,504, $1,041 and $1,042 respectively, which is included in other
nonoperating expenses.

      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 Credit
Agreement, the Company must maintain compliance with certain financial covenants
as measured at the end of each quarter. As of September 30, 2007, the Company
was in compliance with such covenants. The Company is also required to pay a
commitment fee ranging from 0.25% to 0.375% per annum based on the amount of any
unused portion of the Credit Agreement.

                                      F-13
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


       The Company estimates the fair value of its Senior Subordinated Notes to
be approximately $458,000 and $460,000 at September 30, 2006 and 2007,
respectively. The carrying value of the Company's Credit Agreement approximates
fair value as borrowings bear interest at market rates.


NOTE 6--INCOME TAXES

       The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                         Years Ended September 30,
                                      -------------------------------
                                        2005        2006       2007
                                      --------    --------   --------
<S>                                   <C>         <C>        <C>
          Current
                Federal ...........   $  6,853    $ 15,480   $  9,734
                State .............        593       1,569        923
                                      --------    --------   --------
                                         7,446      17,049     10,657
                                      --------    --------   --------
          Deferred
                Federal ...........      2,086       1,856      2,966
                State .............       (111)       (563)       194
                                      --------    --------   --------
                                         1,975       1,293      3,160
                                      --------    --------   --------
                                      $  9,421    $ 18,342   $ 13,817
                                      ========    ========   ========

</TABLE>


       The implementation of EITF Topic No. D-108 on October 1, 2005 resulted in
the Company recording an $80,000 pre-tax impairment charge during the year ended
September 30, 2006 (see Note 4). The charge was recorded as a cumulative effect
of change in accounting principle, net of income tax benefit of $31,272, in the
accompanying statement of operations and retained earnings. The $31,272 benefit
for income taxes represented a deferred tax benefit.


                                      F-14
<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,
                                                         --------------------
                                                           2006        2007
                                                         --------    --------
<S>                                                      <C>         <C>
Deferred income tax assets:
      State and local operating loss carryforwards ...   $  4,626    $  4,912
      Amortization ...................................      5,346       1,561
      Accrued employee benefits ......................      1,237       1,150
      Deferred rent ..................................      2,060       2,046
      Allowance for accounts receivable ..............        490         611
      Other ..........................................      1,446       1,549
                                                         --------    --------
                                                           15,205      11,829
      Less valuation allowance .......................     (4,429)     (4,332)
                                                         --------    --------
                                                           10,776       7,497
                                                         --------    --------
Deferred income tax liabilities:
      Depreciation ...................................     (3,532)     (3,413)
                                                         --------    --------
Net deferred income tax assets .......................   $  7,244    $  4,084
                                                         ========    ========

</TABLE>


      The Company has approximately $103,600 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 2008 through 2027.
The change in the valuation allowance for deferred tax assets of $193, ($10) and
($97) during the years ended September 30, 2005, 2006 and 2007, respectively,
principally resulted from management's evaluation of the recoverability of the
loss carryforwards.


                                      F-15
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      The following table reconciles the statutory federal income tax rate to
the Company's effective income tax rate for income before cumulative effect of
change in accounting principle:

<TABLE>
<CAPTION>
                                                             Years ended September 30,
                                                             -------------------------
                                                               2005    2006     2007
                                                               ----    ----     ----
<S>                                                            <C>     <C>      <C>
Statutory federal income tax rate .........................    35.0%   35.0%    35.0%
State income taxes, net of federal income tax benefit .....     1.8     1.9      3.1
Permanent items, principally insurance premiums and
   meals and entertainment ................................     0.7    (0.1)     0.2
Change in valuation allowance .............................     1.1     0.0     (0.3)
Effect of change in statutory federal income tax rate
   on deferred taxes.......................................     2.1     0.0      0.0
Other, net ................................................     0.1     0.0     (0.1)
                                                               -----   -----    -----
Effective income tax rate .................................    40.8%   36.8%    37.9%
                                                               =====   =====    =====

</TABLE>

NOTE 7--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 $342,555, $366,622, and $409,190
during Fiscal 2005, 2006 and 2007, respectively.

      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.


                                      F-16
<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 2005, 2006 and 2007 consist of the following:
<TABLE>
<CAPTION>

                                                                           Federal and
                                                         Distributions    Virginia State         Net
                                                         to Owners and      Income Tax      Distributions
                                                           Dividends        Receivable        to Owners
                                                         -------------    --------------    -------------
     <S>                                                   <C>              <C>               <C>
     Balance as of September 30, 2004...............       $ 339,425        $     --          $ 339,425

     Cash advances and dividends to Perpetual.......          35,505                             35,505
     Repayment of cash advances from Perpetual......         (15,625)                           (15,625)
     Benefit for federal and state income taxes.....                            (6,853)          (6,853)
     Distribution of tax benefit....................                             6,853            6,853
                                                           ---------         ---------        ---------
     Balance as of September 30, 2005...............         359,305              --            359,305

     Cash advances to Perpetual.....................          36,472                             36,472
     Repayment of cash advances from Perpetual......         (13,335)                           (13,335)
     Charge for federal and state income taxes......                           (15,480)         (15,480)
     Payment of income taxes........................                            15,480           15,480
                                                           ---------         ---------        ---------
     Balance as of September 30, 2006...............         382,442              --            382,442

     Cash advances to Perpetual.....................          73,181                             73,181
     Repayment of cash advances from Perpetual......         (11,810)                           (11,810)
     Charge for federal and state income taxes......                            (9,734)          (9,734)
     Payment of income taxes........................                             9,734            9,734
                                                           ---------         ---------        ---------
     Balance as of September 30, 2007...............       $ 443,813         $    --          $ 443,813
                                                           =========         =========        =========
</TABLE>

      Subsequent to September 30, 2007 and through December 12, 2007 the Company
made additional net distributions to owners of $8,995.


 Other Transactions with Related Parties

      During the years ended September 30, 2005, 2006 and 2007, the Company
earned interest income from Perpetual of $262, $226 and $430 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, $550 and $750 were paid to Perpetual by the
Company for each of the years ended September 30, 2005, 2006 and 2007,
respectively. The Company also paid management fees to Mr. Joe L. Allbritton in
the amount of $550 and to Mr. Robert L. Allbritton

                                      F-17
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


in the amount of $200 for the year ended September 30, 2005. Management fees are
included in corporate expenses in the consolidated statements of operations. No
management fees were paid to Mr. Joe L. Allbritton or Mr. Robert L. Allbritton
for the years ended September 30, 2006 or 2007. Effective for the year ended
September 30, 2006, Mr. Joe L. Allbritton is no longer an executive officer of
the Company, and Mr. Robert L. Allbritton receives cash compensation for all
services to the Company from Perpetual, which is allocated to the Company
through the Perpetual management fee.

      During the quarter ended March 31, 2007, Perpetual acquired from the
Robert Lewis Allbritton Revocable Trust its 20% ownership interests in TV
Alabama, Inc. and Harrisburg Television, Inc., the Company's subsidiaries which
operate its television stations in the Birmingham and Harrisburg markets,
respectively. The 20% ownership interests were then contributed into the
Company. As a result, the Company now owns 100% of these and all other of its
subsidiaries. As the entities involved in these transactions are considered to
be under common control, the Company was required to account for this
contribution at its book value. Since the book value of the 20% ownership
interests acquired by Perpetual and then contributed to the Company was zero, no
amount has been recorded in the accompanying consolidated financial statements
related to the contribution.

      The Company has 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 indirect subsidiary of Perpetual. The Company
paid fees of $180, $262 and $416 to Irides during the years ended September 30,
2005, 2006 and 2007, 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 $133, $137 and $141 for the years ended September 30,
2005, 2006 and 2007, respectively, and such amounts are included as an offset to
television operating expenses in the consolidated statements of operations.

      In conjunction with its move to a new headquarters office location during
the year ended September 30, 2006, the Company sold to Perpetual certain
furnishings, which were not being moved to the new office location. Such
furnishings were sold at their independently appraised value of $123, which
approximated book value.

      The Company has historically maintained banking relationships with and
leased certain office space from Riggs Bank. Riggs Bank was a wholly-owned
subsidiary of Riggs National Corporation ("Riggs"), of which Mr. Joe L.
Allbritton was a significant stockholder. Effective May 13, 2005, The PNC
Financial Services Group, Inc. acquired the stock of Riggs, and Mr. Joe L.
Allbritton is not a significant stockholder of the acquiring company. During the
period from October 1, 2004 through May 13, 2005, the Company paid $260 to Riggs
Bank related to the rental of office space.


                                      F-18
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


NOTE 8--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 $933, $1,065 and $970 for the years ended
September 30, 2005, 2006 and 2007, 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 $564, $611 and $618 for the years ended
September 30, 2005, 2006 and 2007, respectively.


NOTE 9--COMMITMENTS AND CONTINGENT LIABILITIES

      The Company leases office and studio facilities and machinery and
equipment under operating leases expiring in various years through 2021. Certain
leases contain provisions for renewal and extension.

      Future minimum lease payments under operating leases, which have remaining
noncancellable lease terms in excess of one year as of September 30, 2007, are
as follows:
<TABLE>
<CAPTION>

Year ending September 30,
      <S>                                              <C>
      2008..........................................   $  4,582
      2009..........................................      4,464
      2010..........................................      4,350
      2011..........................................      4,296
      2012..........................................      4,191
      2013 and thereafter...........................     23,729
                                                       --------
                                                       $ 45,612
                                                       ========
</TABLE>

      Rental expense under operating leases aggregated approximately $4,100,
$4,200 and $4,500 for the years ended September 30, 2005, 2006 and 2007,
respectively.

                                      F-19
<PAGE>

                        ALLBRITTON COMMUNICATIONS COMPANY

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


      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, 2007. Under these agreements, the
Company must make specific minimum payments approximating the following:

<TABLE>
<CAPTION>

Year ending September 30,
      <S>                                              <C>
      2008..........................................   $  2,536
      2009..........................................     12,346
      2010..........................................     11,904
      2011..........................................     10,882
      2012..........................................      4,071
                                                       --------
                                                       $ 41,739
                                                       ========
</TABLE>


      The Company has entered into various employment contracts. Future
guaranteed payments under such contracts as of September 30, 2007 approximate
the following:

<TABLE>
<CAPTION>

Year ending September 30,
      <S>                                              <C>
      2008..........................................   $ 11,345
      2009..........................................      1,751
      2010..........................................        595
      2011..........................................         75
                                                       --------
                                                       $ 13,766
                                                       ========

</TABLE>

      The Company has entered into various deferred compensation agreements with
certain employees. Under these agreements, the Company is required to make
payments aggregating $1,740 during the years 2008 through 2013. At September 30,
2006 and 2007, the Company has recorded a deferred compensation liability of
approximately $1,732 and $1,536, respectively, which is included as a component
of accrued employee benefit expenses in the accompanying consolidated balance
sheets.

         The Company also has certain obligations and commitments under various
executory agreements to make future payments for goods and services. These
agreements secure the future rights to certain goods and services to be used in
the normal course of operations.

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


                                      F-20
<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, 2005:
    Allowance for doubtful
       accounts                         $ 1,231          $   599             --        $  (642)<F2>      $ 1,188
                                        =======          =======          =======      =======           =======

    Valuation allowance for
       deferred income tax assets       $ 4,246          $   650<F1>         --        $  (457)<F3>      $ 4,439
                                        =======          =======          =======      =======           =======

Year ended September 30, 2006:
    Allowance for doubtful
       accounts                         $ 1,188          $   587             --        $  (535)<F2>      $ 1,240
                                        =======          =======          =======      =======           =======

    Valuation allowance for
       deferred income tax assets       $ 4,439          $ 1,860<F1>         --        $(1,870)<F3>      $ 4,429
                                        =======          =======          =======      =======           =======

Year ended September 30, 2007:
    Allowance for doubtful
       accounts                         $ 1,240          $ 1,265             --        $  (958)<F2>      $ 1,547
                                        =======          =======          =======      =======           =======

    Valuation allowance for
       deferred income tax assets       $ 4,429          $   372<F1>         --        $  (469)<F3>      $ 4,332
                                        =======          =======          =======      =======           =======

<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.
</FN>
</TABLE>


                                                      F-21
<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 14, 2007

      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/ BARBARA B. ALLBRITTON      Executive Vice President     December 14, 2007
------------------------------       and Director
     Barbara B. Allbritton

   /s/ ROBERT L. ALLBRITTON       Chairman, Chief Executive    December 14, 2007
------------------------------       Officer and Director
     Robert L. Allbritton            (principal executive
                                     officer)

  /s/ FREDERICK J. RYAN, JR.      Vice Chairman, President,    December 14, 2007
------------------------------       Chief Operating Officer
    Frederick J. Ryan, Jr.           and Director

     /s/ STEPHEN P. GIBSON        Senior Vice President and    December 14, 2007
------------------------------       Chief Financial Officer
       Stephen P. Gibson             (principal financial
                                     officer)

    /s/ ELIZABETH A. HALEY        Vice President and           December 14, 2007
------------------------------       Controller (principal
      Elizabeth A. Haley             accounting officer)

<PAGE>


                                  EXHIBIT INDEX

Exhibit No.                  Description of Exhibit                     Page 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)

   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)

   4.4        Credit Agreement dated as of August 23, 2005 by and among     *
              ACC, certain financial institutions, and Bank of America,
              N.A.,  as the  Administrative  Agent,  and Deutsche  Bank
              Securities Inc., as the Syndication Agent.  (Incorporated
              by  reference to Exhibit 4.1 of the  Company's  Report on
              Form 8-K, No. 333-02302, dated August 23, 2005)


                                       A-1
<PAGE>

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

  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        Primary   Television    Affiliation    Agreement   (WSET,     *
              Incorporated)   (with  a  schedule   attached  for  other
              stations'     substantially     identical     affiliation
              agreements).  (Incorporated  by reference to Exhibit 10.3
              of the  Company's  Quarterly  Report  on Form  10-Q,  No.
              333-02302, dated May 13, 2004)**

  10.4        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)

  10.5        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)

  10.6        Pledge Agreement dated as of August 23, 2005 by and among     *
              ACC, Allbritton Group, Inc., Allfinco,  Inc., and Bank of
              America,  N.A., as Agent.  (Incorporated  by reference to
              Exhibit  10.1 of the  Company's  Report on Form 8-K,  No.
              333-02302, dated August 23, 2005)

  10.7        Unlimited Guaranty dated as of August 23, 2005 by each of     *
              the  subsidiaries  of ACC in  favor  of Bank of  America,
              N.A., as Administrative Agent. (Incorporated by reference
              to Exhibit 10.2 of the Company's  Report on Form 8-K, No.
              333-02302, dated August 23, 2005)

  10.8        Collateral  Assignment of Proceeds and Security Agreement     *
              dated  as  of  August  23,  2005  by  and  among  certain
              subsidiaries of ACC and Bank of America,  N.A., as Agent.
              (Incorporated   by  reference  to  Exhibit  10.3  of  the
              Company's Report on Form 8-K, No. 333-02302, dated August
              23, 2005)

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<PAGE>

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

  14.         Code   of   Ethics   for   Senior   Financial   Officers.     *
              (Incorporated by reference to Exhibit 14 of the Company's
              Form 10-K, No. 333-02302, dated December 12, 2003)

  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 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 Exchange Act of 1934, as amended.


-----------------
*Previously filed
**Portions have been omitted pursuant to confidential treatment


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