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**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**Form 10-Q**

 

**QuarterlyReport pursuant to Section 13 OR 15 (d) of the****Securities Exchange Act of 1934**

 

**For the quarterly period ended September 30, 2010**

 
| **Commission file number: 001-31311** | **Commission file number: 000-25206** |
|---------------------------------------|---------------------------------------|
|                                  |                                  |
|                                  | **LIN  Television**                   |
| **LIN TV  Corp.**                     | **Corporation**                       |
| (Exact  name of registrant as         | (Exact  name of registrant as         |
| specified  in its charter)            | specified  in its charter)            |
|                                  |                                  |
| **Delaware**                          | **Delaware**                          |
| (State  or other jurisdiction of      | (State  or other jurisdiction of      |
| incorporation  or organization)       | incorporation  or organization)       |
|                                  |                                  |
| **05-0501252**                        | **13-3581627**                        |
| (I.R.S.  Employer                     | (I.R.S.  Employer                     |
| Identification  No.)                  | Identification  No.)                  |

 

**One West Exchange Street, Suite 5A, Providence, RhodeIsland 02903**

(Addressof principal executive offices)

 

**(401)454-2880**

(Registrant’stelephone number, including area code)

 

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

 

Indicate by check markwhether the registrant has submitted electronically and posted to its corporateWeb site, if any, every Interactive Date File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding twelve months (or for such shorter period that theregistrant was required to submit and post such files).  Yes o  No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act. (Check one):

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

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o  No x

 

This combined Form 10-Qis separately filed by (i) LIN TV Corp. and (ii) LIN TelevisionCorporation. LIN Television Corporation meets the conditions set forth ingeneral instruction H (1) (a) and (b) of Form 10-Q and is,therefore, filing this form with the reduced disclosure format permitted bysuch instruction.

 

LIN TV Corp. Class Acommon stock, $0.01 par value, outstanding as of October 28, 2010: 31,446,514shares

LIN TV Corp. Class Bcommon stock, $0.01 par value, outstanding as of October 28, 2010:23,502,059 shares.

LIN TV Corp. Class Ccommon stock, $0.01 par value, outstanding as of October 28, 2010: 2shares.

LIN Television Corporationcommon stock, $0.01 par value, issued and outstanding as of October 27,2010: 1,000 shares.

 

 

 

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Tableof Contents

 
| Part I.  Financial Information                                                                                               |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                              |   |
| Item 1.  Unaudited Consolidated Financial Statements of LIN TV Corp.                                                              |   |
| Consolidated  Balance Sheets                                                                                                      | 3      |
| Consolidated  Statements of Operations                                                                                            | 4      |
| Consolidated Statements of Stockholders’ Deficit and  Comprehensive Income (Loss)                                       | 5      |
| Consolidated Statements of Cash Flows                                                                                             | 7      |
| Notes to Unaudited Consolidated Financial Statements  (See separate index for financial statements of LIN Television Corporation) | 8      |
| Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations                               | 18     |
| Item 3. Quantitative and Qualitative Disclosures about  Market Risk                                                               | 23     |
| Item 4. Controls and Procedures                                                                                                   | 24     |
| Part II.  Other Information                                                                                                  | 24     |
| Item  1. Legal Proceedings                                                                                                        | 24     |
| Item  1A. Risk Factors                                                                                                            | 24     |
| Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds                                                              | 27     |
| Item 3. Defaults Upon Senior Securities                                                                                           | 27     |
| Item 4.  Reserved                                                                                                                 | 27     |
| Item  5. Other Information                                                                                                        | 27     |
| Item 6.  Exhibits                                                                                                                 | 28     |
| Signature  Page                                                                                                                   | 29     |

 

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**Part I.Financial Information**

 

**Item 1.Financial Statements**

 

**LIN TV Corp.**

**ConsolidatedBalance Sheets**

**(unaudited)**

 
| ** **                                                                                                                                                                                                                                                                                                            | ** ** | **September 30,**                                    | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                            | ** ** | **2010**                                                  | ** ** | **2009**              | ** ** |
| ** **                                                                                                                                                                                                                                                                                                            | ** ** | **(in thousands, except share data)** | ** ** |
| **ASSETS**                                                                                                                                                                                                                                                                                                            | ** ** | ** **                                                | ** ** | ** **            | ** ** |
| Current assets:                                                                                                                                                                                                                                                                                                       |       |                                                      |       |                  |       |
| Cash and cash equivalents                                                                                                                                                                                                                                                                                             |       | $                                                         | 8,766      |                  | $          | 11,105 |   |
| Restricted cash                                                                                                                                                                                                                                                                                                       |       | —                                                    |       | 2,000                 |       |
| Accounts receivable, less allowance for doubtful  accounts (2010 - $1,976; 2009 - $2,272)                                                                                                                                                                                                                             |       | 80,281                                                    |       | 73,948                |       |
| Program rights                                                                                                                                                                                                                                                                                                        |       | 1,112                                                     |       | 2,126                 |       |
| Other current assets                                                                                                                                                                                                                                                                                                  |       | 6,601                                                     |       | 6,402                 |       |
| Total current assets                                                                                                                                                                                                                                                                                                  |       | 96,760                                                    |       | 95,581                |       |
| Property and equipment, net                                                                                                                                                                                                                                                                                           |       | 156,536                                                   |       | 165,061               |       |
| Deferred financing costs                                                                                                                                                                                                                                                                                              |       | 8,342                                                     |       | 8,389                 |       |
| Program rights                                                                                                                                                                                                                                                                                                        |       | 870                                                       |       | 1,400                 |       |
| Goodwill                                                                                                                                                                                                                                                                                                              |       | 117,259                                                   |       | 117,259               |       |
| Broadcast licenses and other intangible assets,  net                                                                                                                                                                                                                                                                  |       | 397,645                                                   |       | 398,877               |       |
| Other assets                                                                                                                                                                                                                                                                                                          |       | 5,026                                                     |       | 3,936                 |       |
| Total assets                                                                                                                                                                                                                                                                                                          |       | $                                                         | 782,438    |                  | $          | 790,503 |   |
|                                                                                                                                                                                                                                                                                                                  |       |                                                      |       |                  |       |
| **LIABILITIES AND STOCKHOLDERS’  DEFICIT**                                                                                                                                                                                                                                                                       | ** ** | ** **                                                | ** ** | ** **            | ** ** |
| Current liabilities:                                                                                                                                                                                                                                                                                                  |       |                                                      |       |                  |       |
| Current portion of long-term debt                                                                                                                                                                                                                                                                                     |       | $                                                         | 7,051      |                  | $          | 16,372 |   |
| Accounts payable                                                                                                                                                                                                                                                                                                      |       | 6,981                                                     |       | 6,556                 |       |
| Accrued expenses                                                                                                                                                                                                                                                                                                      |       | 54,341                                                    |       | 41,916                |       |
| Program obligations                                                                                                                                                                                                                                                                                                   |       | 7,221                                                     |       | 10,319                |       |
| Total current liabilities                                                                                                                                                                                                                                                                                             |       | 75,594                                                    |       | 75,163                |       |
| Long-term debt, excluding current portion                                                                                                                                                                                                                                                                             |       | 634,291                                                   |       | 666,582               |       |
| Deferred income taxes, net                                                                                                                                                                                                                                                                                            |       | 172,916                                                   |       | 162,025               |       |
| Program obligations                                                                                                                                                                                                                                                                                                   |       | 1,375                                                     |       | 2,092                 |       |
| Other liabilities                                                                                                                                                                                                                                                                                                     |       | 45,160                                                    |       | 53,795                |       |
| Total liabilities                                                                                                                                                                                                                                                                                                     |       | 929,336                                                   |       | 959,657               |       |
|                                                                                                                                                                                                                                                                                                                  |       |                                                      |       |                  |       |
| Commitments and Contingencies (Note 12)                                                                                                                                                                                                                                                                               |       |                                                      |       |                  |       |
|                                                                                                                                                                                                                                                                                                                  |       |                                                      |       |                  |       |
| Stockholders’ deficit:                                                                                                                                                                                                                                                                                           |       |                                                      |       |                  |       |
| Class A common stock, $0.01 par value,  100,000,000 shares authorized,   Issued: 32,319,232 and 30,270,167 shares as of September 30, 2010 and  December 31, 2009, respectively

Outstanding: 31,446,414 and 29,397,349 shares as of  September 30, 2010 and December 31, 2009, respectively |       | 294                                                       |       | 294                   |       |
| Class B common stock, $0.01 par value,  50,000,000 shares authorized, 23,502,059 shares as of September 30, 2010  and December 31, 2009, issued and outstanding; convertible into an equal  number of shares of Class A or Class C common stock                                              |       | 235                                                       |       | 235                   |       |
| Class C common stock, $0.01 par value,  50,000,000 shares authorized, 2 shares as of September 30, 2010 and  December 31, 2009, issued and outstanding; convertible into an equal  number of shares of Class A common stock                                                                       |       | —                                                    |       | —                |       |
| Treasury stock, 872,818 shares of Class A  common stock as of September 30, 2010 and December 31, 2009, at  cost                                                                                                                                                                                       |       | (7,869                                                    | )          | (7,869                | )          |
| Additional paid-in capital                                                                                                                                                                                                                                                                                            |       | 1,108,314                                                 |       | 1,104,161             |       |
| Accumulated deficit                                                                                                                                                                                                                                                                                                   |       | (1,222,642                                                | )          | (1,238,058            | )          |
| Accumulated other comprehensive loss                                                                                                                                                                                                                                                                                  |       | (25,230                                                   | )          | (27,917               | )          |
| Total stockholders’ deficit                                                                                                                                                                                                                                                                                      |       | (146,898                                                  | )          | (169,154              | )          |
| Total liabilities and stockholders’ deficit                                                                                                                                                                                                                                                                      |       | $                                                         | 782,438    |                  | $          | 790,503 |   |

 

Theaccompanying notes are an integral part of the unaudited consolidated financialstatements.

 

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**LIN TV Corp.**

**ConsolidatedStatements of Operations**

**(unaudited)**

 
| ** **                                                                                                                                                                                   | ** ** | **Three months ended September 30,** | ** ** | **Nine months ended September 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                                                                                                                                   | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
| ** **                                                                                                                                                                                   | ** ** | **(in thousands)**                                  | ** ** |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Net revenues                                                                                                                                                                                 |       | $                                                        | 103,616    |                                                    | $          | 81,371 |   | $ | 294,921 |   | $ | 238,363 |   |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Operating costs and expenses:                                                                                                                                                                |       |                                                     |       |                                                    |       |   |   |   |   |
| Direct operating                                                                                                                                                                             |       | 31,708                                                   |       | 25,635                                                  |       | 90,836 |   | 79,083 |   |
| Selling, general and administrative                                                                                                                                                          |       | 26,660                                                   |       | 24,727                                                  |       | 78,736 |   | 75,089 |   |
| Amortization of program rights                                                                                                                                                               |       | 6,024                                                    |       | 6,317                                                   |       | 18,070 |   | 18,221 |   |
| Corporate                                                                                                                                                                                    |       | 6,047                                                    |       | 4,206                                                   |       | 17,925 |   | 13,193 |   |
| Depreciation                                                                                                                                                                                 |       | 7,079                                                    |       | 7,561                                                   |       | 21,127 |   | 23,135 |   |
| Amortization of intangible assets                                                                                                                                                            |       | 411                                                      |       | 24                                                      |       | 1,232 |   | 64 |   |
| Impairment of goodwill and broadcast licenses                                                                                                                                                |       | —                                                   |       | —                                                  |       | — |   | 39,894 |   |
| Restructuring charge                                                                                                                                                                         |       | —                                                   |       | —                                                  |       | 2,181 |   | 498 |   |
| Gain from asset dispositions                                                                                                                                                                 |       | (1,148                                                   | )          | (886                                                    | )          | (3,359 | ) | (3,544 | ) |
| Operating income (loss)                                                                                                                                                                      |       | 26,835                                                   |       | 13,787                                                  |       | 68,173 |   | (7,270 | ) |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Other expense (income):                                                                                                                                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| Interest expense, net                                                                                                                                                                        |       | 13,313                                                   |       | 11,259                                                  |       | 38,456 |   | 32,314 |   |
| Share of loss in equity investments                                                                                                                                                          |       | 40                                                       |       | 2,000                                                   |       | 134 |   | 2,000 |   |
| (Gain) loss on derivative instruments                                                                                                                                                        |       | (481                                                     | )          | 17                                                      |       | 2,584 |   | 12 |   |
| Loss (gain) on extinguishment of debt                                                                                                                                                        |       | —                                                   |       | —                                                  |       | 2,749 |   | (50,149 | ) |
| Other, net                                                                                                                                                                                   |       | (28                                                      | )          | (249                                                    | )          | (710 | ) | (188 | ) |
| Total other expense (income), net                                                                                                                                                            |       | 12,844                                                   |       | 13,027                                                  |       | 43,213 |   | (16,011 | ) |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Income from continuing operations before provision  for income taxes                                                                                                                         |       | 13,991                                                   |       | 760                                                     |       | 24,960 |   | 8,741 |   |
| Provision for income taxes                                                                                                                                                                   |       | 5,720                                                    |       | 1,635                                                   |       | 9,544 |   | 9,944 |   |
| Income (loss) from continuing operations                                                                                                                                                     |       | 8,271                                                    |       | (875                                                    | )          | 15,416 |   | (1,203 | ) |
| Discontinued operations:                                                                                                                                                                     |       |                                                     |       |                                                    |       |   |   |   |   |
| Loss from discontinued operations, net of a gain  from the sale of discontinued operations of $11 and a benefit from income taxes  of $677 for the nine months ended September 30, 2009 |       | —                                                   |       | —                                                  |       | — |   | (446 | ) |
| Net income (loss)                                                                                                                                                                            |       | $                                                        | 8,271      |                                                    | $          | (875 | ) | $ | 15,416 |   | $ | (1,649 | ) |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| **Basic income (loss) per common  share:**                                                                                                                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Income (loss) from continuing operations                                                                                                                                                     |       | $                                                        | 0.15       |                                                    | $          | (0.02 | ) | $ | 0.29 |   | $ | (0.02 | ) |
| Loss from discontinued operations, net of tax                                                                                                                                                |       | —                                                   |       | —                                                  |       | — |   | (0.01 | ) |
| Net income (loss)                                                                                                                                                                            |       | $                                                        | 0.15       |                                                    | $          | (0.02 | ) | $ | 0.29 |   | $ | (0.03 | ) |
| Weighted-average number of common shares  outstanding used in calculating basic income (loss) per common share                                                                               |       | 54,734                                                   |       | 51,367                                                  |       | 53,705 |   | 51,380 |   |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| **Diluted income (loss) per common  share:**                                                                                                                                                 |       |                                                     |       |                                                    |       |   |   |   |   |
| Income (loss) from continuing operations                                                                                                                                                     |       | $                                                        | 0.15       |                                                    | $          | (0.02 | ) | $ | 0.28 |   | $ | (0.02 | ) |
| Loss from discontinued operations, net of tax                                                                                                                                                |       | —                                                   |       | —                                                  |       | — |   | (0.01 | ) |
| Net income (loss)                                                                                                                                                                            |       | $                                                        | 0.15       |                                                    | $          | (0.02 | ) | $ | 0.28 |   | $ | (0.03 | ) |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Weighted-average number of common shares  outstanding used in calculating diluted income (loss) per common share                                                                             |       | 56,113                                                   |       | 51,367                                                  |       | 55,264 |   | 51,380 |   |

 

Theaccompanying notes are an integral part of the unaudited consolidated financialstatements.

 

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**LIN TV Corp.**

**ConsolidatedStatements of Stockholders’ Deficit and Comprehensive Income**

**(unaudited)**

**(in thousands)**

*** ***
| ** **                                                                              | ** ** | **Total**   | ** ** | **Class A** | ** ** | **Class B** | ** ** | **Class C** | ** ** | **Treasury  Stock (at** | ** ** | **Additional  Paid-In** | ** ** | **Accumulated** | ** ** | **Accumulated  Other  Comprehensive** | ** ** | **Total  Stockholders’** | ** ** | **Comprehensive** | ** ** |
|-----------------------------------------------------------------------------------------|------------|-------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------------------|------------|-------------------------|------------|-----------------|------------|---------------------------------------|------------|-------------------------------|------------|-------------------|------------|
| ** **                                                                              | ** ** | **Deficit** | ** ** | **Amount**       | ** ** | **Amount**       | ** ** | **Amount**       | ** ** | **cost)**                    | ** ** | **Capital**             | ** ** | **Deficit**     | ** ** | **Loss**                              | ** ** | **Deficit**                   | ** ** | **Income**        | ** ** |
| Balance as of December 31, 2009                                                    |       | $           | (169,154   | )                | $          | 294              |       | $                | 235        |                         | $          | —                  |       | $               | (7,869     | )                                     | $          | 1,104,161                     |       | $                 | (1,238,058 | ) | $ | (27,917 | ) | $ | (169,154 | ) |   |   |
| Amortization of pension net loss, net of tax of  $112                                   |       | 171         |       | —           |       | —           |       | —           |       | —                       |       | —                  |       | —          |       | 171                                   |       | 171                           |       | $                 | 171        |   |
| Reclassification of unrealized loss on cash flow  hedge, net of tax of $1,603           |       | 2,516       |       | —           |       | —           |       | —           |       | —                       |       | —                  |       | —          |       | 2,516                                 |       | 2,516                         |       | 2,516             |       |
| Stock-based compensation                                                                |       | 3,641       |       | —           |       | —           |       | —           |       | —                       |       | 3,641                   |       | —          |       | —                                |       | 3,641                         |       |              |       |
| Class A common stock issued under employee and  director stock-based compensation plans |       | 512         |       | —           |       | —           |       | —           |       | —                       |       | 512                     |       | —          |       | —                                |       | 512                           |       |              |       |
| Net income                                                                              |       | 15,416      |       | —           |       | —           |       | —           |       | —                       |       | —                  |       | 15,416          |       | —                                |       | 15,416                        |       | 15,416            |       |
| Comprehensive income - September 30, 2010                                          |       |        |       |             |       |             |       |             |       |                         |       |                    |       |            |       |                                  |       |                          |       | $                 | 18,103     |   |
| Balance as of September 30, 2010                                                   |       | $           | (146,898   | )                | $          | 294              |       | $                | 235        |                         | $          | —                  |       | $               | (7,869     | )                                     | $          | 1,108,314                     |       | $                 | (1,222,642 | ) | $ | (25,230 | ) | $ | (146,898 | ) |   |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements

 

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**LIN TV Corp.**

**ConsolidatedStatements of Stockholders’ Deficit and Comprehensive Loss**

**(unaudited)**

**(in thousands)**

 

 
| ** **                                              | ** ** | **Total**   | ** ** | **Class A** | ** ** | **Class B** | ** ** | **Class C** | ** ** | **Treasury  Stock (at** | ** ** | **Additional  Paid-In** | ** ** | **Accumulated** | ** ** | **Accumulated  Other  Comprehensive** | ** ** | **Total  Stockholders’** | ** ** | **Noncontrolling** | ** ** | **Comprehensive** | ** ** |
|---------------------------------------------------------|------------|-------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------------------|------------|-------------------------|------------|-----------------|------------|---------------------------------------|------------|-------------------------------|------------|--------------------|------------|-------------------|------------|
| ** **                                              | ** ** | **Deficit** | ** ** | **Amount**       | ** ** | **Amount**       | ** ** | **Amount**       | ** ** | **cost)**                    | ** ** | **Capital**             | ** ** | **Deficit**     | ** ** | **Loss**                              | ** ** | **Deficit**                   | ** ** | **Interest**       | ** ** | **Loss**          | ** ** |
| Balance as of December 31, 2008                    |       | $           | (182,250   | )                | $          | 294              |       | $                | 235        |                         | $          | —                  |       | $               | (18,005    | )                                     | $          | 1,101,919                     |       | $                  | (1,239,090 | )                 | $          | (34,634 | ) | $ | (189,281 | ) | $ | 7,031 |   |   |   |
| Amortization of prior service cost, net of tax of  $9   |       | 14          |       | —           |       | —           |       | —           |       | —                       |       | —                  |       | —          |       | 14                                    |       | 14                            |       | —             |       | $                 | 14         |   |
| Amortization of pension net loss, net of tax of  $50    |       | 74          |       | —           |       | —           |       | —           |       | —                       |       | —                  |       | —          |       | 74                                    |       | 74                            |       | —             |       | 74                |       |
| Unrealized loss on cash flow hedge, net of tax of  $653 |       | 984         |       | —           |       | —           |       | —           |       | —                       |       | —                  |       | —          |       | 984                                   |       | 984                           |       | —             |       | 984               |       |
| Stock-based compensation                                |       | 1,445       |       | —           |       | —           |       | —           |       | —                       |       | 1,445                   |       | —          |       | —                                |       | 1,445                         |       | —             |       |              |       |
| Distribution to minority shareholders                   |       | (2,644      | )          | —           |       | —           |       | —           |       | —                       |       | —                  |       | —          |       | —                                |       | —                        |       | (2,644             | )          |              |       |
| Net loss                                                |       | (6,036      | )          | —           |       | —           |       | —           |       | —                       |       | —                  |       | (1,649          | )          | —                                |       | (1,649                        | )          | (4,387             | )          | (1,649            | )          |
| Comprehensive loss - September 30, 2009            |       |        |       |             |       |             |       |             |       |                         |       |                    |       |            |       |                                  |       |                          |       |               |       | $                 | (577       | ) |
| Balance as of September 30, 2009                   |       | $           | (188,413   | )                | $          | 294              |       | $                | 235        |                         | $          | —                  |       | $               | (18,005    | )                                     | $          | 1,103,364                     |       | $                  | (1,240,739 | )                 | $          | (33,562 | ) | $ | (188,413 | ) | $ | — |   |   |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements

 

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**LIN TV Corp.**

**ConsolidatedStatements of Cash Flows**

**(unaudited)**

 
| ** **                                                                               | ** ** | **Nine months ended September 30,** | ** ** |
|------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                               | ** ** | **2010**                                                | ** ** | **2009** | ** ** |
| ** **                                                                               | ** ** | **(in thousands)**                                 | ** ** |
| **OPERATING ACTIVITIES:**                                                                |       |                                                    |       |   |   |
| Net income (loss)                                                                        |       | $                                                       | 15,416     |   | $ | (1,649 | ) |
| Loss from discontinued operations                                                        |       | —                                                  |       | 446 |   |
| Adjustment to reconcile net income (loss) to net  cash provided by operating activities: |       |                                                    |       |   |   |
| Depreciation                                                                             |       | 21,127                                                  |       | 23,135 |   |
| Amortization of intangible assets                                                        |       | 1,232                                                   |       | 64 |   |
| Impairment of goodwill and broadcast licenses                                            |       | —                                                  |       | 39,894 |   |
| Amortization of financing costs and note discounts                                       |       | 3,440                                                   |       | 2,945 |   |
| Amortization of program rights                                                           |       | 18,070                                                  |       | 18,221 |   |
| Program payments                                                                         |       | (20,763                                                 | )          | (18,322 | ) |
| Loss (gain) on extinguishment of debt                                                    |       | 2,749                                                   |       | (50,149 | ) |
| Loss on derivative instruments                                                           |       | 2,584                                                   |       | 12 |   |
| Share of loss in equity investments                                                      |       | 134                                                     |       | 2,000 |   |
| Deferred income taxes, net                                                               |       | 9,444                                                   |       | 10,462 |   |
| Stock-based compensation                                                                 |       | 3,641                                                   |       | 1,615 |   |
| Gain from asset dispositions                                                             |       | (3,359                                                  | )          | (3,539 | ) |
| Other, net                                                                               |       | (129                                                    | )          | 2,108 |   |
| Changes in operating assets and liabilities:                                             |       |                                                    |       |   |   |
| Accounts receivable                                                                      |       | (6,333                                                  | )          | 6,350 |   |
| Other assets                                                                             |       | 916                                                     |       | (164 | ) |
| Accounts payable                                                                         |       | 425                                                     |       | (3,322 | ) |
| Accrued interest expense                                                                 |       | 14,627                                                  |       | 5,914 |   |
| Other liabilities and accrued expenses                                                   |       | 457                                                     |       | (17,220 | ) |
| **Net cash provided by operating  activities, continuing operations**                    |       | 63,678                                                  |       | 18,801 |   |
| **Net cash used in operating  activities, discontinued operations**                      |       | —                                                  |       | (101 | ) |
| **Net cash provided by operating  activities**                                           |       | 63,678                                                  |       | 18,700 |   |
|                                                                                     |       |                                                    |       |   |   |
| **INVESTING ACTIVITIES:**                                                                |       |                                                    |       |   |   |
| Capital expenditures                                                                     |       | (13,023                                                 | )          | (4,772 | ) |
| Cash paid for broadcast license rights                                                   |       | —                                                  |       | (7,561 | ) |
| Change in restricted cash                                                                |       | 2,000                                                   |       | (2,000 | ) |
| Payments for business combinations                                                       |       | (575                                                    | )          | — |   |
| Proceeds from the sale of assets                                                         |       | 180                                                     |       | — |   |
| Payments on derivative instruments                                                       |       | (1,525                                                  | )          | — |   |
| Shortfall loan to joint venture with NBC  Universal                                 |       | (4,079                                                  | )          | — |   |
| Other investments, net                                                                   |       | (1,980                                                  | )          | — |   |
| **Net cash used in investing  activities, continuing operations**                        |       | (19,002                                                 | )          | (14,333 | ) |
| **Net cash provided by investing  activities, discontinued operations**                  |       | 660                                                     |       | 5,875 |   |
| **Net cash used in investing  activities**                                               |       | (18,342                                                 | )          | (8,458 | ) |
|                                                                                     |       |                                                    |       |   |   |
| **FINANCING ACTIVITIES:**                                                                |       |                                                    |       |   |   |
| Net proceeds from employee and director stock-based  compensation plans                  |       | 512                                                     |       | — |   |
| Proceeds from borrowings on long-term debt                                               |       | 213,000                                                 |       | 81,000 |   |
| Principal payments on long-term debt                                                     |       | (255,855                                                | )          | (93,280 | ) |
| Payment of long-term debt issue costs                                                    |       | (4,887                                                  | )          | (3,662 | ) |
| **Net cash used in financing  activities, continuing operations**                        |       | (47,230                                                 | )          | (15,942 | ) |
| **Net cash used in financing  activities, discontinued operations**                      |       | (445                                                    | )          | (2,644 | ) |
| **Net cash used in financing  activities**                                               |       | (47,675                                                 | )          | (18,586 | ) |
|                                                                                     |       |                                                    |       |   |   |
| Net decrease in cash and cash equivalents                                                |       | (2,339                                                  | )          | (8,344 | ) |
| Cash and cash equivalents at the beginning of the  period                                |       | 11,105                                                  |       | 20,106 |   |
| Cash and cash equivalents at the end of the period                                       |       | $                                                       | 8,766      |   | $ | 11,762 |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements.

 

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**LIN TV Corp.**

**Notes to Unaudited Consolidated Financial Statements**

 

**Note 1 —Basis of Presentation and Summary of Significant Accounting Policies**

 

*Descriptionof Business*

 

LIN TV Corp. (“LIN TV”),together with its subsidiaries, including LIN Television Corporation (“LINTelevision”), is a local television and digital media company, owning,operating or servicing 32 television stations and interactive televisionstation and niche web sites in 17 U.S. markets. In these notes, the terms “Company,”“LIN TV,” “we,” “us” or “our” mean LIN TV Corp. and all subsidiaries includedin our unaudited consolidated financial statements.

 

The unaudited consolidatedinterim financial statements have been prepared in conformity with accountingprinciples generally accepted in the United States (“U.S. GAAP”).

 

In the opinion ofmanagement, the accompanying unaudited interim financial statements contain alladjustments necessary to state fairly our financial position, results ofoperations and cash flows for the periods presented. The interim results ofoperations are not necessarily indicative of the results to be expected for thefull year.

 

*Use ofEstimates*

 

The preparation of financialstatements in conformity with U.S. GAAP requires our management to makeestimates and assumptions that affect the amounts reported in the unauditedconsolidated financial statements and the notes to the unaudited consolidatedfinancial statements. Our actual results could differ from these estimates.Estimates are used for the allowance for doubtful accounts in receivables,valuation of goodwill and intangible assets, amortization of program rights andintangible assets, stock-based compensation, pension costs, barter transactions,income taxes, employee medical insurance claims, useful lives of property andequipment, contingencies, litigation and net assets of businesses acquired.

 

*NetEarnings per Common Share*

 

Basic earnings per share (“EPS”)is based upon net income divided by the weighted-average number of commonshares outstanding during the period. Diluted EPS reflects the effect of theassumed exercise of stock options and vesting of restricted shares only in theperiods in which such effect would have been dilutive.

 

The following is areconciliation of net income available to common shareholders andweighted-average common shares outstanding for purposes of calculating basicand diluted income per common share (in thousands):

 
| ** **                                               | ** ** | **Three Months  Ended  September 30,** | ** ** | **Nine Months  Ended  September 30,** | ** ** |
|----------------------------------------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                               | ** ** | **2010**                                         | ** ** | **2010**                                        | ** ** |
| ** **                                               | ** ** | ** **                                       | ** ** | ** **                                      | ** ** |
| **Numerator for income per common share calculation:**   |       |                                             |       |                                            |       |
|                                                     |       |                                             |       |                                            |       |
| Net  income available to common shareholders             |       | $                                                | 8,271      |                                            | $          | 15,416 |   |
|                                                     |       |                                             |       |                                            |       |
| **Denominator for income per common share calculation:** |       |                                             |       |                                            |       |
|                                                     |       |                                             |       |                                            |       |
| Weighted-average  common shares, basic                   |       | 54,734                                           |       | 53,705                                          |       |
| Effect  of dilutive securities:                          |       |                                             |       |                                            |       |
| Stock  options                                           |       | 1,379                                            |       | 1,559                                           |       |
| Weighted-average  common shares, diluted                 |       | 56,113                                           |       | 55,264                                          |       |
|                                                          |            |                                                  |            |                                                 |            |  |  |

 

For the three and ninemonths ended September 30, 2009, because the Company incurred a net loss,all potential common shares from the exercise of stock options and the vestingof restricted stock were anti-dilutive.  As a result, there was nodifference between basic and diluted loss per share.

 

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*Comprehensive Income (Loss)*

 

Our total comprehensive income (loss)includes net income (loss) and other comprehensive income (loss) itemslisted in the table below (in thousands): 

 
| ** **                                     | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                     | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
|                                           |       |                                                     |       |                                                    |       |   |   |   |   |
| Net  income (loss)                             |       | $                                                        | 8,271      |                                                    | $          | (875 | ) | $ | 15,416 |   | $ | (1,649 | ) |
| Amortization  of prior service cost on pension |       | —                                                   |       | 5                                                       |       | — |   | 14 |   |
| Amortization  of pension net loss              |       | 57                                                       |       | 24                                                      |       | 171 |   | 74 |   |
| Unrealized  loss on cash flow hedge            |       | —                                                   |       | 153                                                     |       | 2,516 |   | 984 |   |
| Total  comprehensive income (loss)             |       | $                                                        | 8,328      |                                                    | $          | (693 | ) | $ | 18,103 |   | $ | (577 | ) |

 

*RecentlyIssued Accounting Pronouncements*

 

In October 2009, therewere revisions to the accounting standard for revenue arrangements withmultiple deliverables.  The revisions address how to separatedeliverables and how to measure and allocate arrangement consideration to oneor more units of accounting.  The revisions are effectiveprospectively for revenue arrangements entered into or materially modified infiscal years beginning on or after June 15, 2010. We plan to adopt thisguidance effective January 1, 2011, and we do not expect it to have amaterial impact on our financial position or results of operations.

 

**Note 2 —Acquisitions**

 

*ACME Communications, Inc.*

 

On May 28, 2010, LINTelevision and ACME Communication, Inc. (“ACME”) entered into a sharedservices arrangement and related agreements with respect to ACME’s televisionstations KWBQ-TV, KRWB-TV, and KASY-TV in the Albuquerque-Santa Fe, NM market;WBDT-TV in the Dayton, OH market; and WCWF-TV (f/k/a WIWB-TV) in theGreen-Bay-Appleton, WI market. Concurrent with the execution of these agreements, we entered into anoption agreement, giving LIN Television the right to acquire any or all of thestations covered under these agreements, and giving ACME the right, starting inJanuary 2013 and subject to certain conditions, including regulatoryapproval, to put any or all of the stations to LIN Television at the greater ofa defined purchase price or the then-current fair market value.

 

On August 26, 2010, LINTelevision exercised its option to acquire WCWF-TV and certain assets ofWBDT-TV.  LIN Television assigned itsrights to acquire the remaining WBDT-TV assets, including the FCC license, toWBDT Television, LLC.  The aggregatepurchase price for both stations is $11.5 million, of which LIN Televisionagreed to pay approximately $10.5 million and WBDT Television, LLC agreed topay approximately $1.0 million.  On September 3,2010, LIN Television funded $0.6 million of the purchase price into an escrowaccount. LIN Television also has the option to fund 50% of its portion of thepurchase price with unregistered shares of LIN TV’s common stock.  Completion of the transaction is subject toregulatory approvals and certain other terms and conditions.  We expect the transaction to close during2011.

 

**Note 3 —Discontinued Operations**

 

*BanksBroadcasting*

 

Our consolidated financialstatements reflect the operations, assets and liabilities of the BanksBroadcasting joint venture as discontinued for all periods presented.

 

OnApril 23, 2009, Banks Broadcasting completed the sale of KNIN-TV, a CWaffiliate in Boise, for $6.6 million to Journal Broadcast Corporation. As aresult of the sale we received, on the basis of our economic interest in BanksBroadcasting, distributions of $0.4 million and $2.6 million during the ninemonths ended September 30, 2010 and 2009, respectively.  As of September 30,2010, all of the assets of the Banks Broadcasting joint venture have beenliquidated.

 

We provided no capitalcontributions to Banks Broadcasting during the nine months ended September 30,2010 and 2009.

 

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The following presentssummarized information for the discontinued operations (in thousands):

 
| ** **     | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|----------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **     | ** ** | **2009**                                             | ** ** | **2009**                                            | ** ** |
| ** **     | ** ** | ** **                                           | ** ** | ** **                                          | ** ** |
| Net revenues   |       | $                                                    | —     |                                                | $          | 823 |   |
| Operating loss |       | —                                               |       | (3,141                                              | )          |
| Net loss       |       | —                                               |       | (446                                                | )          |
|                |            |                                                      |            |                                                     |            |  |  |

 

The operating loss for thenine months ended September 30, 2009 includes an impairment charge of $1.9million to reduce the carrying value of broadcast licenses to fair value basedon the final sale price of KNIN-TV of $6.6 million. Net loss for the ninemonths ended September 30, 2009 reflects our 50% share of net losses ofBanks Broadcasting, net of taxes and non-operating items to adjust the carryingvalue of the non-controlling interest to reflect the estimated amounts thatwere due to the minority shareholders upon liquidation of Banks Broadcasting.

 

**Note 4 —Equity Investments**

 

*JointVenture with NBC Universal*

 

We own a 20.38% interest inStation Venture Holdings, LLC (“SVH”), a joint venture with NBC Universal, andaccount for our interest using the equity method, as we do not have acontrolling interest. SVH wholly owns Station Venture Operations, LP (“SVO”),which is the operating company that manages KXAS-TV and KNSD-TV, the televisionstations that comprise the joint venture. The following presents summarizedfinancial information of SVH (in thousands):

 
| ** **                                                | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|-----------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                | ** ** | **2010**                                             | ** ** | **2009**                                            | ** ** | **2010** | ** ** | **2009** | ** ** |
|                                                      |       |                                                 |       |                                                |       |   |   |   |   |
| Cash  distributions to SVH from SVO                       |       | $                                                    | 15,760     |                                                | $          | 9,177 |   | $ | 29,535 |   | $ | 36,607 |   |
|                                                      |       |                                                 |       |                                                |       |   |   |   |   |
| Income  to SVH                                            |       | $                                                    | 15,457     |                                                | $          | 9,180 |   | $ | 40,429 |   | $ | 18,409 |   |
| Other  expense, net (primarily interest on the GECC note) |       | (16,569                                              | )          | (16,491                                             | )          | (49,553 | ) | (49,473 | ) |
| Net  loss of SVH                                          |       | $                                                    | (1,112     | )                                                   | $          | (7,311 | ) | $ | (9,124 | ) | $ | (31,064 | ) |
|                                                      |       |                                                 |       |                                                |       |   |   |   |   |
| Shortfall  loans to SVH from LIN Television               |       | $                                                    | 204        |                                                | $          | — |   | $ | 4,079 |   | $ | — |   |
| Shortfall  loans to SVH from NBC Universal                |       | $                                                    | 796        |                                                | $          | — |   | $ | 15,934 |   | $ | — |   |

 

Beginning in 2009, we nolonger recognize our 20.38% share of SVH’s net loss because the investment waswritten-off during the year ended December 31, 2008; accordingly, wesuspended recognition of equity method gains and losses.

 

During the year ended December 31,2009, we recognized a contingent liability of $6.0 million based on ourestimate of amounts that we expected to loan to the joint venture pursuant tothe 2009 shortfall funding agreement and the 2010 shortfall funding agreementwith NBC Universal (collectively, the “Shortfall Funding Agreements”) asfurther described in Note 12 -  “Commitmentsand Contingencies”.  Due to uncertainty surrounding the joint venture’sability to repay the shortfall loans, we concurrently impaired all accruedloans to the joint venture as of December 31, 2009.

 

On March 25, 2010, June 22,2010 and September 23, 2010, pursuant to the terms of the ShortfallFunding Agreements, we made shortfall loans in the principal amounts of $3.1million, $0.8 million and $0.2 million, respectively, to the joint venture,representing our 20.38% share in cumulative debt service shortfalls at thejoint venture.  Concurrent with our funding of the shortfall loans,NBC Universal funded shortfall loans in the principal amounts of $12.2 million,$2.9 million and $0.8 million, respectively, to the joint venture, in respectof its 79.62% share in the cumulative debt service shortfalls at the jointventure.  We have a remaining shortfall funding accrual of $1.9million as of September 30, 2010, which we expect to fund during 2011.

 

Werecognize shortfall funding liabilities to the joint venture on ourbalance sheet****when thoseliabilities become both probable and estimable, which results******when jointventure management provides us with budget or forecast information of operatingcash flows and working capital needs indicating that a debt service shortfallis probable to occur and when we intend to reach a shortfall funding agreementwith NBC Universal covering the budgeted or forecasted period.  Based on fourthquarter 2010 and full year 2011 forecast information provided by joint venturemanagement, we estimate our share of shortfall funding will be approximately$1.9

 

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millionthrough December 31, 2011.  As of the date of this report, there isno agreement between us and NBC Universal for shortfall funding for the periodfollowing the expiration of the 2010 Shortfall Funding Agreement on April 1,2011.   Our estimate assumes that we will enter into a newshortfall funding agreement with NBC Universal for the period extending throughDecember 31, 2011 for the purpose of sharing in any joint venture debtservice shortfalls, on substantially the same terms as the 2010 ShortfallFunding Agreement.  Actual cash shortfalls at the joint venture could varyfrom our current estimates. We could also fail to reach an agreement with NBCUniversal regarding******the sharing of any joint venture debt service shortfalls****for the period following terminationof the 2010 Shortfall Funding Agreement, in which event we would not berequired to fund any immediate cash shortfalls (see Note 14 — “Commitments andContingencies” included in our Annual Report on Form 10-K for the yearended December 31, 2009 (“10-K”)).  Cash shortfalls at the jointventure beyond December 31, 2011 are not currently estimable or probable;therefore, we have not accrued for any potential obligations beyond the$1.9 million discussed above*.*

 

Because they were fullyimpaired, the amounts receivable under the shortfall loans, and all accruedinterest due from the joint venture, are carried at zero on our balance sheetas of September 30, 2010 and December 31, 2009.  The loansbear interest at 8% annually; payable quarterly in arrears subject to certainconditions, and have no maturity date.  Under the terms of theshortfall loan notes, payments of principal and interest are allocated betweenus and NBC Universal based on our respective economic interests in the jointventure, and are applied first toward the principal amount owed under theshortfall loans, and second toward the payment of accruedinterest.  Principal and interest payments are payable only if thejoint venture has available cash on hand in excess of amounts required by thejoint venture to fund its quarterly interest payments on the debt financingprovided by General Electric Capital Corporation (“GECC”) described further inNote 12 — “Commitments and Contingencies”.

 

For further details on thetiming of debt service shortfalls and our recognition of liabilities under theShortfall Funding Agreements see Note 12 — “Commitments and Contingencies”.

 

**Note 5 —Intangible Assets**

 

The following tablesummarizes the carrying amount of intangible assets (in thousands):

 
| ** **                                    | ** ** | **September 30, 2010** | ** ** | **December 31, 2009** | ** ** |
|-----------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                    | ** ** | **Gross Carrying  Amount**  | ** ** | **Accumulated  Amortization**   | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
|                                          |       |                             |       |                            |       |   |   |   |   |
| Goodwill                                      |       | $                                | 117,259    |                            | $          | — |   | $ | 117,259 |   | $ | — |   |
| Broadcast licenses                            |       | 391,801                          |       | —                          |       | 391,801 |   | — |   |
| Intangible assets subject to amortization (1) |       | 14,403                           |       | (8,559                          | )          | 14,403 |   | (7,327 | ) |
| Total intangible assets                       |       | $                                | 523,463    |                            | $          | (8,559 | ) | $ | 523,463 |   | $ | (7,327 | ) |

 

----

(1)          Intangibleassets subject to amortization are amortized on a straight-line basis andinclude acquired customer relationships, brand names, non-compete agreements,internal-use software, favorable operating leases, tower rental income leases,option agreements and network affiliations.

 

Werecorded an impairment charge of $39.9 million during the second quarter of2009 that included an impairment to the carrying values of our broadcastlicenses of $37.2 million, relating to 26 of our television stations; and animpairment to the carrying values of our goodwill of $2.7 million, relating totwo of our television stations.  Wetested our indefinite-lived intangible assets for impairment at June 30,2009, between the required annual tests, because we believed events hadoccurred and circumstances changed that would more likely than not reduce thefair value of our broadcast licenses and goodwill below their carryingamounts.  The need for an impairmentanalysis at June 30, 2009 was triggered by the continued decline inadvertising revenue at certain of our stations in excess of our original plan,due to the ongoing effects of the economic downturn that resulted in downwardadjustments to their respective forecasts.

 

Therewere no events during the nine months ended September 30, 2010 thatwarranted an interim impairment test of our indefinite-lived intangible assets.

 

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**Note 6 —Debt**

 

We guarantee substantiallyall of LIN Television’s debt. All of the consolidated 100% owned subsidiariesof LIN Television fully and unconditionally guarantee LIN Television’s seniorsecured credit facility and LIN Television’s 83/8% Senior Notes (the “Senior Notes”), 61⁄2% Senior Subordinated Notes and61⁄2%  Senior Subordinated Notes — Class B(together the “Senior Subordinated Notes”) on a joint-and-several basis.

 

Debt consisted of thefollowing (in thousands):

 
| ** **                                                                                                                                                                         | ** ** | **September 30,  2010** | ** ** | **December 31,  2009** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Senior secured credit facility:                                                                                                                                                    |       |                         |       |                        |       |
| Revolving credit loans                                                                                                                                                             |       | $                            | 13,063     |                        | $          | 204,000 |   |
| Term loans                                                                                                                                                                         |       | 10,399                       |       | 61,975                      |       |
| 83/8% Senior Notes due 2018                                                                                                                                                        |       | 200,000                      |       | —                      |       |
| 61⁄2% Senior Subordinated Notes due 2013                                                                                                                                        |       | 275,883                      |       | 275,883                     |       |
| $141,316 61⁄2% Senior Subordinated Notes -  Class B due 2013, net of discount of $3,877 and $4,965 as of  September 30, 2010 and December 31, 2009, respectively |       | 137,439                      |       | 136,351                     |       |
| $2,157 LIN-RMM Note, net of discount of $40 and  $160 as of September 30, 2010 and December 31, 2009, respectively                                                       |       | 2,117                        |       | 1,997                       |       |
| $1,257 and $1,598 RMM Note, net of premium of $84  and $112 as of September 30, 2010 and December 31, 2009,  respectively                                                |       | 1,341                        |       | 1,710                       |       |
| $1,121 RMM Bank Note, net of discount of $21 and  $83 as of September 30, 2010 and December 31, 2009, respectively                                                       |       | 1,100                        |       | 1,038                       |       |
| Total debt                                                                                                                                                                         |       | 641,342                      |       | 682,954                     |       |
| Less current portion                                                                                                                                                               |       | 7,051                        |       | 16,372                      |       |
| Total long-term debt                                                                                                                                                               |       | $                            | 634,291    |                        | $          | 666,582 |   |

 

We repaid $0.8 million and$5.6 million of principal on the term loans, related to mandatory quarterlypayments under our senior secured credit facility, from operating cash flowsduring the three and nine months ended September 30, 2010, respectively.

 

On April 12, 2010, LINTelevision completed an offering of its Senior Notes in an aggregate principalamount of $200.0 million.   Proceeds fromthe issuance of the Senior Notes were used to repay $148.9 million of principalon our revolving credit facility and $45.9 million of principal on ourterm loans, plus accrued interest, pursuant to the mandatory prepayment termsof our senior secured credit facility. As a result, we recorded a loss on extinguishment of debt of $2.7million during the nine months ended September 30, 2010, consisting of awrite-off of deferred financing fees of $1.9 million and $0.8 million relatedto the revolving credit facility and term loans, respectively.  The repayment of principal on our revolvingcredit facility resulted in a reduction of our revolving credit commitments,from $225.0 million to $76.1 million. Additionally, as a result of the repayment of principal on our termloans, our interest rate hedge ceased to be highly effective, as furtherdescribed in Note 7 — “Derivative Financial Instruments”.

 

During the nine months endedSeptember 30, 2009, we purchased a total notional amount of $79.7 millionand $42.0 million of our 61⁄2% Senior Subordinated Notes and 61⁄2% SeniorSubordinated Notes — Class B, respectively, under a Rule 10b5-1 plan.The aggregate purchase price for both classes was $68.4 million, resulting in again on extinguishment of debt of $50.1 million, net of a write-off of deferredfinancing fees and discount related to the Senior Subordinated Notes of $3.2million.

 

The fair values of ourlong-term debt are estimated based on quoted market prices for the same orsimilar issues, or based on the current rates offered to us for debt of thesame remaining maturities. The carrying amounts and fair values of our long-termdebt were as follows (in thousands):

 
| ** **       | ** ** | **September 30, 2010** | ** ** | **December 31, 2009** | ** ** |
|------------------|------------|-----------------------------|------------|----------------------------|------------|
| Carrying  amount |       | $                           | 641,342    |                       | $          | 682,954 |   |
| Fair  value      |       | 642,923                     |       | 616,247                    |       |
|                  |            |                             |            |                            |            |  |  |

 

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**Note 7 —Derivative Financial Instruments**

 

We have historically usedderivative financial instruments in the management of our interest rateexposure for our long-term debt, principally our senior secured creditfacility. In accordance with our policy, we do not enter into derivativeinstruments unless there is an underlying exposure and we do not enterinto derivative financial instruments for speculative trading purposes.

 

During the second quarter of2006, we entered into a contract to hedge a notional amount of the decliningbalances of our term loans (the “2006 interest rate hedge”) to mitigate changesin our cash flows resulting from fluctuations in interest rates. The 2006interest rate hedge effectively converted the floating LIBORrate-based-payments to fixed payments at 5.33% plus the applicable margin ratecalculated under our senior secured credit facility, which expires in November 2011.

 

We have historicallydesignated the 2006 interest rate hedge as a cash flow hedge.  However, as a result of the April 12,2010 repayment of $45.9 million of principal on our term loans, as describedfurther in Note 6 — “Debt”, the 2006 interest rate hedge ceased to be highlyeffective in hedging the variable rate cash flows associated with our termloans.  Accordingly, the portion of thefair value recognized in accumulated other comprehensive loss, $3.6million, was recorded as a charge to our consolidated statement of operationsfor the nine months ended September 30, 2010.  Additionally, because the hedge ceased to behighly effective in hedging the variable rate cash flows, all changes in fairvalue are now recorded in our consolidated statement of operations.  We therefore recorded a (gain) loss onderivative instruments of $(0.5) million and $2.6 million, including the $3.6million charge from accumulated other comprehensive loss, for the three andnine months ended September 30, 2010, respectively.

 

The fair value of the 2006interest rate hedge liability was $2.6 million and $4.2 million as of September 30,2010 and December 31, 2009, respectively, and is included in otherliabilities in our consolidated balance sheet. The fair value is calculated byusing observable inputs (Level 2) prescribed by the three-level fair valuehierarchy, which is calculated using the discounted expected future cashoutflows from a series of three-month LIBOR strips through November 4,2011, the same maturity date as our senior secured credit facility.

 

The following tablesummarizes our derivative activity during the three and nine months ended September 30(in thousands):

 
| ** **                         | ** ** | **(Gain) Loss on Derivative Instruments** | ** ** |
|------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                         | ** ** | **Three Months Ended September 30,**      | ** ** | **Nine Months Ended September 30,** | ** ** |
| ** **                         | ** ** | **2010**                                                      | ** ** | **2009** | ** ** | **2010** | ** ** | **2009** | ** ** |
| **Mark-to-Market Adjustments on:** |       |                                                          |       |   |   |   |   |   |   |
| 2006 interest rate hedge           |       | $                                                             | (481       | ) | $ | 17 |   | $ | 2,584 |   | $ | 12 |   |
|                                    |            |                                                               |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **                         | ** ** | **Other Comprehensive Loss, Net of Tax** | ** ** |
|------------------------------------|------------|-------------------------------------------------------------------|------------|
| ** **                         | ** ** | **Three Months Ended September 30,**          | ** ** | **Nine Months Ended September 30,** | ** ** |
| ** **                         | ** ** | **2010**                                                          | ** ** | **2009** | ** ** | **2010** | ** ** | **2009** | ** ** |
| **Mark-to-Market Adjustments on:** |       |                                                              |       |   |   |   |   |   |   |
| 2006 interest rate hedge           |       | $                                                                 | —     |   | $ | 153 |   | $ | 2,516 |   | $ | 984 |   |
|                                    |            |                                                                   |            |  |  |  |  |  |  |  |  |  |  |

 

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**Note 8 —Fair Value Measurements**

 

We record the fair value ofcertain financial assets and liabilities on a recurring basis. The followingtable summarizes the financial assets and liabilities measured at fair value inthe accompanying financial statements using the prescribed three-level fairvalue hierarchy as of September 30, 2010 and December 31, 2009 (inthousands):

 
| ** **                                | ** ** | **Quoted prices in  active markets** | ** ** | **Significant  observable  inputs** | ** ** | **Significant  unobservable inputs** | ** ** | ** ** | ** ** |
|-------------------------------------------|------------|-----------------------------------------------------|------------|-------------------------------------|------------|-------------------------------------------|------------|------------|------------|
| ** **                                | ** ** | **(Level 1)**                                  | ** ** | **(Level 2)**                  | ** ** | **(Level 3)**                        | ** ** | **Total**  | ** ** |
| September 30, 2010                   |       |                                                |       |                                |       |                                      |       |       |       |
| **Assets:**                               |       |                                                |       |                                |       |                                      |       |       |       |
| Deferred compensation related investments |       | $                                                   | 1,407      |                                | $          | —                                    |       | $          | —     |   | $ | 1,407 |   |
|                                      |       |                                                |       |                                |       |                                      |       |       |       |
| **Liabilities:**                          |       |                                                |       |                                |       |                                      |       |       |       |
| 2006 interest rate hedge                  |       | $                                                   | —     |                                | $          | 2,645                                     |       | $          | —     |   | $ | 2,645 |   |
| Deferred compensation related liabilities |       | 1,407                                               |       | —                              |       | —                                    |       | 1,407      |       |
|                                      |       |                                                |       |                                |       |                                      |       |       |       |
| December 31, 2009                    |       |                                                |       |                                |       |                                      |       |       |       |
| **Assets:**                               |       |                                                |       |                                |       |                                      |       |       |       |
| Deferred compensation related investments |       | $                                                   | 2,454      |                                | $          | —                                    |       | $          | —     |   | $ | 2,454 |   |
|                                      |       |                                                |       |                                |       |                                      |       |       |       |
| **Liabilities:**                          |       |                                                |       |                                |       |                                      |       |       |       |
| 2006 interest rate hedge                  |       | $                                                   | —     |                                | $          | 4,181                                     |       | $          | —     |   | $ | 4,181 |   |
| Deferred compensation related liabilities |       | 2,454                                               |       | —                              |       | —                                    |       | 2,454      |       |
| Equity value shortfall amount             |       | —                                              |       | —                              |       | 627                                       |       | 627        |       |

 

The fair value of ourdeferred compensation plan is determined based on the fair value of theinvestments selected by employees.

 

The following table detailsthe change in fair value of our Level 3 liability for the nine months ended September 30,2010:

 
| ** **                                   | ** ** | **Equity Value  Shortfall Amount** | ** ** |
|----------------------------------------------|------------|----------------------------------------------|------------|
| Balance  as of December 31, 2009        |       | $                                            | 627        |   |
| Realized  gain from the change in fair value |       | (627                                         | )          |
| Balance  as of September 30, 2010       |       | $                                            | —     |   |

 

The equity value shortfallamount is a liability that was incurred in connection with the acquisition ofRed McCombs Media, LP (“RMM”) on October 2, 2009.  The fairvalue of the equity value shortfall amount was determined based on an optionpricing model reflecting our assumptions about the value that marketparticipants would place on this liability. As of December 31, 2009, theestimated fair value was $0.6 million. On April 2, 2010, the six-monthanniversary date of the acquisition of RMM, the fair value of our class Acommon stock which comprised the merger consideration exceeded $4.5 million,resulting in no further consideration.  Therefore, we recorded a gainof $0.6 million in other, net in our consolidated statement of operationsduring the nine months ended September 30, 2010, and the liability waspermanently relieved from our consolidated balance sheet.  Forfurther information on the equity value shortfall amount and the acquisition ofRMM see Note 2 — “Acquisitions” included in our 10-K.

 

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**Note 9 —Retirement Plans**

 

The following table showsthe components of the net periodic pension benefit cost and the contributionsto our 401(k) Plan and to the retirement plans (in thousands):

 
| ** **                                | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|-------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
| ***Net periodic  pension benefit cost:*** | ** ** | ** **                                               | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Service cost                              |       | $                                                        | —     |                                                    | $          | — |   | $ | — |   | $ | 385 |   |
| Interest cost                             |       | 1,523                                                    |       | 1,587                                                   |       | 4,569 |   | 4,765 |   |
| Expected return on plan assets            |       | (1,611                                                   | )          | (1,641                                                  | )          | (4,834 | ) | (4,969 | ) |
| Amortization of prior service cost        |       | —                                                   |       | —                                                  |       | — |   | 31 |   |
| Amortization of pension net loss          |       | 94                                                       |       | —                                                  |       | 282 |   | 165 |   |
| Curtailment                               |       | —                                                   |       | —                                                  |       | — |   | 438 |   |
| Net periodic benefit cost (benefit)       |       | $                                                        | 6          |                                                    | $          | (54 | ) | $ | 17 |   | $ | 815 |   |
| ***Contributions***                       |       |                                                     |       |                                                    |       |   |   |   |   |
| 401(k) Plan                          |       | $                                                        | 785        |                                                    | $          | 56 |   | $ | 2,557 |   | $ | 393 |   |
| Defined contribution retirement plans     |       | 180                                                      |       | —                                                  |       | 180 |   | — |   |
| Defined benefit retirement plans          |       | 2,600                                                    |       | —                                                  |       | 3,500 |   | — |   |
| Total contributions                       |       | $                                                        | 3,565      |                                                    | $          | 56 |   | $ | 6,237 |   | $ | 393 |   |

 

We expect to makecontributions of $1.5 million to our defined benefit retirement plans duringthe fourth quarter of 2010. See Note 11 — “Retirement Plans” included in our10-K for a full description of our retirement plans.

 

We recorded a curtailmentduring the nine months ended September 30, 2009 as a result of freezingbenefit accruals to the plan during 2009. The $0.4 million charge relates tothe recognition of the prior service cost associated with the plan.

 

**Note 10 —Restructuring**

 

During the nine months endedSeptember 30, 2010, we recorded a restructuring charge of $2.2 million asa result of the consolidation of certain activities at our stations and ourcorporate headquarters, which resulted in the termination of 43 employees.During the nine months ended September 30, 2010, we made cash payments of$2.2 million related to this restructuring.

 

As of September 30,2010, we had a remaining liability of $0.2 million related to the cancellationof certain programming and other contracts in 2008.  We expect tomake cash payments of $0.2 million related to this restructuring through 2012.

 

**Note 11 —Income Taxes**

 

Werecorded a provision for income taxes of $5.7 million and $9.5million for the three and nine months ended September 30, 2010,respectively, compared to a provision for income taxes of $1.6 million and $9.9million for the three and nine months ended September 30, 2009,respectively.  Our effective income tax rate was 38.2% and 113.7% for the nine months ended September 30, 2010and 2009, respectively. The change in the tax provision and effective incometax rate was primarily a result of a taxable gain on extinguishment of debt andthe impairment charge to our goodwill and broadcast licenses recognized duringthe nine months ended September 30, 2009, which did not recur during thesame period in 2010.

 

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**Note 12 —Commitments and Contingencies**

 

*Commitments*

 

We lease land, buildings,vehicles and equipment pursuant to non-cancelable operating lease agreementsand we contract for general services pursuant to non-cancelable operatingagreements that expire at various dates through 2017. The following tablesummarizes all of our estimated future cash payments, after giving effectto amendments to certain of these agreements since December 31, 2009.

 
| **Year**                     | ** ** | **Operating Leases and  Agreements** | ** ** | **Syndicated Television  Programming** | ** ** | **Total** | ** ** |
|------------------------------|------------|------------------------------------------------|------------|---------------------------------------------|------------|-----------|------------|
| 2010                         |       | $                                              | 17,654     |                                        | $          | 26,585    |       | $ | 44,239 |   |
| 2011                         |       | 15,406                                         |       | 24,586                                      |       | 39,992    |       |
| 2012                         |       | 14,152                                         |       | 20,119                                      |       | 34,271    |       |
| 2013                         |       | 6,290                                          |       | 16,798                                      |       | 23,088    |       |
| 2014                         |       | 4,448                                          |       | 8,140                                       |       | 12,588    |       |
| Thereafter                   |       | 1,510                                          |       | 520                                         |       | 2,030     |       |
| Total  commitments           |       | 59,460                                         |       | 96,748                                      |       | 156,208   |       |
| Less  recognized liabilities |       | —                                         |       | (8,596                                      | )          | (8,596    | )          |
| Unrecorded  commitments      |       | $                                              | 59,460     |                                        | $          | 88,152    |       | $ | 147,612 |   |

 

*Contingencies*

 

*GECC Note*

 

GECC provided debt financingfor the joint venture between NBC Universal and us, in the form of an $815.5million non-amortizing senior secured note due 2023 bearing interest at aninitial rate of 8% per annum until March 2, 2013 and 9% per annumthereafter (“GECC Note”). We have a 20.38% equity interest in the jointventure and NBC Universal has the remaining 79.62% equity interest, in which weand NBC Universal each have a 50% voting interest.  NBC Universaloperates two television stations, KXAS-TV, an NBC Universal affiliate inDallas, and KNSD-TV, an NBC Universal affiliate in San Diego, pursuant to amanagement agreement.  NBC Universal and GECC are both majority-ownedsubsidiaries of General Electric Co. LIN TV has guaranteed the payment ofprincipal and interest on the GECC Note.

 

The GECC Note is anobligation of the joint venture and is not an obligation of LIN TV or LINTelevision or any of its subsidiaries. GECC’s only recourse, upon an event ofdefault under the GECC Note, is to the joint venture, our equity interest inthe joint venture and, after exhausting all remedies against the assets of thejoint venture and the other equity interests in the joint venture, to LIN TVpursuant to its guarantee of the GECC Note. An event of default under theGECC Note will occur if the joint venture fails to make any scheduled interestpayment within 90 days of the date due and payable, or to pay the principalamount on the maturity date.  If the joint venture fails to payinterest on the GECC Note, and neither NBC Universal nor we make a shortfallloan to cover the interest payment within 90 days of the date due and payable,an event of default would occur and GECC could accelerate the maturity of theentire amount due under the GECC Note. Other than the acceleration of the principal amount upon an event ofdefault, prepayment of the principal of the GECC Note is prohibited unlessagreed upon by both NBC Universal and us.

 

In light of the adverseeffect of the economic downturn on the joint venture’s operating results, in2009 we entered into a shortfall funding agreement with NBC Universal, whichprovided that: a) we and NBC Universal waived the requirement that the jointventure maintain debt service reserve cash balances of at least $15 million; b)the joint venture would use a portion of its existing debt service reserve cashbalances to fund interest payments on the GECC Note in 2009; c) NBC Universalagreed to defer its receipt of 2008 and 2009 management fees; and d) we agreedthat if the joint venture does not have sufficient cash to fund interestpayments on the GECC Note through April 1, 2010, we and NBC Universalwould each provide the joint venture with a shortfall loan on the basis of ourrespective percentage of economic interest in the joint venture (the “OriginalShortfall Funding Agreement”).

 

Because of anticipatedfuture shortfalls during 2010 at the joint venture, on March 9, 2010,we and NBC Universal entered into another shortfall funding agreementcovering the period through April 1, 2011 (the “2010 Shortfall FundingAgreement”).  Under the terms of the 2010 Shortfall FundingAgreement: a) the joint venture may continue to access any portion of itsexisting debt service reserve cash balances to fund interest payments on theGECC Note; b) NBC Universal will continue to defer the payment of 2008 and 2009management fees and defer payment of 2010 management fees through March 31,2011 (payable subject to repayment first of any joint venture shortfall loans);and c) we agreed that if the joint venture does not have sufficient cash tofund interest payments on the GECC Note through April 1, 2011, we and NBCUniversal would each provide the joint venture with a shortfall loan on the basisof our respective percentage of economic interests in the joint venture.

 

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Based on the 2010 budgetprovided by the joint venture, and our discussions with the joint venture’smanagement, as of December 31, 2009, we accrued our portion of theestimated debt service shortfalls through April 1, 2011, bringing thetotal accrual for our joint venture shortfall obligations to $6.0 million as ofDecember 31, 2009. Due to uncertainty surrounding the joint venture’sability to repay the shortfall loans, we concurrently impaired all accruedloans to the joint venture as of December 31, 2009.

 

On March 25, 2010, June 22,2010 and September 23, 2010, pursuant to the terms of the ShortfallFunding Agreements, we made shortfall loans in the principal amounts of $3.1million, $0.8 million and $0.2 million, respectively, to the joint venture,representing our 20.38% share in cumulative debt service shortfalls at thejoint venture.  Concurrent with our funding of the shortfall loans,NBC Universal funded shortfall loans in the principal amounts of $12.2 million,$2.9 million and $0.8 million, respectively, to the joint venture, in respectof its 79.62% share in the cumulative debt service shortfalls at the jointventure.  We have a remaining shortfall funding accrual of $1.9million as of September 30, 2010, which we expect to fund during 2011.

 

Werecognize shortfall funding liabilities to the joint venture on ourbalance sheet****when thoseliabilities become both probable and estimable, which results******when jointventure management provides us with budget or forecast information of operatingcash flows and working capital needs indicating that a debt service shortfallis probable to occur and when we intend to reach a shortfall funding agreementwith NBC Universal covering the budgeted or forecasted period.  Based onfourth quarter 2010 and full year 2011 forecast information provided by jointventure management, we estimate our share of shortfall funding will beapproximately $1.9 million through December 31, 2011.  As of the dateof this report, there is no agreement between us and NBC Universal forshortfall funding for the period following the expiration of the 2010 ShortfallFunding Agreement on April 1, 2011. Our estimate assumes that wewill enter into a new shortfall funding agreement with NBC Universal for theperiod extending through December 31, 2011 for the purpose of sharing inany joint venture debt service shortfalls, on substantially the same terms asthe 2010 Shortfall Funding Agreement.  Actual cash shortfalls at the jointventure could vary from our current estimates. We could also fail to reach anagreement with NBC Universal regarding******the sharing of any joint venture debtservice shortfalls****for theperiod following termination of the 2010 Shortfall Funding Agreement,in which event we would not be required to fund any immediate cash shortfalls(see Note 14 — “Commitments and Contingencies” included in our 10-K). Cashshortfalls at the joint venture beyond December 31, 2011 are not currentlyestimable or probable; therefore, we have not accrued for any potentialobligations beyond the $1.9 million discussed above*.*

 

Under the terms of itsguarantee of the GECC Note, LIN TV would be required to make a payment for anamount to be determined (the “Guarantee Amount”) upon occurrence of thefollowing events: a) there is an event of default; b) neither NBC Universal norwe remedy the default; and c) after GECC exhausts all remedies against theassets of the joint venture, the total amount realized upon exercise of thoseremedies is less than the $815.5 million principal amount of the GECCNote. Upon the occurrence of such events, the amount owed by LIN TV toGECC pursuant to the guarantee would be calculated as the difference between i)the total amount at which the joint venture’s assets were sold and ii) theprincipal amount and any unpaid interest due under the GECC Note.  Asof December 31, 2009, we estimated that the fair value of the televisionstations in the joint venture to be approximately $366 million less than theoutstanding balance of the GECC Note of $815.5 million.

 

We believe the probabilityis remote that there would be an event of default and therefore an accelerationof the principal amount of the GECC Note during 2010 and through April 1,2011, although there can be no assurances that such an event of default willnot occur.  There are no financial or similar covenants in the GECCNote and, since both NBC Universal and we have agreed to fund interest paymentsif the joint venture is unable to do so during 2010 and through April 1,2011, NBC Universal and we are able to control the occurrence of a defaultunder the GECC Note.

 

However, if an event ofdefault under the GECC Note occurs, LIN TV, which conducts all of itsoperations through its subsidiaries, could experience material adverseconsequences, including:

 

·                  GECC, afterexhausting all remedies against the joint venture, could enforce its rightsunder the guarantee, which could cause LIN TV to determine that LIN Televisionshould seek to sell material assets owned by it in order to satisfy LIN TV’sobligations under the guarantee;

 

·                  GECC’sinitiation of proceedings against LIN TV under the guarantee, if they result inmaterial adverse consequences to LIN Television, could cause an acceleration ofLIN Television’s senior secured credit facility and other outstandingindebtedness; and

 

·                  if the GECCNote is prepaid because of an acceleration on default or otherwise, we wouldincur a substantial tax liability of approximately $273.6 million related toour deferred gain associated with the formation of the joint venture.

 

**Note 13 —Related Party**

 

During the second quarter of2010, we acquired a non-controlling investment in an interactive serviceprovider that hosts our web sites for $2.0 million.  Additionally, we incurred charges of $0.4million and $0.9 million for webhosting services from the provider during the threeand nine months ended September 30, 2010, respectively, and paid $1.3million and $1.9 million to the provider for web site development andcustomization during the three and nine months ended September 30, 2010,respectively.

 

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**LIN TV Corp.**

**Management’s Discussion and Analysis**

 

**Item 2.Management’s Discussion and Analysis of Financial Condition and****Results of Operations**

 

Our consolidated financialstatements reflect the operations, assets and liabilities of the BanksBroadcasting joint venture as discontinued for all periods presented.

 

**SpecialNote about Forward-Looking Statements**

 

This report contains certainforward-looking statements with respect to our financial condition, results ofoperations and business, including statements under this caption Item 2. “Management’sDiscussion and Analysis of Financial Condition and Results of Operations.”  All of these forward-looking statements arebased on estimates and assumptions made by our management, which, although webelieve them to be reasonable, are inherently uncertain. Therefore, you shouldnot place undue reliance upon such estimates and statements. We cannot assureyou that any of such estimates or statements will be realized and actualresults may differ materially from those contemplated by such forward-lookingstatements. Factors that may cause such differences include those discussedunder the caption Item 1A. “Risk Factors” of our 10-K.

 

Many of these factors arebeyond our control. Forward-looking statements contained herein speak only asof the date hereof. We undertake no obligation to publicly release the resultof any revisions to these forward-looking statements, which may be made toreflect events or circumstances after the date hereof or to reflect theoccurrence of unanticipated events.

 

**ExecutiveSummary**

 

Our Company owns, operatesor services 32 television stations and interactive television station and nicheweb sites in 17 mid-sized markets in the United States. Our operating revenuesare derived primarily from the sale of advertising time to local and nationaladvertisers and, presently, to a lesser extent, from digital revenues, networkcompensation, barter and other revenues.

 

During the three and ninemonths ended September 30, 2010, economic conditions improved compared tothe same periods in 2009.  Net revenues increased by 27% and 24% to$103.6 and $294.9 million for the three and nine months ended September 30,2010, respectively, compared to $81.4 million and $238.4 million for the sameperiods in 2009.  The increases were driven by recovery in core localand national advertising.  Further, the three and nine months ended September 30,2010 included the benefit from increased political and issue advertisingcompared to the same periods in 2009. Net revenues during the nine months ended September 30, 2010 alsoincluded incremental advertising revenue from the 2010 Olympic Winter Games.

 

During the three and ninemonths ended September 30, 2010, we made shortfall loans in the principalamount of $0.2 million and $4.1 million, respectively, to our jointventure with NBC Universal.  We have aremaining shortfall funding accrual of $1.9 million as of September 30,2010, which we expect to fund during 2011.

 

On April 12, 2010, LINTelevision completed the issuance and sale of $200.0 million in aggregateprincipal amount of its 83/8% Senior Notesdue 2018, and used the proceeds of such issuance to repay $148.9million of principal on our revolving credit facility and $45.9million of principal on our term loans, plus accrued interest, pursuant tothe mandatory prepayment terms of our senior secured credit facility.  Forfurther information regarding the terms of these notes, see Liquidity andCapital Resources.

 

**CriticalAccounting Policies and Estimates and Recently Issued Accounting****Pronouncements**

 

Certain of our accountingpolicies, as well as estimates we make, are critical to the presentation of ourfinancial condition and results of operations since they are particularlysensitive to our judgment. Some of these policies and estimates relate tomatters that are inherently uncertain. The estimates and judgments we makeaffect the reported amounts of assets, liabilities, revenues and expenses, andrelated disclosures of contingent liabilities. On an on-going basis, weevaluate our estimates, including those related to intangible assets andgoodwill, receivables and investments, program rights, income taxes,stock-based compensation, employee medical insurance claims, pensions, usefullives of property and equipment, contingencies, barter transactions, acquiredasset valuations and litigation. We base our estimates on historical experienceand on various other assumptions that we believe to be reasonable under thecircumstances, the results of which form the basis for making judgments aboutthe carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates underdifferent assumptions or conditions, and it is possible that such differencescould have a material impact on our consolidated financial statements. For a moredetailed explanation of the judgments made in these areas and a discussion ofour accounting policies, refer to “Critical Accounting Policies, Estimates andRecently Issued Accounting Pronouncements” included in Item 7. “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” andNote 1 - “Summary of Significant Accounting Policies” included in our 10-K.

 

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**RecentAccounting Pronouncements**

 

In October 2009, therewere revisions to the accounting standard for revenue arrangements withmultiple deliverables.  The revisions address how to separatedeliverables and how to measure and allocate arrangement consideration to oneor more units of accounting.  The revisions are effectiveprospectively for revenue arrangements entered into or materially modified infiscal years beginning on or after June 15, 2010. We plan to adopt thisguidance effective January 1, 2011, and we do not expect it to have amaterial impact on our financial position or results of operations.

 

**Results ofOperations**

 

Our consolidatedfinancial statements reflect the operations, assets and liabilities of theBanks Broadcasting joint venture as discontinued for all periods presented. Setforth below are key components that contributed to our operating results (inthousands):

 
| ** **                                                                | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|---------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **% change** | ** ** | **% of  Gross  revenues** | ** ** | **2010** | ** ** | **2009** | ** ** | **% change** | ** ** | **% of  Gross  revenues** | ** ** |
|                                                                      |       |                                                     |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Local  time sales                                                         |       | $                                                        | 55,676     |                                                    | $          | 51,462 |   | 8 | % | 47 | % | $ | 170,970 |   | $ | 156,164 |   | 9 | % | 51 | % |
| National  time sales                                                      |       | 29,390                                                   |       | 24,091                                                  |       | 22 | % | 25 | % | 87,675 |   | 70,463 |   | 24 | % | 26 | % |
| Political  time sales                                                     |       | 12,488                                                   |       | 3,032                                                   |       | 312 | % | 11 | % | 21,183 |   | 4,915 |   | 331 | % | 7 | % |
| Digital  revenues                                                         |       | 15,977                                                   |       | 10,393                                                  |       | 54 | % | 14 | % | 43,789 |   | 29,529 |   | 48 | % | 13 | % |
| Other  revenues                                                           |       | 3,730                                                    |       | 3,241                                                   |       | 15 | % | 3 | % | 10,170 |   | 9,165 |   | 11 | % | 3 | % |
| Total  gross revenues                                                     |       | 117,261                                                  |       | 92,219                                                  |       | 27 | % | 100 | % | 333,787 |   | 270,236 |   | 24 | % | 100 | % |
| Agency  commissions                                                       |       | (13,645                                                  | )          | (10,848                                                 | )          | 26 | % | 12 | % | (38,866 | ) | (31,873 | ) | 22 | % | 12 | % |
| Net  revenues                                                             |       | 103,616                                                  |       | 81,371                                                  |       | 27 | % | 88 | % | 294,921 |   | 238,363 |   | 24 | % | 88 | % |
|                                                                      |       |                                                     |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating  costs and expenses:                                            |       |                                                     |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Direct  operating                                                         |       | 31,708                                                   |       | 25,635                                                  |       | 24 | % |   |   | 90,836 |   | 79,083 |   | 15 | % |   |   |
| Selling,  general and administrative                                      |       | 26,660                                                   |       | 24,727                                                  |       | 8 | % |   |   | 78,736 |   | 75,089 |   | 5 | % |   |   |
| Amortization  of program rights                                           |       | 6,024                                                    |       | 6,317                                                   |       | -5 | % |   |   | 18,070 |   | 18,221 |   | -1 | % |   |   |
| Corporate                                                                 |       | 6,047                                                    |       | 4,206                                                   |       | 44 | % |   |   | 17,925 |   | 13,193 |   | 36 | % |   |   |
| Depreciation                                                              |       | 7,079                                                    |       | 7,561                                                   |       | -6 | % |   |   | 21,127 |   | 23,135 |   | -9 | % |   |   |
| Amortization  of intangible assets                                        |       | 411                                                      |       | 24                                                      |       | 1613 | % |   |   | 1,232 |   | 64 |   | 1825 | % |   |   |
| Impairment  of goodwill, broadcast licenses and other finite-lived assets |       | —                                                   |       | —                                                  |       | — |   |   |   | — |   | 39,894 |   | -100 | % |   |   |
| Restructuring  charge                                                     |       | —                                                   |       | —                                                  |       | — |   |   |   | 2,181 |   | 498 |   | 338 | % |   |   |
| Gain  from asset dispositions                                             |       | (1,148                                                   | )          | (886                                                    | )          | 30 | % |   |   | (3,359 | ) | (3,544 | ) | -5 | % |   |   |
| Total  operating costs and expenses                                       |       | 76,781                                                   |       | 67,584                                                  |       | 14 | % |   |   | 226,748 |   | 245,633 |   | -8 | % |   |   |
| Operating  income (loss)                                                  |       | $                                                        | 26,835     |                                                    | $          | 13,787 |   | 95 | % |   |   | $ | 68,173 |   | $ | (7,270 | ) | 1038 | % |   |   |

 

**PeriodComparison**

 

**Revenues**

 

***Net revenues***consist primarily of national, local andpolitical advertising revenues, net of sales adjustments and agencycommissions. Additional but less significant amounts are generated fromInternet revenues, retransmission consent fees, barter revenues, networkcompensation, production revenues, tower rental income and station copyrightroyalties.

 

Net revenues increased $22.2million, or 27%, for the three months ended September 30, 2010 compared withthe three months ended September 30, 2009. The increase was primarily dueto: (a) an increase in political revenues of $9.5 million; (b) anincrease in digital revenues of $5.6 million; (c) an increase in nationaladvertising revenues of $5.3 million; and (d) an increase in localadvertising sales of $4.2 million. These increases were partially offset by anincrease in agency commissions of $2.8 million.

 

Net revenues increased $56.6million, or 24%, for the nine months ended September 30, 2010 compared withthe nine months ended September 30, 2009. The increase was primarily dueto: (a) an increase in national advertising revenues of $17.2 million; (b) anincrease in political revenues of $16.3 million; (c) an increase in localadvertising sales of $14.8 million; (d) an increase in digital revenues of$14.3 million; and (e) an increase in other revenues of $1.0 million.These increases were partially offset by an increase in agency commissions of$7.0 million.

 

The increase in local andnational advertising revenues during both the three and nine months ended September 30,2010 is primarily due to economic recovery relative to the same periods in theprior year, which resulted in increased advertising spending in ourmarkets.  In particular, the automotivecategory, which represented 24% of our core advertising sales for the threemonths ended September 30, 2010, increased by 41% to $20.6 million,compared to $14.6 million for the same period in 2009. For the 

 

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nine months ended September 30,2010, the automotive category, which represented 24% of our core advertisingsales, increased by 48% to $61.6 million, compared to $41.6 million for thesame period in 2009.  The increase inpolitical revenues during the three and nine months ended September 30,2010, compared to the same periods last year, is primarily the result ofCongressional, state and local elections which take place in even numberedyears as well as growth in issue advertising compared to the same period in2009.  The increase in digital revenues for the three and nine monthsended September 30, 2010, compared to the same periods last year, is dueto incremental revenues from the acquisition of RMM in October 2009,growth in Internet advertising revenues resulting from increased traffic to ourInternet web sites and growth in retransmission consent revenues as a result ofcontractual rate increases in per subscriber fees and an increase in subscriberlevels compared to the same periods of 2009.

 

**OperatingCosts and Expenses**

 

***Operating costs and expenses***increased $9.2 million anddecreased $18.9 million, or 14% and (8%), for the three and nine months ended September 30,2010, respectively, compared to the same periods in 2009.  The increase for the three months ended September 30,2010 was primarily due to higher direct operating, selling, general andadministrative and corporate expenses associated with RMM and increases invariable direct costs attributable to the growth in revenue compared to thesame period in 2009.  The decrease forthe nine months ended September 30, 2010 was primarily due to animpairment charge of $39.9 million recorded during the nine months ended September 30,2009 related to our broadcast licenses and goodwill that did not recur duringthe same period in 2010. This decrease was partially offset by incrementaldirect operating, selling, general and administrative and corporate expensesassociated with RMM and increases invariable direct costs attributable to the growth in revenue during thenine months ended September 30, 2010 compared to the same period in 2009.

 

**Otherexpense (income)**

 

***Other expense (income),******net*** decreased $0.2 millionfor the three months ended September 30, 2010 compared to the same periodin 2009.  The decrease was due to an increase in gain on derivativeinstruments of $0.5 million during the three months ended September 30,2010, offset by: (a) an increase in interest expense of $2.1 millionduring the three months ended September 30, 2010 primarily related to theissuance of our 83/8% Senior Notes; and (b) a $2.0 millioncharge for the impairment of a shortfall loan to the NBC joint venture recordedduring the three months ended September 30, 2009 that did not recur duringthe same period in 2010.

 

Other expense (income),net increased $59.2 million for the nine months ended September 30, 2010compared to the same period in 2009, primarily due to the gain on extinguishmentof debt of $50.1 million that we recorded during the nine months ended September 30,2009 as a result of the purchase of our 61/2% Senior Subordinated Notes and 61/2% SeniorSubordinated Notes — Class B, which did not recur during the same periodin 2010.  The increase is also attributable to the additional chargesrelated to the issuance of our 83/8% Senior Notesduring the second quarter of 2010 including: (a) an increase ininterest expense of $6.1 million; (b) a loss on derivative instruments of$2.6 million; and (c) a loss on extinguishment of debt of $2.7 million.

 

***Interest expense, net*** increased $2.1 million and$6.1 million, or 18% and 19%, for the three and nine months ended September 30,2010, respectively, compared to the same periods in 2009 primarily due to theissuance of our 83/8% Senior Notes during thesecond quarter of 2010.  These increaseswere partially offset by reductions in interest expense under our seniorsecured credit facility as a result of reduced balances outstanding under thefacility during the 2010 periods.  Thefollowing summarizes the components of our interest expense, net (inthousands):

 
| ** **                                             | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|--------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                             | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
| Components of interest expense                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Credit Facility                                        |       | $                                                        | 630        |                                                    | $          | 2,866 |   | $ | 5,008 |   | $ | 6,473 |   |
| 83/8% Senior Notes                                     |       | 4,341                                                    |       | —                                                  |       | 8,115 |   | — |   |
| 61⁄2% Senior Subordinated Notes                     |       | 4,664                                                    |       | 4,664                                                   |       | 14,042 |   | 14,561 |   |
| 61⁄2% Senior Subordinated Notes — Class B |       | 2,754                                                    |       | 2,750                                                   |       | 8,285 |   | 8,677 |   |
| RMM Notes                                              |       | 104                                                      |       | —                                                  |       | 314 |   | — |   |
| Other interest costs                                   |       | 820                                                      |       | 979                                                     |       | 2,692 |   | 2,603 |   |
| Total interest expense, net                            |       | $                                                        | 13,313     |                                                    | $          | 11,259 |   | $ | 38,456 |   | $ | 32,314 |   |

 

**P****rovision for Income Taxes**

 

***Provision for income taxes***increased $4.1 million and decreased$0.4 million for the three and nine months ended September 30, 2010,respectively, compared to the same periods in 2009. Our effective income taxrate was 38.2% and 113.7% forthe nine months ended September 30, 2010 and 2009, respectively. Thechange in the tax provision and effective income tax rate was primarily aresult of the taxable gain on extinguishment of debt and the impairment chargeto our goodwill and broadcast licenses recognized during the nine months ended September 30,2009, which did not recur during the same period in 2010.  As permitted 

 

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bythe American Recovery and Reinvestment Act of 2009, the taxable gain onextinguishment of debt was deferred and will be recognized for tax purposesover a five year period commencing in 2014.

 

**Results ofDiscontinued Operations**

 

Ourconsolidated financial statements reflect the operations of the BanksBroadcasting joint venture as discontinued for all periods presented. Income(loss) from discontinued operations was $0 and $(0.4) million for the ninemonths ended September 30, 2010, and 2009, respectively. Included in theloss for the nine months ended September 30, 2009, is an impairment chargeto the broadcast license of KNIN-TV, the CW affiliate in Boise of $1.9 million,net of non-controlling interest and taxes, as a result of the adjustment to thepurchase price of KNIN-TV in April 2009.  KNIN-TV was sold on April 23,2009 and as of September 30, 2010, all of the assets of Banks Broadcastinghave been liquidated.  As a result of the sale and liquidation,we received distributions of $0.4 million and $2.6 million during the ninemonths ended September 30, 2010 and 2009, respectively.

 

**Liquidityand Capital Resources**

 

Our principal sources offunds for working capital have historically been cash from operations andborrowings under our senior secured credit facility. As of September 30,2010, we had unrestricted cash and cash equivalents of $8.8 million and a $76.1million revolving credit facility, of which $63.0 million was available,subject to compliance with covenant restrictions.

 

Our total outstanding debtas of September 30, 2010 was $641.3 million. This excludes the contingentobligation associated with our guarantee of the $815.5 million GECC Noteassociated with our joint venture with NBC Universal. The outstanding debtunder our senior secured credit facility is due November 4, 2011, both ofour 61⁄2% Senior Subordinated Notes and 61⁄2% Senior Subordinated Notes — Class Bare due May 15, 2013 and our 83/8% Senior Notes are due on April 15, 2018.

 

Our operating plan for thenext 12 months requires that we generate cash from operations, utilizeavailable borrowings, and repay indebtedness, including mandatory repayments ofterm loans under our credit facility. Our ability to borrow under our revolvingcredit facility is contingent on our compliance with certain financialcovenants, which are measured, in part, by the level of earnings before interestexpense, taxes, depreciation and amortization (“EBITDA”) we generate from ouroperations. As of September 30, 2010, we were in compliance with allfinancial and non-financial covenants under our senior secured credit facility.

 

Our future ability togenerate cash from operations and from borrowings under our senior securedcredit facility could be adversely affected by a number of risks, which arediscussed in the Liquidity and Capital Resources section within Item 7.  “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” andin Item 1A.  “Risk Factors” in our 10-K.

 

Our liquidity positionduring the nine months ended September 30, 2010 was affected by, and overthe next 12 months will primarily be affected by, the following:

 

·                  During the ninemonths ended September 30, 2010, revenues increased 24% compared to thesame period in 2009.  As a result of the increase in operating cashflows during 2010, we made optional prepayments under our revolving creditfacility of $42.0 million, net of borrowings, during the nine months ended September 30,2010, resulting in an increase in the available capacity of our revolvingcredit facility from $21.0 million as of December 31, 2009, to $63.0million as of September 30, 2010.  Duringthe remainder of 2010, we expect that continued recovery compared to the prioryear, along with incremental political revenues generated in 2010, willfavorably impact our liquidity position.

 

·                  On March 25,2010, June 22, 2010 and September 23, 2010, pursuant to the shortfallfunding agreements with NBC Universal, as further described in Item 7. “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” ofour 10-K, we made shortfall loans in the principal amounts of $3.1 million,$0.8 million and $0.2 million, respectively, to the joint venture with NBCUniversal.  We have a remaining shortfallfunding accrual of $1.9 million as of September 30, 2010, which we expectto fund during 2011.

 

·                  As furtherdescribed below in “Description of Indebtedness”, on April 12,2010 LIN Television completed an offering of its 83/8% Senior Notes in an aggregate principal amount of$200.0 million, and used the proceeds of such offering to repay amounts outstandingunder our senior secured credit facility.  In connection with theoffering, we made a mandatory prepayment of principal of $148.9 million and$45.9 million on our revolving credit loans and our term loans, plus accruedinterest, respectively, which resulted in a reduction of our revolving creditcommitments, from $225.0 million to $76.1 million.  Further, as aresult of the $45.9 million repayment of principal on our term loans, themandatory annual principal amortization of term loans was reduced from $15.9million to $3.3 million.

 

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**ContractualObligations**

 

The following tablesummarizes the estimated future cash payments related to our debt obligationsas a result of LIN Television’s issuance and sale of $200.0 million of its 83/8% Senior Notes on April 12, 2010, payment of aportion of our outstanding revolving credit and term loans, and amendments tocertain program obligations and operating contracts since December 31,2009.

 
| ** **                                               | ** ** | **2010**                | ** ** | **2011-2012** | ** ** | **2013-2014** | ** ** | **2015 and  thereafter** | ** ** | **Total** | ** ** |
|----------------------------------------------------------|------------|-------------------------|------------|---------------|------------|---------------|------------|-------------------------------|------------|-----------|------------|
| ** **                                               | ** ** | **(in thousands)** | ** ** |
| Principal payments and mandatory redemptions on  debt(1) |       | $                       | 6,967      |          | $          | 27,088        |       | $                             | 417,199    |      | $          | 200,000 |   | $ | 651,254 |   |
| Cash interest on debt(2)                                 |       | 45,560                  |       | 90,595        |       | 43,669        |       | 55,778                        |       | 235,602   |       |
| Program rights(3)                                        |       | 26,585                  |       | 44,705        |       | 24,938        |       | 520                           |       | 96,748    |       |
| Operating agreements(4)                                  |       | 16,339                  |       | 28,461        |       | 10,024        |       | 1,128                         |       | 55,952    |       |
|                                                          |            |                         |            |               |            |               |            |                               |            |           |            |  |  |  |  |  |

 

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(1)          We areobligated to make mandatory quarterly principal payments and to use proceeds ofasset sales not reinvested to pay-down the term loans under our senior securedcredit facility. Additionally, we are required to make mandatory prepayments ofprincipal on our term loans, and the revolving credit commitments available tous decrease, subject to a computation of excess cash following the delivery ofour year-end financial statements as described in “Description of Indebtedness”in our 10-K. We are also obligated to repay in full our senior secured creditfacility on November 4, 2011, and each of our 61/2% Senior Subordinated Notes and 61⁄2% Senior Subordinated Notes — Class Bon May 15, 2013 and our 83/8% Senior Notes on April 15, 2018. The amount does not include anypotential amounts that may be paid relative to the GECC Note as described inItem 1A. “Risk Factors” in our 10-K.

(2)          We havecontractual obligations to pay cash interest on our term loans, as well ascommitment fees of 0.50% on our revolving credit facility through November 2011,and on each of our 61⁄2% Senior Subordinated Notes and 61⁄2% Senior SubordinatedNotes — Class B through 2013, our 83/8% Senior Notes through 2018, and our RMM Notes, as described in “Descriptionof Indebtedness” in our 10-K.

(3)          We have enteredinto commitments for future syndicated news, entertainment and sportsprogramming. We have recorded $8.6 million of program obligations as of September 30,2010 and we have unrecorded commitments of $74.5 million for programming thatis not available to air as of September 30, 2010.

(4)          We have enteredinto a variety of agreements for services used in the operation of our stationsincluding rating services, consulting and research services, news videoservices, news weather services, marketing services and other operatingcontracts under non-cancelable operating agreements.

 

Other than as shown above,there were no material changes in our contractual obligations from those shownin Liquidity and Capital Resources within Item 7.  “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”section of our 10-K.

 

**Summary ofCash Flows**

 

The following presentssummarized cash flow information (in thousands):

 
| ** **                                 | ** ** | **Nine Months Ended September 30,** | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|---------------------------------------------------------|------------|------------|------------|
| ** **                                 | ** ** | **2010**                                                | ** ** | **2009**   | ** ** | **2010 vs. 2009** | ** ** |
| Cash  provided by operating activities     |       | $                                                       | 63,678     |       | $          | 18,700 |   | $ | 44,978 |   |
| Cash  used in investing activities         |       | (18,342                                                 | )          | (8,458     | )          | (9,884 | ) |
| Cash  used in financing activities         |       | (47,675                                                 | )          | (18,586    | )          | (29,089 | ) |
| Net  decrease in cash and cash equivalents |       | $                                                       | (2,339     | )          | $          | (8,344 | ) | $ | 6,005 |   |

 

***Net cash provided by operating activities***increased $45.0million to $63.7 million for the nine months ended September 30, 2010compared to the same period in the prior year. This increase was primarilyattributable to an increase in net income of $17.1 million for the nine monthsended September 30, 2010, compared to the same period in 2009, and changesin working capital largely due to payments made in the first nine monthsof 2009 related to a restructuring plan announced in the fourth quarter of2008, that did not recur in 2010.

 

***Net cash used in investing activities***increased $9.9million to $18.3 million for the nine months ended September 30, 2010compared to the same period in the prior year. The increase is primarily due toan increase in capital expenditures of $8.3 million, shortfall loans of $4.1million made to our joint venture with NBC Universal and $2.0 million paid toacquire a non-controlling investment in an interactive service provider thathosts our web sites.  During the ninemonths ended September 30, 2009, we received proceeds of $5.9 million fromthe sale of KNIN-TV, of which $2.6 million was distributed to us, offset by$6.0 million paid under our settlement with 54 Broadcasting, and $1.7 millionof other expenses associated with investing activities.

 

***Net cash used in financing activities***increased $29.1million to $47.7 million for the nine months ended September 30, 2010compared to the same period in the prior year. The increase is primarily due toan increase in net principal payments on long-term debt when compared to theprior period as a result of the payments of principal on our revolving creditfacility and term loans as further described in “Description of Indebtedness”.

 

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**Descriptionof Indebtedness**

 

The following is a summaryof our outstanding indebtedness (in thousands):

 
| ** **                                                                                                                                                                         | ** ** | **September 30,  2010** | ** ** | **December 31,  2009** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Senior secured credit facility:                                                                                                                                                    |       |                         |       |                        |       |
| Revolving credit loans                                                                                                                                                             |       | $                            | 13,063     |                        | $          | 204,000 |   |
| Term loans                                                                                                                                                                         |       | 10,399                       |       | 61,975                      |       |
| 83/8% Senior Notes due 2018                                                                                                                                                        |       | 200,000                      |       | —                      |       |
| 61/2% Senior Subordinated  Notes due 2013                                                                                                                                          |       | 275,883                      |       | 275,883                     |       |
| $141,316 61⁄2% Senior Subordinated Notes -  Class B due 2013, net of discount of $3,877 and $4,965 as of  September 30, 2010 and December 31, 2009, respectively |       | 137,439                      |       | 136,351                     |       |
| $2,157 LIN-RMM Note, net of discount of $40 and  $160 as of September 30, 2010 and December 31, 2009, respectively                                                       |       | 2,117                        |       | 1,997                       |       |
| $1,257 and $1,598 RMM Note, net of premium of $84  and $112 as of September 30, 2010 and December 31, 2009,  respectively                                                |       | 1,341                        |       | 1,710                       |       |
| $1,121 RMM Bank Note, net of discount of $21 and  $83 as of September 30, 2010 and December 31, 2009, respectively                                                       |       | 1,100                        |       | 1,038                       |       |
| Total debt                                                                                                                                                                         |       | 641,342                      |       | 682,954                     |       |
| Less current portion                                                                                                                                                               |       | 7,051                        |       | 16,372                      |       |
| Total long-term debt                                                                                                                                                               |       | $                            | 634,291    |                        | $          | 666,582 |   |

 

We repaid $0.8 million and$5.6 million of principal on the term loans, related to mandatory quarterlypayments under our senior secured credit facility, from operating cash flowsduring the three and nine months ended September 30, 2010, respectively.

 

On April 12, 2010, LINTelevision completed the issuance and sale of $200.0 million in aggregateprincipal amount of its Senior Notes in a transaction exempt from theregistration requirements of the Securities Act of 1933, as amended. The SeniorNotes will mature on April 15, 2018, and interest is payable on the SeniorNotes on April 15 and October 15 of each year, commencingOctober 15, 2010.  Proceeds from the issuance of the SeniorNotes were used to repay $148.9 million of principal on our revolving creditfacility and $45.9 million of principal on our term loans, plus accruedinterest, pursuant to the mandatory prepayment terms of our senior securedcredit facility. As a result, we recorded a loss on extinguishment of debt of$2.7 million during the nine months ended September 30, 2010, whichincluded a write-off of deferred financing fees of $1.9 million and $0.8million related to the revolving credit facility and term loans,respectively.  Additionally, therepayment of principal on our revolving credit facility resulted in a reductionof our revolving credit commitments, from $225.0 million to $76.1 million.

 

See “Description ofIndebtedness” included in our 10-K for a full description of our senior securedcredit facility.

 

**Off-BalanceSheet Arrangements**

 

As of September 30,2010, there had been no material changes in our off-balance sheet arrangementsfrom those disclosed in our 10-K.

 

**Item 3.Quantitative and Qualitative Disclosures About Market Risk**

 

We are exposed to marketrisk related to interest rates on borrowings under our senior secured creditfacility debt. We have historically used derivative financial instruments tomitigate our exposure to market risks from fluctuations in interest rates. Inaccordance with our policy, we do not enter into derivative instrumentsunless there is an underlying exposure, and we do not enter into derivativefinancial instruments for speculative trading purposes.

 

*InterestRate Risk*

 

Our long-term debt as ofSeptember 30, 2010 was $641.3 million, including a current portion of $7.1million, of which the Senior Notes due 2018 and the senior subordinated notesbear a fixed interest rate and the senior secured credit facility bears aninterest rate based on, at our option, either a) the LIBOR interest rate, or b)the ABR rate, which is an interest rate that is equal to the greatest of (i) thePrime Rate, (ii) the Federal Funds Effective Rate plus 1⁄2 of 1 percent, and(iii) the one-month LIBOR rate plus 1%. In addition, the rate we selectalso bears an applicable margin rate of 3.750% or 2.750% for LIBOR based loansand ABR rate loans, respectively. The aggregate outstanding balance under oursenior secured credit facility was $23.5 million as of September 30, 2010.

 

Accordingly, we are exposedto potential losses related to increases in interest rates. A hypothetical 1%increase in the floating 

 

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rate used as the basis forthe interest charged on the senior secured credit facility as of September 30,2010 would result in an estimated $0.1 million increase in annualized interestexpense assuming a constant balance outstanding of $23.5 million less thecurrent outstanding loan amount of $10.4 million covered with an interest rateswap agreement.

 

During the second quarter of2006, we entered into a contract to hedge a notional amount of the decliningbalances of our term loans to mitigate changes in our cash flows resulting fromfluctuations in interest rates. The 2006 interest rate hedge effectivelyconverted the floating LIBOR rate-based-payments to fixed payments at 5.33%plus the applicable margin rate calculated under our senior secured credit facility,which expires in November 2011.

 

We have historicallydesignated the 2006 interest rate hedge as a cash flow hedge.  However, as a result of the April 12,2010 repayment of $45.9 million of principal on our term loans, as describedfurther in “Description of Indebtedness”, the interest rate hedge ceased to behighly effective in hedging the variable rate cash flows associated with ourterm loans.  Accordingly, the portion ofthe fair value recognized in accumulated other comprehensive loss,$3.6 million, was recorded as a charge to our consolidated statement ofoperations for the nine months ended September 30, 2010.  Additionally, because the hedge ceased to behighly effective in hedging the variable rate cash flows, all changes in fairvalue are now recorded to our consolidated statement of operations.  We therefore recorded a (gain) loss onderivative instruments of $(0.5) million and $2.6 million, including the $3.6million charge from accumulated other comprehensive loss, for the three andnine months ended September 30, 2010, respectively.

 

**Item 4.Controls and Procedures**

 

a) Evaluation of disclosurecontrols and procedures.

 

Our management, with theparticipation of our Chief Executive Officer and Chief Financial Officer,evaluated the effectiveness of our disclosure controls and procedures as of September 30,2010. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act, means controls and other procedures of acompany that are designed to ensure that information required to be disclosedby a company in the reports that it files or submits under the Exchange Act isrecorded, processed, summarized and reported, within the time periods specifiedin the SEC’s rules and forms. Disclosure controls and procedures include,without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by a company in the reports that it files or submitsunder the Exchange Act is accumulated and communicated to the company’smanagement, including its principal executive and principal financial officers,as appropriate to allow timely decisions regarding required disclosure.Management recognizes that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving itsobjectives and management necessarily applies its judgment in evaluating thecost-benefit relationship of possible controls and procedures. Based on theevaluation of our disclosure controls and procedures as of September 30,2010, our Chief Executive Officer and Chief Financial Officer concluded that,as of such date, our disclosure controls and procedures were effective at thereasonable assurance level.

 

b) Changes in internalcontrols.

 

There were no changes in ourinternal control over financial reporting identified in connection with theevaluation that occurred during the quarter ended September 30, 2010 thathave materially affected or are reasonably likely to materially affect ourinternal control over financial reporting.

 

**Part II.Other Information**

 

**Item 1.Legal Proceedings**

 

We are involved in variousclaims and lawsuits that are generally incidental to our business. We arevigorously contesting all of these matters and believe that their ultimateresolution will not have a material adverse effect on us.

** **

**Item 1A.Risk Factors**

 

The risk factors discussedbelow should be read together with the factors discussed in Part 1 Item1A. “Risk Factors” in our 10-K.  Theserisk factors could materially affect our business, financial condition orfuture results.

 

***We depend to a significant degree onautomotive advertising.***

 

Approximately19%, 24% and 28% of our core advertising sales for the years endedDecember 31, 2009, 2008, and 2007, respectively, and 24% of our coreadvertising sales for the three and nine months ended September 30, 2010,consisted of automotive advertising. A significant decrease in these revenuesin the future could have a material adverse effect on our results of operationsand cash flows, which could affect our ability to fund operations and serviceour debt obligations and affect the value of our common stock.

 

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***The GECC Note could result in significantliabilities, including (i) requiring us to make short-term cash paymentsto the NBC Universal joint venture to fund interest payments, and(ii) potentially giving rise to the acceleration of our existingindebtedness, which would cause such existing indebtedness to becomeimmediately due and payable.***

 

Wemay be required to make cash payments to the joint venture to fund interestpayments on the GECC Note. Our joint venture with NBC Universal has beenadversely impacted by the economic downturn. On March 25, 2010,June 22, 2010 and September 23, 2010, pursuant to agreements betweenus and NBC Universal covering the period from January 1, 2009 toApril 1, 2011, we made loans to the joint venture in the amount of$3.1 million, $0.8 million and $0.2 million, respectively (the “ShortfallLoans”), representing our approximate 20 percent share of the cumulativedebt service shortfalls at the joint venture.

 

Becauseof anticipated future cash shortfalls at the joint venture, on March 9,2010, NBC Universal and we entered into an agreement concerning such shortfallscovering the period through April 1, 2011 (the “2010 Shortfall FundingAgreement”). Under the terms of the 2010 Shortfall Funding Agreement: (i) thejoint venture may continue to access any portion of its existing debt servicereserve cash balances to fund interest payments on the GECC Note; (ii) NBCUniversal will continue to defer the payment of 2008 and 2009 management feesowed to it under the management agreement for the joint venture’s twotelevision stations and will defer payment of 2010 management fees throughMarch 31, 2011; and (iii) if the joint venture does not havesufficient cash to fund interest payments on the GECC Note through April 1,2011, we and NBC Universal will each provide the joint venture with a shortfallloan based on our respective economic interests in the joint venture.

 

Werecognize shortfall funding liabilities to the joint venture on ourbalance sheet****when those liabilitiesbecome both probable and estimable, which results******when joint venture managementprovides us with budget or forecast information of operating cash flows andworking capital needs indicating that a debt service shortfall is probable tooccur and when we intend to reach a shortfall funding agreement with NBCUniversal covering the budgeted or forecasted period.  Based on fourthquarter 2010 and full year 2011 forecast information provided by joint venturemanagement, we estimate our share of shortfall funding will be approximately$1.9 million through December 31, 2011.  As of the date of thisreport, there is no agreement between us and NBC Universal for shortfallfunding for the period following the expiration of the 2010 Shortfall FundingAgreement on April 1, 2011. Our estimate assumes that we willenter into a new shortfall funding agreement with NBC Universal for the periodextending through December 31, 2011 for the purpose of sharing in anyjoint venture debt service shortfalls, on substantially the same terms as the2010 Shortfall Funding Agreement.  Actual cash shortfalls at the jointventure could vary from our current estimates. We could also fail to reach anagreement with NBC Universal regarding******the sharing of any joint venture debtservice shortfalls****for theperiod following termination of the 2010 Shortfall Funding Agreement,in which event we would not be required to fund any immediate cash shortfalls(see Note 14 — “Commitments and Contingencies” included in our 10-K). Cash shortfalls at the joint venture beyond December 31, 2011 are notcurrently estimable or probable; therefore, we have not accrued for anypotential obligations beyond the $1.9 million discussed above*.*

 

Ourability to honor our shortfall loan obligations under the 2010 ShortfallFunding Agreement, and any future shortfall funding agreement, is subject tocompliance with restrictions under our senior secured credit facility, and theindentures governing our 83/8% senior notesand our 61⁄2% senior subordinated notes. Based on budgets provided by jointventure management, and our forecast of total leverage and consolidated EBITDAduring 2010 and 2011, we expect to have the capacity within these restrictionsto provide shortfall funding under the 2010 Shortfall Funding Agreement inproportion to our approximately 20 percent economic interest in the jointventure through the April 1, 2011 expiration of the 2010 Shortfall FundingAgreement, and through December 31, 2011. However, there can be noassurance that we will have the capacity within these restrictions to providesuch funding. If we are required to fund a portion of any additional shortfallloans, we plan to use our available cash balances or available borrowings underour senior secured credit facility. In addition, if the joint ventureexperiences further cash shortfalls beyond December 31, 2011, we maydecide to fund such cash shortfalls, or to fund such shortfalls through furtherloans or equity contributions to the joint venture. If we are unable to makepayments under the 2010 Shortfall Funding Agreement, or a future shortfallfunding agreement, the joint venture may be unable to fund interest obligationsunder the GECC Note, resulting in an event of default.

 

Anevent of default under the GECC Note will occur if the joint venture fails tomake any scheduled interest payment within 90 days of the date due andpayable, or to pay the principal amount on the maturity date. If the jointventure fails to pay interest on the GECC Note, and neither NBC Universal norwe make a shortfall loan to fund the interest payment within 90 days ofthe date due and payable, an event of default would occur and GECC couldaccelerate the maturity of the entire amount due under the GECC Note. Otherthan the acceleration of the principal amount upon an event of default,prepayment of the principal of the note is prohibited unless agreed upon byboth NBC Universal and LIN TV. Upon an event of default under the GECC Note,GECC’s only recourse would be to the joint venture, our equity interest in thejoint venture and, after exhausting all remedies against the assets of thejoint venture and the other equity interests in the joint venture, to LIN TVpursuant to its guarantee of the GECC Note.

 

Underthe terms of its guarantee of the GECC Note, LIN TV would be required to make apayment for an amount to be determined upon occurrence of the following events:(a) there is an event of default; (b) neither NBC Universal nor weremedies the default; and (c) after GECC exhausts all remedies against theassets of the joint venture, the total amount realized upon 

 

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exerciseof those remedies is less than the $815.5 million principal amount of theGECC Note. Upon the occurrence of such events, the amount owed by LIN TV toGECC pursuant to the guarantee would be equal to the difference between(i) the total amount for which the joint venture’s assets were sold and(ii) the principal amount and any unpaid interest due under the GECC Note.As of December 31, 2009, we estimated that the fair value of thetelevision stations in the joint venture to be approximately $366 millionless than the outstanding balance of the GECC Note of $815.5 million.

 

Ifan event of default occurs under the GECC Note, LIN TV, which conducts all ofits operations through its subsidiaries (including us), could experiencematerial adverse consequences, including:

 

·                  GECC, afterexhausting all remedies against the joint venture, could enforce its rightsunder the guarantee, which could cause LIN TV to determine that LIN Televisionshould seek to sell material assets owned by it in order to satisfy LIN TV’sobligations under the guarantee;

 

·                  GECC’sinitiation of proceedings against LIN TV under the guarantee could result in achange of control or other material adverse consequences to LIN Television,which could cause an acceleration of LIN Television’s senior secured creditfacility and other outstanding indebtedness; and

 

·                  if the GECCNote is prepaid because of an acceleration on default or otherwise, LIN TVwould incur a substantial tax liability of approximately $273.6 millionrelated to its deferred gain associated with the formation of the jointventure, exclusive of any potential utilization of LIN TV’s net operating losscarryforwards.

 

***The National Broadband Plan could result inthe reallocation of broadcast spectrum for wireless broadband use, which couldmaterially impair our ability to provide competitive services.***

 

Pursuantto The American Recovery and Reinvestment Act of 2009, on March 16, 2010,the FCC delivered to Congress a staff report titled, “Connecting America:The National Broadband Plan” (the “NBP”). Among the many far-reachingrecommendations contained in the 375-page NBP is that the FCC reallocate120 MHz of spectrum currently occupied by television broadcast stations tomobile wireless broadband services by means of, among other things, amendingthe FCC’s technical rules to reduce television station service areas anddistance separations, permitting channel sharing, conducting voluntary “incentive”auctions for the return of television broadcast spectrum, and certain othervoluntary and involuntary mechanisms. None of the NBP’s recommendations relatedto television spectrum are self-effectuating; consequently, implementation ofthe recommendations would appear to require further action by the FCC orCongress, or both. Legislation has been introduced in both the Senate and theHouse of Representatives that, among other things, would authorize the FCC todirect a portion of auction proceeds to commercial users, includingbroadcasters, that voluntarily surrender some or all of their allotted spectrumfor auction.

 

OnOctober 21, 2010, the Chairman of the FCC announced that at the FCC’s openmeeting on November 30, 2010, it would consider proposals to, among otherthings, implement rule changes that could facilitate channel sharing bytelevision stations and shared use of current television broadcast spectrum bywireless broadband providers. We cannot predict the outcome of any FCCproceedings or whether legislation authorizing incentive spectrum auctions willbe enacted, or the likelihood, timing or extent of a spectrum reallocation. Ifsome or all of our television stations are required to change frequencies orreduce the amount of spectrum they use, our stations could suffer materialadverse effects, including, but not limited to, substantial conversion costs,reduction or loss of over-the-air signal coverage, and an inability to providehigh definition programming and additional program streams, including mobilevideo services.

 

***Changes in FCC ownership rules throughFCC action, judicial review or federal legislation may limit our ability tocontinue providing services to stations under LMAs or similar agreements, mayprevent us from obtaining ownership of the stations we currently provideservices to under LMAs or similar agreements and/or may preclude us fromobtaining the full economic value of one or more of our duopoly, or two-stationoperations, upon a sale, merger or other similar transaction transferringownership of such station or stations.***

 

FCCownership rules currently impose significant limitations on the ability ofbroadcast licensees to have attributable interests in multiple mediaproperties. In addition, federal law prohibits one company from owningbroadcast television stations that collectively have service areas encompassingmore than an aggregate 39% share of national television households. Ownershiprestrictions under FCC rules also include a variety of local limits onmedia ownership. The restrictions include an ownership limit of one televisionstation in most medium and smaller television markets and two stations in mostlarger markets, known as the television duopoly rule. The regulations alsoinclude a prohibition on the common ownership of a newspaper and televisionstation in the same market (newspaper-television cross-ownership), limits oncommon ownership of radio and television stations in the same market(radio-television station ownership) and limits on radio ownership of four toeight radio stations in a local market.

 

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Shouldthe FCC liberalize media ownership rules, attractive opportunities may arisefor additional television station and other media acquisitions. But thesechanges also create additional competition for us from other entities, such asnational broadcast networks, large station groups, newspaper chains and cableoperators, which may be better positioned to take advantage of such changes andbenefit from the resulting operating synergies both nationally and in specificmarkets.

 

Shouldthe television duopoly rule become relaxed, we may be able to acquire theownership of one or more of the stations in Austin, Texas; Providence, RhodeIsland; and Albuquerque, New Mexico for which we currently provide programming,sales and/or other related services under LMAs, shared services agreements orother similar agreements, as the case may be, and for which we have purchaseoption agreements to purchase these stations. Based on the existing televisionduopoly rules, we exercised our option to acquire the stations in Dayton, OHand Green Bay-Appleton, Wisconsin, which are currently serviced under a sharedservices agreement.  Completion of thattransaction is subject to the FCC’s approval and certain other terms andconditions.

 

Shouldwe be unable to acquire the ownership of the stations currently serviced byLMAs or similar agreements, there is no assurance that the grandfathering ofour LMAs, shared services agreements or other similar agreements will bepermitted beyond conclusion of the FCC’s current review of the ownership rules.We had net revenues of $4.3 million and $13.3 million, or 4% and 5%, ofour total net revenues, attributable to LMAs in Providence, Rhode Island and Austin,Texas for the three and nine months ended September 30, 2010,respectively. Additionally, we had net revenues of $0.5 million, or less than1%, of our total revenues, attributable to the shared services agreement forAlbuquerque, New Mexico; Dayton, Ohio and Green Bay-Appleton, Wisconsin, sincethe July 1, 2010 effective date of this agreement, for both the three andnine months ended September 30, 2010.

 

**Item 2.Unregistered Sales of Equity Securities and Use of Proceeds**

 

None.

 

**Item 3.Defaults Upon Senior Securities**

 

None.

 

**Item 4.Reserved**

 

None.

 

**Item 5.Other Information**

 

None.

 

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**Item 6.Exhibits**

 
| 3.1    | Second Amended and  Restated Certificate of Incorporation of LIN TV Corp., as amended (filed as  Exhibit 3.1 to our Quarterly Report on Form 10-Q filed as of  August 9, 2004 (File Nos. 001-31311 and 000-25206) and incorporated by  reference herein)                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                        |
| 3.2    | Third Amended and Restated  Bylaws of LIN TV Corp., filed as Exhibit 3.2 (filed as Exhibit 3.2  to our Report on Form 10-K filed as of March 14, 2008 (File Nos.  001-31311 and 000-25206) and incorporated by reference herein).                                                       |
|   |                                                                                                                                                                                                                                                                                                        |
| 3.3    | Restated Certificate of  Incorporation of LIN Television Corporation (filed as Exhibit 3.1 to the  Quarterly Report on Form 10-Q of LIN TV Corp. and LIN Television  Corporation for the fiscal quarter ended June 30, 2003 (File  No. 000-25206) and incorporated by reference herein) |
|   |                                                                                                                                                                                                                                                                                                        |
| 4.1    | Specimen of stock  certificate representing LIN TV Corp. Class A Common stock, par value  $.01 per share (filed as Exhibit 4.1 to LIN TV Corp.’s Registration  Statement on Form S-1 (Registration No. 333-83068) and incorporated  by reference herein)                           |
|   |                                                                                                                                                                                                                                                                                                        |
| 31.1   | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive  Officer of LIN TV Corp.                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                        |
| 31.2   | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial  Officer of LIN TV Corp.                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                        |
| 31.3   | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive  Officer of LIN Television Corporation                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                        |
| 31.4   | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial  Officer of LIN Television Corporation                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                        |
| 32.1   | Certification pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive  Officer and Chief Financial Officer of LIN TV Corp.                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                        |
| 32.2   | Certification pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive  Officer and Chief Financial Officer of LIN Television Corporation                                                                                                                                     |

 

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**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities Exchange Act of 1934, eachof LIN TV Corp. and LIN Television Corporation, has duly caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.

 
| ***LIN TV CORP.***               |                          |
|----------------------------------|-------------------------------|
| ***LIN TELEVISION CORPORATION*** |                          |
|                             |                          |
|                             | Dated: November 1,  2010 |
|                             | By:                           | /s/ Richard J. Schmaeling |
|                             |                          | Richard J. Schmaeling |
|                             |                          | Senior Vice President,  Chief Financial Officer |
|                             |                          | (Principal Financial  Officer) |
|                             |                          |
|                             | Dated: November 1,  2010 |
|                             | By:                           | /s/ Nicholas N. Mohamed |
|                             |                          | Nicholas N. Mohamed |
|                             |                          | Vice President, Controller |
|                             |                          | (Principal Accounting  Officer) |

 

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Tableof Contents

 
| Item 1.  Unaudited Consolidated Financial Statements of LIN Television Corporation |   |
|------------------------------------------------------------------------------------|--------|
| Consolidated  Balance Sheets                                                       | 31     |
| Consolidated  Statements of Operations                                             | 32     |
| Consolidated Statements of Stockholder’s Deficit and  Comprehensive Income    | 33     |
| Consolidated Statements of Cash Flows                                              | 35     |
| Notes to Unaudited Consolidated Financial Statements                               | 36     |

 

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**Part I. Financial Information**

 

**Item 1. Financial Statements**

** **

**LIN Television Corporation**

**ConsolidatedBalance Sheets**

**(unaudited)**

 
| ** **                                                                                | ** ** | **September 30,**                                    | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                | ** ** | **2010**                                                  | ** ** | **2009**              | ** ** |
| ** **                                                                                | ** ** | **(in thousands, except share data)** | ** ** |
| **ASSETS**                                                                                | ** ** | ** **                                                | ** ** | ** **            | ** ** |
| Current assets:                                                                           |       |                                                      |       |                  |       |
| Cash and cash equivalents                                                                 |       | $                                                         | 8,766      |                  | $          | 11,105 |   |
| Restricted cash                                                                           |       | —                                                    |       | 2,000                 |       |
| Accounts receivable, less allowance for doubtful  accounts (2010 - $1,976; 2009 - $2,272) |       | 80,281                                                    |       | 73,948                |       |
| Program rights                                                                            |       | 1,112                                                     |       | 2,126                 |       |
| Other current assets                                                                      |       | 6,601                                                     |       | 6,402                 |       |
| Total current assets                                                                      |       | 96,760                                                    |       | 95,581                |       |
| Property and equipment, net                                                               |       | 156,536                                                   |       | 165,061               |       |
| Deferred financing costs                                                                  |       | 8,342                                                     |       | 8,389                 |       |
| Program rights                                                                            |       | 870                                                       |       | 1,400                 |       |
| Goodwill                                                                                  |       | 117,259                                                   |       | 117,259               |       |
| Broadcast licenses and other intangible assets,  net                                      |       | 397,645                                                   |       | 398,877               |       |
| Other assets                                                                              |       | 5,026                                                     |       | 3,936                 |       |
| Total assets                                                                              |       | $                                                         | 782,438    |                  | $          | 790,503 |   |
|                                                                                      |       |                                                      |       |                  |       |
| **LIABILITIES AND STOCKHOLDER’S  DEFICIT**                                           | ** ** | ** **                                                | ** ** | ** **            | ** ** |
| Current liabilities:                                                                      |       |                                                      |       |                  |       |
| Current portion of long-term debt                                                         |       | $                                                         | 7,051      |                  | $          | 16,372 |   |
| Accounts payable                                                                          |       | 6,981                                                     |       | 6,556                 |       |
| Accrued expenses                                                                          |       | 54,341                                                    |       | 41,916                |       |
| Program obligations                                                                       |       | 7,221                                                     |       | 10,319                |       |
| Total current liabilities                                                                 |       | 75,594                                                    |       | 75,163                |       |
| Long-term debt, excluding current portion                                                 |       | 634,291                                                   |       | 666,582               |       |
| Deferred income taxes, net                                                                |       | 172,916                                                   |       | 162,025               |       |
| Program obligations                                                                       |       | 1,375                                                     |       | 2,092                 |       |
| Other liabilities                                                                         |       | 45,160                                                    |       | 53,795                |       |
| Total liabilities                                                                         |       | 929,336                                                   |       | 959,657               |       |
|                                                                                      |       |                                                      |       |                  |       |
| Commitments and Contingenices (Note 12)                                                   |       |                                                      |       |                  |       |
|                                                                                      |       |                                                      |       |                  |       |
| Stockholder’s deficit:                                                               |       |                                                      |       |                  |       |
| Common stock, $0.00 par value, 1,000 shares                                               |       | —                                                    |       | —                |       |
| Investment in parent company’s stock, at cost                                        |       | (7,869                                                    | )          | (7,869                | )          |
| Additional paid-in capital                                                                |       | 1,108,843                                                 |       | 1,104,690             |       |
| Accumulated deficit                                                                       |       | (1,222,642                                                | )          | (1,238,058            | )          |
| Accumulated other comprehensive loss                                                      |       | (25,230                                                   | )          | (27,917               | )          |
| Total stockholder’s deficit                                                          |       | (146,898                                                  | )          | (169,154              | )          |
| Total liabilities and stockholder’s deficit                                          |       | $                                                         | 782,438    |                  | $          | 790,503 |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements.

 

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**LINTelevision Corporation**

**ConsolidatedStatements of Operations**

**(unaudited)**

 
| ** **                                                                                                                                                                                   | ** ** | **Three months ended September 30,** | ** ** | **Nine months ended September 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                                                                                                                                   | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
| ** **                                                                                                                                                                                   | ** ** | **(in thousands)**                                  | ** ** |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Net revenues                                                                                                                                                                                 |       | $                                                        | 103,616    |                                                    | $          | 81,371 |   | $ | 294,921 |   | $ | 238,363 |   |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Operating costs and expenses:                                                                                                                                                                |       |                                                     |       |                                                    |       |   |   |   |   |
| Direct operating                                                                                                                                                                             |       | 31,708                                                   |       | 25,635                                                  |       | 90,836 |   | 79,083 |   |
| Selling, general and administrative                                                                                                                                                          |       | 26,660                                                   |       | 24,727                                                  |       | 78,736 |   | 75,089 |   |
| Amortization of program rights                                                                                                                                                               |       | 6,024                                                    |       | 6,317                                                   |       | 18,070 |   | 18,221 |   |
| Corporate                                                                                                                                                                                    |       | 6,047                                                    |       | 4,206                                                   |       | 17,925 |   | 13,193 |   |
| Depreciation                                                                                                                                                                                 |       | 7,079                                                    |       | 7,561                                                   |       | 21,127 |   | 23,135 |   |
| Amortization of intangible assets                                                                                                                                                            |       | 411                                                      |       | 24                                                      |       | 1,232 |   | 64 |   |
| Impairment of goodwill and broadcast licenses                                                                                                                                                |       | —                                                   |       | —                                                  |       | — |   | 39,894 |   |
| Restructuring charge                                                                                                                                                                         |       | —                                                   |       | —                                                  |       | 2,181 |   | 498 |   |
| Gain from asset dispositions                                                                                                                                                                 |       | (1,148                                                   | )          | (886                                                    | )          | (3,359 | ) | (3,544 | ) |
| Operating income (loss)                                                                                                                                                                      |       | 26,835                                                   |       | 13,787                                                  |       | 68,173 |   | (7,270 | ) |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Other expense (income):                                                                                                                                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| Interest expense, net                                                                                                                                                                        |       | 13,313                                                   |       | 11,259                                                  |       | 38,456 |   | 32,314 |   |
| Share of loss in equity investments                                                                                                                                                          |       | 40                                                       |       | 2,000                                                   |       | 134 |   | 2,000 |   |
| (Gain) loss on derivative instruments                                                                                                                                                        |       | (481                                                     | )          | 17                                                      |       | 2,584 |   | 12 |   |
| Loss (gain) on extinguishment of debt                                                                                                                                                        |       | —                                                   |       | —                                                  |       | 2,749 |   | (50,149 | ) |
| Other, net                                                                                                                                                                                   |       | (28                                                      | )          | (249                                                    | )          | (710 | ) | (188 | ) |
| Total other expense (income), net                                                                                                                                                            |       | 12,844                                                   |       | 13,027                                                  |       | 43,213 |   | (16,011 | ) |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Income from continuing operations before provision  for income taxes                                                                                                                         |       | 13,991                                                   |       | 760                                                     |       | 24,960 |   | 8,741 |   |
| Provision for income taxes                                                                                                                                                                   |       | 5,720                                                    |       | 1,635                                                   |       | 9,544 |   | 9,944 |   |
|                                                                                                                                                                                         |       |                                                     |       |                                                    |       |   |   |   |   |
| Income (loss) from continuing operations                                                                                                                                                     |       | 8,271                                                    |       | (875                                                    | )          | 15,416 |   | (1,203 | ) |
| Discontinued operations:                                                                                                                                                                     |       |                                                     |       |                                                    |       |   |   |   |   |
| Loss from discontinued operations, net of a gain  from the sale of discontinued operations of $11 and a benefit from income taxes  of $677 for the nine months ended September 30, 2009 |       | —                                                   |       | —                                                  |       | — |   | (446 | ) |
| Net income (loss)                                                                                                                                                                            |       | $                                                        | 8,271      |                                                    | $          | (875 | ) | $ | 15,416 |   | $ | (1,649 | ) |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements.

 

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**LIN Television Corporation**

**ConsolidatedStatements of Stockholder’s Deficit and Comprehensive Income**

**(unaudited)**

**(in thousands, except share data)**

*** ***
| ** **                                                                                                  | ** ** | **Total**   | ** ** | **Common Stock** | ** ** | **Investment in Parent  Company’s Common** | ** ** | **Additional  Paid-In**      | ** ** | **Accumulated** | ** ** | **Accumulated  Other  Comprehensive** | ** ** | **Total  Stockholder’s** | ** ** | **Comprehensive** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|-------------|------------|-----------------------|------------|----------------------------------------------------------------|------------|------------------------------|------------|-----------------|------------|---------------------------------------|------------|-------------------------------|------------|-------------------|------------|
| ** **                                                                                                  | ** ** | **Deficit** | ** ** | **Shares**            | ** ** | **Amount**                                                     | ** ** | **Stock, at cost** | ** ** | **Capital**     | ** ** | **Deficit**                           | ** ** | **Loss**                      | ** ** | **Deficit**       | ** ** | **Income** | ** ** |
| Balance as of December 31, 2009                                                                        |       | $           | (169,154   | )                     | 1,000      |                                                           | $          | —                       |       | $               | (7,869     | )                                     | $          | 1,104,690                     |       | $                 | (1,238,058 | ) | $ | (27,917 | ) | $ | (169,154 | ) |   |   |
| Amortization of pension net loss, net of tax of  $112                                                       |       | 171         |       | —                |       | —                                                         |       | —                       |       | —          |       | —                                |       | 171                           |       | 171               |       | $ | 171 |   |
| Reclassification of unrealized loss on cash flow  hedge, net of tax of $1,603                               |       | 2,516       |       | —                |       | —                                                         |       | —                       |       | —          |       | —                                |       | 2,516                         |       | 2,516             |       | 2,516 |   |
| Stock-based compensation                                                                                    |       | 3,641       |       | —                |       | —                                                         |       | —                       |       | 3,641           |       | —                                |       | —                        |       | 3,641             |       |   |   |
| LIN TV Corp.’s class A common stock issued under  employee and director stock-based compensation plans |       | 512         |       | —                |       | —                                                         |       | —                       |       | 512             |       |                                  |       | —                        |       | 512               |       |   |   |
| Net income                                                                                                  |       | 15,416      |       | —                |       | —                                                         |       | —                       |       | —          |       | 15,416                                |       | —                        |       | 15,416            |       | 15,416 |   |
| Comprehensive income - September 30, 2010                                                              |       |        |       |                  |       |                                                           |       |                         |       |            |       |                                  |       |                          |       |              |       | $ | 18,103 |   |
| Balance as of September 30, 2010                                                                       |       | $           | (146,898   | )                     | 1,000      |                                                           | $          | —                       |       | $               | (7,869     | )                                     | $          | 1,108,843                     |       | $                 | (1,222,642 | ) | $ | (25,230 | ) | $ | (146,898 | ) |   |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements

 

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**LIN Television Corporation**

**ConsolidatedStatements of Stockholder’s Deficit and Comprehensive Loss**

**(unaudited)**

**(in thousands, except share data)**

 
| ** **                                              | ** ** | **Total**   | ** ** | **Common Stock** | ** ** | **Investment in Parent  Company’s Common** | ** ** | **Additional  Paid-In**      | ** ** | **Accumulated** | ** ** | **Accumulated  Other  Comprehensive** | ** ** | **Total  Stockholder’s** | ** ** | **Preferred  Stock of  Banks** | ** ** | **Comprehensive** | ** ** |
|---------------------------------------------------------|------------|-------------|------------|-----------------------|------------|----------------------------------------------------------------|------------|------------------------------|------------|-----------------|------------|---------------------------------------|------------|-------------------------------|------------|-------------------------------------|------------|-------------------|------------|
| ** **                                              | ** ** | **Deficit** | ** ** | **Shares**            | ** ** | **Amount**                                                     | ** ** | **Stock, at cost** | ** ** | **Capital**     | ** ** | **Deficit**                           | ** ** | **Loss**                      | ** ** | **Deficit**                         | ** ** | **Broadcasting**  | ** ** | **Loss** | ** ** |
| Balance as of December 31, 2008                    |       | $           | (182,250   | )                     | 1,000      |                                                           | $          | —                       |       | $               | (18,005    | )                                     | $          | 1,102,448                     |       | $                                   | (1,239,090 | )                 | $          | (34,634 | ) | $ | (189,281 | ) | $ | 7,031 |   |   |   |
| Amortization of prior service cost, net of tax of  $9   |       | 14          |       | —                |       | —                                                         |       | —                       |       | —          |       | —                                |       | 14                            |       | 14                                  |       | —            |       | $ | 14 |   |
| Amortization of net loss, net of tax of $50             |       | 74          |       | —                |       | —                                                         |       | —                       |       | —          |       | —                                |       | 74                            |       | 74                                  |       | —            |       | 74 |   |
| Unrealized loss on cash flow hedge, net of tax of  $653 |       | 984         |       | —                |       | —                                                         |       | —                       |       | —          |       | —                                |       | 984                           |       | 984                                 |       | —            |       | 984 |   |
| Stock-based compensation, continuing operations         |       | 1,445       |       | —                |       | —                                                         |       | —                       |       | 1,445           |       | —                                |       | —                        |       | 1,445                               |       | —            |       |   |   |
| Distribution to minority shareholders                   |       | (2,644      | )          | —                |       | —                                                         |       | —                       |       | —          |       | —                                |       | —                        |       | —                              |       | (2,644            | )          |   |   |
| Net loss                                                |       | (6,036      | )          | —                |       | —                                                         |       | —                       |       | —          |       | (1,649                                | )          | —                        |       | (1,649                              | )          | (4,387            | )          | (1,649 | ) |
| Comprehensive loss - September 30, 2009            |       |        |       |                  |       |                                                           |       |                         |       |            |       |                                  |       |                          |       |                                |       |              |       | $ | (577 | ) |
| Balance as of September 30, 2009                   |       | $           | (188,413   | )                     | 1,000      |                                                           | $          | —                       |       | $               | (18,005    | )                                     | $          | 1,103,893                     |       | $                                   | (1,240,739 | )                 | $          | (33,562 | ) | $ | (188,413 | ) | $ | — |   |   |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements

 

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**LIN Television Corporation**

**ConsolidatedStatements of Cash Flows**

**(unaudited)**

 
| ** **                                                                               | ** ** | **Nine months ended September 30,** | ** ** |
|------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                               | ** ** | **2010**                                                | ** ** | **2009** | ** ** |
| ** **                                                                               | ** ** | **(in thousands)**                                 | ** ** |
| **OPERATING ACTIVITIES:**                                                                |       |                                                    |       |   |   |
| Net income (loss)                                                                        |       | $                                                       | 15,416     |   | $ | (1,649 | ) |
| Loss from discontinued operations                                                        |       | —                                                  |       | 446 |   |
| Adjustment to reconcile net income (loss) to net  cash provided by operating activities: |       |                                                    |       |   |   |
| Depreciation                                                                             |       | 21,127                                                  |       | 23,135 |   |
| Amortization of intangible assets                                                        |       | 1,232                                                   |       | 64 |   |
| Impairment of goodwill and broadcast licenses                                            |       | —                                                  |       | 39,894 |   |
| Amortization of financing costs and note discounts                                       |       | 3,440                                                   |       | 2,945 |   |
| Amortization of program rights                                                           |       | 18,070                                                  |       | 18,221 |   |
| Program payments                                                                         |       | (20,763                                                 | )          | (18,322 | ) |
| Loss (gain) on extinguishment of debt                                                    |       | 2,749                                                   |       | (50,149 | ) |
| Loss on derivative instruments                                                           |       | 2,584                                                   |       | 12 |   |
| Share of loss in equity investments                                                      |       | 134                                                     |       | 2,000 |   |
| Deferred income taxes, net                                                               |       | 9,444                                                   |       | 10,462 |   |
| Stock-based compensation                                                                 |       | 3,641                                                   |       | 1,615 |   |
| Gain from asset dispositions                                                             |       | (3,359                                                  | )          | (3,539 | ) |
| Other, net                                                                               |       | (129                                                    | )          | 2,108 |   |
| Changes in operating assets and liabilities:                                             |       |                                                    |       |   |   |
| Accounts receivable                                                                      |       | (6,333                                                  | )          | 6,350 |   |
| Other assets                                                                             |       | 916                                                     |       | (164 | ) |
| Accounts payable                                                                         |       | 425                                                     |       | (3,322 | ) |
| Accrued interest expense                                                                 |       | 14,627                                                  |       | 5,914 |   |
| Other liabilities and accrued expenses                                                   |       | 457                                                     |       | (17,220 | ) |
| **Net cash provided by operating  activities, continuing operations**                    |       | 63,678                                                  |       | 18,801 |   |
| **Net cash used in operating  activities, discontinued operations**                      |       | —                                                  |       | (101 | ) |
| **Net cash provided by operating  activities**                                           |       | 63,678                                                  |       | 18,700 |   |
|                                                                                     |       |                                                    |       |   |   |
| **INVESTING ACTIVITIES:**                                                                |       |                                                    |       |   |   |
| Capital expenditures                                                                     |       | (13,023                                                 | )          | (4,772 | ) |
| Cash paid for broadcast license rights                                                   |       | —                                                  |       | (7,561 | ) |
| Change in restricted cash                                                                |       | 2,000                                                   |       | (2,000 | ) |
| Payments for business combinations                                                       |       | (575                                                    | )          | — |   |
| Proceeds from the sale of assets                                                         |       | 180                                                     |       | — |   |
| Payments on derivative instruments                                                       |       | (1,525                                                  | )          | — |   |
| Shortfall loan to joint venture with NBC  Universal                                 |       | (4,079                                                  | )          | — |   |
| Other investments, net                                                                   |       | (1,980                                                  | )          | — |   |
| **Net cash used in investing  activities, continuing operations**                        |       | (19,002                                                 | )          | (14,333 | ) |
| **Net cash provided by investing activities,  discontinued operations**                  |       | 660                                                     |       | 5,875 |   |
| **Net cash used in investing  activities**                                               |       | (18,342                                                 | )          | (8,458 | ) |
|                                                                                     |       |                                                    |       |   |   |
| **FINANCING ACTIVITIES:**                                                                |       |                                                    |       |   |   |
| Net proceeds from employee and director stock-based  compensation plans                  |       | 512                                                     |       | — |   |
| Proceeds from borrowings on long-term debt                                               |       | 213,000                                                 |       | 81,000 |   |
| Principal payments on long-term debt                                                     |       | (255,855                                                | )          | (93,280 | ) |
| Payment of long-term debt issue costs                                                    |       | (4,887                                                  | )          | (3,662 | ) |
| **Net cash used in financing  activities, continuing operations**                        |       | (47,230                                                 | )          | (15,942 | ) |
| **Net cash used in financing  activities, discontinued operations**                      |       | (445                                                    | )          | (2,644 | ) |
| **Net cash used in financing  activities**                                               |       | (47,675                                                 | )          | (18,586 | ) |
|                                                                                     |       |                                                    |       |   |   |
| Net decrease in cash and cash equivalents                                                |       | (2,339                                                  | )          | (8,344 | ) |
| Cash and cash equivalents at the beginning of the  period                                |       | 11,105                                                  |       | 20,106 |   |
| Cash and cash equivalents at the end of the period                                       |       | $                                                       | 8,766      |   | $ | 11,762 |   |

 

The accompanying notes are an integral part of the unauditedconsolidated financial statements.

 

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**LIN Television Corporation**

**Notes to Unaudited Consolidated Financial Statements**

 

**Note 1 —Basis of Presentation and Summary of Significant Accounting Policies**

 

*Descriptionof Business*

 

LIN Television Corporation (“LINTelevision”), together with its subsidiaries, is a television station groupoperator in the United States. LIN Television and its subsidiaries areaffiliates of HM Capital Partners LLC (“HMC”). In these notes, the terms “Company,”“LIN Television,” “we,” “us” or “our” mean LIN Television Corporation and allsubsidiaries included in our consolidated financial statements. LIN Televisionis a wholly-owned subsidiary of LIN TV Corp. (“LIN TV”).

 

All of our consolidatedwholly-owned subsidiaries fully and unconditionally guarantee LIN Television’ssenior secured credit facility, 61/2% Senior Subordinated Notes and 61⁄2% Senior Subordinated Notes — Class Band 83/8% Senior Notes due 2018 (the“Senior Notes”) on a joint-and-several basis.

 

The unaudited consolidatedinterim financial statements have been prepared in conformity with accountingprinciples generally accepted in the United States (“U.S. GAAP”).

 

In the opinion ofmanagement, the accompanying unaudited interim financial statements contain alladjustments necessary to state fairly our financial position, results ofoperations and cash flows for the periods presented. The interim results ofoperations are not necessarily indicative of the results to be expected for thefull year.

 

*Use ofEstimates*

 

The preparation of financialstatements in conformity with U.S. GAAP requires our management to makeestimates and assumptions that affect the amounts reported in the unauditedconsolidated financial statements and the notes to the unaudited consolidatedfinancial statements. Our actual results could differ from these estimates.Estimates are used for the allowance for doubtful accounts in receivables,valuation of goodwill and intangible assets, amortization of program rights andintangible assets, stock-based compensation, pension costs, bartertransactions, income taxes, employee medical insurance claims, useful lives ofproperty and equipment, contingencies, litigation and net assets of businessesacquired.

 

*Comprehensive Income (Loss)*

 

Ourtotal comprehensive income (loss) includes net income (loss) andother comprehensive income (loss) items listed in the table below (inthousands):

 
| ** **                                    | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                    | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
|                                          |       |                                                     |       |                                                    |       |   |   |   |   |
| Net income (loss)                             |       | $                                                        | 8,271      |                                                    | $          | (875 | ) | $ | 15,416 |   | $ | (1,649 | ) |
| Amortization of prior service cost on pension |       | —                                                   |       | 5                                                       |       | — |   | 14 |   |
| Amortization of pension net loss              |       | 57                                                       |       | 24                                                      |       | 171 |   | 74 |   |
| Unrealized loss on cash flow hedge            |       | —                                                   |       | 153                                                     |       | 2,516 |   | 984 |   |
| Total comprehensive income (loss)             |       | $                                                        | 8,328      |                                                    | $          | (693 | ) | $ | 18,103 |   | $ | (577 | ) |

 

*RecentlyIssued Accounting Pronouncements*

 

In October 2009, therewere revisions to the accounting standard for revenue arrangements withmultiple deliverables.  The revisions address how to separatedeliverables and how to measure and allocate arrangement consideration to oneor more units of accounting.  The revisions are effectiveprospectively for revenue arrangements entered into or materially modified infiscal years beginning on or after June 15, 2010. We plan to adopt thisguidance effective January 1, 2011, and we do not expect it to have amaterial impact on our financial position or results of operations.

 

**Note 2 — Acquisitions**

 

*ACME Communications, Inc.*

 

On May 28, 2010, LINTelevision and ACME Communication, Inc. (“ACME”) entered into a sharedservices arrangement and related agreements with respect to ACME’s televisionstations KWBQ-TV, KRWB-TV, and KASY-TV in the Albuquerque-Santa Fe, NM market;WBDT-TV in the Dayton, OH market; and WCWF-TV (f/k/a WIWB-TV) in theGreen-Bay-Appleton, WI 

 

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market.  Concurrent with the execution of theseagreements, we entered into an option agreement, giving LIN Television theright to acquire any or all of the stations covered under these agreements, andgiving ACME the right, starting in January 2013 and subject to certainconditions, including regulatory approval, to put any or all of the stations toLIN Television at the greater of a defined purchase price or the then-currentfair market value.

 

On August 26, 2010, LINTelevision exercised its option to acquire WCWF-TV and certain assets ofWBDT-TV.  LIN Television assigned itsrights to acquire the remaining WBDT-TV assets, including the FCC license, toWBDT Television, LLC.  The aggregatepurchase price for both stations is $11.5 million, of which LIN Televisionagreed to pay approximately $10.5 million and WBDT Television, LLC agreed topay approximately $1.0 million.  On September 3,2010, LIN Television funded $0.6 million of the purchase price into an escrowaccount. LIN Television also has the option to fund 50% of its portion of thepurchase price with unregistered shares of LIN TV’s common stock.  Completion of the transaction is subject toregulatory approvals and certain other terms and conditions.  We expect the transaction to close during2011.

 

**Note 3 —Discontinued Operations**

 

*BanksBroadcasting*

 

Our consolidated financialstatements reflect the operations, assets and liabilities of the BanksBroadcasting joint venture as discontinued for all periods presented.

 

OnApril 23, 2009, Banks Broadcasting completed the sale of KNIN-TV, a CWaffiliate in Boise, for $6.6 million to Journal Broadcast Corporation. As aresult of the sale we received, on the basis of our economic interest in BanksBroadcasting, distributions of $0.4 million and $2.6 million during the ninemonths ended September 30, 2010 and 2009, respectively.  As of September 30,2010, all of the assets of the Banks Broadcasting joint venture have beenliquidated.

 

We provided no capitalcontributions to Banks Broadcasting during the nine months ended September 30,2010 and 2009.

 

The following presentssummarized information for the discontinued operations (in thousands):

 
| ** **     | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|----------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **     | ** ** | **2009**                                             | ** ** | **2009**                                            | ** ** |
| ** **     | ** ** | ** **                                           | ** ** | ** **                                          | ** ** |
| Net revenues   |       | $                                                    | —     |                                                | $          | 823 |   |
| Operating loss |       | —                                               |       | (3,141                                              | )          |
| Net loss       |       | —                                               |       | (446                                                | )          |
|                |            |                                                      |            |                                                     |            |  |  |

 

The operating loss for thenine months ended September 30, 2009 includes an impairment charge of $1.9million to reduce the carrying value of broadcast licenses to fair value basedon the final sale price of KNIN-TV of $6.6 million. Net loss for the ninemonths ended September 30, 2009 reflects our 50% share of net losses ofBanks Broadcasting, net of taxes and non-operating items to adjust the carryingvalue of the non-controlling interest to reflect the estimated amounts that weredue to the minority shareholders upon liquidation of Banks Broadcasting.

 

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**Note 4 —Equity Investments**

 

*JointVenture with NBC Universal*

 

We own a 20.38% interest inStation Venture Holdings, LLC (“SVH”), a joint venture with NBC Universal, andaccount for our interest using the equity method, as we do not have acontrolling interest. SVH wholly owns Station Venture Operations, LP (“SVO”),which is the operating company that manages KXAS-TV and KNSD-TV, the televisionstations that comprise the joint venture. The following presents summarizedfinancial information of SVH (in thousands):

 
| ** **                                                | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine Months Ended  September 30,** | ** ** |
|-----------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                | ** ** | **2010**                                             | ** ** | **2009**                                            | ** ** | **2010** | ** ** | **2009** | ** ** |
|                                                      |       |                                                 |       |                                                |       |   |   |   |   |
| Cash distributions to SVH from SVO                        |       | $                                                    | 15,760     |                                                | $          | 9,177 |   | $ | 29,535 |   | $ | 36,607 |   |
|                                                      |       |                                                 |       |                                                |       |   |   |   |   |
| Income to SVH                                             |       | $                                                    | 15,457     |                                                | $          | 9,180 |   | $ | 40,429 |   | $ | 18,409 |   |
| Other expense, net (primarily interest on the GECC  note) |       | (16,569                                              | )          | (16,491                                             | )          | (49,553 | ) | (49,473 | ) |
| Net loss of SVH                                           |       | $                                                    | (1,112     | )                                                   | $          | (7,311 | ) | $ | (9,124 | ) | $ | (31,064 | ) |
|                                                      |       |                                                 |       |                                                |       |   |   |   |   |
| Shortfall loans to SVH from LIN Television                |       | $                                                    | 204        |                                                | $          | — |   | $ | 4,079 |   | $ | — |   |
| Shortfall loans to SVH from NBC Universal                 |       | $                                                    | 796        |                                                | $          | — |   | $ | 15,934 |   | $ | — |   |

 

Beginning in 2009, we nolonger recognize our 20.38% share of SVH’s net loss because the investment waswritten-off during the year ended December 31, 2008; accordingly, wesuspended recognition of equity method gains and losses.

 

During the year ended December 31,2009, we recognized a contingent liability of $6.0 million based on ourestimate of amounts that we expected to loan to the joint venture pursuant tothe 2009 shortfall funding agreement and the 2010 shortfall funding agreementwith NBC Universal (collectively, the “Shortfall Funding Agreements”) asfurther described in Note 12 -  “Commitmentsand Contingencies”.  Due to uncertainty surrounding the joint venture’sability to repay the shortfall loans, we concurrently impaired all accruedloans to the joint venture as of December 31, 2009.

 

On March 25, 2010, June 22,2010 and September 23, 2010, pursuant to the terms of the ShortfallFunding Agreements, we made shortfall loans in the principal amounts of $3.1million, $0.8 million and $0.2 million, respectively, to the joint venture,representing our 20.38% share in cumulative debt service shortfalls at thejoint venture.  Concurrent with our funding of the shortfall loans,NBC Universal funded shortfall loans in the principal amounts of $12.2 million,$2.9 million and $0.8 million, respectively, to the joint venture, in respectof its 79.62% share in the cumulative debt service shortfalls at the jointventure.  We have a remaining shortfall funding accrual of $1.9million as of September 30, 2010, which we expect to fund during 2011.

 

Werecognize shortfall funding liabilities to the joint venture on ourbalance sheet****when thoseliabilities become both probable and estimable, which results******when jointventure management provides us with budget or forecast information of operatingcash flows and working capital needs indicating that a debt service shortfallis probable to occur and when we intend to reach a shortfall funding agreementwith NBC Universal covering the budgeted or forecasted period.  Based onfourth quarter 2010 and full year 2011 forecast information provided by jointventure management, we estimate our share of shortfall funding will beapproximately $1.9 million through December 31, 2011.  As of the dateof this report, there is no agreement between us and NBC Universal forshortfall funding for the period following the expiration of the 2010 ShortfallFunding Agreement on April 1, 2011. Our estimate assumes that wewill enter into a new shortfall funding agreement with NBC Universal for theperiod extending through December 31, 2011 for the purpose of sharing inany joint venture debt service shortfalls, on substantially the same terms asthe 2010 Shortfall Funding Agreement.  Actual cash shortfalls at the jointventure could vary from our current estimates. We could also fail to reach anagreement with NBC Universal regarding******the sharing of any joint venture debtservice shortfalls****for theperiod following termination of the 2010 Shortfall Funding Agreement,in which event we would not be required to fund any immediate cash shortfalls(see Note 14 — “Commitments and Contingencies” included in our 10-K). Cash shortfalls at the joint venture beyond December 31, 2011 are notcurrently estimable or probable; therefore, we have not accrued for anypotential obligations beyond the $1.9 million discussed above*.*

 

Because they were fullyimpaired, the amounts receivable under the shortfall loans, and all accruedinterest due from the joint venture, are carried at zero on our balance sheetas of September 30, 2010.  The loans bear interest at 8%annually; payable quarterly in arrears subject to certain conditions, and haveno maturity date.  Under the terms of the shortfall loan notes,payments of principal and interest are allocated between us and NBC Universalbased on our respective economic interests in the joint venture, and areapplied first toward the principal amount owed under the shortfall loans, andsecond toward the payment of accrued interest.  Principal and interestpayments are payable only if the joint venture has available cash on hand inexcess of amounts required by the joint venture to fund its quarterly interestpayments on the debt financing provided by General Electric Capital Corporation(“GECC”) described further in Note 12 — “Commitments and Contingencies”.

 

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For further details on thetiming of debt service shortfalls and our recognition of liabilities under theShortfall Funding Agreements see Note 12 — “Commitments and Contingencies”.

 

**Note 5 —Intangible Assets**

 

The following tablesummarizes the carrying amount of intangible assets (in thousands):

 
| ** **                                    | ** ** | **September 30, 2010** | ** ** | **December 31, 2009** | ** ** |
|-----------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                    | ** ** | **Gross Carrying  Amount**  | ** ** | **Accumulated  Amortization**   | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
|                                          |       |                             |       |                            |       |   |   |   |   |
| Goodwill                                      |       | $                                | 117,259    |                            | $          | — |   | $ | 117,259 |   | $ | — |   |
| Broadcast licenses                            |       | 391,801                          |       | —                          |       | 391,801 |   | — |   |
| Intangible assets subject to amortization (1) |       | 14,403                           |       | (8,559                          | )          | 14,403 |   | (7,327 | ) |
| Total intangible assets                       |       | $                                | 523,463    |                            | $          | (8,559 | ) | $ | 523,463 |   | $ | (7,327 | ) |

 

----

(2)          Intangibleassets subject to amortization are amortized on a straight-line basis andinclude acquired customer relationships, brand names, non-compete agreements,internal-use software, favorable operating leases, tower rental income leases,option agreements and network affiliations.

 

Werecorded an impairment charge of $39.9 million during the second quarter of2009 that included an impairment to the carrying values of our broadcastlicenses of $37.2 million, relating to 26 of our television stations; and animpairment to the carrying values of our goodwill of $2.7 million, relating totwo of our television stations.  Wetested our indefinite-lived intangible assets for impairment at June 30,2009, between the required annual tests, because we believed events hadoccurred and circumstances changed that would more likely than not reduce thefair value of our broadcast licenses and goodwill below their carryingamounts.  The need for an impairmentanalysis at June 30, 2009 was triggered by the continued decline inadvertising revenue at certain of our stations in excess of our original plan,due to the ongoing effects of the economic downturn that resulted in downwardadjustments to their respective forecasts.

 

Therewere no events during the nine months ended September 30, 2010 thatwarranted an interim impairment test of our indefinite-lived intangible assets.

 

**Note 6 — Debt**

 

LIN TV guaranteessubstantially all of our debt. All of the consolidated 100% owned subsidiariesof LIN Television fully and unconditionally guarantee our senior secured creditfacility and our 83/8% Senior Notes (the “SeniorNotes”), 61/2% Senior Subordinated Notesand 61/2%  Senior Subordinated Notes — Class B(together the “Senior Subordinated Notes”) on a joint-and-several basis.

 

Debt consisted of thefollowing (in thousands):

 
| ** **                                                                                                                                                                      | ** ** | **September 30,  2010** | ** ** | **December 31,  2009** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Senior secured credit facility:                                                                                                                                                 |       |                         |       |                        |       |
| Revolving credit loans                                                                                                                                                          |       | $                            | 13,063     |                        | $          | 204,000 |   |
| Term loans                                                                                                                                                                      |       | 10,399                       |       | 61,975                      |       |
| 83/8% Senior Notes due 2018                                                                                                                                                     |       | 200,000                      |       | —                      |       |
| 61/2% Senior Subordinated  Notes due 2013                                                                                                                                       |       | 275,883                      |       | 275,883                     |       |
| $141,316 61/2% Senior Subordinated  Notes - Class B due 2013, net of discount of $3,877 and $4,965 as of  September 30, 2010 and December 31, 2009, respectively |       | 137,439                      |       | 136,351                     |       |
| $2,157 LIN-RMM Note, net of discount of $40 and  $160 as of September 30, 2010 and December 31, 2009, respectively                                                    |       | 2,117                        |       | 1,997                       |       |
| $1,257 and $1,598 RMM Note, net of premium of $84  and $112 as of September 30, 2010 and December 31, 2009,  respectively                                             |       | 1,341                        |       | 1,710                       |       |
| $1,121 RMM Bank Note, net of discount of $21 and  $83 as of September 30, 2010 and December 31, 2009, respectively                                                    |       | 1,100                        |       | 1,038                       |       |
| Total debt                                                                                                                                                                      |       | 641,342                      |       | 682,954                     |       |
| Less current portion                                                                                                                                                            |       | 7,051                        |       | 16,372                      |       |
| Total long-term debt                                                                                                                                                            |       | $                            | 634,291    |                        | $          | 666,582 |   |

 

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We repaid $0.8 million and$5.6 million of principal on the term loans, related to mandatory quarterlypayments under our senior secured credit facility, from operating cash flowsduring the three and nine months ended September 30, 2010, respectively.

 

On April 12, 2010, wecompleted an offering of our Senior Notes in an aggregate principal amount of$200.0 million.   Proceeds from theissuance of the Senior Notes were used to repay $148.9 million of principal onour revolving credit facility and $45.9 million of principal on our termloans, plus accrued interest, pursuant to the mandatory prepayment terms of oursenior secured credit facility.  As aresult, we recorded a loss on extinguishment of debt of $2.7 million during thenine months ended September 30, 2010, consisting of a write-off ofdeferred financing fees of $1.9 million and $0.8 million related to therevolving credit facility and term loans, respectively.  The repayment of principal on our revolvingcredit facility resulted in a reduction of our revolving credit commitments,from $225.0 million to $76.1 million. Additionally, as a result of the repayment of principal on our termloans, our interest rate hedge ceased to be highly effective, as furtherdescribed in Note 7 — “Derivative Financial Instruments”.

 

During the nine months endedSeptember 30, 2009, we purchased a total notional amount of $79.7 millionand $42.0 million of our 61⁄2% Senior Subordinated Notes and 61⁄2% SeniorSubordinated Notes — Class B, respectively, under a Rule 10b5-1 plan.The aggregate purchase price for both classes was $68.4 million, resulting in again on extinguishment of debt of $50.1 million, net of a write-off of deferredfinancing fees and discount related to the Senior Subordinated Notes of $3.2million.

 

The fair values of ourlong-term debt are estimated based on quoted market prices for the same orsimilar issues, or based on the current rates offered to us for debt of thesame remaining maturities. The carrying amounts and fair values of ourlong-term debt were as follows (in thousands):

 
| ** **      | ** ** | **September 30, 2010** | ** ** | **December 31, 2009** | ** ** |
|-----------------|------------|----------------------------------|------------|---------------------------------|------------|
| Carrying amount |       | $                                | 641,342    |                            | $          | 682,954 |   |
| Fair value      |       | 642,923                          |       | 616,247                         |       |
|                 |            |                                  |            |                                 |            |  |  |

 

**Note 7 —Derivative Financial Instruments**

 

We have historically usedderivative financial instruments in the management of our interest rateexposure for our long-term debt, principally our senior secured creditfacility. In accordance with our policy, we do not enter into derivativeinstruments unless there is an underlying exposure and we do not enterinto derivative financial instruments for speculative trading purposes.

 

During the second quarter of2006, we entered into a contract to hedge a notional amount of the decliningbalances of our term loans (the “2006 interest rate hedge”) to mitigate changesin our cash flows resulting from fluctuations in interest rates. The 2006interest rate hedge effectively converted the floating LIBORrate-based-payments to fixed payments at 5.33% plus the applicable margin ratecalculated under our senior secured credit facility, which expires in November 2011.

 

We have historicallydesignated the 2006 interest rate hedge as a cash flow hedge.  However, as a result of the April 12,2010 repayment of $45.9 million of principal on our term loans, as describedfurther in Note 6 — “Debt”, the 2006 interest rate hedge ceased to be highlyeffective in hedging the variable rate cash flows associated with our termloans.  Accordingly, the portion of thefair value recognized in accumulated other comprehensive loss, $3.6million, was recorded as a charge to our consolidated statement of operationsfor the nine months ended September 30, 2010.  Additionally, because the hedge ceased to behighly effective in hedging the variable rate cash flows, all changes in fairvalue are now recorded in our consolidated statement of operations.  We therefore recorded a (gain) loss onderivative instruments of $(0.5) million and $2.6 million, including the $3.6 millioncharge from accumulated other comprehensive loss, for the three and nine monthsended September 30, 2010, respectively.

 

The fair value of the 2006interest rate hedge liability was $2.6 million and $4.2 million as of September 30,2010 and December 31, 2009, respectively, and is included in otherliabilities in our consolidated balance sheet. The fair value is calculated byusing observable inputs (Level 2) prescribed by the three-level fair valuehierarchy, which is calculated using the discounted expected future cashoutflows from a series of three-month LIBOR strips through November 4,2011, the same maturity date as our senior secured credit facility.

 

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The following tablesummarizes our derivative activity during the three and nine months ended September 30(in thousands):

 
| ** **                         | ** ** | **(Gain) Loss on Derivative Instruments** | ** ** |
|------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                         | ** ** | **Three Months Ended September 30,**      | ** ** | **Nine Months Ended September 30,** | ** ** |
| ** **                         | ** ** | **2010**                                                      | ** ** | **2009** | ** ** | **2010** | ** ** | **2009** | ** ** |
| **Mark-to-Market Adjustments on:** |       |                                                          |       |   |   |   |   |   |   |
| 2006 interest rate hedge           |       | $                                                             | (481       | ) | $ | 17 |   | $ | 2,584 |   | $ | 12 |   |
|                                    |            |                                                               |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **                         | ** ** | **Other Comprehensive Loss, Net of Tax** | ** ** |
|------------------------------------|------------|-------------------------------------------------------------------|------------|
| ** **                         | ** ** | **Three Months Ended September 30,**          | ** ** | **Nine Months Ended September 30,** | ** ** |
| ** **                         | ** ** | **2010**                                                          | ** ** | **2009** | ** ** | **2010** | ** ** | **2009** | ** ** |
| **Mark-to-Market Adjustments on:** |       |                                                              |       |   |   |   |   |   |   |
| 2006 interest rate hedge           |       | $                                                                 | —     |   | $ | 153 |   | $ | 2,516 |   | $ | 984 |   |
|                                    |            |                                                                   |            |  |  |  |  |  |  |  |  |  |  |

 

**Note 8 —Fair Value Measurements**

 

We record the fair value ofcertain financial assets and liabilities on a recurring basis. The followingtable summarizes the financial assets and liabilities measured at fair value inthe accompanying financial statements using the prescribed three-level fairvalue hierarchy as of September 30, 2010 and December 31, 2009 (inthousands):

 
| ** **                                | ** ** | **Quoted prices in  active markets** | ** ** | **Significant  observable  inputs** | ** ** | **Significant  unobservable inputs** | ** ** | ** ** | ** ** |
|-------------------------------------------|------------|-----------------------------------------------------|------------|-------------------------------------|------------|-------------------------------------------|------------|------------|------------|
| ** **                                | ** ** | **(Level 1)**                                  | ** ** | **(Level 2)**                  | ** ** | **(Level 3)**                        | ** ** | **Total**  | ** ** |
| September 30, 2010                   |       |                                                |       |                                |       |                                      |       |       |       |
| **Assets:**                               |       |                                                |       |                                |       |                                      |       |       |       |
| Deferred compensation related investments |       | $                                                   | 1,407      |                                | $          | —                                    |       | $          | —     |   | $ | 1,407 |   |
|                                      |       |                                                |       |                                |       |                                      |       |       |       |
| **Liabilities:**                          |       |                                                |       |                                |       |                                      |       |       |       |
| 2006 interest rate hedge                  |       | $                                                   | —     |                                | $          | 2,645                                     |       | $          | —     |   | $ | 2,645 |   |
| Deferred compensation related liabilities |       | 1,407                                               |       | —                              |       | —                                    |       | 1,407      |       |
|                                      |       |                                                |       |                                |       |                                      |       |       |       |
| December 31, 2009                    |       |                                                |       |                                |       |                                      |       |       |       |
| **Assets:**                               |       |                                                |       |                                |       |                                      |       |       |       |
| Deferred compensation related investments |       | $                                                   | 2,454      |                                | $          | —                                    |       | $          | —     |   | $ | 2,454 |   |
|                                      |       |                                                |       |                                |       |                                      |       |       |       |
| **Liabilities:**                          |       |                                                |       |                                |       |                                      |       |       |       |
| 2006 interest rate hedge                  |       | $                                                   | —     |                                | $          | 4,181                                     |       | $          | —     |   | $ | 4,181 |   |
| Deferred compensation related liabilities |       | 2,454                                               |       | —                              |       | —                                    |       | 2,454      |       |
| Equity value shortfall amount             |       | —                                              |       | —                              |       | 627                                       |       | 627        |       |

 

The fair value of ourdeferred compensation plan is determined based on the fair value of theinvestments selected by employees.

 

The following table detailsthe change in fair value of our Level 3 liability for the nine months ended September 30,2010:

 
| ** **                                  | ** ** | **Equity Value  Shortfall Amount** | ** ** |
|---------------------------------------------|------------|----------------------------------------------|------------|
| Balance as of December 31, 2009        |       | $                                            | 627        |   |
| Realized gain from the change in fair value |       | (627                                         | )          |
| Balance as of September 30, 2010       |       | $                                            | —     |   |

 

The equity value shortfallamount is a liability that was incurred in connection with the acquisition of RedMcCombs Media, LP (“RMM”) on October 2, 2009.  The fair value ofthe equity value shortfall amount was determined based on an option pricingmodel reflecting our assumptions about the value that market participants wouldplace on this liability. As of December 31, 2009, the estimated fair valuewas $0.6 million. On April 2, 2010, the six-month anniversary date of theacquisition of RMM, the fair value of LIN TV’s class A common stock whichcomprised the merger consideration exceeded $4.5 million, resulting in nofurther consideration.  Therefore, we recorded a gain of $0.6 millionin other, net in our consolidated statement of operations 

 

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during the nine months endedSeptember 30, 2010, and the liability was permanently relieved from ourconsolidated balance sheet.  For further information on theequity value shortfall amount and the acquisition of RMM see Note 2 — “Acquisitions”included in our10-K.

 

**Note 9 —Retirement Plans**

 

The following table showsthe components of the net periodic pension benefit cost and the contributionsto our 401(k) Plan and to the retirement plans (in thousands):

 
| ** **                                | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|-------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                | ** ** | **2010**                                                 | ** ** | **2009**                                                | ** ** | **2010** | ** ** | **2009** | ** ** |
| ***Net periodic  pension benefit cost:*** | ** ** | ** **                                               | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Service cost                              |       | $                                                        | —     |                                                    | $          | — |   | $ | — |   | $ | 385 |   |
| Interest cost                             |       | 1,523                                                    |       | 1,587                                                   |       | 4,569 |   | 4,765 |   |
| Expected return on plan assets            |       | (1,611                                                   | )          | (1,641                                                  | )          | (4,834 | ) | (4,969 | ) |
| Amortization of prior service cost        |       | —                                                   |       | —                                                  |       | — |   | 31 |   |
| Amortization of pension net loss          |       | 94                                                       |       | —                                                  |       | 282 |   | 165 |   |
| Curtailment                               |       | —                                                   |       | —                                                  |       | — |   | 438 |   |
| Net periodic benefit cost (benefit)       |       | $                                                        | 6          |                                                    | $          | (54 | ) | $ | 17 |   | $ | 815 |   |
| ***Contributions***                       |       |                                                     |       |                                                    |       |   |   |   |   |
| 401(k) Plan                          |       | $                                                        | 785        |                                                    | $          | 56 |   | $ | 2,557 |   | $ | 393 |   |
| Defined contribution retirement plans     |       | 180                                                      |       | —                                                  |       | 180 |   | — |   |
| Defined benefit retirement plans          |       | 2,600                                                    |       | —                                                  |       | 3,500 |   | — |   |
| Total contributions                       |       | $                                                        | 3,565      |                                                    | $          | 56 |   | $ | 6,237 |   | $ | 393 |   |

 

We expect to makecontributions of $1.5 million to our defined benefit retirement plans duringthe fourth quarter of 2010. See Note 11 — “Retirement Plans” included in our10-K for a full description of our retirement plans.

 

We recorded a curtailmentduring the nine months ended September 30, 2009 as a result of freezingbenefit accruals to the plan during 2009. The $0.4 million charge relates tothe recognition of the prior service cost associated with the plan.

 

**Note 10 —Restructuring**

 

During the nine months endedSeptember 30, 2010, we recorded a restructuring charge of $2.2 million asa result of the consolidation of certain activities at our stations and ourcorporate headquarters, which resulted in the termination of 43 employees.During the nine months ended September 30, 2010, we made cash payments of$2.2 million related to this restructuring.

 

As of September 30,2010, we had a remaining liability of $0.2 million related to the cancellationof certain programming and other contracts in 2008.  We expect tomake cash payments of $0.2 million related to this restructuring through 2012.

 

**Note 11 —Income Taxes**

 

Werecorded a provision for income taxes of $5.7 million and $9.5million for the three and nine months ended September 30, 2010,respectively, compared to a provision for income taxes of $1.6 million and $9.9million for the three and nine months ended September 30, 2009,respectively.  Our effective income tax rate was 38.2% and 113.7% for the nine months ended September 30, 2010and 2009, respectively. The change in the tax provision and effective incometax rate was primarily a result of a taxable gain on extinguishment of debt andthe impairment charge to our goodwill and broadcast licenses recognized duringthe nine months ended September 30, 2009, which did not recur during thesame period in 2010.

 

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**Note 12 —Commitments and Contingencies**

 

*Commitments*

 

We lease land, buildings,vehicles and equipment pursuant to non-cancelable operating lease agreementsand we contract for general services pursuant to non-cancelable operatingagreements that expire at various dates through 2017. The following tablesummarizes all of our estimated future cash payments, after giving effectto amendments to certain of these agreements since December 31, 2009.

 
| **Year**                    | ** ** | **Operating Leases and  Agreements** | ** ** | **Syndicated Television  Programming** | ** ** | **Total** | ** ** |
|-----------------------------|------------|------------------------------------------------|------------|---------------------------------------------|------------|-----------|------------|
| 2010                        |       | $                                              | 17,654     |                                        | $          | 26,585    |       | $ | 44,239 |   |
| 2011                        |       | 15,406                                         |       | 24,586                                      |       | 39,992    |       |
| 2012                        |       | 14,152                                         |       | 20,119                                      |       | 34,271    |       |
| 2013                        |       | 6,290                                          |       | 16,798                                      |       | 23,088    |       |
| 2014                        |       | 4,448                                          |       | 8,140                                       |       | 12,588    |       |
| Thereafter                  |       | 1,510                                          |       | 520                                         |       | 2,030     |       |
| Total commitments           |       | 59,460                                         |       | 96,748                                      |       | 156,208   |       |
| Less recognized liabilities |       | —                                         |       | (8,596                                      | )          | (8,596    | )          |
| Unrecorded commitments      |       | $                                              | 59,460     |                                        | $          | 88,152    |       | $ | 147,612 |   |

 

*Contingencies*

 

*GECC Note*

 

GECC provided debt financingfor the joint venture between NBC Universal and us, in the form of an $815.5million non-amortizing senior secured note due 2023 bearing interest at aninitial rate of 8% per annum until March 2, 2013 and 9% per annumthereafter (“GECC Note”). We have a 20.38% equity interest in the jointventure and NBC Universal has the remaining 79.62% equity interest, in which weand NBC Universal each have a 50% voting interest.  NBC Universaloperates two television stations, KXAS-TV, an NBC Universal affiliate inDallas, and KNSD-TV, an NBC Universal affiliate in San Diego, pursuant to amanagement agreement.  NBC Universal and GECC are both majority-ownedsubsidiaries of General Electric Co. LIN TV has guaranteed the payment ofprincipal and interest on the GECC Note.

 

The GECC Note is anobligation of the joint venture and is not an obligation of LIN TV or LINTelevision or any of its subsidiaries. GECC’s only recourse, upon an event ofdefault under the GECC Note, is to the joint venture, our equity interest inthe joint venture and, after exhausting all remedies against the assets of thejoint venture and the other equity interests in the joint venture, to LIN TVpursuant to its guarantee of the GECC Note. An event of default under theGECC Note will occur if the joint venture fails to make any scheduled interestpayment within 90 days of the date due and payable, or to pay the principalamount on the maturity date.  If the joint venture fails to payinterest on the GECC Note, and neither NBC Universal nor we make a shortfallloan to cover the interest payment within 90 days of the date due and payable,an event of default would occur and GECC could accelerate the maturity of theentire amount due under the GECC Note. Other than the acceleration of the principal amount upon an event ofdefault, prepayment of the principal of the GECC Note is prohibited unlessagreed upon by both NBC Universal and us.

 

In light of the adverseeffect of the economic downturn on the joint venture’s operating results, in2009 we entered into a shortfall funding agreement with NBC Universal, whichprovided that: a) we and NBC Universal waived the requirement that the jointventure maintain debt service reserve cash balances of at least $15 million; b)the joint venture would use a portion of its existing debt service reserve cashbalances to fund interest payments on the GECC Note in 2009; c) NBC Universalagreed to defer its receipt of 2008 and 2009 management fees; and d) we agreedthat if the joint venture does not have sufficient cash to fund interestpayments on the GECC Note through April 1, 2010, we and NBC Universalwould each provide the joint venture with a shortfall loan on the basis of ourrespective percentage of economic interest in the joint venture (the “OriginalShortfall Funding Agreement”).

 

Because of anticipatedfuture shortfalls during 2010 at the joint venture, on March 9, 2010,we and NBC Universal entered into another shortfall funding agreementcovering the period through April 1, 2011 (the “2010 Shortfall FundingAgreement”).  Under the terms of the 2010 Shortfall FundingAgreement: a) the joint venture may continue to access any portion of itsexisting debt service reserve cash balances to fund interest payments on theGECC Note; b) NBC Universal will continue to defer the payment of 2008 and 2009management fees and defer payment of 2010 management fees through March 31,2011 (payable subject to repayment first of any joint venture shortfall loans);and c) we agreed that if the joint venture does not have sufficient cash tofund interest payments on the GECC Note through April 1, 2011, we and NBCUniversal would each provide the joint venture with a shortfall loan on thebasis of our respective percentage of economic interests in the joint venture.

 

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Based on the 2010 budgetprovided by the joint venture, and our discussions with the joint venture’smanagement, as of December 31, 2009, we accrued our portion of theestimated debt service shortfalls through April 1, 2011, bringing thetotal accrual for our joint venture shortfall obligations to $6.0 million as ofDecember 31, 2009. Due to uncertainty surrounding the joint venture’sability to repay the shortfall loans, we concurrently impaired all accruedloans to the joint venture as of December 31, 2009.

 

On March 25, 2010, June 22,2010 and September 23, 2010, pursuant to the terms of the ShortfallFunding Agreements, we made shortfall loans in the principal amounts of $3.1million, $0.8 million and $0.2 million, respectively, to the joint venture,representing our 20.38% share in cumulative debt service shortfalls at thejoint venture.  Concurrent with our funding of the shortfall loans,NBC Universal funded shortfall loans in the principal amounts of $12.2 million,$2.9 million and $0.8 million, respectively, to the joint venture, in respectof its 79.62% share in the cumulative debt service shortfalls at the jointventure.  We have a remaining shortfall funding accrual of $1.9million as of September 30, 2010, which we expect to fund during 2011.

 

Werecognize shortfall funding liabilities to the joint venture on ourbalance sheet****when thoseliabilities become both probable and estimable, which results******when jointventure management provides us with budget or forecast information of operatingcash flows and working capital needs indicating that a debt service shortfallis probable to occur and when we intend to reach a shortfall funding agreementwith NBC Universal covering the budgeted or forecasted period.  Based onfourth quarter 2010 and full year 2011 forecast information provided by jointventure management, we estimate our share of shortfall funding will beapproximately $1.9 million through December 31, 2011.  As of the dateof this report, there is no agreement between us and NBC Universal forshortfall funding for the period following the expiration of the 2010 ShortfallFunding Agreement on April 1, 2011. Our estimate assumes that we willenter into a new shortfall funding agreement with NBC Universal for the periodextending through December 31, 2011 for the purpose of sharing in anyjoint venture debt service shortfalls, on substantially the same terms as the2010 Shortfall Funding Agreement.  Actual cash shortfalls at the jointventure could vary from our current estimates. We could also fail to reach anagreement with NBC Universal regarding******the sharing of any joint venture debtservice shortfalls****for theperiod following termination of the 2010 Shortfall Funding Agreement,in which event we would not be required to fund any immediate cash shortfalls(see Note 14 — “Commitments and Contingencies” included in our 10-K). Cash shortfalls at the joint venture beyond December 31, 2011 are notcurrently estimable or probable; therefore, we have not accrued for anypotential obligations beyond the $1.9 million discussed above*.*

 

Under the terms of itsguarantee of the GECC Note, LIN TV would be required to make a payment for anamount to be determined (the “Guarantee Amount”) upon occurrence of thefollowing events: a) there is an event of default; b) neither NBC Universal norwe remedy the default; and c) after GECC exhausts all remedies against theassets of the joint venture, the total amount realized upon exercise of thoseremedies is less than the $815.5 million principal amount of the GECCNote. Upon the occurrence of such events, the amount owed by LIN TV toGECC pursuant to the guarantee would be calculated as the difference between i)the total amount at which the joint venture’s assets were sold and ii) theprincipal amount and any unpaid interest due under the GECC Note.  Asof December 31, 2009, we estimated that the fair value of the televisionstations in the joint venture to be approximately $366 million less than theoutstanding balance of the GECC Note of $815.5 million.

 

We believe the probabilityis remote that there would be an event of default and therefore an accelerationof the principal amount of the GECC Note during 2010 and through April 1,2011, although there can be no assurances that such an event of default willnot occur.  There are no financial or similar covenants in the GECCNote and, since both NBC Universal and we have agreed to fund interest paymentsif the joint venture is unable to do so during 2010 and through April 1,2011, NBC Universal and we are able to control the occurrence of a defaultunder the GECC Note.

 

However, if an event ofdefault under the GECC Note occurs, LIN TV, which conducts all of itsoperations through its subsidiaries, could experience material adverseconsequences, including:

 

·                  GECC, afterexhausting all remedies against the joint venture, could enforce its rightsunder the guarantee, which could cause LIN TV to determine that LIN Televisionshould seek to sell material assets owned by it in order to satisfy LIN TV’sobligations under the guarantee;

 

·                  GECC’sinitiation of proceedings against LIN TV under the guarantee, if they result inmaterial adverse consequences to LIN Television, could cause an acceleration ofLIN Television’s senior secured credit facility and other outstandingindebtedness; and

 

·                  if the GECCNote is prepaid because of an acceleration on default or otherwise, we wouldincur a substantial tax liability of approximately $273.6 million related toour deferred gain associated with the formation of the joint venture.

 

**Note 13 —Related Party**

 

During the second quarter of2010, we acquired a non-controlling investment in an interactive serviceprovider that hosts our web sites for $2.0 million.  Additionally, we incurred charges of $0.4million and $0.9 million for webhosting services from the provider during the threeand nine months ended September 30, 2010, respectively, and paid $1.3million and $1.9 million to the provider for web site development andcustomization during the three and nine months ended September 30, 2010,respectively.

 

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