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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 COMMISSION FILE NUMBER:333-26427-01

                                   KDSM, INC.
             (Exact name of Registrant as specified in its charter)


                MARYLAND                               52-1975792
         (State of incorporation)        (I.R.S. Employer Identification No.)

                              10706 BEAVER DAM ROAD
                             COCKEYSVILLE, MD 21030
                    (Address of principal executive offices)
                                 (410) 568-1500
              (Registrant's telephone number, including area code)

                                SINCLAIR CAPITAL
             (Exact name of Registrant as specified in its charter)

               DELAWARE                          52-2026076
       (State of incorporation)    (I.R.S. Employer Identification No.)

                              10706 BEAVER DAM ROAD
                             COCKEYSVILLE, MD 21030
                    (Address of principal executive offices)
                                 (410) 568-1500
              (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 checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

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

As of March 27, 2001, there are 100 shares of class A common stock, $.01 par
value of KDSM, Inc., issued and outstanding.

In addition, 2,000,000 shares of $200 million aggregate liquidation value of 11
5/8 % high yield trust offered preferred securities of Sinclair Capital, a
subsidiary trust of KDSM, Inc., are issued and outstanding.

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                                     PART I

FORWARD-LOOKING STATEMENTS

     This report includes or incorporates forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
risks, uncertainties and assumptions about us, including, among other things:

     -    the impact of changes in national and regional economies,

     -    pricing fluctuations in local and national advertising,

     -    volatility in programming costs and

     -    the effects of governmental regulation of broadcasting.

     Other matters set forth in this report may also cause actual results in the
future to differ materially from those described in the forward-looking
statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this report might not occur.

ITEM 1. BUSINESS

     KDSM is an indirect wholly owned subsidiary of Sinclair Broadcast Group,
Inc. (Sinclair), which, together with its wholly-owned subsidiary, KDSM
Licensee, LLC, owns all of the assets related to the operation of television
station KDSM.

     KDSM, Channel 17, is located in Des Moines, the state capital of Iowa. The
Des Moines market is currently served by five commercial television stations,
all of which are network affiliated. KDSM, the Fox affiliate, is pursuing a
counter-programming strategy against the other network affiliates designed to
attract additional audience share in demographic groups not served by
programming on competing stations.

     The following table sets forth certain market revenue, size and audience
share information for the Des Moines designated market area:

<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                                         1998                 1999                2000
                                                                    (DOLLARS IN THOUSANDS)
------------------------------------------------- ------------------------------------------------------------

<S>                                               <C>                  <C>                  <C>
Market revenue..                                  $        44,699      $      44,739        $      48,497
Annual market revenue growth................                 11.9%               0.1%                 8.4%
Station rank within market..................                    3                  3                    3
Television homes............................              388,000            393,000              394,000
KDSM audience share.........................                  6.3%               6.0%                 6.3%

</TABLE>

     KDSM had station broadcast revenues of $8.8 million and broadcast cash flow
of $3.3 million in 2000.

     The principal office of KDSM is located at 10706 Beaver Dam Road,
Cockeysville, MD 21030 and its telephone number is 410-568-1500.

SINCLAIR CAPITAL

     Sinclair Capital is a special purpose statutory business trust created
under Delaware law pursuant to a trust agreement executed by KDSM as depositor
for the trust, First Union National Bank of Maryland as property trustee (the
property trustee), and First Union Bank of Delaware as Delaware trustee (the
Delaware trustee), and the filing of a certificate of trust with the Delaware
Secretary of State.

     The property trustee acts as sole trustee under the trust agreement for the
purposes of compliance with the Trust Indenture Act. The trust exists for the
exclusive purposes of:

     -    issuing the preferred securities and the common securities,
          representing undivided beneficial interests in the assets of the
          trust,

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     -    purchasing the KDSM senior debentures with the proceeds from sale of
          the preferred securities and the common securities and

     -    engaging in only those other activities necessary or incidental
          thereto.

     All of the common securities of Sinclair Capital are owned by KDSM and KDSM
has agreed in the KDSM senior debenture indenture to maintain such ownership.
KDSM acquired common securities having an aggregate liquidation amount equal to
3% of the total capital of the trust. The trust has a term expiring in 2015, but
may terminate earlier as provided in the trust agreement. The trust's business
affairs will be conducted by the property trustee, the Delaware trustee and the
administrative trustee. The holder of the common securities, or the holders of
at least a majority in the aggregate liquidation value of then outstanding
preferred securities if an event of default has occurred and is continuing, will
be entitled to appoint, remove or replace the trustees of the trust.

     The duties and obligations of the trustees are governed by the trust
agreement. David D. Smith and David B. Amy, each an officer of Sinclair, were
appointed as administrative trustees of the trust (in such capacity, the
administrative trustees) pursuant to the terms of the trust agreement. Under the
trust agreement, the administrative trustees have certain duties and powers
including, but not limited to, the delivery of certain notices to the holders of
the preferred securities, the appointment of the preferred securities paying
agent and the preferred securities registrar, the registering of transfers of
the preferred securities and the common securities and preparing and filing on
behalf of the trust all United States federal, state and local tax information
and returns and reports required to be filed by or in respect of the trust.
Under the trust agreement, the property trustee has certain duties and powers,
including, but not limited to, holding legal title to the KDSM senior debentures
on behalf of the trust, the collection of payments in respect of the KDSM senior
debentures, maintenance of the payment account, the sending of default notices
with respect to the preferred securities and the distribution of the assets of
the trust in the event of a winding-up of the trust.

TELEVISION BROADCASTING

OPERATING STRATEGY

     Our television operating strategy includes the following key elements:

ATTRACTING VIEWERSHIP

     We seek to attract viewership and expand our audience share through
selective, high-quality programming.

     POPULAR PROGRAMMING. We believe that an important factor in attracting
viewership is our network affiliation with Fox. The affiliation enables us to
attract viewers by virtue of the quality first-run original programming provided
by this network and the network's promotion of such programming. We also seek to
obtain, at attractive prices, popular syndicated programming that is
complementary to the station's network affiliation. Examples of popular
syndicated programming obtained by us for broadcast are "The Simpsons,"
"Seinfeld," "Spin City," "Drew Carey," "Frasier," "Third Rock," "Caroline in the
City" and "Cheers".

     LOCAL NEWS. We believe that the production and broadcasting of local news
is an important link to the community and an aid to the station's efforts to
expand its viewership. In addition, local news programming can provide access to
advertising sources targeted specifically to local news viewers. In March 2001,
we commenced a 35-minute prime-time local newscast, airing seven days a week
from 9:00pm to 9:35pm (CST) which is being produced by KGAN-TV, a wholly-owned
Sinclair television station in Cedar Rapids, Iowa. This is central Iowa's only
prime-time local newscast.

     COUNTER-PROGRAMMING. Our programming strategy on our Fox station also
includes "counter-programming," which consists of broadcasting programs that are
alternatives to the types of programs being shown concurrently on competing
stations. This strategy is designed to attract additional audience share in
demographic groups not served by concurrent programming on competing stations.
We believe that implementation of this strategy enables our station to achieve
competitive rankings in households in the 18-49 and 25-54 demographics and to
offer greater diversity of programming in its DMA.

     POPULAR SPORTING EVENTS. We attempt to capture a portion of advertising
dollars designated to sports programming. Affiliates of Fox are subject to
prohibitions against preemptions of network programming. We have been able to
acquire the local television broadcast rights for certain sporting events,
including Major League Baseball, NFL football, Big Ten football, and Iowa and
Big Ten basketball.

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INNOVATIVE LOCAL SALES AND MARKETING

     We believe that we are able to attract new advertisers to our station and
increase our share of existing customers' advertising budgets by creating a
sense of partnership with those advertisers. We develop such relationships by
training our sales force to offer new marketing ideas and campaigns to
advertisers. These campaigns often involve the sponsorship by advertisers of
local promotional events that capitalize on the station's local identity and
programming franchises. For example, KDSM has a local Family Fair, which allows
station advertisers to reinforce their on-air advertising with their target
audience. Through our strong local sales and marketing focus, we seek to capture
an increasing share of our revenues from local sources, which are generally more
stable than national advertising.

CONTROL OF OPERATING AND PROGRAMMING COSTS

     By employing a disciplined approach to managing programming acquisition and
other costs, Sinclair has been able to achieve operating margins that Sinclair
believes are among the highest in the television broadcast industry. Sinclair
has sought and will continue to seek to acquire quality programming for prices
at or below prices paid in the past which directly affects us. As an owner or
provider of programming services to 62 stations located in 40 geographically
diverse markets reaching approximately 25% of the U.S. television households,
Sinclair believes that it is able to negotiate favorable terms for the
acquisition of programming. Moreover, Sinclair emphasizes control of our
programming and operating costs through program-specific profit analysis,
detailed budgeting, tight control over staffing levels and detailed long-term
planning models.

ATTRACT AND RETAIN HIGH QUALITY MANAGEMENT

     We believe that much of our success is due to our ability to attract and
retain highly skilled and motivated managers, both at the corporate and local
station levels. A portion of the compensation provided to general managers,
sales managers and other station managers is based on their achieving certain
operating results. We also provide our corporate and station managers with
deferred compensation plans offering options to acquire class A common stock.

COMMUNITY INVOLVEMENT

     We actively participate in various community activities and offer many
community services. Our activities include broadcasting programming of local
interest and sponsorship of community and charitable events. We also encourage
our station employees to become active members of their communities and to
promote involvement in community and charitable affairs. We believe that active
community involvement by our station provides increased exposure in our DMA and
ultimately increases viewership and advertising support.

PROGRAMMING AND AFFILIATIONS

     Sinclair continually reviews our existing programming inventory and seeks
to purchase the most profitable and cost-effective syndicated programs available
for each time period. In developing its selection of syndicated programming,
Sinclair balances the cost of available syndicated programs with their potential
to increase advertising revenue and the risk of their reduced popularity during
the term of the program contract. Sinclair seeks to purchase only those programs
with contractual periods that permit programming flexibility and which
complement a station's overall programming strategy and counter-programming
strategy. Programs that can perform successfully in more than one time period
are more attractive due to the long lead time and multi-year commitments
inherent in program purchasing.

     On August 21, 1996, Sinclair entered into an agreement with Fox (the Fox
agreement) which, among other things, provides that the affiliation agreement
between Fox and KDSM would be amended to have a new five-year term commencing on
the date of the Fox agreement and ending on August 21, 2001. Fox had, but did
not exercise, an option to extend the affiliation agreement for an additional
five-year term. Although we are not currently negotiating with Fox to secure a
long-term affiliation agreement for KDSM, we do not believe that Fox has any
current plans to terminate the affiliation of KDSM. The existing Fox agreement
also includes provisions limiting the ability of KDSM to preempt Fox programming
except where it has existing programming conflicts or where KDSM preempts to
serve a public purpose. Fox produces and distributes programming in exchange for
KDSM's commitment to air the programming at specified times and for commercial
announcement time during the programming.

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FEDERAL REGULATION OF TELEVISION BROADCASTING

     The ownership, operation and sale of television stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act of 1934, as amended (Communications Act). Among other things,
the FCC assigns frequency bands for broadcasting; determines the particular
frequencies, locations and operating power of stations; issues, renews, revokes
and modifies station licenses; regulates equipment used by stations; adopts and
implements regulations and policies that directly or indirectly affect the
ownership, operation and employment practices of stations; and has the power to
impose penalties for violations of its rules or the Communications Act.

     The following is a brief summary of certain provisions of the
Communications Act, the Telecommunications Act of 1996 (the 1996 Act) and
specific FCC regulations and policies. Reference should be made to the
Communications Act, the 1996 Act, FCC rules and the public notices and rulings
of the FCC for further information concerning the nature and extent of federal
regulation of broadcast stations.

LICENSE GRANT AND RENEWAL

     Television stations operate pursuant to broadcasting licenses that are
granted by the FCC for maximum terms of eight years and are subject to renewal
upon application to the FCC. During certain periods when renewal applications
are pending, petitions to deny license renewals can be filed by interested
parties, including members of the public. The FCC will generally grant a renewal
application if it finds:

     -    that the station has served the public interest, convenience and
          necessity;

     -    that there have been no serious violations by the licensee of the
          Communications Act or the rules and regulations of the FCC; and

     -    that there have been no other violations by the licensee of the
          Communications Act or the rules and regulations of the FCC that, when
          taken together, would constitute a pattern of misconduct.

     KDSM's FCC license will expire on February 1, 2006. Although renewal of a
license is granted in the vast majority of cases even when petitions to deny are
filed, there can be no assurance that the license of a station will be renewed.

OWNERSHIP MATTERS

     GENERAL. The Communications Act prohibits the assignment of a broadcast
license or the transfer of control of a broadcast licensee without the prior
approval of the FCC. In determining whether to permit the assignment or transfer
of control of, or the grant or renewal of, a broadcast license, the FCC
considers a number of factors pertaining to the licensee, including compliance
with various rules limiting common ownership of media properties, the
"character" of the licensee and those persons holding "attributable" interests
in that licensee, and compliance with the Communications Act's limitations on
alien ownership.

     To obtain the FCC's prior consent to assign a broadcast license or transfer
control of a broadcast licensee, appropriate applications must be filed with the
FCC. If the application involves a "substantial change" in ownership or control,
the application must be placed on public notice for a period of approximately 30
days during which petitions to deny the application may be filed by interested
parties, including members of the public. If the application does not involve a
"substantial change" in ownership or control, it is a "pro forma" application.
The "pro forma" application is not subject to petitions to deny or a mandatory
waiting period, but is nevertheless subject to having informal objections filed
against it. If the FCC grants an assignment or transfer application, interested
parties have approximately 30 days from public notice of the grant to seek
reconsideration or review of the grant. Generally, parties that do not file
initial petitions to deny or informal objections against the application face
difficulty in seeking reconsideration or review of the grant. The FCC normally
has approximately an additional 10 days to set aside such grant on its own
motion. When passing on an assignment or transfer application, the FCC is
prohibited from considering whether the public interest might be served by an
assignment or transfer to any party other than the assignee or transferee
specified in the application.

     The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding, or through subsidiaries controlling, broadcast
licenses, the interests of officers, directors and those who, directly or
indirectly, have the right to vote 5% or more of the corporation's stock (or 20%
or more of such stock in the case of insurance companies, investment companies
and bank trust departments that are passive investors) are generally
attributable. In August 1999, the FCC revised its attribution and multiple
ownership rules, and adopted the equity-debt-plus rule that

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causes certain creditors or investors to be attributable owners of a station.
Under this rule, a major programming supplier (any programming supplier that
provides more than 15% of the station's weekly programming hours) or same-market
media entity will be an attributable owner of a station if the supplier or
same-market media entity holds debt or equity, or both, in the station that is
greater than 33% of the value of the station's total debt plus equity. For
purposes of this rule, equity includes all stock, whether voting or non-voting,
and equity held by insulated limited partners in partnerships. Debt includes all
liabilities whether long-term or short-term.

     The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country (collectively,
aliens). The Communications Act also authorizes the FCC, if the FCC determines
that it would be in the public interest, to prohibit the issuance of a broadcast
license to, or the holding of a broadcast license by, any corporation directly
or indirectly controlled by any other corporation of which more than 25% of the
capital stock is owned of record or voted by aliens. The FCC has issued
interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships.

     As a result of these provisions, the licenses granted to KDSM Licensee, LLC
by the FCC could be revoked if, among other restrictions imposed by the FCC,
more than 25% of Sinclair's stock were directly or indirectly owned or voted by
aliens. Sinclair and its subsidiaries are domestic corporations, and the members
of the Smith family (who together hold over 90% of the common voting rights of
Sinclair) are all United States citizens. The amended and restated articles of
incorporation of Sinclair (the amended certificate) contain limitations on alien
ownership and control that are substantially similar to those contained in the
Communications Act. Pursuant to the amended certificate, Sinclair has the right
to repurchase alien-owned shares at their fair market value to the extent
necessary, in the judgment of its board of directors, to comply with the alien
ownership restrictions.

     RADIO/TELEVISION CROSS-OWNERSHIP RULE. The FCC's radio/television
cross-ownership rule (the "one to a market" rule) generally permits a party to
own a combination of up to two television stations and six radio stations
depending on the number of independent media voices in the market.

     LOCAL TELEVISION/CABLE CROSS-OWNERSHIP RULE. While the 1996 Act eliminates
a previous statutory prohibition against the common ownership of a television
broadcast station and a cable system that serve the same local market, the 1996
Act leaves the current FCC rule in place. The legislative history of the Act
indicates that the repeal of the statutory ban should not prejudge the outcome
of any FCC review of the rule.

     BROADCAST/DAILY NEWSPAPER CROSS-OWNERSHIP RULE. The FCC's rules prohibit
the common ownership of a radio or television broadcast station and a daily
newspaper in the same market. In October 1996, the FCC initiated a rulemaking
proceeding to determine whether it should liberalize its waiver policy with
respect to cross-ownership of a daily newspaper and one or more radio stations
in the same market.

     DUAL NETWORK RULE. A network entity is permitted to operate more than one
television network, provided, however, that ABC, CBS, NBC, and/or Fox are
currently prohibited, absent a waiver, from merging with each other or with
another network television entity such as WB or UPN.

     ANTITRUST REGULATION. The Department of Justice (DOJ) and the Federal Trade
Commission have increased their scrutiny of the television industry since the
adoption of the 1996 Act, and have reviewed matters related to the concentration
of ownership within markets (including LMAs) even when the ownership or LMA in
question is permitted under the laws administered by the FCC or by FCC rules and
regulations. For instance, the DOJ has for some time taken the position that an
LMA entered into in anticipation of a station's acquisition with the proposed
buyer of the station constitutes a change in beneficial ownership of the station
which, if subject to filing under the HSR Act, cannot be implemented until the
waiting period required by that statute has ended or been terminated.

     Expansion of our broadcast operations on both a local and national level
will continue to be subject to the FCC's ownership rules and any changes the FCC
or Congress may adopt. Concomitantly, any further relaxation of the FCC's
ownership rules may increase the level of competition in one or more of the
markets in which our stations are located, more specifically to the extent that
any of our competitors may have greater resources and thereby be in a superior
position to take advantage of such changes.

     NATIONAL OWNERSHIP RULE. No individual or entity may have an attributable
interest in television stations reaching more than 35% of the national
television viewing audience. Where an individual or entity has an

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attributable interest in more than one television station in a Designated Market
Area (DMA), the percentage of the national television viewing audience
encompassed within that DMA is only counted once. Historically, VHF stations
have shared a larger portion of the market than UHF stations. Therefore, only
half of the households in the market area of any UHF station are included when
calculating whether an entity or individual owns television stations reaching
more than 35% of the national television viewing audience. KDSM is a UHF
station.

     DUOPOLY RULE. Under the FCC's new local television ownership rules, a party
may own two television stations in adjoining DMA, even if there is Grade B
overlap between the two stations' signals and generally may own two stations in
the same market:

     -    if there is no Grade B overlap between the stations; or

     -    if the market containing both the stations contains at least eight
          separately-owned full-power television stations (the "eight voices
          test") and not more than one station is among the top-four rated
          stations in the market.

     In addition, a party may request a waiver of the rule to acquire a second
station in the market if the station to be acquired is economically distressed
or unbuilt and there is no party who does not own a local television station who
would purchase the station for a reasonable price.

THE SATELLITE HOME VIEWER ACT (SHVA)

     In 1988, Congress enacted SHVA which enabled satellite carriers to provide
broadcast programming to those satellite subscribers who were unable to obtain
broadcast network programming over-the-air. SHVA did not permit satellite
carriers to retransmit local broadcast television signals directly to their
subscribers. The Satellite Home Viewer Improvement Act of 1999 (SHVIA) revised
SHVA to reflect changes in the satellite and broadcasting industry. This
legislation allows satellite carriers to provide local television signals by
satellite within a station market, and requires satellite carriers to carry all
local signals in any market where it carries any local signals starting January
1, 2002. SHVIA requires all television stations to elect to exercise certain
"must carry" or "retransmission consent" rights in connection with their
carriage by satellite carriers on or before July 1, 2001. We have entered into
agreements granting the two primary satellite carriers retransmission consent to
carry our station.

MUST-CARRY/RETRANSMISSION CONSENT

     Pursuant to the Cable Act of 1992, television broadcasters are required to
make triennial elections to exercise either certain "must-carry" or
"retransmission consent" rights in connection with their carriage by cable
systems in each broadcaster's local market. By electing the must-carry rights, a
broadcaster demands carriage on a specified channel on cable systems within its
DMA, in general as defined by the Nielsen DMA Market and Demographic Rank Report
of the prior year. These must-carry rights are not absolute, and their exercise
is dependent on variables such as:

     -    the number of activated channels on a cable system,

     -    the location and size of a cable system, and

     -    the amount of programming on a broadcast station that duplicates the
          programming of another broadcast station carried by the cable system.

     Therefore, under certain circumstances, a cable system may decline to carry
a given station. Alternatively, if a broadcaster chooses to exercise
retransmission consent rights, it can prohibit cable systems from carrying its
signal or grant the appropriate cable system the authority to retransmit the
broadcast signal for a fee or other consideration. In October 1999, we elected
retransmission consent with respect to KDSM. Our stations continue to be carried
on all pertinent cable systems, and we do not believe that our elections have
resulted in the shifting of our stations to less desirable cable channel
locations. Many of the agreements we have negotiated for cable carriage are
short term, subject to month-to-month extensions. Accordingly, we may need to
negotiate new long term retransmission consent agreements for our stations to
ensure carriage on those relevant cable systems for the balance of this
triennial period (i.e., through December 31, 2002).

     The FCC recently determined not to apply must-carry rules to require cable
companies to carry both the analog and digital signals of local broadcasters
during the DTV transition period between 2002 and 2006 when television stations
will be broadcasting both signals. As a result of this decision by the FCC,
cable customers in our broadcast markets may not receive the station's digital
signal.

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SYNDICATED EXCLUSIVITY/TERRITORIAL EXCLUSIVITY

     The FCC's syndicated exclusivity rules allow local broadcast television
stations to demand that cable operators black out syndicated non-network
programming carried on "distant signals" (i.e., signals of broadcast stations,
including so-called "superstations," which serve areas substantially removed
from the cable system's local community). The FCC's network non-duplication
rules allow local broadcast network television affiliates to require that cable
operators black out duplicating network programming carried on distant signals.

RESTRICTIONS ON BROADCAST ADVERTISING

     Advertising of cigarettes and certain other tobacco products on broadcast
stations has been banned for many years. Various states also restrict the
advertising of alcoholic beverages. FCC rules also restrict the amount and type
of advertising which can appear in programming broadcast primarily for an
audience of children twelve years old and younger.

     The Communications Act and FCC rules also place restrictions on the
broadcasting of advertisements by legally qualified candidates for elective
office. Among other things,

     -    stations must provide "reasonable access" for the purchase of time by
          legally qualified candidates for federal office,

     -    stations must provide "equal opportunities" for the purchase of
          equivalent amounts of comparable broadcast time by opposing candidates
          for the same elective office, and

     -    during the 45 days preceding a primary or primary run-off election and
          during the 60 days preceding a general or special election, legally
          qualified candidates for elective office may be charged no more than
          the station's "lowest unit charge" for the same class of
          advertisement, length of advertisement, and daypart.

Both the former President of the United States and the former Chairman of the
FCC have called for rules that would require broadcast stations to provide free
airtime to political candidates. We cannot predict whether or not the new
administration will adopt this position. Nor can we predict the effect of any
such requirement on our stations' advertising revenues.

PROGRAMMING AND OPERATION

     GENERAL. The Communications Act requires broadcasters to serve the "public
interest." The FCC has relaxed or eliminated many of the more formalized
procedures it had developed in the past to promote the broadcast of certain
types of programming responsive to the needs of a station's community of
license. FCC licensees continue to be required, however, to present programming
that is responsive to their communities' issues, and to maintain certain records
demonstrating such responsiveness. Complaints from viewers concerning a
station's programming may be considered by the FCC when it evaluates renewal
applications of a licensee, although such complaints may be filed at any time
and generally may be considered by the FCC at any time. Stations also must pay
regulatory and application fees, and follow various rules promulgated under the
Communications Act that regulate, among other things, political advertising,
sponsorship identifications, obscene and indecent broadcasts, and technical
operations, including limits on radio frequency radiation.

     During 2000, the FCC adopted rules to require broadcast licensees to create
equal employment opportunity outreach programs and maintain records and make
filing with the FCC evidencing such efforts. In January 2001, the United States
Court of Appeals for the District of Columbia Circuit vacated these rules. The
FCC subsequently issued a Public Notice suspending the outreach and
record-keeping aspects of the rules. The FCC is entitled to seek further
rehearing or appeal of the case and may attempt to promulgate new regulations
that meet the Court's concerns. We cannot predict whether the FCC will take any
of these actions or the outcome should it do so.

     CHILDREN'S TELEVISION PROGRAMMING. Television stations are required to
broadcast a minimum of three hours per week of "core" children's educational
programming, which the FCC defines as programming that

     -    has the significant purpose of servicing the educational and
          informational needs of children 16 years of age and under;

     -    is regularly scheduled, weekly and at least 30 minutes in duration;
          and

     -    is aired between the hours of 7:00 a.m. and 10:00 p.m. Furthermore,
          "core" children's educational programs, in order to qualify as such,
          are required to be identified as educational and informational
          programs over the air at the time they are broadcast, and are required
          to be identified in the children's

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          programming reports required to be placed quarterly in stations'
          public inspection files and filed quarterly with the FCC.

     Additionally, television stations are required to identify and provide
information concerning "core" children's programming to publishers of program
guides. The FCC is considering whether or not to require the use of the digital
broadcast spectrum for the broadcast of additional amounts of "core" children's
programming.

     TELEVISION VIOLENCE. The television industry has developed a ratings system
that has been approved by the FCC. Furthermore, the FCC requires certain
television sets to include the so-called "V-chip," a computer chip that allows
blocking of rated programming.

DIGITAL TELEVISION

     The FCC has taken a number of steps to implement digital television (DTV)
broadcasting services. The FCC has adopted an allotment table that provides all
authorized television stations with a second channel on which to broadcast a DTV
signal. The FCC has attempted to provide DTV coverage areas that are comparable
to stations' existing service areas. The FCC has ruled that television broadcast
licensees may use their digital channels for a wide variety of services such as
high-definition television, multiple standard definition television programming,
audio, data, and other types of communications, subject to the requirement that
each broadcaster provide at least one free video channel equal in quality to the
current technical standard and further subject to the requirement that
broadcasters pay a fee of 5% of gross revenues on all DTV subscription services.

     DTV channels are generally located in the range of channels from channel 2
through channel 51. The FCC required that affiliates of ABC, CBS, NBC and Fox in
the top 10 television markets begin digital broadcasting by May 1, 1999 and that
affiliates of these networks in markets 11 through 30 begin digital broadcasting
by November 1999. All other commercial stations are required to begin digital
broadcasting by May 1, 2002. KDSM is required to commence digital operations by
May 1, 2002. An application for KDSM's digital facilities was filed by November
1, 1999. The FCC's plan calls for the DTV transition period to end in the year
2006, at which time the FCC expects that television broadcasters will cease
non-digital broadcasting and return one of their two channels to the government,
allowing that spectrum to be recovered for other uses. The FCC has been
authorized by Congress to extend the December 31, 2006 deadline for reclamation
of a television station's non-digital channel if, in any given case:

     -    one or more television stations affiliated with ABC, CBS, NBC or Fox
          in a market is not broadcasting digitally, and the FCC determines that
          such stations have "exercised due diligence" in attempting to convert
          to digital broadcasting, or

     -    less than 85% of the television households in the station's market
          subscribe to a multichannel video service (cable, wireless cable or
          direct-to-home broadcast satellite television (DBS)) that carries at
          least one digital channel from each of the local stations in that
          market, or

     -    less than 85% of the television households in the market can receive
          digital signals off the air using either a set-top converter box for
          an analog television set or a new DTV television set.

     Congress directed the FCC to auction the remaining non-digital channels by
September 30, 2002 even though they are not to be reclaimed by the government
until at least December 31, 2006. Broadcasters are permitted to bid on the
non-digital channels in cities with populations greater than 400,000, provided
the channels are used for DTV. The FCC has initiated separate proceedings to
consider the surrender of existing television channels and how these frequencies
will be used after they are eventually recovered from broadcasters.

     Implementation of digital television will also impose substantial
additional costs on television stations because of the need to replace equipment
and because some stations will need to operate at higher utility costs and there
can be no assurance that our television stations will be able to increase
revenue to offset such costs. The FCC has proposed imposing new public interest
requirements on television licensees in exchange for their receipt of DTV
channels. In addition, Congress has held hearings on broadcasters' plans for the
use of their digital spectrum.

PENDING MATTERS

     The Congress and the FCC have under consideration, and in the future may
consider and adopt, 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 station, result in the loss of audience share
and advertising revenues for our broadcast station, and affect our ability to
acquire additional broadcast stations or finance such acquisitions. In addition
to the changes and proposed changes noted above, such matters may

<PAGE>

include, for example, the license renewal process, spectrum use fees, political
advertising rates, potential restrictions on the advertising of certain products
(beer, wine and hard liquor, for example), and the rules and policies with
respect to equal employment opportunity.

     Other matters that could affect KDSM include technological innovations and
developments generally affecting competition in the mass communications
industry, such as direct television broadcast satellite service, creation of
Class A television services, the continued establishment of wireless cable
systems and low power television stations, digital television technologies, the
Internet and the advent of telephone company participation in the provision of
video programming service.

OTHER CONSIDERATIONS

     The foregoing summary does not purport to be a complete discussion of all
provisions of the Communications Act or other congressional acts or of the
regulations and policies of the FCC. For further information, reference should
be made to the Communications Act, the 1996 Act, other congressional acts, and
regulations and public notices promulgated from time to time by the FCC. There
are additional regulations and policies of the FCC and other federal agencies
that govern political broadcasts, advertising, equal employment opportunity, and
other matters affecting our business and operations.

EMPLOYEES

     As of December 31, 2000, we had approximately 39 employees. None of the
employees are represented by labor unions under any collective bargaining
agreement. We have not experienced significant labor problems and we consider
our overall labor relations to be good.

ITEM 2. PROPERTIES

     We have facilities consisting of offices, studios and tower sites.
Transmitter and tower sites are located to provide maximum signal coverage of
the station's market. The following table generally describes our principal
owned and leased real property in the Des Moines market:

<TABLE>
<CAPTION>

TYPE OF FACILITY AND USE                OWNED OR LEASED                  APPROXIMATE SIZE (SQ.FEET)
------------------------                ---------------                  --------------------------
<S>                                     <C>                              <C>
KDSM Studio & Office Site               Owned                            13,000
KDSM Transmitter Bldg/Tower             Owned                            2,000
KDSM Transmitter Land                   Leased (expires 11/08/2034)      40 Acres

</TABLE>

     We believe that all of our properties, both owned and leased, are generally
in good operating condition, subject to normal wear and tear, and are suitable
and adequate for our current business operations.

ITEM 3. LEGAL PROCEEDINGS

     Lawsuits and claims are filed against us from time to time in the ordinary
course of business. These actions are in various preliminary stages, and no
judgments or decisions have been rendered by hearing boards or courts.
Management, after reviewing developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on us.

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

     No matters were submitted to a vote of our stockholders during the fourth
quarter of 2000.

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS
     None.

ITEM 6. SELECTED FINANCIAL DATA

     The selected consolidated financial data for the years ended December 31,
1996, 1997, 1998, 1999 and 2000 have been derived from our audited Consolidated
Financial Statements. The Consolidated Financial Statements for the years ended
December 31, 1998, 1999 and 2000 are included elsewhere in this Form 10-K.

     The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere in this Form 10-K.

<PAGE>

<TABLE>
<CAPTION>

                                                  COMBINED (a)                        THE COMPANY
                                                --------------  ------------------------------------------------------
                                                                      YEARS ENDED DECEMBER 31,
                                                ----------------------------------------------------------------------
                                                    1996          1997          1998           1999          2000
                                                    ----          ----          ----           ----          ----
                                                                       (DOLLARS IN THOUSANDS)
<S>                                             <C>           <C>           <C>            <C>           <C>
STATEMENT OF OPERATIONS DATA:
Net broadcast revenues (b)................      $     8,218   $     8,140   $     8,363    $     8,461   $     8,807
Barter revenues...........................              204           398           552            541           731
                                                -----------   -----------   -----------    -----------   -----------

Total revenues............................            8,422         8,538         8,915          9,002         9,538
                                                -----------   -----------   -----------    -----------   -----------

Operating costs (c).......................            3,773         3,658         3,742          3,997         4,241
Expenses from barter arrangements.........              225           283           377            392           636
Depreciation and amortization (d).........            2,616         3,521         4,349          3,555         3,592
Stock-based compensation..................                -            23            23             23            26
                                                -----------   -----------   -----------    -----------   -----------

Broadcast operating income................            1,808         1,053           424          1,035         1,043
Parents preferred stock dividend income...                -        20,826        26,033         26,033        26,033
Subsidiary trust minority interest
   expense (e)............................                -      (18,600)      (23,250)       (23,250)      (23,250)
Interest and other income.................                -             -           239            671         1,179
                                                -----------   -----------   -----------    -----------   -----------

Income before income taxes................      $     1,808   $     3,279   $     3,446    $     4,489   $     5,005
                                                ===========   ===========   ===========    ===========   ===========

Net income................................      $     1,323   $     1,895   $       729    $     8,977   $     5,005
                                                ===========   ===========   ===========    ===========   ===========

Net income available to common
   shareholders...........................      $     1,323   $     1,895   $       729    $     8,977   $     5,005
                                                ===========   ===========   ===========    ===========   ===========

OTHER DATA:
Broadcast cash flow (f)...................      $     3,727   $     3,661   $     3,693    $     3,433   $     3,284
Broadcast cash flow margin (g)............            45.4%         45.0%         44.2%          40.6%         37.3%
Adjusted EBITDA (h).......................      $     3,291   $     3,378   $     3,423    $     3,175   $     2,992
Adjusted EBITDA margin (g)................            40.0%         41.5%         40.9%          37.5%         34.0%
Program contract payments.................      $     1,133   $     1,219   $     1,373    $     1,438   $     1,669
Corporate overhead expense................              436           283           270            258           292
Capital expenditures......................              190           197           235            151           956
Cash flows from operating activities......            1,647         4,060         4,210         10,428         6,968
Cash flows from investing activities......            (190)     (207,973)         (235)          (151)         (955)
Cash flows from financing activities......          (1,485)       203,921       (3,979)       (10,275)       (5,950)

BALANCE SHEET DATA:
Cash and cash equivalents.................      $         3   $        11   $         7    $         9   $        72
Total assets..............................           40,674       258,540       259,519        268,061       272,705
HYTOPS (i)................................                -       200,000       200,000        200,000       200,000
Total equity of partnership 1996, total
stockholders equity 1997 to 2000..........           37,516        53,749        54,478         63,455        68,460
</TABLE>
-----------------------------------------
(a)  The combined column represents the results of operations for the five
     months ended May 31, 1996 of KDSM-TV, a division of River City
     Broadcasting, L.P. (the predecessor) and the results of operations for the
     seven months ended December 31, 1996 of KDSM, Inc. and subsidiaries.

(b)  "Net broadcast revenues" are defined as broadcast revenues net of agency
     commissions.

(c)  Operating costs include program and production expenses and selling,
     general and administrative expenses.

(d)  Depreciation and amortization includes amortization of program contract
     costs and net realizable value adjustments, depreciation and amortization
     of property and equipment, and amortization of acquired intangible
     broadcasting assets and other assets including amortization of deferred
     financing costs and costs related to excess syndicated programming.

(e)  Subsidiary trust minority interest expense represents the distributions on
     the HYTOPS (see footnote i).

(f)  "Broadcast cash flow" is defined as broadcast operating income plus
     corporate overhead expense, special bonuses paid to executive officers,
     stock-based compensation, depreciation and amortization (including film
     amortization and excess syndicated programming), less cash payments for
     program rights. Cash program payments represent cash payments made for
     current programs payable and do

<PAGE>

     not necessarily correspond to program usage. Special bonuses paid to
     executive officers are considered unusual and non-recurring. We have
     presented broadcast cash flow data, which we believe are comparable to the
     data provided by other companies in the industry, because such data are
     commonly used as a measure of performance for broadcast companies. However,
     broadcast cash flow does not purport to represent cash provided by
     operating activities as reflected in our consolidated statements of cash
     flows, is not a measure of financial performance under generally accepted
     accounting principles and should not be considered in isolation or as a
     substitute for measures of performance prepared in accordance with
     generally accepted accounting principles.

(g)  "Broadcast cash flow margin" is defined as broadcast cash flow divided by
     net broadcast revenues. "Adjusted EBITDA margin" is defined as Adjusted
     EBITDA divided by net broadcast revenues.

(h)  "Adjusted EBITDA" is defined as broadcast cash flow less corporate expenses
     and is a commonly used measure of performance for broadcast companies.
     Adjusted EBITDA does not purport to represent cash provided by operating
     activities as reflected in our consolidated statements of cash flows, is
     not a measure of financial performance under generally accepted accounting
     principles and should not be considered in isolation or as a substitute for
     measures of performance prepared in accordance with generally accepted
     accounting principles.

(i)  HYTOPS represents our Obligated Mandatorily Redeemable Security of
     Subsidiary Trust Holding Solely KDSM Senior Debentures representing $200
     million aggregate liquidation value.

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

INTRODUCTION

     Our operating revenues are derived from local and national advertisers. Our
revenues from local advertisers have continued to trend upward and revenues from
national advertisers have continued to trend downward when measured as a
percentage of total broadcast revenue. We believe this trend is primarily
resulting from an increase in the number of media outlets providing national
advertisers a means by which to advertise their goods and services. Our efforts
to mitigate this trend include continuing our efforts to increase local revenues
and the development of innovative marketing strategies to sell traditional and
non-traditional services to national advertisers.

     Our primary operating expenses involved in owning, operating or programming
the television station are syndicated program rights fees, commissions on
revenues, employee salaries and station promotional costs. Amortization and
depreciation of costs associated with the acquisition of the station are also
significant factors in determining our overall profitability.

     Set forth below are the principal types of broadcast revenues received by
our station for the periods indicated and the percentage contribution of each
type to our total gross broadcast revenues:

                               BROADCAST REVENUES
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                   ------------------------------------------------------------------------------
                                             1998                      1999                      2000
                                             ----                      ----                      ----
<S>                                <C>              <C>      <C>              <C>      <C>              <C>
Local/regional advertising...      $    6,618        69.2%   $    6,996        72.7%   $    7,531        75.4%
National advertising.........           2,769        29.0%        2,536        26.4%        2,356        23.6%
Network compensation.........              53         0.5%            -         0.0%            -         0.0%
Political advertising........              34         0.4%           17         0.2%           26         0.3%
Production...................              89         0.9%           73         0.7%           70         0.7%
                                   ----------   ----------   ----------   ----------   ----------   ----------
Broadcast revenues...........           9,563       100.0%        9,622       100.0%        9,983       100.0%
                                                ==========                ==========                ==========
Less: agency commissions.....         (1,200)                   (1,161)                   (1,176)
                                   ----------                ----------                ----------
Broadcast revenues, net......           8,363                     8,461                     8,807
Barter revenues..............             552                       541                       731
                                   ----------                ----------                ----------
Total revenues...............      $    8,915                $    9,002                $    9,538
                                   ==========                ==========                ==========
</TABLE>

     Our primary types of programming and their approximate percentages of 2000
net broadcast revenues were syndicated programming (66.5%), network programming
(20.9%), sports programming (9.3%), children's programming (2.1%) and paid
programming (1.2%). Similarly, our six largest categories of advertising and
their approximate percentages of 2000 net broadcast revenues were automotive
(19%), services (16%), restaurants (11%), food (9%), retail/department stores
(7%), and soft drinks (6%). No other advertising category accounted for more
than 6% of our net broadcast revenues in 2000. No individual advertiser
accounted for more than 5% of the station's net broadcast revenues in 2000.

<PAGE>

     The following table sets forth certain of our operating data for the years
ended December 31, 1998, 1999 and 2000. For definitions of items, see footnotes
to table in "Item 6. Selected Financial Data".

                                 OPERATING DATA
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                       YEARS ENDED DECEMBER 31,
                                                                       ------------------------
                                                              1998               1999               2000
                                                              ----               ----               ----
<S>                                                     <C>                <C>                 <C>
Net broadcast revenues (b).........................     $          8,363   $          8,461    $        8,807
Barter revenues....................................                  552                541               731
                                                        ----------------   ----------------   ---------------
Total revenues.....................................                8,915              9,002             9,538
                                                        ----------------   ----------------   ---------------
Operating costs (c)................................                3,742              3,997             4,241
Expenses from barter arrangements..................                  377                392               636
Depreciation and amortization (d)..................                4,349              3,555             3,592
Stock-based compensation...........................                   23                 23                26
                                                        ----------------   ----------------   ---------------
Broadcast operating income.........................                  424              1,035             1,043
Parent preferred stock dividend income.............               26,033             26,033            26,033
Subsidiary trust minority interest expense (e).....             (23,250)           (23,250)          (23,250)
Interest and other income..........................                  239                671             1,179
                                                        ----------------   ----------------   ---------------
Income before income taxes.........................     $          3,446   $          4,489    $        5,005
Net income.........................................     $            729   $          8,977    $        5,005
                                                        ----------------   ----------------   ---------------
Basic  and  diluted  net  income  available  to
common shareholders................................     $            729   $          8,977    $        5,005
                                                        ================   ================   ===============

BROADCAST CASH FLOW (BCF) DATA:
    BCF (f)........................................     $          3,693   $          3,433    $        3,284
    BCF margin (g).................................                44.2%              40.6%             37.3%

OTHER DATA:
    Adjusted EBITDA (h)............................     $          3,423   $          3,175    $        2,992
    Adjusted EBITDA margin (g).....................                40.9%              37.5%             34.0%
    Program contract payments......................     $          1,373   $          1,438    $        1,669
    Corporate overhead expense.....................                  270                258               292
    Capital expenditures...........................                  235                151               956
    Cash flows from operating activities...........                4,210             10,428             6,968
    Cash flows from investing activities...........                (235)              (151)             (955)
    Cash flows from financing activities...........              (3,979)           (10,275)           (5,950)

</TABLE>

<PAGE>

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2000 AND 1999

     Net broadcast revenues increased to $8.8 million for the year ended
December 31, 2000 from $8.5 million for the year ended December 31, 1999, or
3.5%. When comparing the year ended December 31, 2000 to the year ended December
31, 1999, revenues from local advertisers increased approximately $536,000, or
7.7% and revenues from national advertisers decreased approximately $180,000, or
7.1%. Our decrease in national advertising was mitigated by an offsetting
increase in local advertising revenue. The decrease in national revenue is a
trend that we believe is resulting from an increase in the number of media
outlets providing national advertisers a means by which to advertise their goods
and services.

     Station operating costs increased to $4.2 million for the year ended
December 31, 2000 from $4.0 million for the year ended December 31, 1999, or
5.0%. The increase in operating costs for the year ended December 31, 2000, as
compared to the year ended December 31, 1999 primarily related to an increase in
programming costs of $182,000 related to our Fox agreement to purchase
additional inventory.

     Depreciation and amortization remained consistent at $3.6 million for the
year ended December 31, 2000 as compared to the year ended December 31, 1999.

     Broadcast operating income remained consistent at $1.0 million for the year
ended December 31, 2000 as compared to the year ended December 31, 1999.

     Parent preferred stock dividend income of $26.0 million for the year ended
December 31, 2000 is related to our investment in 12 5/8% series C preferred
stock (the parent preferred securities) issued by Sinclair, completed March 12,
1997. Subsidiary trust minority interest expense of $23.3 million for the year
ended December 31, 2000 is related to the private placement of the subsidiary
trust preferred securities (the HYTOPS). Our ability to make future subsidiary
trust minority interest payments is directly contingent upon the parent's
ability to pay dividends on parent preferred stock.

     We recorded no income tax provision or benefit for the year ended December
31, 2000 compared to an income tax benefit of $4.5 million for the year ended
December 31, 1999. The change in income taxes for the year ended December 31,
2000 as compared to the year ended December 31, 1999 is attributable to the
dividends received deduction associated with the HYTOPS. Our effective tax rate
for the year ended December 31, 2000 was zero as compared to (100.0%) for the
year ended December 31, 1999. The change in our effective tax rate for 2000
primarily resulted from the dividends received deduction associated with the
HYTOPS, resulting in no income tax provision in 2000 and a benefit in 1999
related to Sinclair's recognition of earnings and profits for the year ended
December 31, 1999 and 2000. The benefit recorded for the year ended December 31,
1999 resulted from a reduction of a net deferred tax liability to zero.

     Net deferred taxes remained consistent at zero as of December 31, 2000 as
compared to December 31, 1999. Federal income taxes are allocated to or from us
by Sinclair at the statutory rate, are considered payable or receivable
currently and are reflected as an adjustment to due from parent or due to parent
in our balance sheet depending upon whether there is a tax benefit or provision,
respectively.

     Net income decreased to $5.0 million for the year ended December 31, 2000
from $9.0 million for the year ended December 31, 1999. The decrease in net
income for the year ended December 31, 2000 as compared to the year ended
December 31, 1999 is primarily due to the change in income taxes combined with
an increase in net broadcast revenues offset by the increase in operating costs
as noted above.

     Broadcast cash flow decreased to $3.3 million for the year ended December
31, 2000 from $3.4 million for the year ended December 31, 1999, or 2.9%. Our
broadcast cash flow margin decreased to 37.3% for the year ended December 31,
2000 from 40.6% for the year ended December 31, 1999. The decrease in broadcast
cash flow and broadcast cash flow margin for the year ended December 31, 2000 as
compared to the year ended December 31, 1999 primarily resulted from an increase
in operating expenses as noted above combined with an increase in program
contract payments offset by an increase in net broadcast revenues.

     Adjusted EBITDA decreased to $3.0 million for the year ended December 31,
2000 from $3.2 million for the year ended December 31, 1999, or 6.3%. Our
Adjusted EBITDA margin decreased to 34.0% for the year ended December 31, 2000
from 37.5% for the year ended December 31, 1999. The decrease in adjusted EBITDA
and adjusted EBITDA margin for the year ended December 31, 2000 as compared to
the year ended December

<PAGE>

31, 1999 primarily resulted from an increase in operating expenses as noted
above combined with an increase in program contract payments offset by an
increase in net broadcast revenues.

YEARS ENDED DECEMBER 31, 1999 AND 1998

     Net broadcast revenues increased to $8.5 million for the year ended
December 31, 1999 from $8.4 million for the year ended December 31, 1998, or
1.2%. When comparing the year ended December 31, 1999 to the year ended December
31, 1998, revenues from local advertisers increased approximately $378,000 or
5.7%, and revenues from national advertisers decreased approximately $233,000 or
8.4%. Our decrease in national advertising was mitigated by an offsetting
increase in local advertising revenue. The decrease in national revenue is a
trend that we believe is resulting from an increase in the number of media
outlets providing national advertisers a means by which to advertise their goods
and services.

     Station operating costs increased to $4.0 million for the year ended
December 31, 1999 from $3.7 million for the year ended December 31, 1998, or
8.1%. The increase in operating costs for the year ended December 31, 1999
compared to the year ended December 31, 1998 primarily resulted from an increase
in promotion and programming costs.

     Depreciation and amortization decreased to $3.6 million for the year ended
December 31, 1999 from $4.3 million for the year ended December 31, 1998, or
16.3%. The decrease in depreciation and amortization for the year ended December
31, 1999 as compared to the year ended December 31, 1998 was primarily due to
the write-off of deferred financing costs in May 1998.

     Broadcast operating income increased to $1.0 million for the year ended
December 31, 1999 from $424,000 for the year ended December 31, 1998, or 136.0%.
The increase in broadcast operating income for the year ended December 31, 1999
as compared to the year ended December 31, 1998 was primarily attributable to
the decrease in depreciation and amortization combined with an increase in net
broadcast revenues as noted above.

     Parent preferred stock dividend income of $26.0 million for the year
ended December 31, 1999 is related to our investment in 12 5/8% series C
preferred stock (the parent preferred securities) issued by Sinclair,
completed March 12, 1997. Subsidiary trust minority interest expense of $23.3
million for the year ended December 31, 1999 is related to the private
placement of the subsidiary trust preferred securities (the HYTOPS). Our
ability to make future subsidiary trust minority interest payments is
directly contingent upon the parent's ability to pay dividends on parent
preferred stock.

     We recorded an income tax benefit of $4.5 million for the year ended
December 31, 1999 compared to an income tax provision of $2.7 million for the
year ended December 31, 1998. The change in income taxes for the year ended
December 31, 1999 as compared to the year ended December 31, 1998 is
attributable to the dividends received deduction associated with the HYTOPS. Our
effective tax rate for the year ended December 31, 1999 was (100.0%) as compared
to 78.8% for the year ended December 31, 1998. The decrease in our effective tax
rate for 1999 primarily resulted from the dividends received deduction
associated with the HYTOPS.

     Deferred state tax liability decreased to zero as of December 31, 1999 from
$846,000 as of December 31, 1998. The decrease in our deferred tax liability as
of December 31, 1999 as compared to December 31, 1998 is primarily due to the
dividends received deduction associated with the HYTOPS. Federal income taxes
are allocated to or from us by Sinclair at the statutory rate, are considered
payable or receivable currently and are reflected as an adjustment to due from
parent or due to parent in our balance sheet depending upon whether there is a
tax benefit or provision, respectively.

     Net income increased to $9.0 million for the year ended December 31, 1999
from $729,000 for the year ended December 31, 1998. The increase in net income
for the year ended December 31, 1999 as compared to the year ended December 31,
1998 is primarily due to the change in income taxes combined with a decrease in
depreciation and amortization and an increase in net broadcast revenues as noted
above.

     Broadcast cash flow decreased to $3.4 million for the year ended December
31, 1999 from $3.7 million for the year ended December 31, 1998, or 8.1%. Our
broadcast cash flow margin decreased to 40.6% for the year ended December 31,
1999 from 44.2% for the year ended December 31, 1998. The decrease in broadcast
cash flow and broadcast cash flow margin for the year ended December 31, 1999 as
compared to the year ended December 31, 1998 primarily resulted from an increase
in operating expenses as noted above combined with an increase in program
payments offset by an increase in net broadcast revenues.

<PAGE>

     Adjusted EBITDA decreased to $3.2 million for the year ended December 31,
1999 from $3.4 million for the year ended December 31, 1998, or 5.9%. Our
Adjusted EBITDA margin decreased to 37.5% for the year ended December 31, 1999
from 40.9% for the year ended December 31, 1998. The decrease in adjusted EBITDA
and adjusted EBITDA margin for the year ended December 31, 1999 as compared to
the year ended December 31, 1998 primarily resulted from an increase in
operating expenses as noted above combined with an increase in program contract
payments offset by an increase in net broadcast revenues.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2000, we had cash balances of approximately $72,000 and
working capital of approximately $900,000. Our primary source of liquidity is
cash from operations which management believes to be sufficient to meet
operating cash requirements. Cash requirements or excess cash from operations
are funded by or deposited into Sinclair's centralized banking system utilized
by all of its wholly owned subsidiaries.

     We anticipate capital expenditures in the coming year to exceed historical
capital expenditures, which were approximately $955,000 in 2000. The increase is
due to $2.3 million in planned digital television expenditures for 2001. If we
are required to make capital expenditures to keep up with emerging technologies,
management believes we will be able to fund such expenditures from cash flow and
from the proceeds of indebtedness or financing that is allowed to be incurred or
obtained under our senior debenture indenture (provided that our debt to
Adjusted EBITDA ratio is 4 to 1 or less) or from capital contributions from
Sinclair to the extent permitted under Sinclair's debt instruments. Under these
instruments, Sinclair would currently be able to make capital contributions to
us in an amount sufficient to cover such costs if it chose to do so.

SEASONALITY

     Our results usually are subject to seasonal fluctuations, which result in
fourth quarter broadcast operating income being greater usually than first,
second and third quarter broadcast operating income. This seasonality is
primarily attributable to increased expenditures by advertisers in anticipation
of holiday season spending and an increase in viewership during this period. In
addition, revenues from political advertising tend to be higher in even numbered
years.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCUSSION ABOUT MARKET RISKS

     Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Our financial statement and supplementary data required by this item are
filed as exhibits, are listed under Item 14(a)(1) and (2), and are incorporated
by reference.

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

     None.

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Set forth below is certain information relating to our executive officers,
directors, certain key employees and persons expected to become executive
officers, directors or key employees.

<TABLE>
<CAPTION>

                NAME                            AGE                          TITLE
                ----                            ---                          -----
<S>                                             <C>                <C>
David D. Smith...................               50                 President and Director
David B. Amy.....................               48                 Secretary and Director
Dr. David McCarus................               49                 Director

</TABLE>

     Members of the board of directors are elected for one-year terms and until
their successors are duly elected and qualified. Executive officers are
appointed by the board of directors annually to serve for one-year terms and
until their successors are duly appointed and qualified.

     DAVID D. SMITH has served as President of KDSM since April of 1996. In
addition, Mr. Smith has served as President, Chief Executive Officer and
Chairman of the Board for Sinclair Broadcast Group, Inc. since September
1990. Prior to that, he served as General Manager of WPTT, Pittsburgh,
Pennsylvania, from 1984 to 1986, and assumed the financial and engineering
responsibility for Sinclair, including the construction of WTTE, Columbus,
Ohio,in 1984. From 1978 to 1986 Mr. Smith co-founded and served as an officer
and director of Comark Communications, Inc., a company engaged in manufacture
of high-power transmitters for UHF television stations. His television career
began with WBFF in Baltimore, where he helped in the construction of the
station and was in charge of technical maintenance until 1978. David Smith is
currently a member of the Board of Directors of Sinclair Ventures, Inc.,
Acrodyne Communications, Inc. and G1440, Inc.

     DAVID B. AMY has served as Secretary and Director of KDSM since April of
1996. In addition he has served as Executive Vice President and Chief Financial
Officer (CFO) of Sinclair Broadcast Group, Inc. since March 2001. Prior to that
time, Mr. Amy served as Executive Vice President of Sinclair since September
1999 and as Vice President and CFO of Sinclair since October of 1994. In
addition, he serves as Secretary of Sinclair Communications, Inc., the Sinclair
subsidiary which owns and operates the broadcasting operations. Prior to his
appointment, Mr. Amy served as the Corporate Controller of Sinclair beginning in
1986. Mr. Amy has over sixteen years of broadcast experience, having joined
Sinclair as a business manager for WPTT-TV in Pittsburgh. Mr. Amy received an
MBA degree from the University of Pittsburgh in 1981. Mr. Amy is currently a
member of the board of directors of Acrodyne Communications, Inc. and an advisor
to Allegiance Capital.

     DR. DAVID C. MCCARUS has served as Director of KDSM since February 9, 1999.
Dr. McCarus is Board Certified in Obstetrics and Gynecology and has been in
private practice since 1983. Dr. McCarus has served on various committees and
medical staff for the Greater Baltimore Medical Center. He currently serves as a
member of the Quality Assurance Committee of Aetna US Healthcare and is an
active member of the St. Joseph Medical Center staff. He also serves as the Head
of the Division of Gynecology for MedTrend Health Systems, Inc. and Towson
Surgery Center, located in Maryland. Dr. McCarus received his M.D. Degree from
the West Virginia University School of Medicine and completed his residency
training at the Greater Baltimore Medical Center.

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

     The following table sets forth certain information regarding the annual and
long-term compensation by Sinclair for services rendered in all capacities
during the year ended December 31, 2000 by the President and the other officers
of KDSM who received total annual salary and bonus of $100,000 or more in 2000
(the named executive officers):

                           SUMMARY COMPENSATION TABLE
                               ANNUAL COMPENSATION
<TABLE>
<CAPTION>






                                                                  LONG-TERM
                               ANNUAL COMPENSATION               COMPENSATION
       NAME AND                -------------------            SECURITIES UNDERLYING     ALL OTHER
  PRINCIPLE POSITION       YEAR       SALARY     BONUS (a)       OPTIONS GRANTED     COMPENSATION (b)
----------------------     ----       ------     --------        ---------------     ---------------
<S>                        <C>      <C>          <C>            <C>                    <C>
David D. Smith
    President........      2000     $1,000,008   $     ---           150,000             $ 6,659
                           1999      1,072,500     603,115               ---               6,409
                           1998      1,290,000     502,526               ---               6,515

David B. Amy
    Secretary........      2000        300,000         ---           100,000               6,659
                           1999        300,000      75,000               ---              10,945
                           1998        200,000      75,000           135,000              11,136

</TABLE>

(a)  The bonuses reported in this column represent amounts awarded and paid
     during the fiscal years noted but relate to the fiscal year immediately
     prior to the year noted.

(b)  All other compensation consists of income deemed received for personal use
     of Sinclair-leased automobiles, our 401 (k) contribution, life insurance
     and long-term disability coverage.

STOCK OPTIONS

The following table shows the number of stock options granted during 2000 and
the 2000 year-end value of the stock options held by the named executive
officers:

<TABLE>
<CAPTION>

                                    NUMBER OF
                                   SECURITIES                                          POTENTIAL REALIZABLE VALUE AT
                               UNDERLYING OPTIONS               MARKET                 ASSUMED ANNUAL RATES OF STOCK
                                   GRANTED TO       EXERCISE   PRICE ON                PRICE APPRECIATION FOR OPTION
                                  EMPLOYEES IN      PRICE       DATE OF   EXPIRATION                  TERM
            NAME                   FISCAL YEAR      PER SHARE    GRANT       DATE         0%        5%        10%
            ----                   -----------      ---------    -----       ----         --        --        ---
<S>                                  <C>              <C>       <C>         <C>        <C>       <C>        <C>
David D. Smith............           150,000          $9.25     $9.625      3/1/10     $56,250   $964,217   $2,357,216
David B. Amy..............           100,000           9.25      9.625      3/1/10      37,500    642,811    1,571,477

</TABLE>

-----------

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 2000 OPTION
VALUES

The following table shows information regarding options exercised during 2000
and the number of securities underlying, and the value of the "in the money"
options outstanding on December 31, 2000:

<TABLE>
<CAPTION>

                                                                    NUMBER OF
                                                              SECURITIES UNDERLYING           VALUE OF UNEXERCISED
                        SHARES ACQUIRED      VALUE             UNEXERCISED OPTIONS           "IN-THE-MONEY" OPTIONS
         NAME             ON EXERCISE       REALIZED          AT DECEMBER 31, 2000          AT DECEMBER 31, 2000 (a)
         ----             -----------       --------          --------------------          ------------------------
                                                         EXCERCISABLE     UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
<S>                     <C>                 <C>          <C>              <C>              <C>            <C>
David D. Smith.....           ---             ---           37,500           112,500       $    29,295    $   87,885
David B. Amy.......           ---             ---           90,000           210,000            19,530        58,590

</TABLE>

-----------

(a)  An "In-the-Money" option is an option for which the option price of the
     underlying stock is less than the market price at December 31, 2000, and
     all of the value shown reflects stock price appreciation since the granting
     of the option.

<PAGE>

EMPLOYMENT AGREEMENTS

     Sinclair entered into an employment agreement with David D. Smith,
President and Chief Executive Officer of Sinclair, on June 12, 1995, which
expired on June 12, 1998. Sinclair has not entered into a new agreement with Mr.
Smith and does not currently anticipate entering into a new agreement. As of
January 1, 2001, David Smith receives a base salary of approximately $1,000,000.

     In September 1998, Sinclair entered into an amended employment agreement
with David B. Amy, Executive Vice President and Chief Financial Officer of
Sinclair and Secretary of KDSM. The agreement does not have any specified
termination date, and Sinclair has the right to terminate the employment of Mr.
Amy at any time, with or without cause, subject to the payment of severance
payments for termination without cause. The severance payment due upon
termination without cause is equal to one month's base salary in effect at the
time of the termination times the number of the years of continuous employment
by Sinclair or its predecessor. During each year, Mr. Amy will be entitled to
receive compensation as determined by the compensation committee of Sinclair in
consultation with the Chief Executive Officer of Sinclair. Mr. Amy's
compensation may include a bonus in the sole discretion of the compensation
committee of Sinclair. The agreement also contains non-competition and
confidentiality restrictions on Mr. Amy.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Other than as follows, no named executive officer is a director of a
corporation that has a director or executive officer who is also a director of
KDSM. Each of David D. Smith and David B. Amy, both of whom are executive
officers and directors of KDSM, is a director and/or executive officer of
Sinclair.

     During 2000, none of the named executive officers participated in any
deliberations of our board of directors or the compensation committee relating
to compensation of the named executive officers.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of KDSM, Inc. common stock as of March 20, 2001, by holders having
beneficial ownership of more than five percent of KDSM, Inc. common stock.

<TABLE>
<CAPTION>

                                                                     COMMON STOCK
                                                      -----------------------------------------------
          NAME OF BENEFICIAL OWNER                    NUMBER OF SHARES               PERCENT OF CLASS
          ------------------------                    ----------------               ----------------
<S>                                                         <C>                            <C>
Sinclair Communications, Inc..                              100                            100%
   10706 Beaver Dam Road
   Cockeysville, MD  21030

</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
         FORM 8-K

(a) (1) Financial Statements

     The following financial statements required by this item are submitted in a
separate section beginning on page F-1 of this report.

<TABLE>
<CAPTION>

                                                                                                 PAGE
                                                                                                 ----

<S>                                                                                              <C>
     Index to Financial Statements................................................................F-1

     Report of Independent Public Accountants.....................................................F-2

     Consolidated Balance Sheets as of December 31, 1999 and 2000.................................F-3

     Consolidated Statements of Operations for the Years Ended December 31, 1998,

        1999 and 2000.............................................................................F-4

     Consolidated Statements of Stockholder's Equity for the Years Ended December 31,

        1998, 1999 and 2000.......................................................................F-5

     Consolidated Statements of Cash Flows for the Years Ended December 31, 1998,

        1999 and 2000.............................................................................F-6

     Notes to Consolidated Financial Statements...................................................F-7

</TABLE>

(a)  (2) Index to Financial Statements Schedules

     The financial statements schedules required by this item are submitted on
pages S-1 through S-3 of this Report.

<TABLE>
<CAPTION>

                                                                                                 PAGE
                                                                                                 ----

<S>                                                                                              <C>
     Index to Schedules...........................................................................S-1

     Report of Independent Public Accountants.....................................................S-2

     Schedule II--Valuation and Qualifying Account................................................S-3

</TABLE>

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

(a)  (3) Index to Exhibits

     The exhibit index in Item 14(c) is incorporated by reference in this
report.

(b)  Reports on Form 8-K

     There were no reports on Form 8-K filed by the registrant during the fourth
quarter of the fiscal year ended December 31, 2000.

<PAGE>

(c)  Exhibits

     The following exhibits are filed with this report:

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

    EXHIBIT
      NO.                           DESCRIPTION
      --                            -----------

<S>       <C>
     3.1  Amended and Restated Trust Agreement, dated as of March 12, 1997 among
          KDSM, Inc., First Union National Bank of Maryland, First Union Bank of
          Delaware, David D. Smith, and David B. Amy (1)

     3.2  Articles of Incorporation of KDSM, Inc., as of April 22, 1996 (1)

     3.3  By-Laws of KDSM, Inc. (1)

     4.1  Indenture, dated as of March 12, 1997 among KDSM, Inc., Sinclair
          Broadcast Group, Inc., and its First Union National Bank of Maryland.
          (1)

     4.2  Pledge and Security Agreement dated as of March 12, 1997 between KDSM,
          Inc. and First Union National Bank of Maryland (1)

     4.3  Form of 11 5/8% High Yield Trust Offered Preferred Securities of
          Sinclair Capital (1)

     4.4  Form of 11 5/8% Senior Debentures due 2009 of KDSM, Inc. (included in
          Exhibit 4.1) (1)

     4.5  Form of Parent Guarantee Agreement between Sinclair Broadcast Group,
          Inc. and First Union National Bank of Maryland (1)

</TABLE>

--------------

  (1)  Incorporated by reference from the Company's Registration Statement on
       Form S-4, No. 333-26427.

  (d)  Financial Statements Schedules

       The financial statements schedules required by this Item are listed under
Item 14(a)(2)

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized on this
28th day of March 2001.


                          KDSM, INC.

                          By:      /s/ DAVID D. SMITH
                                   --------------------------------------------
                                   David D. Smith
                                   President
                                   Principal Executive Officer

                          SINCLAIR CAPITAL

                          By:      /s/ DAVID B. AMY
                                   --------------------------------------------
                                   David B. Amy
                                   Administrative Trustee



                                POWER OF ATTORNEY
     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below under the heading "Signature" constitutes and appoints David B. Amy as his
or her true and lawful attorney-in-fact, each acting alone, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead in any and all capacities to sign any or all amendments to this 10-K
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the SEC, granting unto said attorney-in-fact full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully for all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact, or their substitutes, each acting
alone, may lawfully do or cause to be done by virtue hereof.

     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.

<TABLE>
<CAPTION>

             SIGNATURE                                    TITLE                                              DATE
             ---------                                    -----                                              ----
<S>                                   <C>                                                               <C>
/s/ DAVID D. SMITH                    Director and President, KDSM, Inc.                                March 28, 2001
-------------------------------
David D. Smith                           (principal executive officer)
                                      Administrative Trustee, Sinclair Capital
                                         (principal executive officer)

/s/ DAVID B. AMY                      Director and Secretary, KDSM Inc.                                 March 28, 2001
-------------------------------
David B. Amy                             (principal financial and accounting officer)
                                      Administrative Trustee, Sinclair Capital
                                         (principal financial and accounting officer)

/s/ DR. DAVID MCCARUS                 Director                                                          March 28, 2001
-------------------------------
Dr. David McCarus                     KDSM, Inc.

</TABLE>

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

KDSM, INC. AND SUBSIDIARIES                                                                      PAGE
                                                                                                 ----

<S>                                                                                              <C>
   Report of Independent Public Accountants.......................................................F-2

   Consolidated Balance Sheets as of December 31, 1999 and 2000...................................F-3

   Consolidated Statements of Operations for the Years Ended December 31, 1998, 1999 and 2000.....F-4

   Consolidated Statements of Stockholder's Equity for the Years Ended December 31,
   1998, 1999 and 2000............................................................................F-5

   Consolidated Statements of Cash Flows for the Years Ended December 31, 1998,
   1999 and 2000..................................................................................F-6

   Notes to Consolidated Financial Statements.....................................................F-7

</TABLE>


                                      F-1

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders of
Sinclair Broadcast Group, Inc.:

We have audited the accompanying consolidated balance sheets of KDSM, Inc. (a
Maryland corporation and a wholly-owned subsidiary of Sinclair Broadcast
Group, Inc.) and Subsidiaries (the Company) as of December 31, 1999 and 2000,
and the related consolidated statements of operations, stockholder's equity
and cash flows for each of the three years in the period ended December 31,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of KDSM, Inc. and Subsidiaries
as of December 31, 1999 and 2000, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2000,
in conformity with accounting principles generally accepted in the United
States.

                                                            ARTHUR ANDERSEN LLP
Baltimore, Maryland,
March 2, 2001


                                      F-2

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                        AS OF DECEMBER 31,
                                                                                    ---------------------------
                                                                                        1999          2000
                                                                                        ----          ----
                                      ASSETS
<S>                                                                                 <C>           <C>
CURRENT ASSETS:
   Cash......................................................................       $         9   $        72
   Accounts receivable, net of allowance for doubtful accounts of $19 and $21,
     respectively............................................................             1,901         1,879
   Dividends receivable from parent..........................................             1,085         1,085
   Current portion of program contract costs.................................               961           937
   Prepaid expenses and other current assets.................................                 9            14
   Deferred barter costs.....................................................                29            38
                                                                                    -----------   -----------
      Total current assets...................................................             3,994         4,025
PROPERTY AND EQUIPMENT, net                                                               2,813         3,350
PROGRAM CONTRACT COSTS, less current portion.................................               890           706
INVESTMENT IN PARENT PREFERRED SECURITIES....................................           206,200       206,200
DUE FROM PARENT..............................................................            16,927        22,717
OTHER ASSETS, net of accumulated amortization of $1,786 and $2,426,
   respectively..............................................................             5,892         5,252
ACQUIRED INTANGIBLE BROADCAST ASSETS, net of accumulated
   amortization of $3,533 and $4,583, respectively...........................            31,345        30,455
                                                                                    -----------   -----------
        Total Assets.........................................................       $   268,061   $   272,705
                                                                                    ===========   ===========

                       LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
   Accounts payable..........................................................       $        58   $        75
   Accrued liabilities.......................................................               353           364
   Current portion of program contracts payable..............................             1,915         1,659
   Deferred barter revenues..................................................                52            57
   Subsidiary trust minority interest expense payable........................               969           969
                                                                                    -----------   -----------
       Total current liabilities.............................................             3,347         3,124
PROGRAM CONTRACTS PAYABLE......                                                           1,259         1,121
                                                                                    -----------   -----------
       Total liabilities.....................................................             4,606         4,245
                                                                                    -----------   -----------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY TRUST HOLDING
SOLELY KDSM SENIOR DEBENTURES................................................           200,000       200,000
                                                                                    -----------   -----------
STOCKHOLDER'S EQUITY:
   Common stock, $.01 par value, 1,000 shares authorized and 100 shares
     issued and outstanding..................................................               ---           ---
   Additional paid-in capital................................................            51,149        51,149
   Retained earnings.........................................................            12,306        17,311
                                                                                    -----------   -----------
       Total stockholder's equity............................................            63,455        68,460
                                                                                    -----------   -----------
       Total Liabilities and Stockholder's Equity............................       $   268,061   $   272,705
                                                                                    ===========   ===========

</TABLE>

        The accompanying notes are an integral part of these consolidated
statements.


                                      F-3

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                      1998           1999           2000
                                                                      ----           ----           ----
<S>                                                             <C>             <C>            <C>
REVENUES:
   Station broadcast revenues, net of agency commissions of
      $1,200, $1,161 and $1,176, respectively...............     $      8,363    $     $8,461   $     $8,807
   Revenues realized from station barter arrangements.......              552             541            731
                                                                 ------------    ------------   ------------
       Total revenues.......................................            8,915           9,002          9,538
                                                                 ------------    ------------   ------------

OPERATING EXPENSES:
Program and production......................................            1,086           1,353          1,520
Selling, general and administrative.........................            2,679           2,667          2,747
Expenses realized from station barter arrangements..........              377             392            636
Amortization of program contract costs and net realizable
   value adjustments........................................            1,710           1,483          1,483
Depreciation of property and equipment                                    381             400            419
Amortization of acquired intangible broadcast assets
   and other assets.........................................            2,258           1,672          1,690
                                                                 ------------    ------------   ------------
       Total operating expenses.............................            8,491           7,967          8,495
                                                                 ------------    ------------   ------------
       Broadcast operating income...........................              424           1,035          1,043
                                                                 ------------    ------------   ------------

OTHER INCOME (EXPENSE):
   Parent preferred stock dividend income...................           26,033          26,033         26,033
   Subsidiary trust minority interest expense...............          (23,250)        (23,250)       (23,250)
   Interest income..........................................              239             671          1,179
                                                                 ------------    ------------   ------------
       Income before allocation of consolidated federal
         income taxes and state income taxes................            3,446           4,489          5,005

ALLOCATION OF CONSOLIDATED FEDERAL

INCOME TAX PROVISION (BENEFIT)
                                                                        2,205          (3,642)           ---
STATE INCOME TAX PROVISION (BENEFIT)........................              512            (846)           ---
                                                                 ------------    ------------   ------------
NET INCOME..................................................     $        729    $      8,977   $      5,005
                                                                 ============    ============   ============

Basic and diluted net income per common share...............     $      7,290    $     89,770   $     50,050
                                                                 ============    ============   ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED            100             100            100
                                                                 ============    ============   ============

</TABLE>

     The accompanying notes are an integral part of these consolidated
statements.


                                      F-4

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                            ADDITIONAL                               TOTAL
                                             COMMON          PAID-IN           RETAINED          STOCKHOLDER'S
                                             STOCK           CAPITAL           EARNINGS             EQUITY
                                           -----------    ---------------    --------------     ----------------
<S>                                        <C>            <C>               <C>                <C>
BALANCE, December 31, 1997............       $  ---         $   51,149        $    2,600         $   53,749
    Net income........................          ---                ---               729                729
                                           --------       ------------       -----------        -----------
BALANCE, December 31, 1998............          ---             51,149             3,329             54,478
    Net income........................          ---                ---             8,977              8,977
                                           --------       ------------       -----------        -----------
BALANCE, December 31, 1999............          ---             51,149            12,306             63,455
    Net income........................          ---                ---             5,005              5,005
                                           --------       ------------       -----------        -----------
BALANCE, December 31, 2000............       $  ---         $   51,149        $   17,311         $   68,460
                                           ========       ============       ===========        ===========

</TABLE>

     The accompanying notes are an integral part of these consolidated
statements.


                                      F-5

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                   1998         1999         2000
                                                                   ----         ----         ----
<S>                                                            <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income..............................................     $     729    $   8,977    $   5,005
   Adjustments to reconcile net income to net cash flows
     from operating activities--
     Depreciation of property and equipment................           381          400          419
     Amortization of acquired intangible broadcast assets
      and other assets.....................................         2,258        1,672        1,690
     Amortization of program contract costs and net
      realizable value adjustments.........................         1,710        1,483        1,483
     Net effect of change in deferred barter revenues and
      deferred barter costs................................           (35)         (51)          (4)
   Changes in assets and liabilities, net of effects of
     acquisitions and dispositions--
     Decrease in accounts receivable, net..................            43          206           22
     Decrease (increase) in prepaid expenses and other current
         assets............................................             8           17           (6)
     (Decrease) increase in accounts payable and accrued
         liabilities.......................................           (23)           8           28
     Increase (decrease) in deferred state taxes...........           512         (846)         ---
   Payments on program contracts payable...................        (1,373)      (1,438)      (1,669)
                                                                ---------    ---------   ----------
   Net cash flows from operating activities................         4,210       10,428        6,968
                                                                ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment...................          (235)        (151)        (955)
                                                                ---------    ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net change in due from parent...........................        (3,979)     (10,275)      (5,950)
                                                                ---------    ---------    ---------
NET (DECREASE) INCREASE IN CASH...........................             (4)           2           63
CASH, beginning of period..................................            11            7            9
                                                                ---------    ---------    ---------
CASH, end of  period.......................................     $       7    $       9           72
                                                                =========    =========    =========
SUPPLEMENTAL SCHEDULE OF INVESTING AND
   FINANCING ACTIVITIES:
   Subsidiary trust minority interest payments.............     $  23,250    $  23,250    $  23,250
                                                                =========    =========    =========
   Parent preferred stock dividend income..................     $  26,033    $  26,033    $  26,033
                                                                =========    =========    =========

</TABLE>

     The accompanying notes are an integral part of these consolidated
statements.


                                      F-6

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of KDSM,
Inc., Sinclair Capital (a subsidiary trust), and KDSM Licensee, Inc., which are
collectively referred to hereafter as "the Company" or "KDSM". The Company is a
television broadcaster serving the Des Moines, Iowa area through station KDSM on
Channel 17. KDSM owns all the issued and outstanding common stock of KDSM
Licensee, Inc. and all of the common trust interests of Sinclair Capital. All
intercompany amounts are eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues, and expenses in the financial statements and in the disclosures of
contingent assets and liabilities. While actual results could differ from those
estimates, management believes that actual results will not be materially
different from amounts provided in the accompanying consolidated financial
statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Unless otherwise stated, the financial instruments in the accompanying balance
sheets approximate fair value.

PROGRAMMING

The Company has agreements with distributors for the rights to television
programming over contract periods which generally run from one to seven years.
Contract payments are made in installments over terms that are generally shorter
than the contract period. Each contract is recorded as an asset and a liability
when the license period begins and the program is available for its first
showing. The portion of program contracts payable within one year is reflected
as a current liability in the accompanying consolidated balance sheets.

The rights to program materials are reflected in the accompanying consolidated
balance sheets at the lower of unamortized cost or estimated net realizable
value. Estimated net realizable values are based upon management's expectation
of future advertising revenues net of sales commissions to be generated by the
program material. Amortization of program contract costs is generally computed
using either a four year accelerated method or based on usage, whichever yields
the greater amortization for each program. Program contract costs estimated by
management to be amortized in the succeeding year are classified as current
assets. Payments of program contract liabilities are typically paid on a
scheduled basis and are not affected by adjustments for amortization or
estimated net realizable value.

BARTER ARRANGEMENTS

Certain program contracts provide for the exchange of advertising air time in
lieu of cash payments for the rights to such programming. These contracts are
recorded as the programs are aired at the estimated fair value of the
advertising air time given in exchange for the program rights. Network
programming is excluded from these calculations.

The Company broadcasts certain customers' advertising in exchange for
equipment, merchandise and services. The estimated fair value of the
equipment, merchandise or services received is recorded as deferred barter
costs and the corresponding obligation to broadcast advertising is recorded
as deferred barter revenues. The deferred barter costs are expensed or
capitalized as they are used, consumed or received. Deferred barter revenues
are recognized as the related advertising is aired.

OTHER ASSETS

Other assets primarily consist of costs related to the issuance of the 11
5/8% High Yield Trust Offered Preferred Securities (the "HYTOPS" or the
"Trust Preferred Securities") of Sinclair Capital, a subsidiary


                                      F-7

<PAGE>


trust of the Company in March of 1997. These costs are being amortized on a
straight line basis over a 12 year period which represents the date they are
mandatorily redeemable.

ACQUIRED INTANGIBLE BROADCAST ASSETS

Acquired intangible broadcast assets are being amortized over periods of 15 to
40 years. These amounts result from the acquisition of the broadcast assets of
KDSM-TV by Sinclair Broadcast Group, Inc. (Sinclair) from River City
Broadcasting L.P. (RCB). The Company monitors and continually evaluates the
realizability of intangible and tangible assets and the existence of any
impairment to its recoverability based on the projected undiscounted cash flows
of the respective stations. Management believes that the carrying amounts of the
Company's tangible and intangible assets have not been impaired.

Intangible assets, at cost, as of December 31, 1999 and 2000, consisted of
the following (in thousands):


<TABLE>
<CAPTION>
                                                     AMORTIZATION
                                                       PERIOD              1999                2000
                                                       ------              ----                ----
<S>                                                    <C>         <C>                  <C>
     Goodwill.............................             40 years    $     26,777         $    26,938
     Decaying advertiser base.............             15 years           1,452               1,452
     FCC licenses.........................             25 years           4,966               4,966
     Network affiliations.................             25 years           1,683               1,682
                                                                   ------------       -------------
                                                                         34,878              35,038
     Less - Accumulated amortization......                               (3,533)             (4,583)
                                                                   ------------       --------------
                                                                   $     31,345         $    30,455
                                                                   =============      =============

</TABLE>

<TABLE>
<CAPTION>

ACCRUED LIABILITIES

Accrued liabilities consist of the following as of December 31, 1999 and 2000
(in thousands):

                                                                          1999                2000
                                                                          ----                ----
<S>                                                                  <C>                <C>
       Compensation.....................................             $      211         $      223
       Other............................................                    142                141
                                                                     ----------         ----------
                                                                     $      353         $      364
                                                                     ==========         ==========

</TABLE>

REVENUES

Broadcasting revenues are derived principally from the sale of program time and
spot announcements to local, regional, and national advertisers. Advertising
revenue is recognized in the period during which the program time and spot
announcements are broadcast.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior years' financial
statements to conform with the current year presentation.

STATEMENT OF FINANCIAL ACCOUNTING STANDARD NO. 133

In June, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. In June 1999, the FASB issued Statement No.
137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -DEFERRAL OF
THE EFFECTIVE DATE OF FASB STATEMENT NO. 133. In June 2000, the FASB issued
Statement 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING
ACTIVITIES, AN AMENDMENT OF FASB

STATEMENT NO. 133. Statement 133, as amended, establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
The Statement requires that changes in the derivative instrument's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying


                                      F-8

<PAGE>


hedges allows a derivative instrument's gains and losses to offset related
results on the hedged item in the income statement, to the extent effective, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. The Company
estimates that SFAS 133 will have no effect on its financial statements.

2.   PROPERTY AND EQUIPMENT:

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed under the straight-line method over the following
estimated useful lives:

<TABLE>

<S>                                                              <C>
       Buildings and improvements.........................        10 - 35 years
       Station equipment..................................         5 - 10 years
       Office furniture and equipment.....................         5 - 10 years
       Leasehold improvements.............................        10 - 31 years
       Automotive equipment...............................          3 - 5 years

</TABLE>

Property and equipment consisted of the following as of December 31, 1999 and
2000 (in thousands):

<TABLE>
<CAPTION>

                                                                         1999              2000
                                                                         ----              ----
<S>                                                                <C>                  <C>
       Buildings and improvements........................           $     800            $  843
       Station equipment.................................               2,926             3,133
       Office furniture and equipment....................                 328               331
       Leasehold improvements............................                  34                34
       Automotive equipment..............................                  51                93
       Construction in progress..........................                 ---               661
                                                                    ---------            ------
                                                                        4,139             5,095
       Less - Accumulated depreciation...................              (1,326)           (1,745)
                                                                    ----------           ------
                                                                    $   2,813            $3,350
                                                                    ===========          ======

</TABLE>

3.   PROGRAM CONTRACTS PAYABLE:

Future payments required under program contracts payable as of December 31, 2000
were as follows (in thousands):

<TABLE>

<S>                                                   <C>
       2001.......................................      $    1,659
       2002.......................................             636
       2003.......................................             311
       2004.......................................             162
       2005.......................................              12
                                                        -----------
                                                             2,780
       Less: Current portion......................          (1,659)
                                                        -----------
       Long-term portion of program contracts
        payable...................................      $    1,121
                                                        ===========

</TABLE>

Included in the current portion amounts are payments due in arrears of $291,000.
In addition, the Company has entered into non-cancelable commitments for future
program rights aggregating $2.2 million as of December 31, 2000.

The Company has estimated the fair value of its program contract payables and
non-cancelable commitments at approximately $2.8 million and $1.7 million,
respectively, as of December 31, 1999, and $2.4 million and $1.8 million,
respectively, at December 31, 2000, based on future cash flows discounted at the
Company's current borrowing rate.


                                      F-9

<PAGE>


4.   RELATED PARTY TRANSACTIONS:

The financial statements of KDSM are included in the consolidated financial
statements of Sinclair Broadcast Group, Inc. (Sinclair). Sinclair corporate
expenses are allocated to KDSM and each of the Sinclair subsidiaries to cover
the salaries and expenses of senior management. Total management fees and
expenses, including allocated corporate expenses, for the years ended December
31, 1998, 1999, and 2000 were approximately $270,000, $258,000, and $292,000,
respectively. Management believes these amounts approximate the charges which
would have been incurred had the services been purchased from independent third
parties. Sinclair also provides and receives short-term cash advances to and
from the Company through a central cash management system. No interest is
charged or received for these advances. The total amount due from Sinclair was
approximately $16.9 million and $22.7 million as of December 31, 1999 and 2000,
respectively.

5.   INCOME TAXES:

Sinclair files a consolidated federal income tax return and separate state tax
returns for each of its subsidiaries. It is Sinclair's policy to charge KDSM for
its federal income tax provision through intercompany charges, and KDSM is
directly responsible for its current state tax liabilities. The accompanying
financial statements have been prepared in accordance with the separate return
method of FASB 109, whereby the allocation of federal tax provision due the
Parent is based on what the subsidiary's current and deferred federal tax
provision would have been had the subsidiary filed a federal income tax return
outside its consolidated group. Given that KDSM is required to reimburse
Sinclair for its federal tax provision, the federal income tax provision is
recorded as an intercompany charge and included as a reduction of the due from
Parent amount in the accompanying consolidated balance sheets as a current
obligation. Accordingly, KDSM has no federal deferred income taxes. Since KDSM
is directly responsible for its state taxes, all deferred tax assets or
liabilities are related to state income taxes. The Company had no alternative
minimum tax credit carryforwards as of December 31, 1999 and 2000.

The allocation of consolidated income taxes consists of the following for the
years ended December 31, 1998, 1999 and 2000 (in thousands):

<TABLE>
<CAPTION>

                                                                     1998              1999             2000
                                                                     ----              ----             ----
<S>                                                           <C>               <C>                <C>
      Current:
        Federal...................................            $       2,205     $     (3,642)      $     ---

      Deferred:
        State.....................................                      512             (846)            ---
                                                              -------------     ------------       ---------
                                                              $       2,717     $     (4,488)      $     ---
                                                              =============     ============       =========

</TABLE>


                                      F-10

<PAGE>


The following is a reconciliation of federal income taxes at the applicable
statutory rate to the recorded provision:

<TABLE>
<CAPTION>

                                                                   1998             1999            2000
                                                                   ----             ----            ----
<S>                                                               <C>            <C>              <C>
Statutory federal income taxes.........................           35.0%            35.0%           35.0%
Adjustments-
   State income taxes..................................            7.9              7.9             7.9
   Non-deductible expense items........................            0.2              1.0             1.0
   Tax liability (benefit) related to dividends on
     Parent Preferred Stock (a)........................           35.6           (130.0)          (42.9)
   Other...............................................            0.1            (13.9)           (1.0)
                                                             ----------      -----------       ---------

Provision for income taxes.............................           78.8%          (100.0)%           0.0%
                                                            ===========     =============     ==========
</TABLE>
---------------
(a)  In March 1997, the Company issued the HYTOPS securities. In connection with
     this transaction, Sinclair Broadcast Group, Inc. (the "Parent") issued
     $206.2 million of Series C Preferred Stock (the "Parent Preferred Stock")
     to KDSM, Inc., a wholly owned subsidiary. Parent Preferred Stock dividends
     paid to KDSM, Inc. are considered taxable income for Federal tax purposes
     and not considered income for book purposes. Also for Federal tax purposes,
     KDSM, Inc. is allowed a tax deduction for dividends received on the Parent
     Preferred Stock in an amount equal to Parent Preferred Stock dividends
     received in each taxable year limited to the extent that the Parent's
     consolidated group has "earnings and profits." To the extent that dividends
     received by KDSM, Inc. are in excess of the Parent's consolidated group
     earnings and profits, KDSM will reduce its tax basis in the Parent
     Preferred Stock which gives rise to a deferred tax liability (to be
     recognized upon redemption). During the year ended December 31, 1998, the
     Parent did not generate "earnings and profits" in an amount greater than or
     equal to dividends paid on the Parent Preferred Stock. This resulted in a
     reduction in tax basis of the Parent's Series C Preferred Stock and
     generated a related deferred tax liability. During the years ended December
     31, 1999 and 2000, the Parent generated "earnings and profits" and avoided
     a reduction in basis of its Parent Preferred Stock. Additionally, during
     1999 the Company was able to realize certain benefits related to basis
     reductions recorded in prior years.

The following table summarizes the state tax effects of the significant types of
temporary differences between financial reporting basis and tax basis as of the
years ended December 31, 1999 and 2000 (in thousands):

<TABLE>
<CAPTION>

                                                                      1999             2000
                                                                      ----             ----
<S>                                                                <C>            <C>
     Net operating losses..............................            $    3,865     $   4,005
     Film amortization.................................                    34             3
     Fixed asset depreciation..........................                   (93)          (87)
     Intangible amortization...........................                  (361)         (469)
     Preferred stock deferred tax liability
       [see (a) above].................................                (3,462)       (3,462)
     Other.............................................                    17            10
                                                                    ----------     ---------
                                                                   $      ---     $     ---
                                                                    ==========     =========

</TABLE>

The deferred state tax assets and liabilities represent the state tax benefits
related to the temporary differences listed above. The estimated blended federal
and state statutory rate was 41.9% for the years ended December 31, 1999 and
2000.

6.   EMPLOYEE BENEFITS:

KDSM participates in Sinclair's retirement savings plan under Section 401(k) of
the Internal Revenue Code. This plan covers substantially all employees of the
Company who meet minimum age or service requirements and allows participants to
defer a portion of their annual compensation on a pre-tax basis. Contributions
from the Company are made on an annual basis in an amount equal to 50% of the
participating employee contributions, to the extent such contributions do not
exceed 4% of the employees' eligible compensation during the year.


                                      F-11

<PAGE>

7.   COMMITMENTS AND CONTINGENCIES:

LITIGATION

The Company is involved in certain litigation matters arising in the normal
course of business. In the opinion of management, these matters are not
significant and will not have a material adverse effect on the Company's
financial position.

OPERATING LEASES

The Company leases certain property and equipment under non-cancelable operating
lease agreements. Rental expense charged to income for the years ended December
31, 1998, 1999, and 2000 was approximately $31,000, $23,000, and $12,000,
respectively. Future minimum payments under the leases are as follows (in
thousands):

<TABLE>

<S>   <C>                                        <C>
       2001...................................     $   12
       2002...................................         12
       2003...................................         12
       2004...................................         12
       2005...................................         12
       2006 and thereafter....................        302
                                                   -------
                                                   $  362
                                                   -------
                                                   -------
</TABLE>

8.   COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY
     TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES:

In March 1997, the Company completed a private placement of $200 million
aggregate liquidation value of HYTOPS. The Trust Preferred Securities were
issued March 12, 1997, mature March 15, 2009, are mandatorily redeemable at
maturity and provide for quarterly distributions to be paid in arrears
beginning June 15, 1997. The Trust Preferred Securities were sold to
"qualified institutional buyers" (as defined in Rule 144A under the
Securities Act of 1933, as amended) and a limited number of institutional
"accredited investors" and the offering was exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
Section #4(2) of the Securities Act and Rule 144A thereunder. The Company
utilized the proceeds of the private placement combined with other capital
contributions to acquire $206.2 million of 12 5/8% Series C Preferred Stock
(the "Parent Preferred Securities") of Sinclair.

Pursuant to a Registration Rights Agreement entered into in connection with the
private placement of the Trust Preferred Securities, Sinclair Capital offered
holders of the Trust Preferred Securities the right to exchange the Trust
Preferred Securities with new Trust Preferred Securities having the same terms
as the existing securities, except that the exchange of the new Trust Preferred
Securities for the existing Trust Preferred Securities has been registered under
the Securities Act. On May 2, 1997, the Company filed a registration statement
on Form S-4 with the Securities and Exchange Commission for the purpose of
registering the new Trust Preferred Securities to be offered in exchange for the
aforementioned existing Trust Preferred Securities issued by the Company in
March 1997 (the "Exchange Offer"). The Company's Exchange Offer was closed and
became effective on August 11, 1997, at which time all of the existing Trust
Preferred Securities were exchanged for new Trust Preferred Securities.


                                      F-12

<PAGE>

9.   PARENT PREFERRED SECURITIES:

In March 1997, the Company utilized the proceeds of the Trust Preferred
Securities combined with other capital contributions to acquire $206.2 million
of 12 5/8% Parent Preferred Securities issued by Sinclair. The Parent Preferred
Securities were issued March 12, 1997, mature March 15, 2009, are mandatorily
redeemable at maturity, and provide for quarterly distributions to be paid in
arrears beginning June 15, 1997.

Pursuant to a Registration Rights Agreement entered into in connection with the
private placement of the Trust Preferred Securities, Sinclair was obligated to
exchange the existing Parent Preferred Securities (the "Old Parent Preferred")
with New Parent Preferred Securities (the "New Parent Preferred") registered
under the Securities Act. The terms of the New Parent Preferred are identical in
all material respects to those of the Old Parent Preferred. A registration
statement was filed on May 2, 1997 with respect to registering the New Parent
Preferred, and was declared effective on July 14, 1997 and the exchange has been
completed.

The Company intends to hold the New Parent Preferred securities until
maturity. In accordance with management's intentions, these investments are
carried at cost. Any permanent impairment to the investment will result in a
write-down of the investment at the time of the impairment.

10.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED, IN THOUSANDS):

<TABLE>
<CAPTION>

                                                                          QUARTER ENDED
                                              --------------------------------------------------------------------
                                                 MARCH 31,         JUNE 30,       SEPTEMBER 30,      DECEMBER 31,
                                                   1999              1999              1999              1999
                                                   ----              ----              ----              ----
<S>                                           <C>              <C>                <C>              <C>
Total revenues...................              $    2,314       $   2,095          $    1,998       $    2,595
Operating income.................                     195             399                 113              328
Net income.......................                     396             613                 689            7,279
Basic and diluted net income
  per common share...............                   3,960           6,130               6,890           72,790

</TABLE>

<TABLE>
<CAPTION>

                                                                          QUARTER ENDED
                                              ----------------------------------------------------------------------
                                                 MARCH 31,         JUNE 30,       SEPTEMBER 30,      DECEMBER 31,
                                                   2000              2000              2000              2000
                                                   ----              ----              ----              ----
<S>                                           <C>              <C>                <C>              <C>
Total revenues...................              $    2,401       $   2,366          $    2,247       $    2,524
Operating income.................                      20             425                 283              315
Net income.......................                     867           1,269               1,413            1,456
Basic and diluted net income
  per common share...............                   8,670          12,690              14,130           14,560

</TABLE>

11.  SUBSEQUENT EVENT:

During the first quarter of 2001, Sinclair offered a voluntary early retirement
program to its eligible employees and implemented a restructuring program to
reduce overhead costs. As a result of these initiatives, KDSM reduced its staff
by 3 employees and expects to incur a special charge during the first quarter of
2001 of approximately $18,300.


                                      F-13

<PAGE>

                           KDSM, INC. AND SUBSIDIARIES

                               INDEX TO SCHEDULES

<TABLE>

<S>                                                                    <C>
Report of Independent Public Accountants.........................       S-2
Schedule II - Valuation and Qualifying Accounts..................       S-3

</TABLE>

All schedules except those listed above are omitted as not applicable or not
required or the required information is included in the consolidated financial
statements or in the notes thereto.


                                      S-1

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders of
Sinclair Broadcast Group, Inc.:

We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated balance sheets, statements of operations,
changes in stockholder's equity and cash flows of KDSM, Inc. and Subsidiaries
included in this Form 10-K and have issued our report thereon dated March 2,
2001. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the
accompanying index is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

                                                            ARTHUR ANDERSEN LLP

Baltimore, Maryland,
March 2, 2001


                                      S-2

<PAGE>

                                                                     SCHEDULE II


                           KDSM, INC. AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>


                                                  BALANCE AT    CHARGED TO                   BALANCE
                                                  BEGINNING     COSTS AND                   AT END OF
                  DESCRIPTION                     OF PERIOD      EXPENSES    DEDUCTIONS      PERIOD
                  -----------                     ---------      --------    ----------      ------
<S>                                               <C>            <C>         <C>          <C>
1998
   Allowance for doubtful accounts......              $30           $13          $10           $33
1999
   Allowance for doubtful accounts......               33            25           39            19
2000
   Allowance for doubtful accounts......               19            51           49            21

</TABLE>


                                      S-3