UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Form
10-Q
 
 Quarterly Report pursuant to Section
13 OR 15 (d) of the Securities Exchange Act of
1934
 
 For
the quarterly period ended September 30, 2009
 
 Commission
      file number: 001-31311
              Commission
      file number: 000-25206LIN
      TelevisionLIN
      TV Corp.
              Corporation(Exact
      name of registrant as
              (Exact
      name of registrant asspecified
      in its charter)
              specified
      in its charter)Delaware
              Delaware(State
      or other jurisdiction of
              (State
      or other jurisdiction ofincorporation
      or organization)
              incorporation
      or organization)05-0501252
              13-3581627(I.R.S.
      Employer
              (I.R.S.
      EmployerIdentification
      No.)
              Identification
      No.)
 
 Four
Richmond Square, Suite 200, Providence, Rhode Island 02906
 (Address
of principal executive offices)
 
 (401)
454-2880
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes R  No
£
 
 Indicate
by check mark whether the registrant has submitted electronically and posted to
its corporate Web site, if any, every Interactive Date File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding twelve months (or for such shorter period that the
registrant was required to submit and post such files).  Yes £  No
£
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer £
              Accelerated
      filer R
              Non-accelerated  filer
      £
              Smaller
      reporting company £(Do
      not check if a smaller reporting
company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes £  No
R
 
 This
combined Form 10-Q is separately filed by (i) LIN TV Corp. and (ii) LIN
Television Corporation. LIN Television Corporation meets the conditions set
forth in general instruction H (1) (a) and (b) of Form 10-Q and is, therefore,
filing this form with the reduced disclosure format permitted by such
instruction.
 
 LIN TV
Corp. Class A common stock, $0.01 par value, outstanding at October 28, 2009:
28,810,510 shares
 LIN TV
Corp. Class B common stock, $0.01 par value, outstanding at October 28, 2009:
23,502,059 shares.
 LIN TV
Corp. Class C common stock, $0.01 par value, outstanding at October 28, 2009: 2
shares.
 LIN
Television Corporation common stock, $0.01 par value, outstanding at October 28,
2009: 1,000 shares.
 
 
 
    1
 Table of Contents
  Table of Contents
 
 Part I. Financial InformationItem 1. Unaudited Consolidated Financial Statements of LIN TV
      Corp.Consolidated Balance Sheets
              3Consolidated Statements of Operations
              4Consolidated Statements of Stockholders’ Deficit and
      Comprehensive Loss
              5Consolidated Statements of Cash Flows
              7Notes to Unaudited Consolidated Financial Statements (See
      separate index for financial statements of LIN Television
      Corporation)
              8Item 2. Management’s Discussion and Analysis of Financial
      Condition and Results of Operations
              23Item 3. Quantitative and Qualitative Disclosures about Market
      Risk
              34Item 4. Controls and Procedures
              34Part II. Other InformationItem 1. Legal Proceedings
              35Item 1A. Risk Factors
              35Item 2. Unregistered Sales of Equity Securities and Use of
      Proceeds
              35Item 3. Defaults Upon Senior Securities
              35Item 4. Submission of Matters to a Vote of Security
      Holders
              35Item 5. Other Information
              36Item 6. Exhibits
              36Signature Page
              37
 
 
  2
 Table of Contents
  
 Part I. Financial InformationItem 1.Unaudited
      Consolidated Financial Statements of LIN TV
    Corp.LIN
      TV Corp.Consolidated Balance Sheets(unaudited)September
      30,
              
              
              December
      31,2009
              
              
              2008(in
      thousands, except share data)ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              11,762
              
              
              $
              20,106Restricted
      cash
              
              
              2,000
              
              
              
              -Accounts
      receivable, less allowance for doubtful accounts (2009 - $2,652; 2008 -
      $2,761)
              
              
              61,927
              
              
              
              68,277Program
      rights
              
              
              2,256
              
              
              
              3,311Assets
      held for sale
              
              
              -
              
              
              
              430Other
      current assets
              
              
              5,705
              
              
              
              5,045Total
      current assets
              
              
              83,650
              
              
              
              97,169Property
      and equipment, net
              
              
              166,420
              
              
              
              180,679Deferred
      financing costs
              
              
              9,304
              
              
              
              8,511Program
      rights
              
              
              1,982
              
              
              
              3,422Goodwill
              
              
              114,486
              
              
              
              117,159Broadcast
      licenses and other intangible assets, net
              
              
              392,856
              
              
              
              430,142Assets
      held for sale
              
              
              -
              
              
              
              8,872Other
      assets
              
              
              4,008
              
              
              
              6,640Total
      assets
              
              $
              772,706
              
              
              $
              852,594LIABILITIES,
      PREFERRED STOCK AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Current
      portion of long-term debt
              
              $
              15,900
              
              
              $
              15,900Accounts
      payable
              
              
              4,666
              
              
              
              7,988Accrued
      expenses
              
              
              45,727
              
              
              
              56,701Program
      obligations
              
              
              10,789
              
              
              
              10,109Liabilities
      held for sale
              
              
              -
              
              
              
              429Total
      current liabilities
              
              
              77,082
              
              
              
              91,127Long-term
      debt, excluding current portion
              
              
              664,924
              
              
              
              727,453Deferred
      income taxes, net
              
              
              153,382
              
              
              
              141,702Program
      obligations
              
              
              2,512
              
              
              
              5,336Other
      liabilities
              
              
              63,219
              
              
              
              69,226Total
      liabilities
              
              
              961,119
              
              
              
              1,034,844Stockholders'
      Deficit:Class
      A common stock, $0.01 par value, 100,000,000 shares
      authorized,Issued:
      29,684,218 and 29,733,672 shares at September 30, 2009 and December 31,
      2008, respectivelyOutstanding:
      27,877,790 and 27,927,244 shares at September 30, 2009 and December 31,
      2008, respectively
              
              
              294
              
              
              
              294Class
      B common stock, $0.01 par value, 50,000,000 shares
      authorized,  23,502,059 shares at September 30, 2009 and
      December 31, 2008, issued and outstanding; convertible into an equal
      number of shares of Class A or Class C common stock
              
              
              235
              
              
              
              235Class
      C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares at
      September 30, 2009 and December 31, 2008, respectively, issued and
      outstanding; convertible into an equal number of shares of Class A common
      stock
              
              
              -
              
              
              
              -Treasury
      stock, 1,806,428 shares of Class A common stock at September 30, 2009 and
      December 31, 2008, at cost
              
              
              (18,005
              )
              
              
              (18,005
              )Additional
      paid-in capital
              
              
              1,103,364
              
              
              
              1,101,919Accumulated
      deficit
              
              
              (1,240,739
              )
              
              
              (1,239,090
              )Accumulated
      other comprehensive loss
              
              
              (33,562
              )
              
              
              (34,634
              )Total
      stockholders' deficit
              
              
              (188,413
              )
              
              
              (189,281
              )Preferred
      stock of Banks Broadcasting, Inc.
              
              
              -
              
              
              
              7,031Total
      deficit
              
              
              (188,413
              )
              
              
              (182,250
              )Total
      liabilities, preferred stock and stockholders'
    deficit
              
              $
              772,706
              
              
              $
              852,594The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements.
   3
 Table of Contents
 
 LIN
      TV Corp.Consolidated Statements of Operations(unaudited)Three
      months ended September 30,
              
              
              Nine
      months ended September 30,2009
              
              
              2008
              
              
              2009
              
              
              2008(in
      thousands)Net
      revenues
              
              $
              81,371
              
              
              $
              98,804
              
              
              $
              238,363
              
              
              $
              295,571Operating
      costs and expenses:Direct
      operating
              
              
              25,635
              
              
              
              28,977
              
              
              
              79,083
              
              
              
              88,666Selling,
      general and administrative
              
              
              24,727
              
              
              
              28,321
              
              
              
              75,089
              
              
              
              85,157Amortization
      of program rights
              
              
              6,317
              
              
              
              5,856
              
              
              
              18,221
              
              
              
              17,620Corporate
              
              
              4,206
              
              
              
              3,683
              
              
              
              13,193
              
              
              
              14,922Depreciation
              
              
              7,561
              
              
              
              7,308
              
              
              
              23,135
              
              
              
              22,125Amortization
      of intangible assets
              
              
              24
              
              
              
              44
              
              
              
              64
              
              
              
              228Impairment
      of goodwill and broadcast licenses
              
              
              -
              
              
              
              -
              
              
              
              39,894
              
              
              
              296,972Restructuring
      charge
              
              
              -
              
              
              
              -
              
              
              
              498
              
              
              
              -(Gain)
      loss from asset dispositions
              
              
              (886
              )
              
              
              74
              
              
              
              (3,544
              )
              
              
              (296
              )Operating
      income (loss)
              
              
              13,787
              
              
              
              24,541
              
              
              
              (7,270
              )
              
              
              (229,823
              )Other
      expense (income):Interest
      expense, net
              
              
              11,259
              
              
              
              13,241
              
              
              
              32,314
              
              
              
              41,554Share
      of loss (income) in equity investments
              
              
              2,000
              
              
              
              (662)
              
              
              
              2,000
              
              
              
              (861
              )Loss
      (income) on extinguishment of debt
              
              
              -
              
              
              
              491
              
              
              
              (50,149
              )
              
              
              4,195Other,
      net
              
              
              (232)
              
              
              
              1,036
              
              
              
              (176)
              
              
              
              622Total
      other expense (income), net
              
              
              13,027
              
              
              
              14,106
              
              
              
              (16,011
              )
              
              
              45,510Income
      (loss) from continuing operations before provision for income
      taxes
              
              
              760
              
              
              
              10,435
              
              
              
              8,741
              
              
              
              (275,333
              )Provision
      for (benefit from) income taxes
              
              
              1,635
              
              
              
              218
              
              
              
              9,944
              
              
              
              (70,666
              )(Loss)
      income from continuing operations
              
              
              (875
              )
              
              
              10,217
              
              
              
              (1,203
              )
              
              
              (204,667
              )Discontinued
      operations:(Loss)
      income from discontinued operations, net of gain from the sale of
      discontinued operations of $11 for the nine months ended September 30,
      2009 and net of provision for income taxes of $74 for the three months
      ended September 30, 2008, and net of (benefit from) provision for income
      taxes of $(628) and $215 for the nine months ended September 30, 2009 and
      2008, respectively
              
              
              -
              
              
              
              (196
              )
              
              
              (446
              )
              
              
              184Net
      (loss) income
              
              $
              (875
              )
              
              $
              10,021
              
              
              $
              (1,649
              )
              
              $
              (204,483
              )Basic
      (loss) income per common share:(Loss)
      income from continuing operations
              
              $
              (0.02
              )
              
              $
              0.20
              
              
              $
              (0.02
              )
              
              $
              (4.04
              )(Loss)
      income from discontinued operations, net of tax
              
              
              -
              
              
              
              -
              
              
              
              (0.01
              )
              
              
              0.01Net
      (loss) income
              
              $
              (0.02
              )
              
              $
              0.20
              
              
              $
              (0.03
              )
              
              $
              (4.03
              )Weighted
      - average number of common shares outstandingused
      in calculating basic (loss) income per common share
              
              
              51,367
              
              
              
              50,620
              
              
              
              51,371
              
              
              
              50,714Diluted
      (loss) income per common share:(Loss)
      income from continuing operations
              
              $
              (0.02
              )
              
              $
              0.20
              
              
              $
              (0.02
              )
              
              $
              (4.04
              )(Loss)
      income from discontinued operations, net of tax
              
              
              -
              
              
              
              -
              
              
              
              (0.01
              )
              
              
              0.01Net
      (loss) income
              
              $
              (0.02
              )
              
              $
              0.20
              
              
              $
              (0.03
              )
              
              $
              (4.03
              )Weighted
      - average number of common shares outstandingused
      in calculating diluted (loss) income per common
share
              
              
              51,367
              
              
              
              50,620
              
              
              
              51,371
              
              
              
              50,714The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements.
  4
 Table of Contents


LIN
      TV Corp.Consolidated Statements of Stockholders' Deficit and
      Comprehensive Loss(unaudited)(in
      thousands)Accumulated
      Other
              
              
              Total
              
              
              Preferred
      StockClass
      A
              
              
              Class
      B
              
              
              Class
      C
              
              
              Treasury Stock               
      Additional
      Paid-               
      Accumulated
              
              
              Comprehensive
              
              
              Stockholders'
              
              
              of Banks
              
              
              ComprehensiveTotal
      Deficit
              
              Amount
              
              
              Amount
              
              
              Amount
              
              
              (at cost)
              
              
              In
    Capital
              
              
              Deficit
              
              
              Loss
              
              
              Deficit
              
              
              Broadcasting
              
              
              LossBalance
      at December 31, 2008
              
              $
              (182,250
              )
              
              $
              294
              
              
              $
              235
              
              
              $
              -
              
              
              $
              (18,005
              )
              
              $
              1,101,919
              
              
              $
              (1,239,090
              )
              
              $
              (34,634
              )
              
              $
              (189,281
              )
              
              $
              7,031Amortization
      of prior service cost, net of tax of $9
              
              
              14
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              14
              
              
              
              14
              
              
              
              -
              
              
              
              14Amortization
      of net loss on pension plan assets, net of tax of $50
              
              
              74
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              74
              
              
              
              74
              
              
              
              -
              
              
              
              74Unrealized
      loss on cash flow hedge, net of tax of $653
              
              
              984
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              984
              
              
              
              984
              
              
              
              -
              
              
              
              984Stock-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
      at 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 unaudited consolidated
      financial statements
  5
 Table of Contents
   LIN
      TV Corp.Consolidated
      Statements of Stockholders' Equity and Comprehensive
  Loss(unaudited)(in
      thousands)Accumulated
      Other
              
              
              Total
              
              
              Preferred
      StockClass
      A
              
              
              Class
      B
              
              
              Class
      C
              
              
              Treasury Stock            
      Additional
      Paid-             
      Accumulated
              
              
              Comprehensive
              
              
              Stockholders'
              
              
              of Banks
              
              
              ComprehensiveTotal
      Equity
              
              Amount
              
              
              Amount
              
              
              Amount
              
              
              (at cost)
              
              
              In Capital
              
              
              Deficit
              
              
              Loss
              
              
              Equity
              
              
              Broadcasting
              
              
              LossBalance
      at December 31, 2007
              
              $
              665,144
              
              
              $
              292
              
              
              $
              235
              
              
              $
              -
              
              
              $
              (18,005
              )
              
              $
              1,096,455
              
              
              $
              (408,726
              )
              
              $
              (14,153
              )
              
              $
              656,098
              
              
              $
              9,046Amortization
      of prior service cost, net of tax of $36
              
              
              54
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              54
              
              
              
              54
              
              
              
              -
              
              
              
              54Amortization
      of net loss on pension plan assets, net of tax of $57
              
              
              87
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              87
              
              
              
              87
              
              
              
              -
              
              
              
              87Unrealized
      loss on cash flow hedge, net of tax of $123
              
              
              184
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              184
              
              
              
              184
              
              
              
              -
              
              
              
              184Exercises
      of employee and director stock based compensation
              
              
              1,185
              
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,184
              
              
              
              
              
              
              
              -
              
              
              
              1,185
              
              
              
              -Stock-based
      compensation, continuing operations
              
              
              3,573
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,573
              
              
              
              -
              
              
              
              -
              
              
              
              3,573
              
              
              
              -Stock-based
      compensation, discontinued operations
              
              
              8
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              8
              
              
              
              
              
              
              
              -
              
              
              
              8
              
              
              
              -Tax
      benefit from stock option exercises
              
              
              134
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              134
              
              
              
              
              
              
              
              -
              
              
              
              134
              
              
              
              -Net
      loss
              
              
              (206,434
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (204,483
              )
              
              
              -
              
              
              
              (204,483
              )
              
              
              (1,951
              )
              
              
              (204,483
              )Comprehensive
      loss - September 30, 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (204,158
              )Balance
      at September 30, 2008
              
              $
              463,935
              
              
              $
              293
              
              
              $
              235
              
              
              $
              -
              
              
              $
              (18,005
              )
              
              $
              1,101,354
              
              
              $
              (613,209
              )
              
              $
              (13,828
              )
              
              $
              456,840
              
              
              $
              7,095The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements







6
 Table of Contents


LIN
      TV Corp.Consolidated Statements of Cash Flows(unaudited)Nine
      Months Ended September 30,2009
            
            2008(in
      thousands)OPERATING
      ACTIVITIES:Net
      loss
            
            $
            (1,649
            )
            $
            (204,483
            )Loss
      (income) from discontinued operations
            
            
            446
            
            
            (184
            )Adjustment
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
            
            
            23,135
            
            
            22,125Amortization
      of intangible assets
            
            
            64
            
            
            228Impairment
      of goodwill, broadcast licenses and broadcast
    equipment
            
            
            39,894
            
            
            296,972Amortization
      of financing costs and note discounts
            
            
            2,945
            
            
            4,782Amortization
      of program rights
            
            
            18,221
            
            
            17,620Program
      payments
            
            
            (18,322
            )
            
            (19,909
            )(Gain)
      loss on extinguishment of debt
            
            
            (50,149
            )
            
            4,195Share
      of loss (income) in equity investments
            
            
            2,000
            
            
            (861
            )Deferred
      income taxes, net
            
            
            10,462
            
            
            (71,082
            )Stock-based
      compensation
            
            
            1,615
            
            
            3,583Gain
      from asset dispositions
            
            
            (3,539
            )
            
            (296
            )Other,
      net
            
            
            2,120
            
            
            25Changes
      in operating assets and liabilities, net of acquisitions and
      disposals:Accounts
      receivable
            
            
            6,350
            
            
            11,602Other
      assets
            
            
            (164)
            
            
            2,104Accounts
      payable
            
            
            (3,322
            )
            
            (6,822
            )Accrued
      interest expense
            
            
            5,914
            
            
            8,889Other
      accrued expenses
            
            
            (17,220
            )
            
            (2,076
            )Net
      cash provided by operating activities, continuing
      operations
            
            
            18,801
            
            
            66,412Net
      cash used in operating activities, discontinued
      operations
            
            
            (101)
            
            
            (1,142
            )Net
      cash provided by operating activities
            
            
            18,700
            
            
            65,270INVESTING
      ACTIVITIES:Capital
      expenditures
            
            
            (4,772
            )
            
            (16,314
            )Cash
      paid for broadcast license rights
            
            
            (7,561)
            
            
            -Change
      in restricted cash
            
            
            (2,000)
            
            
            -Distributions
      from equity investments
            
            
            -
            
            
            2,649Other
      investments, net
            
            
            -
            
            
            401Net
      cash used in investing activities, continuing
    operations
            
            
            (14,333
            )
            
            (13,264
            )Net
      cash provided by (used in) investing activities, discontinued
      operations
            
            
            5,875
            
            
            (693
            )Net
      cash used in investing activities
            
            
            (8,458)
            
            
            (13,957
            )FINANCING
      ACTIVITIES:Net
      proceeds on exercises of employee and director stock based
      compensation
            
            
            -
            
            
            1,183Proceeds
      from borrowings on long-term debt
            
            
            81,000
            
            
            115,000Principal
      payments on long-term debt
            
            
            (93,280
            )
            
            (190,025
            )Payment
      of long-term debt financing costs
            
            
            (3,662)
            
            
            (1,232)Net
      cash used in financing activities, continuing
    operations
            
            
            (15,942
            )
            
            (75,074
            )Net
      cash used in financing activities, discontinued
      operations
            
            
            (2,644
            )
            
            -Net
      cash used in financing activities
            
            
            (18,586
            )
            
            (75,074
            )Net
      decrease in cash and cash equivalents
            
            
            (8,344
            )
            
            (23,761
            )Cash
      and cash equivalents at the beginning of the period
            
            
            20,106
            
            
            40,031Cash
      and cash equivalents at the end of the period
            
            $
            11,762
            
            $
            16,270Supplemental
      schedule of non-cash investing activities:
                Accrual
      for estimated loan to the joint venture with NBC Universal for cash flow
      shortfalls
            
            $
            2,000
            
            $
            -The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements.






7
 Table of Contents





LIN
TV Corp.


Notes to Unaudited Consolidated Financial Statements





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





Description
of Business





LIN TV
Corp. (“LIN TV”), together with its subsidiaries, including LIN Television
Corporation (“LIN Television”), is a television station group operator in the
United States. In these notes, the terms “Company,” “LIN TV,” “we,” “us” or
“our” mean LIN TV Corp. and all subsidiaries included in our unaudited
consolidated financial statements.





Financial
Condition





Our
operating plan for the next 12 months requires that we generate cash from
operations, utilize borrowings, and repay amounts, including mandatory
repayments of term loans under our credit facility. Our ability to borrow under
our revolving credit facility is contingent on our compliance with certain
financial covenants, which are measured, in part, by the level of earnings
before interest expense, taxes, depreciation and amortization (“EBITDA”) we
generate from our operations.   During the six months ended June 30,
2009, we experienced declines in revenues compared to the same periods in 2008,
which were in excess of our original 2009 plan.  As a result, and to
ensure continued compliance with the financial covenants in our credit
agreement, on July 31, 2009 we entered into an Amended and Restated Credit
Agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as
Administrative Agent, and banks and financial institutions party
thereto. For further information regarding the terms of the Amended Credit
Agreement see Note 5 – “Debt”.  As of September 30, 2009, we were in
compliance with all financial and non-financial covenants in our credit
agreement.





During
the three months ended September 30, 2009, we continued to experience declines
in revenues compared to the same periods in 2008.  These declines in
revenues were in excess of our original 2009 plan and we anticipate continued
weakness in revenues during the remainder of this year.





Our joint venture with NBC Universal
continues to be adversely impacted by the current economic
downturn.Under
an agreement we reached with NBC Universal, the joint venture may access the
existing $15.0 million debt service reserve fund, defer management fees to
conserve cash balances, and borrow funds under shortfall loans provided by us
and NBC Universal through April 1, 2010, if the joint venturedoes not have sufficient cash to cover
interest obligations under the General Electric Capital Corporation (“GECC”)
Note.  Our obligation under the shortfall funding agreement is to
provide the joint venture with a shortfall loan on the basis of our 20.38
percentage of economic interest in the joint venture.During the nine months ended September
30, 2009, the joint venture used approximately $12.9 million of the existing
debt service cash reserves, leaving approximately $2.2 million
available.Based on the most recent 2009 forecast
provided by the joint venture, there will be an estimated debt service shortfall
through December 31, 2009 of $3.0 to $5.0 million.  Additionally,
based on current discussions with the joint venture, we estimate an additional
shortfall of $5.0 to $7.0 million for the first quarter of 2010.  As a
result, as ofSeptember
30, 2009, we have accrued $2.0 million for our portion of the estimable and
probable obligations under the shortfall funding agreement which expires on
April 1, 2010.  Due to the uncertainty surrounding the joint venture’s
ability to repay the shortfall loan, we have concurrently impaired the loan as
of September 30, 2009.We plan to use our available cash
balances or available borrowings under our credit facility to fund any shortfall
loan.





The joint
venture has not provided a forecast for 2010, and we have not had any
discussions with NBC Universal regarding how, if at all, we and NBC Universal
may share responsibility for any shortfall in cash at the joint venture to cover
interest obligations under the GECC Note after April 1, 2010.  If the joint
venture experiences further cash shortfalls beyond April 1, 2010, it is possible
that we could decide to fund a portion of such cash shortfalls through further
loans or equity contributions to the joint venture, subject to compliance with
restrictions under our senior credit facility and the indentures governing our
senior notes.  We have not accrued for any shortfalls beyond April 1,
2010 as these amounts have been determined to be neither probable nor
estimable.  If the joint venture defaults on its obligations to pay
interest under the GECC Note, GECC would have the right to exercise its remedies
under such note, including enforcing our guarantee of such
note.  Refer to Note 14 – "Commitments and Contingencies" in our
Annual Report on Form 10-K for further information on the organization of the
joint venture and the consequences of an event of default under the GECC Note by
the joint venture to us as it relates to our guarantee of the GECC
Note.





8
 Table of Contents


Basis
of Presentation





Our
consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States (“GAAP”). Our
significant accounting policies are described below.





On July
1, 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Codification (“ASC”) 105-10, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles”,
(collectively, the “Codification”). The Codification establishes the exclusive
authoritative reference for U.S. GAAP for use in financial statements, except
for Securities and Exchange Commission (“SEC”) rules and interpretive releases,
which are also authoritative GAAP for SEC registrants. The Codification
supersedes all existing non-SEC accounting and reporting standards relating to
U.S. GAAP.





Our
consolidated financial statements have been prepared without audit, pursuant to
the rules and regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted pursuant to such rules and regulations.
Certain financial statement accounts have been reclassified in the prior
period financial statements to conform to the current period financial statement
presentation.





In the
opinion of management, the accompanying unaudited interim financial statements
contain all normal recurring adjustments necessary to present fairly our
financial position, results of operations and cash flows for the periods
presented. Due to seasonal fluctuations and other factors, the interim results
of operations are not necessarily indicative of the results to be expected for
the full year.





Use
of Estimates





The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts reported in the
unaudited consolidated financial statements and the notes to the unaudited
consolidated financial 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 and intangible assets, stock-based-compensation, pension costs,
barter transactions, income taxes, employee medical insurance claims, useful
lives of property and equipment, contingencies, litigation and net assets of
businesses acquired.





Changes
in Classifications





In
December 2007, the FASB issued ASC 810-10 “Non-controlling Interests in
Consolidated Financial Statements”, which amends ARB 51, “Consolidated Financial
Statements”. (“ASC 810-10”). ASC 810-10 is effective for quarterly and annual
reporting periods that begin after December 15, 2008. ASC 810-10
establishes accounting and reporting standards with respect to non-controlling
interests (also called minority interests) in an effort to improve the
relevance, comparability and transparency of financial information that a
company provides with respect to its non-controlling interests. The significant
requirements under ASC 810-10 are the reporting of the non-controlling interests
separately in the equity section of the balance sheet and the reporting of the
net income or loss of the controlling and non-controlling interests separately
on the face of the statement of operations. We adopted ASC 810-10 effective
January 1, 2009, and as a result, reclassified the preferred stock of Banks
Broadcasting, Inc. (“Banks Broadcasting”), representing a non-controlling
interest, to the equity section of our balance sheet.





9
 Table of Contents


Net
Earnings per Common Share





Basic
earnings per share (“EPS”) is based upon net earnings divided by the weighted
average number of common shares outstanding during the period. Diluted EPS
reflects the effect of the assumed exercise of stock options, vesting of
restricted shares and the potential common shares from the assumed conversion of
the contingently convertible debt only in periods in which such effect would
have been dilutive.





For the
three and nine months ended September 30, 2009 and 2008, because the Company
incurred a net loss, there was no difference between basic and diluted income
per share.  As a result of the net loss, all potential common shares from
the exercise of stock options, the vesting of restricted stock and the potential
common shares from the assumed conversion of the contingently convertible debt
were anti-dilutive.





Recently
Issued Accounting Pronouncements





In
October 2009, the FASB issued ASU 2009-15 “Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging
Issues Task Force” (“ASC 470-20”). ASC 470-20 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. ASC 470-20 addresses how to separate
deliverables and how to measure and allocate arrangement consideration to one or
more units of accounting. We plan to adopt ASC 470-20 effective June 30, 2010,
and we do not expect it to have a material impact on our financial position or
results of operations.





In August
2009, the FASB issued ASU 2009-05 “Measuring Liabilities at Fair Value” (“ASC
820-10”). ASC 820-10 is effective for the first reporting period, including
interim periods, beginning after issuance. ASC 820-10 clarifies the application
of certain valuation techniques in circumstances in which a quoted price in an
active market for the identical liability is not available and clarifies that
when estimating the fair value of a liability, the fair value is not adjusted to
reflect the impact of contractual restrictions that prevent its transfer. ASC
820-10 becomes effective for us on October 1, 2009.  We adopted ASC
820-10 effective September 30, 2009, and it did not have a material impact on
our financial position or results of operations.





In June
2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)”
(“FAS 167”).  FAS 167 is effective for interim and annual reporting
periods beginning after November 15, 2009. FAS 167 amends certain guidance in
FIN 46(R) to eliminate the exemption for special purpose entities, require a new
qualitative approach for determining who should consolidate a variable interest
entity and change the requirement for when to reassess who should consolidate a
variable interest entity. We plan to adopt FAS 167 effective January 1,
2010, and we do not expect it to have a material impact on our financial
position or results of operations.





In June 2009, the FASB issued FAS 166
“Accounting for Transfers of Financial Assets – an amendment of FAS Statement
No. 140” (“FAS 166”). FAS 166 is effective for interim and annual reporting
periods beginning after November 15, 2009 and must be applied to transfers
occurring on or after the effective date.  FAS 166 clarifies that the
objective of paragraph 9 of Statement 140 is to determine whether a transferor
and all of the entities included in the transferor’s financial statements being
presented have surrendered control over transferred financial
assets.We plan to adopt FAS 166 effective
January 1, 2010, and we do not expect it to have a material impact on our
financial position or results of operations.





In May
2009, the FASB issued ASC 855-10 “Subsequent Events” (“ASC 855-10”). ASC 855-10
is effective for interim and annual reporting periods ending after June 15,
2009. ASC 855-10 introduces the concept of financial statements being available
to be issued and requires disclosure of the date through which an entity has
evaluated subsequent events and the basis for that date. We adopted ASC 855-10
effective June 30, 2009 and included the required disclosure in Note 14 –
“Subsequent Events”. ASC 855-10 did not have a material impact on our financial
position or results of operations.





10
 Table of Contents


In April
2009, the FASB issued ASC 825-10, “Interim Disclosures about Fair Value of
Financial Instruments” (“ASC 825-10”), which requires public entities to
disclose in their interim financial statements the fair value of all financial
instruments within the scope of FASB Statement No. 107, “Disclosures about Fair
Value of Financial Instruments”, as well as the method(s) and significant
assumptions used to estimate the fair value of those financial instruments.
 We adopted the provisions of ASC 825-10 by including the required
additional financial statement disclosures as of June 30, 2009 in Note 6 –
Derivative Financial Instruments and Note 7 - Fair Value Measurement.  The
adoption of ASC 825-10 had no financial impact on our financial position or
results of operations.





Also in
April 2009, the FASB issued ASC 320-10, “Recognition and Presentation of
Other-Than-Temporary Impairments” (“ASC 320-10”), to change the method for
determining whether an other-than-temporary impairment exists for debt
securities and the amount of an impairment charge to be recorded in earnings.
 ASC 320-10 also requires enhanced disclosures, including the Company’s
methodology and key inputs used for determining the amount of credit losses
recorded in earnings. We adopted ASC 320-10 during the second quarter of 2009
and the adoption had no impact on our financial position or results of
operations.





Additionally,
in April 2009 the FASB issued ASC 820-10, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (“ASC 820-10”). ASC
820-10 provides additional guidance to highlight and expand on the factors that
should be considered in estimating fair value when there has been a significant
decrease in market activity for a financial asset. ASC 820-10 also requires new
disclosures relating to fair value measurement inputs and valuation techniques
(including changes in inputs and valuation techniques). We adopted ASC 820-10
during the second quarter of 2009.  The adoption of ASC 820-10 had no
impact on our financial position or results of operations.  See Note 4
(Fair Value) for further detail.





Effective
January 1, 2009, the Company adopted ASC 805-10, “Business Combinations” (“ASC
805-10”). ASC 805-10 establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any non-controlling interest in the
acquiree; how the acquirer recognizes and measures the goodwill acquired in a
business combination; and how the acquirer determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The adoption of ASC 805-10 did
not have a material impact on our financial position or results of operations as
of or for the period ended September 30, 2009.





In
December 2008, the FASB issued ASC 715-10, “Employers’ Disclosures about
Postretirement Benefit Plan Assets” (“ASC 715-20”). ASC 715-20 is effective for
fiscal years ending after December 15, 2009. ASC 715-20 increases disclosure
requirements related to an employer’s defined benefit pension or other
postretirement plans.  We plan to adopt ASC 715-10 effective December
31, 2009, and we do not expect it to have a material impact on our financial
position or results of operations.





In
November 2008, the FASB issued ASC 605-25, “Revenue Arrangements with Multiple
Deliverables” (“ASC 605-25”). ASC 605-25 is effective for revenue arrangements
entered into or materially modified in fiscal years beginning on or after
December 31, 2009 and shall be applied on a prospective
basis.  Earlier application is permitted as of the beginning of a
fiscal year. ASC 605-25 addresses some aspects of the accounting by a vendor for
arrangements under which it will perform multiple revenue-generating activities.
We plan to adopt ASC 605-25 effective December 31, 2009, and we do not expect it
to have a material impact on our financial position or results of
operations.





Note
2 — Discontinued Operations





Our
consolidated financial statements reflect the operations, assets and liabilities
of Banks Broadcasting as discontinued for all periods presented.





11
 Table of Contents


Banks
Broadcasting





On April
23, 2009, Banks Broadcasting completed the sale of KNIN-TV, a CW affiliate in
Boise, for $6.6 million to Journal Broadcast Corporation. As a result of the
sale we received, on the basis of our economic interest in Banks
Broadcasting, a distribution of $2.6 million during the quarter ended June
30, 2009. The operating loss for the nine months ended September 30, 2009
includes an impairment charge of $1.9 million to reduce the carrying value of
broadcast licenses to fair value based on the final sale price of KNIN-TV of
$6.6 million. Net loss included within discontinued operations for the nine
months ended September 30, 2009 reflects our 50% share of net losses of Banks
Broadcasting, net of taxes, through the April 23, 2009 disposal
date.





Banks
Broadcasting distributed $2.5 million to us for the nine months ended September
30, 2008.  We provided no capital contributions to Banks Broadcasting
during either the three or nine months ended September 30, 2009 and
2008.





Following
the sale of KNIN-TV on April 23, 2009, substantially all of the assets of Banks
Broadcasting had been liquidated.





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








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      revenues
            
            $
            -
            
            
            $
            680
            
            
            $
            823
            
            
            $
            2,247Operating
      (loss) income
            
            
            -
            
            
            
            (190
            )
            
            
            (3,141
            )
            
            
            919Net
      (loss) income
            
            
            -
            
            
            
            (196
            )
            
            
            (446
            )
            
            
            184







Note
3 — Equity Investments





Joint
Venture with NBC Universal





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








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Cash
      distributions to SVH from SVO
            
            $
            9,150
            
            
            $
            23,940
            
            
            $
            36,402
            
            
            $
            62,888Income
      to SVH from SVO
            
            $
            9,180
            
            
            $
            19,922
            
            
            $
            18,409
            
            
            $
            53,879Other
      expense, net (primarily interest on the GECC note)
            
            
            (16,491
            )
            
            
            (16,672
            )
            
            
            (49,473
            )
            
            
            (49,655
            )Net
      (loss) income of SVH
            
            $
            (7,311
            )
            
            $
            3,250
            
            
            $
            (31,064
            )
            
            $
            4,224Cash
      distributions to us
            
            $
            -
            
            
            $
            1,630
            
            
            $
            -
            
            
            $
            2,649





During
the three and nine months ended September 30, 2009, we did not recognize our
20.38% share of SVH’s net loss, because the investment was written down to zero
during the year ended December 31, 2008. SVH had
cash on hand of $2.2 million and $15.1 million as of September 30, 2009 and
December 31, 2008, respectively.





12
 Table of Contents


During
the quarter ended September 30, 2009, we recognized a contingent liability of
$2.0 million based on our estimate of amounts that we expect to loan to the SVH
joint venture pursuant to our shortfall funding agreement with NBC Universal, as
discussed further in Note 1 and Note 13 – “Commitments and
Contingencies”.  Because of uncertainty surrounding the joint
venture’s ability to repay the shortfall loan, we concluded that it is more
likely than not that the amount of the accrued shortfall loan will not be
recovered within a reasonable period of time, and therefore, the loan was fully
impaired.  Accordingly, we recognized a charge of $2.0 million, which
has been classified as Share of loss (income) in equity investments during the
quarter ended September 30, 2009 to reflect the impairment of the
loan.





Note
4 — Intangible Assets





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








September
      30, 2009
            
            
            December
      31, 2008Gross
      Carrying Amount
            
            
            Accumulated
      Amortization
            
            
            Gross
      Carrying Amount
            
            
            Accumulated
      AmortizationGoodwill
            
            $
            114,486
            
            
            $
            -
            
            
            $
            117,159
            
            
            $
            -Broadcast
      licenses
            
            
            391,803
            
            
            
            -
            
            
            
            429,024
            
            
            
            -Intangible
      assets subject to amortization (1)
            
            
            7,796
            
            
            
            (6,743
            )
            
            
            7,796
            
            
            
            (6,678
            )Total
      intangible assets
            
            $
            514,085
            
            
            $
            (6,743
            )
            
            $
            553,979
            
            
            $
            (6,678
            )


_________





(1)
            Intangibles
      subject to amortization are amortized on a straight line basis and include
      acquired advertising contracts, advertiser lists, advertiser
      relationships, favorable operating leases, tower rental income
      leases, option agreements and network
    affiliations.





We
recorded an impairment charge of $39.9 million during the second quarter of
2009 that included an impairment to the carrying values of our broadcast
licenses of $37.2 million, relating to 26 of our television stations; and
an impairment to the carrying values of our goodwill of $2.7 million, relating
to two of our television stations. As required by ASC 350-10, “Goodwill and
Other Intangible Assets”, we tested for impairment of our indefinite lived
intangible assets at June 30, 2009, between the required annual tests,
because we believed events had occurred and circumstances changed that would
more likely than not reduce the fair value of our broadcast licenses and
goodwill below their carrying amounts. The need for an impairment analysis at
June 30, 2009 was triggered by the continued decline in advertising revenue at
certain of our stations, due to the ongoing effects of the economic downturn,
that resulted in downward adjustments to their respective
forecasts.





We used
the income approach to test our broadcast licenses for impairments as of
June 30, 2009 and we used the same assumptions as disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2008, except for the
following adjustments: a) the discount rate was adjusted from 11.0% to 12.0%; b)
average market growth rate was adjusted from 1.0% to 0.2%; and c) average
operating profit margins were adjusted from 26.6% to 30.5%.





We used
the income approach to test goodwill for impairments as of June 30, 2009
and we used the same assumptions as disclosed in our Annual Report on Form 10-K
for the year ended December 31, 2008, except for the following adjustments:
a) the discount rate was adjusted from 14.5% to 15.0%; b) average market growth
rate was adjusted from 1.0% to 0.5%; and c) average operating profit margins
were adjusted from 34.0% to 36.4%.





13
 Table of Contents


These
assumptions are based on the actual historical performance of our stations and
management’s estimates of future performance of our stations. The increase in
the discount rate used for our broadcast licenses and goodwill reflects an
increase in the average beta for the public equity of companies in the
television and media sector since December 31, 2008. The changes in the market
growth rates and operating profit margins for both our broadcast licenses and
goodwill reflect changes in the outlook for advertising revenues in certain
markets where our stations operate.





Determining
the fair value of our television stations requires our management to make a
number of judgments about assumptions and estimates that are highly subjective
and that are based on unobservable inputs or assumptions. The actual results may
differ from these assumptions and estimates; and it is possible that such
differences could have a material impact on our financial
statements.





The
changes in the carrying amount of goodwill for the nine months and year ended
September 30, 2009 and December 31, 2008 respectively, are as
follows:








2009
            
            
            2008Goodwill
            
            $
            666,812
            
            
            $
            664,103Accumulated
      impairment losses
            
            
            (549,653
            )
            
            
            (128,685
            )Balance
      as of January 1
            
            $
            117,159
            
            
            $
            535,418Tax
      Adjustments
            
            
            -
            
            
            
            2,709Impairments
            
            
            (2,673
            )
            
            
            (420.968
            )Goodwill
            
            $
            666,812
            
            
            $
            666,812Accumulated
      impairment losses
            
            
            (552,326
            )
            
            
            (549,653
            )Balance
      as of September 30, 2009 and December 31, 2008,
    respectively
            
            $
            114,486
            
            
            $
            117,159








As of
September 30, 2009 there were no indicators that our tangible or intangible
assets were impaired. For
further discussion of our accounting policy related to impairments refer to Note
1 – Basis of Presentation and Summary of Significant Accounting Policies in our
Annual Report on Form 10-K for the year ended December 31, 2008.





Note
5 — Debt





Debt
consisted of the following (in thousands):




September
      30,
            
            
            December
      31,2009
            
            
            2008Credit
      Facility:Revolving
      credit loans
            
            $
            203,000
            
            
            $
            135,000Term
      loans
            
            
            65,950
            
            
            
            77,87561⁄2%
      Senior Subordinated Notes due 2013
            
            
            275,883
            
            
            
            355,583$141,316
      and $183,285, 61⁄2% Senior Subordinated Notes due 2013 - Class B, net of
      discount of $5,325 and $8,390 at September 30, 2009 December 31, 2008,
      respectively
            
            
            135,991
            
            
            
            174,895Total
      debt
            
            
            680,824
            
            
            
            743,353Less
      current portion
            
            
            15,900
            
            
            
            15,900Total
      long-term debt
            
            $
            664,924
            
            
            $
            727,453





14
 Table of Contents


We repaid
$11.9 million of principal of the term loans, related to mandatory quarterly
payments, under our credit facility, from operating cash balances during the
nine months ended September 30, 2009.





During
2008, we commenced a plan under Rule 10b5-1 of the Securities Exchange Act of
1934 to purchase a portion of our 61⁄2% Senior Subordinated Notes and 61⁄2% 
Senior Subordinated Notes – Class B at market prices using available balances
under our revolving credit facility and available cash balances. During the nine
months ended September 30, 2009, we purchased a total principal amount of $79.7
million and $42.0 million of our 61⁄2% Senior Subordinated Notes and 61⁄2% Senior
Subordinated Notes – Class B, respectively, under this plan. The total purchase
price for the transactions was $68.4 million, resulting in a gain on
extinguishment of debt of $50.1 million, net of a write-off of deferred
financing fees and discount related to the notes of $1.3 million and $1.9
million, respectively.





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








September
      30, 2009
            
            December
      31, 2008Carrying
      amount
            
            $
            680,824
            
            
            $
            743,353Fair
      value
            
            
            568,630
            
            
            
            402,524








On July
31, 2009, we entered into an Amended Credit Agreement, which provides that our
aggregate revolving credit commitments are $225.0 million and our outstanding
term loans remained at $69.9 million (as of July, 31 2009). The terms of
the Amended Credit Agreement include, but are not limited to, changes
to financial covenants, including our consolidated leverage ratio, consolidated
interest coverage ratio and consolidated senior leverage ratio, a general
tightening of the exceptions to our negative covenants (principally by means of
reducing the types and amounts of permitted transactions) and an increase in the
interest rates and fees payable with respect to the borrowings under the Amended
Credit Agreement.  Certain revised financial condition covenants, and
other key terms, are as follows:





15
 Table of Contents





Prior
            
            
            As
      AmendedConsolidated
      Leverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            7.00
            x
            
            
            9.00
            xOctober
      1, 2009 to December 31, 2009
            
            
            7.00
            x
            
            
            10.50
            xJanuary
      1, 2010 through March 31, 2010
            
            
            6.50
            x
            
            
            10.00
            xApril
      1, 2010 through June 30, 2010
            
            
            6.50
            x
            
            
            9.00
            xJuly
      1, 2010 through September 30, 2010
            
            
            6.00
            x
            
            
            7.50
            xOctober
      1, 2010 and thereafter
            
            
            6.00
            x
            
            
            6.00
            xConsolidated
      Interest Coverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            2.00
            x
            
            
            1.75
            xOctober
      1, 2009 through December 31, 2009
            
            
            2.00
            x
            
            
            1.50
            xJanuary
      1, 2010 through June 30, 2010
            
            
            2.25
            x
            
            
            1.75
            xJuly
      1, 2010 through September 30, 2010
            
            
            2.25
            x
            
            
            2.00
            xOctober
      1, 2010 and thereafter
            
            
            2.25
            x
            
            
            2.25
            xConsolidated
      Senior Leverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            3.50
            x
            
            
            3.75
            xOctober
      1, 2009 through December 31, 2009
            
            
            3.50
            x
            
            
            4.25
            xJanuary
      1, 2010 through March 31, 2010
            
            
            3.50
            x
            
            
            4.00
            xApril
      1, 2010 through June 30, 2010
            
            
            3.50
            x
            
            
            3.75
            xJuly
      1, 2010 through September 30, 2010
            
            
            3.50
            x
            
            
            3.00
            xOctober
      1, 2010 and thereafter
            
            
            3.50
            x
            
            
            2.25
            xInterest
      rate on borrowings
            
            LIBOR + 150bps*
            
            LIBOR + 375bps*
      At consolidated leverage of 7x or greater.





The
Amended Credit Agreement revises the calculation of Consolidated Total Debt used
in our consolidated leverage ratios to exclude the netting of cash and cash
equivalents against total debt.





On an
annual basis following the delivery of our year-end financial statements,
the Amended Credit Agreement requires mandatory prepayments of principal,
as well as a permanent reduction in revolving credit commitments, subject to
a computation of excess cash flow for the preceding fiscal year, as more
fully set forth in the Amended Credit Agreement. In addition, the Amended Credit
Agreement restricts the use of proceeds from asset sales or from the issuance of
debt (with the result that such proceeds, subject to certain exceptions, must be
used for mandatory prepayments of principal and permanent reductions in
revolving credit commitments), and includes an anti-cash hoarding provision
which requires that LIN Television utilize unrestricted cash and cash equivalent
balances in excess of $12.5 million to repay principal amounts outstanding, but
not permanently reduce capacity, under our revolving credit
facility.





In
connection with the Amended Credit Agreement, we incurred costs of approximately
$3.9 million during the third quarter related primarily to lender, arrangement
and legal fees, of which, $3.8 million was capitalized as deferred financing
costs and $0.1 million was recognized as expense during the quarter ended
September 30, 2009. Additionally, as a result of the Amended Credit Agreement,
we expect cash interest expense, on an annualized basis, to increase by
approximately $7.0 million, based on the total principal amounts outstanding as
of July 31, 2009.





Note
6 — Derivative Financial Instruments





We use
derivative financial instruments in the management of our interest rate exposure
for our long-term debt, principally our credit facility. In accordance with our
policy, we do not use derivative instruments unless there is an underlying
exposure. We do not hold or enter into derivative financial instruments for
speculative trading purposes.





16
 Table of Contents


During
the second quarter of 2006, we entered into a contract to hedge a notional
amount of the declining balances of our term loan (“2006 interest rate hedge”).
To mitigate changes in our cash flows resulting from fluctuations in interest
rates, we entered into the 2006 interest rate hedge that effectively converted
floating LIBOR rate-based-payments to fixed payments at 5.33% plus the
applicable margin rate calculated under our credit facility, which expires in
November 2011. We designated the 2006 interest rate hedge as a cash flow hedge.
The fair value of the 2006 interest rate hedge liability was $4.9 million and
$6.5 million at September 30, 2009 and December 31, 2008, respectively. The
effective portion of this amount will be released into earnings over the life of
the 2006 interest rate hedge through periodic interest payments. The notional
amount of the 2006 interest rate hedge was $70.0 million and $81.3 million at
September 30, 2009 and December 31, 2008, respectively. During the three
and nine months ended September 30, 2009, we recorded a charge of
$17,000 and $12,000, respectively, to the Other Expense line within
statement of operations, associated with the ineffective portion of this
hedge.





The 2006
interest rate hedge is carried on our consolidated balance sheet as other
liabilities at fair value, which is calculated using the discounted expected
future cash outflows from a series of three-month LIBOR strips through November
4, 2011, the same maturity date as our credit facility. The fair value of this
derivative was calculated by using observable inputs (Level 2) as defined under
ASC 820-10 as noted in Note 7 – “Fair Value Measurements”.





The 2.50%
Exchangeable Senior Subordinated Debentures that we repurchased in 2008 had
certain embedded derivative features that were required to be separately
identified and recorded at fair value each period. The fair value of these
derivatives upon issuance of the debentures was $21.1 million and this amount
was recorded as an original issue discount and accreted through interest expense
from the date of issuance through May 15, 2008 when they were all tendered to us
and purchased. As a result of the purchase of the debentures, we recorded a gain
of $0.4 million during the first quarter of 2008 to earnings for the remaining
fair value of these derivatives.





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





Loss
      (gain) on Derivative InstrumentsThree
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Mark-to-Market
      Adjustments on:2.50%
      Exchangeable Senior Subordinated Debentures
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            (375
            )2006
      interest rate hedge
            
            
            17
            
            
            
            -
            
            
            
            12
            
            
            
            -$
            17
            
            
            $
            -
            
            
            $
            12
            
            
            $
            (375
            )











Comprehensive
      Income, Net of TaxThree
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Mark-to-Market
      Adjustments on:2006
      interest rate hedge
            
            $
            153
            
            
            $
            32
            
            
            $
            984
            
            
            $
            184$
            153
            
            
            $
            32
            
            
            $
            984
            
            
            $
            184











17
 Table of Contents


The
following table summarizes the balances for our derivative liability included in
other liabilities in our consolidated balance sheet (in thousands):








September
      30, 2009
            
            December
      31, 20082006
      interest rate hedge
            
            $
            4,867
            
            
            $
            6,493








Note
7 – Fair Value Measurement





We record
certain financial assets and liabilities at fair value on a recurring basis
consistent with ASC 820-10. The following table summarizes the financial assets
and liabilities measured at fair value in the accompanying financial statements
using the three-level fair value hierarchy established by ASC 820-10 as of
September 30, 2009 (in thousands):








September
      30, 2009Quoted
      prices in active markets
            
            
            Significant
      observable inputs
            
            
            Total(Level
      1)
            
            
            (Level
      2)Assets:Deferred
      compensation related investments
            
            $
            1,323
            
            
            $
            -
            
            
            $
            1,323Liabilities:2006
      interest rate hedge
            
            
            -
            
            
            
            4,867
            
            
            
            4,867Deferred
      compensation related liabilities
            
            
            1,323
            
            
            
            -
            
            
            
            1,323





The fair
value of our deferred compensation plan is determined based on the fair value of
the investments selected by employees.





Note
8 — Retirement Plans





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








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      periodic pension benefit cost:Service
      cost
            
            $
            -
            
            
            $
            538
            
            
            $
            385
            
            
            $
            1,614Interest
      cost
            
            
            1,587
            
            
            
            1,592
            
            
            
            4,765
            
            
            
            4,776Expected
      return on plan assets
            
            
            (1,641
            )
            
            
            (1,705
            )
            
            
            (4,969
            )
            
            
            (5,115
            )Amortization
      of prior service cost
            
            
            -
            
            
            
            30
            
            
            
            31
            
            
            
            90Amortization
      of net loss
            
            
            -
            
            
            
            48
            
            
            
            165
            
            
            
            144Curtailment
            
            
            -
            
            
            
            -
            
            
            
            438
            
            
            
            -Net
      periodic benefit cost
            
            $
            (54
            )
            
            $
            503
            
            
            $
            815
            
            
            $
            1,509Contributions401(k)
      Plan
            
            $
            56
            
            
            $
            532
            
            
            $
            393
            
            
            $
            1,206Retirement
      plans
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,250Total
      contributions
            
            $
            56
            
            
            $
            532
            
            
            $
            393
            
            
            $
            3,456





We do not
expect to make any contributions to our defined benefit retirement plans during
the remainder of 2009. See Note 11 — “Retirement Plans” included in Item 15 of
our Annual Report on Form 10-K for the year ended December 31, 2008 for a full
description of our retirement plans.





18
 Table of Contents


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





As of
September 30, 2009, our pension plan was underfunded by greater than 20%
primarily due to the significant decline in the equity markets over the last
twelve months. At this funding level, withdrawal restrictions are required by
the Internal Revenue Service for those cash balance participants who request
lump sum distributions. Former employees who request a lump sum distribution
including rollovers will receive 50% of their account balance until the funded
status of our plan increases to above 80%.





Note
9 — Stock-Based Compensation





On June
2, 2009, we completed an exchange offer which enabled employees and non-employee
directors to exchange some or all of their outstanding options to purchase
shares of our Class A common stock, for new options to purchase shares of our
Class A common stock, on a one for one basis.  A total of 257
employees participated in the exchange, in which options to purchase an
aggregate of 2,931,285 shares of our Class A common stock were
exchanged.  The new options have an exercise price of $1.99 per share,
equal to the closing price per share of our Class A common stock on June 2,
2009. The new stock options vest ratably over three years. As a result of the
exchange offer, we will recognize an incremental charge of $2.1 million over the
vesting period of the new grants.





Note
10 — Restructuring





During
the second quarter of 2009, we recorded a restructuring charge of $0.5 million
as a result of the consolidation of certain activities at our stations which
resulted in the termination of 28 employees.  We made cash payments of
$0.3 million and $0.5 million during the three and nine months ended September
30, 2009 related to this restructuring.





During
the fourth quarter of 2008, we effected a restructuring that included a
workforce reduction and the cancellation of certain syndicated television
program contracts. The total charge for the plan was $12.9 million,
including $4.3 million for a workforce reduction of 144 employees and $8.6
million for the cancellation of the contracts. We made cash payments of
$0.2 million and $8.8 million for the three and nine months ended September
30, 2009, respectively, related to these restructuring activities. Cumulatively
under the plan, we have made payments of $12.4 million through September 30,
2009. As of September 30, 2009, we had $0.5 million in accrued expenses and
accounts payable in the consolidated balance sheet for this restructuring and
expect to make cash payments of $0.1 million during the remainder of 2009 and
the remaining $0.4 million during 2010 and thereafter.





The
following table details the amounts for both of these restructurings for the
three and nine months ended September 30, 2009.




Balance
      as of
              June30,
      2009
            
            
            Three
      Months Ended September 30, 2009
            
            
            Balance
      as of
              September 30,
      2009Charge
            
            
            PaymentsSeverance
      and related
            
            $
            319
            
            
            $
            -
            
            
            $
            319
            
            
            $
            -Contractual
      and other
            
            
            747
            
            
            
            -
            
            
            
            257
            
            
            
            490Total
            
            $
            1,066
            
            
            $
            -
            
            
            $
            576
            
            
            $
            490  Balance
      as of
                December 31,
      2008
              
              
              Nine
      Months Ended September 30, 2009
              
              
              Balance
      as of
                September 30,
      2009Charge
              
              
              PaymentsSeverance
      and related
              
              $
              3,493
              
              
              $
              (498)
              
              
              $
              3,991
              
              
              $
              -Contractual
      and other
              
              
              5,868
              
              
              
              -
              
              
              
              5,378
              
              
              
              490Total
              
              $
              9,361
              
              
              $
              (498)
              
              
              $
              9,369
              
              
              $
              490







19
 Table of Contents




Note
11 – Concentration of Credit Risk





On April
30, 2009, Chrysler LLC (“Chrysler”) filed for Chapter 11 bankruptcy
protection.  On June 1, 2009, General Motors Corporation (“GM”) filed
for Chapter 11 bankruptcy protection.  We currently have a
concentration of credit risk within our accounts receivable due from both
Chrysler and GM.  We have reviewed our reserves related to receivables
from these customers and auto dealers whose advertising campaigns are subsidized
by both Chrysler and GM.  As of September 30, 2009, we have determined
that we are adequately reserved for all receivables due from these customers and
their affiliates.





Note
12 — Income Taxes





We
recorded a provision for income taxes of $1.6 million and $9.9 million for the
three and nine months ended September 30, 2009, respectively, compared to a
provision for income taxes of $.2 million and a benefit of $70.7 million for the
three and nine months ended September 30, 2008, respectively.  Our
effective income tax rate was 215.1% and 2.1% for the three months ended
September  30, 2009 and 2008, respectively.  Our effective income
tax rate was 113.7% and 25.7% for the nine months ended September 30, 2009 and
2008, respectively.





The
increase in the effective tax rate during the three and nine months ended
September 30, 2009, is due primarily to the impact of 2008 impairment
charges on our pretax income, which resulted in an effective tax rate that was
larger in 2009 as a percentage of pretax income as compared to the same periods
in 2008.





Note
13 — Commitments and Contingencies





GECC
Note





GECC
provided debt financing for the joint venture between NBC Universal and us, in
the form of an $815.5 million non-amortizing senior secured note due 2023
bearing interest at an initial rate of 8% per annum until March 2, 2013 and 9%
per annum thereafter. We have a 20.38% equity interest in the joint venture
and NBC Universal has the remaining 79.62% equity interest, in which we and NBC
Universal each have a 50% voting interest.  NBC Universal operates the
two television stations, KXAS-TV, an NBC affiliate in Dallas, and KNSD-TV, an
NBC affiliate in San Diego, pursuant to a management agreement.  NBC
Universal and GECC are both majority-owned subsidiaries of General Electric
Co. LIN TV has guaranteed the payment of principal and interest on the GECC
Note.





The GECC
Note is an obligation of the joint venture and is not an obligation of LIN TV or
LIN Television or any of its subsidiaries. GECC’s only recourse, upon an event
of default under the GECC Note, is to the joint venture, our equity interest in
the joint venture and, after exhausting all remedies against the assets of the
joint venture and the other equity interests in the joint venture, to LIN TV
pursuant to its guarantee of the GECC Note. An event of default under the
GECC Note will occur if the joint venture fails to make any scheduled interest
payment within 90 days of the date due and payable, or to pay the principal
amount on the maturity date.  If the joint venture fails to pay
interest on the GECC Note, and neither NBC Universal nor we make a shortfall
loan 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 the
entire amount due under the GECC Note.





Our joint venture with NBC Universal
continues to be adversely impacted by the current economic
downturn.Under
an agreement we reached with NBC Universal, the joint venture may access the
existing $15.0 million debt service reserve fund, defer management fees to
conserve cash balances, and borrow funds under shortfall loans provided by us
and NBC Universal through April 1, 2010, if the joint venturedoes not have sufficient cash to cover
interest obligations under the GECC Note.  Our obligation under the
shortfall funding agreement is to provide the joint venture with a shortfall
loan on the basis of our 20.38 percentage of economic interest in the joint
venture.During
the nine months ended September 30, 2009, the joint venture used approximately
$12.9 million of the existing debt service cash reserves, leaving approximately
$2.2 million available.Based on the most recent 2009 forecast
provided by the joint venture, there will be an estimated debt service shortfall
through December 31, 2009 of $3.0 to $5.0 million.  Additionally,
based on current discussions with the joint venture, we estimate an additional
shortfall of $5.0 to $7.0 million for the first quarter of 2010.  As a
result, as ofSeptember
30, 2009, we have accrued $2.0 million for our estimable and probable
obligations under the shortfall funding agreement which expires on April 1,
2010.  Due to the uncertainty surrounding the joint venture’s ability
to repay the shortfall loan, we have concurrently impaired the loan as of
September 30, 2009 (see further discussion in Note 3 – Equity
Investments).We plan to
use our available cash balances or available borrowings under our credit
facility to fund any shortfall loan.





20
 Table of Contents


The joint
venture has not provided a forecast for 2010, and we have not had any
discussions with NBC Universal regarding how, if at all, we and NBC Universal
may share responsibility for any shortfall in cash at the joint venture to cover
interest obligations under the GECC Note after April 1, 2010.  If the joint
venture experiences further cash shortfalls beyond April 1, 2010, it is possible
that we could decide to fund a portion of such cash shortfalls through further
loans or equity contributions to the joint venture, subject to compliance with
restrictions under our senior credit facility and the indentures governing our
senior notes.  We have not accrued for any shortfalls beyond April 1,
2010 as these amounts have been determined to be neither probable nor
estimable.  If the joint venture defaults on its obligations to pay
interest under the GECC Note, GECC would have the right to exercise its remedies
under such note, including enforcing our guarantee of such note.





Under the
terms of its guarantee of the GECC Note, LIN TV would be required to make a
payment for an amount to be determined upon occurrence of the following events:
a) there is an event of default; b) neither NBC Universal nor we remedy the
default; and c) after GECC exhausts all remedies against the assets of the joint
venture, the total amount realized upon exercise of those remedies is less than
the $815.5 million principal amount of the GECC Note. Upon the occurrence
of such events, the amount owed by LIN TV to GECC 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) the principal amount and any unpaid
interest due under the GECC Note.  As of December 31, 2008, we
estimated the fair value of the television stations in the joint venture to be
approximately $300 million less than the outstanding balance of the GECC Note of
$815.5 million. During 2009, the joint venture's operating results indicate that
the deficit to fair value as of September 30, 2009 could now be greater than the
estimated $300 million deficit as of December 31, 2008. We fully impaired our
goodwill associated with these television stations during the fourth quarter of
2008.





We
believe the probability is remote that there would be an event of default and
therefore an acceleration of the principal amount of the GECC Note during 2009
and through the expiry of our agreement with NBC Universal on April 1, 2010,
although there can be no assurances that such an event of default will not
occur.  There are no financial or similar covenants in the GECC Note
and, since both NBC Universal and we have agreed to fund interest payments if
the joint venture is unable to do so in 2009 and through the first quarter of
2010, NBC Universal and we are able to control the occurrence of a default under
the GECC Note.





However,
if an event of default under the GECC Note occurs, LIN TV, which conducts all of
its operations through its subsidiaries, could experience material adverse
consequences, including:





·
            GECC, after exhausting all
      remedies against the joint venture, could enforce its rights under the
      guarantee, which could cause LIN TV to determine that LIN Television
      should seek to sell material assets owned by it in order to satisfy LIN
      TV’s obligations under the
guarantee;





·
            GECC’s initiation of proceedings
      against LIN TV under the guarantee, if they result in material adverse
      consequences to LIN Television, would cause an acceleration of LIN
      Television’s credit facility and other outstanding
      indebtedness; and





·
            if the GECC Note is prepaid
      because of an acceleration on default or otherwise, we would incur a
      substantial tax liability of approximately $271.3 million related to our
      deferred gain associated with the formation of the joint
      venture.








21
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Note
14 — Subsequent Events





Acquisition
of RM Media LLC





On
October 2, 2009, we acquired RM Media LLC, formerly Red McCombs Media, LP ("RM
Media"), an online advertising and media services company based in Austin,
Texas. The acquisition was effected through the merger of RM Media with and into
Primeland Television, Inc., a wholly owned subsidiary of LIN Television
("Primeland"). The aggregate consideration paid by us in connection with the
merger was approximately $7.9 million, which was comprised of approximately $1.2
million paid in cash, $4.5 million paid in the form of shares of LIN TV’s Class
A common stock, and approximately $2.2 million in the form of an unsecured
promissory note. In addition, in connection with the transaction, Primeland
assumed an aggregate of approximately $2.8 million of RM Media's existing
indebtedness and satisfied certain expenses incurred by RM Media and its former
owners.  As part of the merger consideration, LIN TV issued 933,610
shares of Class A common stock, from shares held within treasury, to the former
owners of RM Media.  The Class A common stock was issued in a private
placement transaction that was exempt from registration under the Securities Act
of 1933, as amended.


The
number of shares of Class A common stock issued by LIN TV to the sellers is
subject to adjustment in the event that LIN TV’s Class A common stock has
decreased in value as of the six month anniversary of the
acquisition.  If the value of the LIN TV Class A common stock as of
the six-month anniversary of the acquisition is less than $4.5 million (such
difference, the “Equity Value Shortfall Amount”), we are obligated, at our
option, to a) issue to the sellers a number of additional shares of LIN TV Class
A common stock having a value as of the six-month anniversary of the
acquisition, equal to the Equity Value Shortfall Amount, b) make a cash payment
to the sellers in an amount equal to the Equity Value Shortfall Amount, or c)
satisfy the Equity Value Shortfall Amount through any combination of the
foregoing we determine appropriate.  In the event that we choose to
issue additional shares of LIN TV Class A common stock to the sellers to satisfy
all or a portion of the Equity Value Shortfall Amount, a final adjustment will
be made at the twelve month anniversary of the acquisition in the event that the
value of such shares as of the 12-month anniversary of the acquisition is less
than or exceeds the Equity Value Shortfall Amount by at least $0.25 per
share.  The merger consideration is also subject to customary
adjustments for working capital and indemnification for claims against the
sellers related to the period prior to the merger.


As of the
date of these Unaudited Consolidated Financial Statements, the initial
allocation of the merger consideration to the assets acquired and liabilities
assumed is not complete, and as such we have not yet determined an estimate for
the amount of goodwill and other intangible assets acquired in the
transaction.  Accordingly, certain disclosures required by ASC 805-10 have
been omitted from these Unaudited Consolidated Financial
Statements.





Disclosure





Our
Unaudited Consolidated Financial Statements for the quarter ended September
30, 2009 were issued on November 3, 2009.  We have determined that no other
events or transactions have occurred through the date of issuance that would
require recognition or disclosure within the Unaudited Consolidated Financial
Statements.








22
 Table of Contents





LIN
TV Corp.


Management’s Discussion and Analysis





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





Our
consolidated financial statements reflect the operations, assets and liabilities
of Banks Broadcasting as discontinued for all periods presented.





Special
Note about Forward-Looking Statements





This
report contains certain forward-looking statements with respect to our financial
condition, results of operations and business, including statements under this
caption “Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations”. All of these forward-looking statements are based on
estimates and assumptions made by our management, which, although we believe
them to be reasonable, are inherently uncertain. Therefore, you should not place
undue reliance upon such estimates and statements. We cannot assure you that any
of such estimates or statements will be realized and actual results may differ
materially from those contemplated by such forward-looking statements. Factors
that may cause such differences include those discussed under the caption “Item
1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December
31, 2008.





Many of
these factors are beyond our control. Forward-looking statements contained
herein speak only as of the date hereof. We undertake no obligation to publicly
release the result of any revisions to these forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.





Executive
Summary





Our
Company owns and operates and/or programs 27 television stations in 17 mid-sized
markets in the United States. Our operating revenues are derived primarily from
the sale of advertising time to local and national advertisers and, to a lesser
extent, from digital revenues, network compensation, barter and other
revenues.





During
the nine months ended September 30, 2009, we recorded a net loss of $1.6
million, which included an impairment charge of $39.9 million related to our
broadcast licenses and goodwill.  The impairment charge is a result of
the continued decline in advertising revenues at certain of our stations driven
by the ongoing economic recession.





During
the three and nine months ended September 30, 2009, we experienced declines in
revenues compared to the same periods in 2008.  These declines in
revenues were in excess of our original 2009 plan and we anticipate continued
weakness in revenues during the remainder of this year. As a result, and to
ensure continued compliance with the financial covenants in our credit
agreement, on July 31, 2009 we entered into the Amended Credit Agreement. 
For further information regarding the terms of the Amended Credit Agreement, see
Liquidity and Capital Resources.





Critical Accounting Policies and
Estimates and Recently Issued Accounting Pronouncements





Certain
of our accounting policies, as well as estimates that we make, are critical to
the presentation of our financial condition and results of operations since they
are particularly sensitive to our judgment. Some of these policies and estimates
relate to matters that are inherently uncertain. The estimates and judgments we
make affect the reported amounts of our assets, liabilities, revenues and
expenses, and related disclosures of contingent liabilities. On an on-going
basis, we evaluate our estimates, including those related to intangible assets
and goodwill, receivables and investments, program rights, income taxes,
stock-based compensation, employee medical insurance claims, pensions, useful
lives of property and equipment, contingencies, barter transactions, acquired
asset valuations and litigation. We base our estimates on historical experience
and on various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions, and it is possible that such differences could have a
material impact on our consolidated financial statements. For a more detailed
explanation of the judgments made in these areas and a discussion of our
accounting policies, refer to “Critical Accounting Policies, Estimates and
Recently Issued Accounting Pronouncements” included in Item 7, and Note 1 -
“Summary of Significant Accounting Policies” included in Item 15 of our Annual
Report on Form 10-K for the year ended December 31, 2008.





23
 Table of Contents


Recent
Accounting Pronouncements





In
October 2009, the FASB issued ASU 2009-15 “Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging
Issues Task Force” (“ASC 470-20”). ASC 470-20 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. ASC 470-20 addresses how to separate
deliverables and how to measure and allocate arrangement consideration to one or
more units of accounting. We plan to adopt ASC 470-20 effective June 30, 2010,
and we do not expect it to have a material impact on our financial position or
results of operations.





In August
2009, the FASB issued ASU 2009-05 “Measuring Liabilities at Fair Value” (“ASC
820-10”). ASC 820-10 is effective for the first reporting period, including
interim periods, beginning after issuance. ASC 820-10 clarifies the application
of certain valuation techniques in circumstances in which a quoted price in an
active market for the identical liability is not available and clarifies that
when estimating the fair value of a liability, the fair value is not adjusted to
reflect the impact of contractual restrictions that prevent its transfer. ASC
820-10 becomes effective for us on October 1, 2009.  We adopted ASC
820-10 effective September 30, 2009, and it did not have a material impact on
our financial position or results of operations.





In June
2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)”
(“FAS 167”).  FAS 167 is effective for interim and annual reporting
periods beginning after November 15, 2009. FAS 167 amends certain guidance in
FIN 46(R) to eliminate the exemption for special purpose entities, require a new
qualitative approach for determining who should consolidate a variable interest
entity and change the requirement for when to reassess who should consolidate a
variable interest entity. We plan to adopt FAS 167 effective January 1,
2010, and we do not expect it to have a material impact on our financial
position or results of operations.





In June 2009, the FASB issued FAS 166
“Accounting for Transfers of Financial Assets – an amendment of FAS Statement
No. 140” (“FAS 166”). FAS 166 is effective for interim and annual reporting
periods beginning after November 15, 2009 and must be applied to transfers
occurring on or after the effective date.  FAS 166 clarifies that the
objective of paragraph 9 of Statement 140 is to determine whether a transferor
and all of the entities included in the transferor’s financial statements being
presented have surrendered control over transferred financial
assets.We plan to adopt FAS 166 effective
January 1, 2010, and we do not expect it to have a material impact on our
financial position or results of operations.





In May
2009, the FASB issued ASC 855-10 “Subsequent Events” (“ASC 855-10”). ASC 855-10
is effective for interim and annual reporting periods ending after June 15,
2009. ASC 855-10 introduces the concept of financial statements being available
to be issued and requires disclosure of the date through which an entity has
evaluated subsequent events and the basis for that date. We adopted ASC 855-10
effective June 30, 2009 and included the required disclosure in Note 14 –
“Subsequent Events”. ASC 855-10 did not have a material impact on our financial
position or results of operations.





In April
2009, the FASB issued ASC 825-10, “Interim Disclosures about Fair Value of
Financial Instruments” (“ASC 825-10”), which requires public entities to
disclose in their interim financial statements the fair value of all financial
instruments within the scope of FASB Statement No. 107, “Disclosures about Fair
Value of Financial Instruments”, as well as the method(s) and significant
assumptions used to estimate the fair value of those financial instruments.
 We adopted the provisions of ASC 825-10 by including the required
additional financial statement disclosures as of June 30, 2009 in Note 6 –
Derivative Financial Instruments and Note 7 - Fair Value Measurement.  The
adoption of ASC 825-10 had no financial impact on our financial position or
results of operations.





24
 Table of Contents


Also in
April 2009, the FASB issued ASC 320-10, “Recognition and Presentation of
Other-Than-Temporary Impairments” (“ASC 320-10”), to change the method for
determining whether an other-than-temporary impairment exists for debt
securities and the amount of an impairment charge to be recorded in earnings.
 ASC 320-10 also requires enhanced disclosures, including the Company’s
methodology and key inputs used for determining the amount of credit losses
recorded in earnings. We adopted ASC 320-10 during the second quarter of 2009
and the adoption had no impact on our financial position or results of
operations.





Additionally,
in April 2009 the FASB issued ASC 820-10, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (“ASC 820-10”). ASC
820-10 provides additional guidance to highlight and expand on the factors that
should be considered in estimating fair value when there has been a significant
decrease in market activity for a financial asset. ASC 820-10 also requires new
disclosures relating to fair value measurement inputs and valuation techniques
(including changes in inputs and valuation techniques). We adopted ASC 820-10
during the second quarter of 2009.  The adoption of ASC 820-10 had no
impact on our financial position or results of operations.  See Note 4
(Fair Value) for further detail.





Effective
January 1, 2009, the Company adopted ASC 805-10, “Business Combinations” (“ASC
805-10”). ASC 805-10 establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any non-controlling interest in the
acquiree; how the acquirer recognizes and measures the goodwill acquired in a
business combination; and how the acquirer determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The adoption of ASC 805-10 did
not have a material impact on our financial position or results of operations as
of or for the period ended September 30, 2009.





In
December 2008, the FASB issued ASC 715-10, “Employers’ Disclosures about
Postretirement Benefit Plan Assets” (“ASC 715-20”). ASC 715-20 is effective for
fiscal years ending after December 15, 2009. ASC 715-20 increases disclosure
requirements related to an employer’s defined benefit pension or other
postretirement plans.  We plan to adopt ASC 715-10 effective December
31, 2009, and we do not expect it to have a material impact on our financial
position or results of operations.





In
November 2008, the FASB issued ASC 605-25, “Revenue Arrangements with Multiple
Deliverables” (“ASC 605-25”). ASC 605-25 is effective for revenue arrangements
entered into or materially modified in fiscal years beginning on or after
December 31, 2009 and shall be applied on a prospective
basis.  Earlier application is permitted as of the beginning of a
fiscal year. ASC 605-25 addresses some aspects of the accounting by a vendor for
arrangements under which it will perform multiple revenue-generating activities.
We plan to adopt ASC 605-25 effective December 31, 2009, and we do not expect it
to have a material impact on our financial position or results of
operations.








25
 Table of Contents





Results
of Operations





Our
condensed consolidated financial statements reflect the operations, assets and
liabilities of Banks Broadcasting as discontinued for all periods presented. Set
forth below are key components that contributed to our operating results (in
thousands):








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            %
      change
            
            
            %
      of Gross revenues
            
            
            2009
            
            
            2008
            
            
            %
      change
            
            
            %
      of Gross revenuesLocal
      time sales
            $
            51,462
            
            
            $
            60,629
            
            
            
            -15
            %
            
            
            56
            %
            
            $
            156,164
            
            
            $
            191,704
            
            
            
            -19
            %
            
            
            58
            %National
      time sales
            
            24,091
            
            
            
            29,646
            
            
            
            -19
            %
            
            
            26
            %
            
            
            70,463
            
            
            
            94,542
            
            
            
            -25
            %
            
            
            26
            %Political
      time sales
            
            3,032
            
            
            
            11,357
            
            
            
            -73
            %
            
            
            3
            %
            
            
            4,915
            
            
            
            22,678
            
            
            
            -78
            %
            
            
            2
            %Digital
      revenues
            
            10,393
            
            
            
            8,114
            
            
            
            28
            %
            
            
            12
            %
            
            
            29,529
            
            
            
            19,737
            
            
            
            50
            %
            
            
            11
            %Network
      compensation
            
            903
            
            
            
            913
            
            
            
            -1
            %
            
            
            1
            %
            
            
            2,862
            
            
            
            2,838
            
            
            
            1
            %
            
            
            1
            %Barter
      revenues
            
            1,172
            
            
            
            1,088
            
            
            
            8
            %
            
            
            1
            %
            
            
            3,200
            
            
            
            3,754
            
            
            
            -15
            %
            
            
            1
            %Other
      revenues
            
            
            1,166
            
            
            
            1,152
            
            
            
            1
            %
            
            
            1
            %
            
            
            3,103
            
            
            
            2,986
            
            
            
            4
            %
            
            
            1
            %Total
      gross revenues
            
            
            92,219
            
            
            
            112,899
            
            
            
            -18
            %
            
            
            100
            %
            
            
            270,236
            
            
            
            338,239
            
            
            
            -20
            %
            
            
            100
            %Agency
      commissions
            
            
            (10,848
            )
            
            
            (14,095
            )
            
            
            -23
            %
            
            
            -12
            %
            
            
            (31,873
            )
            
            
            (42,668
            )
            
            
            -25
            %
            
            
            -12
            %Net
      revenues
            
            
            81,371
            
            
            
            98,804
            
            
            
            -18
            %
            
            
            88
            %
            
            
            238,363
            
            
            
            295,571
            
            
            
            -19
            %
            
            
            88
            %Operating
      costs and expenses:Direct
      operating
            
            25,635
            
            
            
            28,977
            
            
            
            -12
            %
            
            
            
            
            
            
            79,083
            
            
            
            88,666
            
            
            
            -11
            %Selling,
      general and administrative
            
            
            24,727
            
            
            
            28,321
            
            
            
            -13
            %
            
            
            
            
            
            
            75,089
            
            
            
            85,157
            
            
            
            -12
            %Amortization
      of program rights
            
            
            6,317
            
            
            
            5,856
            
            
            
            8
            %
            
            
            
            
            
            
            18,221
            
            
            
            17,620
            
            
            
            3
            %Corporate
            
            
            4,206
            
            
            
            3,683
            
            
            
            14
            %
            
            
            
            
            
            
            13,193
            
            
            
            14,922
            
            
            
            -12
            %Depreciation
            
            
            7,561
            
            
            
            7,308
            
            
            
            3
            %
            
            
            
            
            
            
            23,135
            
            
            
            22,125
            
            
            
            5
            %Amortization
      of intangible assets
            
            
            24
            
            
            
            44
            
            
            
            -45
            %
            
            
            
            
            
            
            64
            
            
            
            228
            
            
            
            -72
            %Impairment
      of goodwill and intangible assets
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            39,894
            
            
            
            296,972
            
            
            
            -87
            %Restructuring
      charge
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            498
            
            
            
            -
            
            
            
            100
            %(Gain)
      loss from asset sales
            
            
            (886
            )
            
            
            74
            
            
            
            -1297
            %
            
            
            
            
            
            
            (3,544
            )
            
            
            (296
            )
            
            
            1097
            %Total
      operating costs and expenses
            
            67,584
            
            
            
            74,263
            
            
            
            -9
            %
            
            
            
            
            
            
            245,633
            
            
            
            525,394
            
            
            
            -53
            %Operating
      income (loss)
            
            $
            13,787
            
            
            $
            24,541
            
            
            
            44
            %
            
            
            
            
            
            $
            (7,270
            )
            
            $
            (229,823
            )
            
            
            97
            %





Period
Comparison





Revenues





Net revenuesconsist primarily of national, local and political advertising revenues,
net of sales adjustments and agency commissions. Additional but less significant
amounts are generated from Internet revenues, retransmission consent fees,
barter revenues, network compensation, production revenues, tower rental income
and station copyright royalties.





Net
revenues decreased $17.4 million, or 18%, for the three months ended September
30, 2009 compared with the three months ended September 30, 2008. The decrease
was primarily due to: (a) a decrease in local advertising sales of $9.2 million;
(b) a decrease in national advertising sales of $5.6 million; and (c) a decrease
in political advertising sales of $8.3 million. These decreases were partially
offset by: (a) an increase in digital revenue of $2.3 million; (b) an increase
in barter and other revenues of $0.1 million; and (c) a decrease in agency
commissions of $3.3 million.





Net
revenues decreased $57.2 million, or 19%, for the nine months ended September
30, 2009 compared with the nine months ended September 30, 2008. The decrease
was primarily due to: (a) a decrease in local advertising sales of $35.5
million; (b) a decrease in national advertising sales of $24.1 million; (c) a
decrease in political advertising sales of $17.8 million; and (d) a decrease in
network compensation, barter and other revenues of $0.4 million. These decreases
were partially offset by: (a) an increase in digital revenue of $9.8 million;
and (b) a decrease in agency commissions of $10.8 million.





26
 Table of Contents


The
decrease in local and national advertising sales in both periods is primarily
due to the economic downturn that has broadly impacted demand for advertising.
Automotive advertising declined 35% and 41% for the three and nine months ended
September 30, 2009, respectively, compared to the same period in the prior
year.





The
decrease in political advertising sales during the three and nine months ended
September 30, 2009, compared to the same period last year, is a result of the
Presidential, Congressional, state and local elections in 2008 that did not
recur in 2009.





The
increase in digital revenues for the three and nine months ended September 30,
2009, compared to the same period last year, is primarily due to new
retransmission consent agreements reached with cable operators during the second
half of 2008, and an increase in Internet revenues.  The increase in
Internet revenues is a result of new sales initiatives and increased traffic to
our websites.





Operating
Costs and Expenses





Operating costs
and expensesdecreased $6.7 million and $279.8 million, or 9% and 53%,
for the three and nine months ended September 30, 2009 to $67.6 million and
$245.6 million, respectively, compared to the same periods in
2008.  The decreases for the three and nine month periods are
primarily due to an impairment charge of $297.0 million recorded during the
three months ended June 30, 2008 compared to an impairment charge of $39.9
million recorded during the same period of 2009 related to our broadcast
licenses and goodwill.  Additionally, the decreases were due to lower
direct operating and selling, general and administrative expenses, compared to
the same periods in the prior year, primarily attributable to lower employee
costs as a result of headcount reductions completed during the fourth quarter of
2008 and the second quarter of 2009.  The decrease in operating
expenses recognized in the third quarter of 2009 was partially offset by an
increase in corporate expenses due to a deferred compensation benefit that
occurred in the third quarter of 2008 that did not reoccur in the third quarter
of 2009.





Impairment
of broadcast licenses and goodwill





We
recorded an impairment charge of $39.9 million during the second quarter of
2009 that included an impairment to the carrying values of our broadcast
licenses of $37.2 million, relating to 26 of our television stations; and
an impairment to the carrying values of our goodwill of $2.7 million, relating
to two of our television stations. As required by ASC 350-10, “Goodwill and
Other Intangible Assets”, we tested for impairment of our indefinite lived
intangible assets at June 30, 2009, between the required annual tests,
because we believed events had occurred and circumstances changed that would
more likely than not reduce the fair value of our broadcast licenses and
goodwill below their carrying amounts. The need for an impairment analysis at
June 30, 2009 was triggered by the continued decline in advertising revenue at
certain of our stations, due to the ongoing effects of economic decline, that
resulted in downward adjustments to their respective forecasts.





We used
the income approach to test our broadcast licenses for impairments as of
June 30, 2009 and we used the same assumptions as disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2008, except for the
following adjustments: a) the discount rate was adjusted from 11.0% to 12.0%; b)
average market growth rate was adjusted from 1.0% to 0.2%; and c) average
operating profit margins were adjusted from 26.6% to 30.5%.





We used
the income approach to test goodwill for impairments as of June 30, 2009
and we used the same assumptions as disclosed in our Annual Report on Form 10-K
for the year ended December 31, 2008, except for the following adjustments:
a) the discount rate was adjusted from 14.5% to 15.0%; b) average market growth
rate was adjusted from 1.0% to 0.5%; and c) average operating profit margins
were adjusted from 34.0% to 36.4%.





27
 Table of Contents


These
assumptions are based on the actual historical performance of our stations and
management’s estimates of future performance of our stations. The increase in
the discount rate used for our broadcast licenses and goodwill reflects an
increase in the average beta for the public equity of companies in the
television and media sector since December 31, 2008. The changes in the market
growth rates and operating profit margins for both our broadcast licenses and
goodwill reflect changes in the outlook for advertising revenues in certain
markets where our stations operate.





Determining
the fair value of our television stations requires our management to make a
number of judgments about assumptions and estimates that are highly subjective
and that are based on unobservable inputs or assumptions. The actual results may
differ from these assumptions and estimates; and it is possible that such
differences could have a material impact on our financial
statements.





As of
September 30, 2009 there were no indicators that our tangible or intangible
assets were impaired.





For
further discussion on our accounting policy related to impairments refer to
Critical Accounting Policies, Estimates and Recently Issued Accounting
Pronouncements within Item 7. Management’s Discussion and Analysis in our Annual
Report on Form 10-K for the year ended December 31, 2008.





Other
Expense (Income)





Other
expense (income), netdecreased $1.1million during the three months ended
September 30, 2009, compared to the same period in the prior year, primarily due
to a reduction in interest expense of $2.6 million related to the purchase of a
portion of our outstanding 61⁄2%Senior Subordinated Notes and
61⁄2%Senior Subordinated Notes – Class B in
2008 and 2009, offset by other miscellaneous expense items, including a $2.0
million charge for the impairment of a shortfall loan to the NBC joint
venture.





Other (income) expense, net increased
$61.5 million during the nine months ended September 30, 2009, compared to the
same period in the prior year, primarily due to the gain on extinguishment of
debt of $50.1 million that we recorded during the nine months ended September
30, 2009, a decrease in interest expense of $2.8 million due to lower average
borrowings outstanding as a result of the purchase of our 2.50% Exchangeable
Senior Subordinated Debentures in 2008, as well as a reduction in interest
expense of $7.0 million, as a result of the purchase of a portion of our
outstanding 61⁄2%Senior Subordinated Notes and
61⁄2%Senior Subordinated Notes – Class
B.





The
following summarizes the components of our interest expense, net (in
thousands):








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Components
      of interest expenseCredit
      Facility
            
            $
            2,866
            
            
            $
            2,717
            
            
            $
            6,473
            
            
            $
            8,15961⁄2%
      Senior Subordinated Notes
            
            
            4,664
            
            
            
            6,337
            
            
            
            14,561
            
            
            
            19,07861⁄2%
      Senior Subordinated Notes -- Class B
            
            
            2,750
            
            
            
            3,691
            
            
            
            8,677
            
            
            
            11,1102.50%
      Exchangeable Senior Subordinated Debentures
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,803Other
      interest costs
            
            
            979
            
            
            
            496
            
            
            
            2,603
            
            
            
            404Total
      interest expense, net
            
            $
            11,259
            
            
            $
            13,241
            
            
            $
            32,314
            
            
            $
            41,554





(Benefit
From) Provision for Income Taxes





Provision for
(benefit from) income taxesincreased $1.4 million and $80.6 million for
the three and nine months ended September 30, 2009, respectively, as compared to
the same periods in 2008. The increase was primarily due to the impairment
charges to our goodwill and broadcast licenses during 2008. Our effective income
tax rate was 215.1% and 2.1% for the three months ended September 30, 2009 and
2008, respectively.  Our effective income tax rate was 113.7% and
25.7% for the nine months ended September 30, 2009 and 2008,
respectively.





28
 Table of Contents


The
increase in the effective tax rate is due primarily to the impact of the
impairment charges on our pretax income.  The impact of these items on
the effective tax rate was unusually large in proportion to pretax income as
compared to the prior year.





Results
of Discontinued Operations





Our
consolidated financial statements reflect the operations of Banks Broadcasting
as discontinued for all periods presented.





On April
23, 2009, Banks Broadcasting completed the sale of KNIN-TV, a CW affiliate in
Boise, for $6.6 million to Journal Broadcast Corporation. As a result of the
sale we received a distribution of $2.6 million during the quarter ended June
30, 2009. The operating loss for the nine months ended September 30, 2009
includes an impairment charge of $1.9 million to reduce the carrying value of
broadcast licenses to fair value based on the final sale price of KNIN-TV of
$6.6 million. Net loss included within discontinued operations for the nine
months ended September 30, 2009 reflects our 50% share of net losses of Banks
Broadcasting, net of taxes, through the April 23, 2009 disposal
date.





Liquidity
and Capital Resources





Our
principal sources of funds for working capital have historically been cash from
operations and borrowings under our credit facility. At September 30, 2009, we
had unrestricted cash and cash equivalents of $11.8 million, $2.0 million of
restricted cash and a $225.0 million revolving credit facility, of which $22.0
million was available for borrowing, subject to certain covenant
restrictions.





Our total
outstanding debt as of September 30, 2009 was $680.8 million. This excludes the
contingent obligation associated with our guarantee of an $815.5 million
promissory note associated with our joint venture with NBC Universal (see
Note 13 - “Commitments and Contingencies” for further details). The outstanding
debt under our credit facility is due November 4, 2011 and both of our 61⁄2%
Senior Subordinated Notes and 61⁄2% Senior Subordinated Notes – Class B are due
May 15, 2013.





Our
operating plan for the next 12 months requires that we generate cash from
operations, utilize borrowings, and repay amounts, including mandatory
repayments of term loans under our credit facility. Our ability to borrow under
our revolving credit facility is contingent on our compliance with certain
financial covenants, which are measured, in part, by the level of earnings
before interest expense, taxes, depreciation and amortization (“EBITDA”) we
generate from our operations.   During the six months ended June 30,
2009, we experienced declines in revenues compared to the same periods in 2008
which were in excess of our original 2009 plan.  As a result, and to
ensure continued compliance with the financial covenants in our credit
agreement, on July 31, 2009 we entered into an Amended and Restated Credit
Agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as
Administrative Agent, and banks and financial institutions party thereto. 
As of September 30, 2009, we were in compliance with all financial and
non-financial covenants in our credit agreement.





During
the three and nine months ended September 30, 2009, we continued to experience
declines in revenues compared to the same periods in 2008.  These declines
in revenues were in excess of our original 2009 plan and we anticipate continued
weakness in revenues during the remainder of this year.





Under the Amended Credit Agreement, our
aggregate revolving credit commitments are $225.0 million and our outstanding
term loans remained at $69.9 million (as of July 31, 2009). The terms of
the Amended Credit Agreement include, but are not limited to, changes
to financial covenants, including our consolidated leverage ratio, consolidated
interest coverage ratio and consolidated senior leverage ratio, a general
tightening of the exceptions to our negative covenants (principally by means of
reducing the types and amounts of permitted transactions) and an increase in the
interest rates and fees payable with respect to borrowings under the Amended
Credit Agreement.  Certain revised financial condition covenants, and
other key terms, are as follows:





29
 Table of Contents





Prior
            
            
            As
      AmendedConsolidated
      Leverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            7.00
            x
            
            
            9.00
            xOctober
      1, 2009 to December 31, 2009
            
            
            7.00
            x
            
            
            10.50
            xJanuary
      1, 2010 through March 31, 2010
            
            
            6.50
            x
            
            
            10.00
            xApril
      1, 2010 through June 30, 2010
            
            
            6.50
            x
            
            
            9.00
            xJuly
      1, 2010 through September 30, 2010
            
            
            6.00
            x
            
            
            7.50
            xOctober
      1, 2010 and thereafter
            
            
            6.00
            x
            
            
            6.00
            xConsolidated
      Interest Coverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            2.00
            x
            
            
            1.75
            xOctober
      1, 2009 through December 31, 2009
            
            
            2.00
            x
            
            
            1.50
            xJanuary
      1, 2010 through June 30, 2010
            
            
            2.25
            x
            
            
            1.75
            xJuly
      1, 2010 through September 30, 2010
            
            
            2.25
            x
            
            
            2.00
            xOctober
      1, 2010 and thereafter
            
            
            2.25
            x
            
            
            2.25
            xConsolidated
      Senior Leverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            3.50
            x
            
            
            3.75
            xOctober
      1, 2009 through December 31, 2009
            
            
            3.50
            x
            
            
            4.25
            xJanuary
      1, 2010 through March 31, 2010
            
            
            3.50
            x
            
            
            4.00
            xApril
      1, 2010 through June 30, 2010
            
            
            3.50
            x
            
            
            3.75
            xJuly
      1, 2010 through September 30, 2010
            
            
            3.50
            x
            
            
            3.00
            xOctober
      1, 2010 and thereafter
            
            
            3.50
            x
            
            
            2.25
            xInterest
      rate on borrowings
            
            LIBOR + 150bps*
            
            LIBOR
      + 375bps*
      At consolidated leverage of 7x or greater.





The
Amended Credit Agreement revises the calculation of Consolidated Total Debt used
in our consolidated leverage ratios to exclude the netting of cash and cash
equivalents against total debt.





On an
annual basis following the delivery of our year-end financial statements,
the Amended Credit Agreement requires mandatory prepayments of principal,
as well as a permanent reduction in revolving credit commitments, subject to
a computation of excess cash flow for the preceding fiscal year, as more
fully set forth in the Amended Credit Agreement. In addition, the Amended Credit
Agreement restricts the use of proceeds from asset sales or from the issuance of
debt (with the result that such proceeds, subject to certain exceptions, must be
used for mandatory prepayments of principal and permanent reductions in
revolving credit commitments), and includes an anti-cash hoarding provision
which requires that LIN Television Corporation utilize unrestricted cash and
cash equivalent balances in excess of $12.5 million to repay principal amounts
outstanding, but not permanently reduce capacity, under our revolving credit
facility.





In
connection with the Amended Credit Agreement, we incurred costs of approximately
$3.9 million related primarily to lender, arrangement and legal fees, of which,
$3.8 million was capitalized as deferred financing costs and $0.1 million was
recognized as expense during the quarter ended September 30, 2009. 
Additionally, as a result of the Amended Credit Agreement, we expect cash
interest expense, on an annualized basis, to increase by approximately $7.0
million, based on the total principal amounts outstanding as of July 31,
2009.





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 Table of Contents


Our
future ability to generate cash from operations and from borrowings under our
credit facility could be adversely affected by a number of risks, which are
discussed in the Liquidity and Capital Resources section within the Management
Discussion and Analysis in our Annual Report on Form 10-K for the year ended
December 31, 2008.





Our joint venture with NBC Universal
continues to be adversely impacted by the current economic
downturn.Under
an agreement we reached with NBC Universal,  the joint venture may
access the existing $15.0 million debt service reserve fund, defer management
fees to conserve cash balances, and borrow funds under shortfall loans provided
by us and NBC Universal through April 1, 2010, if the joint venturedoes not have sufficient cash to cover
interest obligations under the (the “GECC Note”).  Our obligation
under the shortfall funding agreement is to provide the joint venture with a
shortfall loan on the basis of our 20.38 percentage of economic interest in the
joint venture.During the nine months ended September
30, 2009, the joint venture used approximately $12.9 million of the existing
debt service cash reserves, leaving approximately $2.2 million
available.Based on the most recent 2009 forecast
provided by the joint venture, there will be an estimated debt service shortfall
through December 31, 2009 of $3.0 to $5.0 million.  Additionally,
based on current discussions with the joint venture, we estimate an additional
shortfall of $5.0 to $7.0 million for the first quarter of 2010.  As a
result, as ofSeptember
30, 2009, we have accrued $2.0 million for our estimable and probable
obligations under the shortfall funding agreement which expires on April 1,
2010.  Due to the uncertainty surrounding the joint venture’s ability
to repay the shortfall loan, we have concurrently impaired the loan as of
September 30, 2009.We plan
to use our available cash balances or available borrowings under our credit
facility to fund any shortfall loan.





The joint
venture has not provided a forecast for 2010, and we have not had any
discussions with NBC Universal regarding how, if at all, we and NBC Universal
may share responsibility for any shortfall in cash at the joint venture to cover
interest obligations under the GECC Note after April 1, 2010.  If the joint
venture experiences further cash shortfalls beyond April 1, 2010, it is possible
that we could decide to fund a portion of such cash shortfalls through further
loans or equity contributions to the joint venture, subject to compliance with
restrictions under our senior credit facility and the indentures governing our
senior notes.  We have not accrued for any shortfalls beyond April 1,
2010 as these amounts have been determined to be neither probable nor
estimable.  If the joint venture defaults on its obligations to pay
interest under the GECC Note, GECC would have the right to exercise its remedies
under such note, including enforcing our guarantee of such
note.  Refer to Note 14 – "Commitments and Contingencies" in our
Annual Report on Form 10-K for further information on the organization of the
joint venture and the consequences of an event of default under the GECC Note by
the joint venture to us as it relates to our guarantee of the GECC
Note.





On April
30, 2009, Chrysler LLC (“Chrysler”) filed for Chapter 11 bankruptcy
protection.  On June 1, 2009, General Motors Corporation (“GM”) filed
for Chapter 11 bankruptcy protection.  We currently have a
concentration of credit risk within our accounts receivable due from both
Chrysler and GM.  We have reviewed our reserves related to receivables
from these customers and auto dealers whose advertising campaigns are subsidized
by both Chrysler and GM.  As of September 30, 2009, we have determined
that we are adequately reserved for all receivables due from these customers and
their affiliates.





Repurchase
of Senior Subordinated Notes and Repayment of Other Debt





During
2008, we commenced a plan under Rule 10b5-1 of the Securities Exchange Act of
1934 to purchase a portion of our 61⁄2% Senior Subordinated Notes and 61⁄2% 
Senior Subordinated Notes – Class B at market prices using available balances
under our revolving credit facility and available cash balances. During the nine
months ended September 30, 2009, we purchased a total principal amount of $79.7
million and $42.0 million of our 61⁄2% Senior Subordinated Notes and 61⁄2% Senior
Subordinated Notes – Class B, respectively, under this plan. The total purchase
price for both classes was $68.4 million, resulting in a gain on extinguishment
of debt of $50.1 million, net of a write-off of deferred financing fees and
discount related to the Notes of $1.3 million and $1.9 million, respectively. We
do not currently intend to make further purchases of our 61⁄2% Senior Subordinated
Notes and 61⁄2%  Senior Subordinated Notes – Class B.





Additionally,
during the nine months ended September 30, 2009, we paid $11.9 million of
principal of the term loans and $13.0 million on our outstanding revolving
balance under our credit facility, drew down $81.0 million from our revolving
credit facility and recorded $3.1 million for amortization of the discount on
our 61⁄2%  Senior Subordinated Notes – Class B, bringing our total
outstanding debt balance to $680.8 million as of September 30,
2009.





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 Table of Contents


Contractual
Obligations





On July
31, 2009, we entered into the Amended Credit Agreement, which was filed as
Exhibit 99.1 to our Current Report on Form 8-K filed on August 6, 2009, and more
fully described in “Liquidity and Capital Resources”.





Summary
of Cash Flows





The
following presents summarized cash flow information (in thousands):








Nine
      Months Ended September 30,
            
            
            Increase
      (Decrease)2009
            
            
            2008Cash
      provided by operating activities
            
            $
            18,700
            
            
            $
            65,270
            
            
            $
            (46,570
            )Cash
      used in investing activities
            
            
            (8,458
            )
            
            
            (13,957
            )
            
            
            5,499Cash
      used in financing activities
            
            
            (18,586
            )
            
            
            (75,074
            )
            
            
            56,488Net
      decrease in cash and cash equivalents
            
            $
            (8,344
            )
            
            $
            (23,761
            )
            
            $
            15,417





Net cash provided
by operating activitiesdecreased $46.6 million to $18.7 million for the
nine months ended September 30, 2009 compared to the same period last
year.  The decrease is primarily attributable to a decrease in operating
income of $34.5 million, excluding non-cash impairment charges, compared to the
same period in 2008, in addition to amounts paid during the nine months ended
September 30, 2009 of $9.4 million for restructuring expenses.





Net cash used in
investing activitiesdecreased $5.5 million to $8.5 million for the nine
months ended September 30, 2009 compared to the same period last year.  The
decrease is primarily attributable to a reduction in capital expenditures of
$11.5 million, plus proceeds of $5.9 million received from the sale of KNIN-TV
included within discontinued operations, both of which were offset by $6.0
million paid under our settlement with 54 Broadcasting, along with $1.7 million
of other expenses associated with investing activities that were not incurred
the same period in 2008, a transfer from cash and cash equivalents to restricted
cash of $2.0 million, and $2.6 million of dividends received during the nine
months ended September 30, 2008, which were not received during the same period
in 2009.





Net cash used in
financing activitiesdecreased $56.5 million to $18.6 million for the
nine months ended September 30, 2009. The decrease was primarily due to a
reduction in principal payments on long-term debt of $96.7 million, offset by a
reduction in proceeds from our revolving credit facility of $34.0 million
compared to the same period last year.  During the nine months ended
September 30, 2009, we had proceeds from our revolving credit facility of $81.0
million, offset by amounts paid as part of the purchase of our 61⁄2%  Senior
Subordinated Notes and 61⁄2%  Senior Subordinated Notes – Class
B.





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 Table of Contents


Description
of Indebtedness





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








September
      30,
            
            
            December
      31,2009
            
            
            2008Credit
      Facility:Revolving
      credit loans
            
            $
            203,000
            
            
            $
            135,000Term
      loans
            
            
            65,950
            
            
            
            77,87561⁄2%
      Senior Subordinated Notes due 2013
            
            
            275,883
            
            
            
            355,583$141,316
      and $183,285, 61⁄2% Senior Subordinated Notes due 2013 - Class B, net of
      discount of $5,325 and $8,390 at September 30, 2009 and December 31, 2008,
      respectively
            
            
            135,991
            
            
            
            174,895Total  debt
            
            
            680,824
            
            
            
            743,353Less
      current portion
            
            
            15,900
            
            
            
            15,900Total
      long-term debt
            
            $
            664,924
            
            
            $
            727,453





We repaid
$11.9 million of principal of the term loans, related to mandatory quarterly
payments, under our credit facility, from operating cash balances during the
nine months ended September 30, 2009.  Additionally, during the nine
months ended September 30, 2009, we purchased a portion of our 61⁄2% Senior
Subordinated Notes and 61⁄2% Senior Subordinated Notes – Class B at market prices
using available balances under our revolving credit facility, as previously
described in “Repurchase of Senior Subordinated Notes and Repayment of Other
Debt”.





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








September
      30, 2009
            
            December
      31, 2008Carrying
      amount
            
            $
            680,824
            
            
            $
            743,353Fair
      value
            
            
            568,630
            
            
            
            402,524





On July
31, 2009, we entered into the Amended Credit Agreement, as more fully described
in Liquidity and Capital Resources.





In
connection with the acquisition of RM Media LLC (“RM Media”) on October 2, 2009,
LIN Television issued a $2.2 million unsecured promissory note to McCombs Family
Partners, Ltd. (the “LIN-RM Media Note”) and a subsidiary of LIN Television also
assumed $1.7 million of RM Media's existing indebtedness to McCombs Family
Partners, Ltd. (the “RM Media Note”) and a $1.1 million promissory note to a
financial institution (the “RM Media Bank Note”). The LIN-RM Media Note bears
interest at a rate based on LIBOR plus 4% and matures in full on January 1,
2011.  The RM Media Note, which is secured by certain assets of RM Media
and is guaranteed by  LIN Television, bears interest at a fixed rate
of 6% and matures in installments through December 1, 2012.  The RM Media
Bank Note, which is also guaranteed by LIN Television, bears interest at the
Prime Rate, currently 3.25%, and matures in full on January 1, 2011.





Off-Balance
Sheet Arrangements





As of
September 30, 2009, there had been no material changes in our off-balance sheet
arrangements from those disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2008.








33
 Table of Contents





Item 3. Quantitative and Qualitative Disclosures About Market
Risk





We are
exposed to market risk related to interest rates on borrowings under our credit
facility and other debt. We use derivative financial instruments to mitigate our
exposure to market risks from fluctuations in interest rates. In accordance with
our policy, we do not use derivative instruments unless there is an underlying
exposure, and we do not hold or enter into derivative financial instruments for
speculative trading purposes.





Interest
Rate Risk





Our
long-term debt at September 30, 2009 was $680.8 million, including a current
portion of $15.9 million. The senior subordinated notes bear a fixed interest
rate and borrowings under the Amended Credit Agreement bear an interest rate
based on, at our option, either a) the LIBOR interest rate, or b) an interest
rate that is equal to the greater of the Prime Rate or the Federal Funds
Effective Rate plus 0.5%. In addition, under the Amended Credit Agreement the
rate we select also bears an applicable margin rate of 2.75% for Prime Rate and
Federal Funds Rate based loans or 3.75% for LIBOR based loans. The outstanding
balance of both the term loans and revolving credit loans under our credit
facility was $269.0 million at September 30, 2009.





Accordingly,
we are exposed to potential losses related to increases in interest rates. A
hypothetical 1% increase in the floating rate used as the basis for the interest
charged on the credit facility as of September 30, 2009 would result in an
estimated $2.0 million increase in annualized interest expense assuming a
constant balance outstanding of $269.0 million less the current outstanding loan
amount of $70.0 million covered with an interest rate swap agreement. If we
incur additional indebtedness or amend or replace our current indebtedness, the
current disruption in the capital and credit markets may impact our ability to
refinance our debt or to refinance our debt on terms similar to our existing
debt agreements.





During
the second quarter of 2006, we entered into a contract to hedge a notional $100
million of our credit facility. The interest payments under our credit facility
term loans are based on LIBOR plus an applicable margin rate. To mitigate
changes in our cash flows resulting from fluctuations in interest rates, we
entered into the 2006 interest rate hedge that effectively converted the
floating LIBOR rate-based-payments to fixed payments at 5.33% plus the
applicable margin rate calculated under our credit facility, which expires in
November 2011. We designated the 2006 interest rate hedge as a cash flow hedge.
The fair value of the 2006 interest rate hedge was a liability of $4.9 million
at September 30, 2009. This amount will be released into earnings over the life
of the 2006 interest rate hedge through periodic interest payments.





Item 4. Controls and Procedures





a)
Evaluation of disclosure controls and procedures.





Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures as of September 30, 2009. The term “disclosure controls and
procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
means controls and other procedures of a company that are designed to ensure
that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company’s management, 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 well designed and operated, can provide
only reasonable assurance of achieving its objectives and management necessarily
applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Based on the evaluation of our disclosure controls and
procedures as of September 30, 2009, our Chief Executive Officer and Chief
Financial Officer concluded that, as of such date, our disclosure controls and
procedures were effective at the reasonable assurance level.





34
 Table of Contents





b)
Changes in internal controls.





There
were no changes in our internal control over financial reporting identified in
connection with the evaluation that occurred during the quarter ended September
30, 2009 that have materially affected or are reasonably likely to materially
affect our internal control over financial reporting.





Part II. Other Information





Item 1. Legal Proceedings





We are
involved in various claims and lawsuits that are generally incidental to our
business. We are vigorously contesting all of these matters and believe that
their ultimate resolution will not have a material adverse effect on
us.





Item 1A. Risk Factors





In
addition to the other information in this report, you should carefully consider
the factors discussed in Part I “Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2008, which could materially affect
our business, financial condition or future results.





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





On
October 2, 2009, we acquired RM Media LLC, formerly Red McCombs Media, LP, an
online advertising and media services company based in Austin, Texas. As part of
the merger consideration, LIN TV issued 933,610 shares of Class A common stock
to the former owners of RM Media, at $4.82 per share, for an aggregate value of
$4.5 million. Refer to Note 14 – “Subsequent Events” for further
information.





Item 3. Defaults Upon Senior Securities





None.





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





None.








35
 Table of Contents








Item 5. Other Information





On
October 29, 2009, we entered into amendments to the employment agreements with
our executive officers for the purpose of amending each such executive’s
incentive bonus plan for the 2009 fiscal year to adjust the financial targets to
reflect the effects of the economic downturn and unusually poor market
conditions since the time the financial targets were established in
2008.  The full text of the amendments to the employment agreements
with each of Vincent L. Sadusky, Scott M. Blumenthal, Denise M. Parent, Richard
J. Schmaeling, Robert S. Richter and Nicholas N. Mohamed are attached hereto as
Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 respectively.  Each of
these amendments apply only to the 2009 fiscal year.








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).10.1
            
            Amendment
      to Employment Agreement dated October 29, 2009 between LIN TV Corp, LIN
      Television Corporation and Vincent L. Sadusky10.2
            
            Amendment
      to Employment Agreement dated October 29, 2009 between LIN TV Corp, LIN
      Television Corporation and Scott M. Blumenthal10.3
            
            Amendment
      to Employment Agreement dated October 29, 2009 between LIN TV Corp, LIN
      Television Corporation and Denise M. Parent10.4
            
            Amendment
      to Employment Agreement dated October 29, 2009 between LIN TV Corp, LIN
      Television Corporation and Richard Schmaeling10.5
            
            Amendment
      to Employment Agreement dated October 29, 2009 between LIN TV Corp, LIN
      Television Corporation and Robert Richter10.6
            
            Amendment
      to Employment Agreement dated October 29, 2009 between LIN TV Corp, LIN
      Television Corporation and Nicholas N. Mohamed10.7
            
            Clarification
      of the Supplemental Benefit Retirement Plan of LIN Television Corporation
      and subsidiary companies, dated October 29 200931.1
            
            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.











36
 Table of Contents





SIGNATURES





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





LIN TV CORP.


LIN TELEVISION
CORPORATION





Dated:
November 3,
2009                                                                      By:              
    /s/ Richard J.
Schmaeling


Richard J. Schmaeling


Senior Vice President, Chief Financial


Officer (Principal Financial Officer)





By:              
    /s/Nicholas N.
Mohamed


Nicholas N. Mohamed


Vice President, Controller


(Principal Accounting Officer)














37
 Table of Contents





Table of
Contents





Item 1. Unaudited Consolidated Financial Statements of LIN
      Television CorporationConsolidated Balance Sheets
            39Consolidated Statements of Operations
            40Consolidated Statements of Stockholders’ Deficit and
      Comprehensive Loss
            41Consolidated Statements of Cash Flows
            43Notes to Unaudited Consolidated Financial
      Statements
            44








38
 Table of Contents








Part
      I. Financial InformationItem 1.Unaudited Consolidated Financial Statements of LIN Television
      Corporation.LIN
      Television Corporation.Consolidated Balance Sheets(unaudited)September
      30,
            
            
            December
      31,2009
            
            
            2008(in
      thousands, except share data)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            11,762
            
            
            $
            20,106Restricted
      cash
            
            
            2,000
            
            
            
            -Accounts
      receivable, less allowance for doubtful accounts (2009 - $2,652; 2008 -
      $2,761)
            
            
            61,927
            
            
            
            68,277Program
      rights
            
            
            2,256
            
            
            
            3,311Assets
      held for sale
            
            
            -
            
            
            
            430Other
      current assets
            
            
            5,705
            
            
            
            5,045Total
      current assets
            
            
            83,650
            
            
            
            97,169Property
      and equipment, net
            
            
            166,420
            
            
            
            180,679Deferred
      financing costs
            
            
            9,304
            
            
            
            8,511Program
      rights
            
            
            1,982
            
            
            
            3,422Goodwill
            
            
            114,486
            
            
            
            117,159Broadcast
      licenses and other intangible assets, net
            
            
            392,856
            
            
            
            430,142Assets
      held for sale
            
            
            -
            
            
            
            8,872Other
      assets
            
            
            4,008
            
            
            
            6,640Total
      assets
            
            $
            772,706
            
            
            $
            852,594LIABILITIES,
      PREFERRED STOCK AND STOCKHOLDERS'  DEFICITCurrent
      liabilities:Current
      portion of long-term debt
            
            $
            15,900
            
            
            $
            15,900Accounts
      payable
            
            
            4,666
            
            
            
            7,988Accrued
      expenses
            
            
            45,727
            
            
            
            56,701Program
      obligations
            
            
            10,789
            
            
            
            10,109Liabilities
      held for sale
            
            
            -
            
            
            
            429Total
      current liabilities
            
            
            77,082
            
            
            
            91,127Long-term
      debt, excluding current portion
            
            
            664,924
            
            
            
            727,453Deferred
      income taxes, net
            
            
            153,382
            
            
            
            141,702Program
      obligations
            
            
            2,512
            
            
            
            5,336Other
      liabilities
            
            
            63,219
            
            
            
            69,226Total
      liabilities
            
            
            961,119
            
            
            
            1,034,844Stockholders'deficit:Common
      stock, $0.00 par value, 1,000 shares outstanding
            
            
            -
            
            
            
            -Investment
      in parent company’s stock, at cost
            
            
            (18,005
            )
            
            
            (18,005
            )Additional
      paid-in capital
            
            
            1,103,893
            
            
            
            1,102,448Accumulated
      deficit
            
            
            (1,240,739
            )
            
            
            (1,239,090
            )Accumulated
      other comprehensive loss
            
            
            (33,562
            )
            
            
            (34,634
            )Total
      stockholders' deficit
            
            
            (188,413
            )
            
            
            (189,281
            )Preferred
      stock of Banks Broadcasting, Inc.
            
            
            -
            
            
            
            7,031Total
      deficit
            
            
            (188,413
            )
            
            
            (182,250
            )Total
      liabilities, preferred stock and stockholders'
    deficit
            
            $
            772,706
            
            
            $
            852,594The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements.











39
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LIN
      Television Corporation.Consolidated Statements of Operations(unaudited)Three
      months ended September 30,
            
            
            Nine
      months ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008(in
      thousands)Net
      revenues
            
            $
            81,371
            
            
            $
            98,804
            
            
            $
            238,363
            
            
            $
            295,571Operating
      costs and expenses:Direct
      operating
            
            
            25,635
            
            
            
            28,977
            
            
            
            79,083
            
            
            
            88,666Selling,
      general and administrative
            
            
            24,727
            
            
            
            28,321
            
            
            
            75,089
            
            
            
            85,157Amortization
      of program rights
            
            
            6,317
            
            
            
            5,856
            
            
            
            18,221
            
            
            
            17,620Corporate
            
            
            4,206
            
            
            
            3,683
            
            
            
            13,193
            
            
            
            14,922Depreciation
            
            
            7,561
            
            
            
            7,308
            
            
            
            23,135
            
            
            
            22,125Amortization
      of intangible assets
            
            
            24
            
            
            
            44
            
            
            
            64
            
            
            
            228Impairment
      of goodwill and broadcast licenses
            
            
            -
            
            
            
            -
            
            
            
            39,894
            
            
            
            296,972Restructuring
      charge
            
            
            -
            
            
            
            -
            
            
            
            498
            
            
            
            -(Gain)
      loss from asset dispositions
            
            
            (886
            )
            
            
            74
            
            
            
            (3,544
            )
            
            
            (296
            )Operating
      income (loss)
            
            
            13,787
            
            
            
            24,541
            
            
            
            (7,270
            )
            
            
            (229,823
            )Other
      expense (income):Interest
      expense, net
            
            
            11,259
            
            
            
            13,241
            
            
            
            32,314
            
            
            
            41,554Share
      of loss (income) in equity investments
            
            
            2,000
            
            
            
            (662)
            
            
            
            2,000
            
            
            
            (861
            )Loss
      (income) on extinguishment of debt
            
            
            -
            
            
            
            491
            
            
            
            (50,149
            )
            
            
            4,195Other,
      net
            
            
            (232)
            
            
            
            1,036
            
            
            
            (176)
            
            
            
            622Total
      other expense (income), net
            
            
            13,027
            
            
            
            14,106
            
            
            
            (16,011
            )
            
            
            45,510Income
      (loss) from continuing operations before provision for income
      taxes
            
            
            760
            
            
            
            10,435
            
            
            
            8,741
            
            
            
            (275,333
            )Provision
      for (benefit from) income taxes
            
            
            1,635
            
            
            
            218
            
            
            
            9,944
            
            
            
            (70,666
            )(Loss)
      income from continuing operations
            
            
            (875
            )
            
            
            10,217
            
            
            
            (1,203
            )
            
            
            (204,667
            )Discontinued
      operations:(Loss)
      income from discontinued operations, net of gain from the sale of
      discontinued operations of $11 for the nine months ended September 30,
      2009 and net of provision for income taxes of $74 for the three months
      ended September 30, 2008, and net of (benefit from) provision for income
      taxes of $(628) and $215 for the nine months ended September 30, 2009 and
      2008, respectively
            
            
            -
            
            
            
            (196
            )
            
            
            (446
            )
            
            
            184Net
      (loss) income
            
            $
            (875
            )
            
            $
            10,021
            
            
            $
            (1,649
            )
            
            $
            (204,483
            )The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements.





40
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LIN
      Television CorporationConsolidated Statements of Stockholders' Deficit and
      Comprehensive Loss(unaudited)(in
      thousands, except share data)Investment
      in Parent
              
              
              
              
              
              
              Accumulated
      Other
              
              Total
              
              
              Preferred
      StockCommon
      Stock
              
              
              Company's
      Common      Additional
      Paid-In           
      Accumulated                  
      Comprehensive             Stockholder's
              
              
              of Banks
              
              
              ComprehensiveTotal
      Deficit
              
              Shares
              
              
              Amount
              
              
              Stock, at cost
              
              
              Capital
              
              
              Deficit
              
              
              Loss
              
              
              Deficit
              
              
              Broadcasting
              
              
              LossBalance
      at December 31, 2008
              
              $
              (182,250
              )
              
              
              1,000
              
              
              $
              -
              
              
              $
              (18,005
              )
              
              $
              1,102,448
              
              
              $
              (1,239,090
              )
              
              $
              (34,634
              )
              
              $
              (189,281
              )
              
              $
              7,031Amortization
      of prior service cost, net of tax of $9
              
              
              14
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              14
              
              
              
              14
              
              
              
              -
              
              
              
              14Amortization
      of net loss, net of tax of $50
              
              
              74
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              74
              
              
              
              74
              
              
              
              -
              
              
              
              74Unrealized
      loss on cash flow hedge, net of tax of $653
              
              
              984
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              984
              
              
              
              984
              
              
              
              -
              
              
              
              984Stock-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
      at 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 unaudited consolidated
      financial statements


41
 Table of Contents


LIN
      Television CorporationConsolidated
      Statements of Stockholders' Equity and Comprehensive
  Loss(unaudited)(in
      thousands, except share data)Investment in Parent
              
              
              
              
              
              
              
              Accumulated
      Other
              
              
              Total
              
              
              Preferred
      StockCommon
      Stock
              
              
              Company's
      Common      Additional
      Paid-In         
      Accumulated               
      Comprehensive                   
      Stockholder's
              
              
              of Banks
              
              
              ComprehensiveTotal
      Equity
              
              Shares
              
              
              Amount
              
              
              Stock, at
      cost
              
              
              Capital
              
              
              Deficit
              
              
              Loss
              
              
              Equity
              
              
              Broadcasting
              
              
              LossBalance
      at December 31, 2007
              
              $
              665,144
              
              
              
              1,000
              
              
              $
              -
              
              
              $
              (18,005
              )
              
              $
              1,096,982
              
              
              $
              (408,726
              )
              
              $
              (14,153
              )
              
              $
              656,098
              
              
              $
              9,046Amortization
      of prior service cost, net of tax of $36
              
              
              54
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              54
              
              
              
              54
              
              
              
              -
              
              
              
              54Amortization
      of net loss, net of tax of $57
              
              
              87
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              87
              
              
              
              87
              
              
              
              -
              
              
              
              87Unrealized
      loss on cash flow hedge, net of tax of $123
              
              
              184
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              184
              
              
              
              184
              
              
              
              -
              
              
              
              184Exercises
      of employee and director stock based compensation
              
              
              1,185
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,185
              
              
              
              -
              
              
              
              -
              
              
              
              1,185
              
              
              
              -Stock-based
      compensation, continuing operations
              
              
              3,573
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,573
              
              
              
              -
              
              
              
              -
              
              
              
              3,573
              
              
              
              -Stock-based
      compensation, discontinued operations
              
              
              8
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              8
              
              
              
              -
              
              
              
              -
              
              
              
              8
              
              
              
              -Tax
      benefit from stock option exercises
              
              
              134
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              134
              
              
              
              -
              
              
              
              -
              
              
              
              134
              
              
              
              -Net
      loss
              
              
              (206,434
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (204,483
              )
              
              
              -
              
              
              
              (204,483
              )
              
              
              (1,951
              )
              
              
              (204,483
              )Comprehensive
      loss - September 30, 2008
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (204,158
              )Balance
      at September 30, 2008
              
              $
              463,935
              
              
              
              1,000
              
              
              $
              -
              
              
              $
              (18,005
              )
              
              $
              1,101,882
              
              
              $
              (613,209
              )
              
              $
              (13,828
              )
              
              $
              456,840
              
              
              $
              7,095The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements









42
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LIN
      Television CorporationConsolidated Statements of Cash Flows(unaudited)Nine
      Months Ended September 30,2009
            
            2008(in
      thousands)OPERATING
      ACTIVITIES:Net
      loss
            
            $
            (1,649
            )
            $
            (204,483
            )Loss
      (income) from discontinued operations
            
            
            446
            
            
            (184
            )Adjustment
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
            
            
            23,135
            
            
            22,125Amortization
      of intangible assets
            
            
            64
            
            
            228Impairment
      of goodwill, broadcast licenses and broadcast
    equipment
            
            
            39,894
            
            
            296,972Amortization
      of financing costs and note discounts
            
            
            2,945
            
            
            4,782Amortization
      of program rights
            
            
            18,221
            
            
            17,620Program
      payments
            
            
            (18,322
            )
            
            (19,909
            )(Gain)
      loss on extinguishment of debt
            
            
            (50,149
            )
            
            4,195Share
      of loss (income) in equity investments
            
            
            2,000
            
            
            (861
            )Deferred
      income taxes, net
            
            
            10,462
            
            
            (71,082
            )Stock-based
      compensation
            
            
            1,615
            
            
            3,583Gain
      from asset dispositions
            
            
            (3,539
            )
            
            (296
            )Other,
      net
            
            
            2,120
            
            
            25Changes
      in operating assets and liabilities, net of acquisitions and
      disposals:Accounts
      receivable
            
            
            6,350
            
            
            11,602Other
      assets
            
            
            (164)
            
            
            2,104Accounts
      payable
            
            
            (3,322
            )
            
            (6,822
            )Accrued
      interest expense
            
            
            5,914
            
            
            8,889Other
      accrued expenses
            
            
            (17,220
            )
            
            (2,076
            )Net
      cash provided by operating activities, continuing
      operations
            
            
            18,801
            
            
            66,412Net
      cash used in operating activities, discontinued
      operations
            
            
            (101)
            
            
            (1,142
            )Net
      cash provided by operating activities
            
            
            18,700
            
            
            65,270INVESTING
      ACTIVITIES:Capital
      expenditures
            
            
            (4,772
            )
            
            (16,314
            )Cash
      paid for broadcast license rights
            
            
            (7,561)
            
            
            -Change
      in restricted cash
            
            
            (2,000)
            
            
            -Distributions
      from equity investments
            
            
            -
            
            
            2,649Other
      investments, net
            
            
            -
            
            
            401Net
      cash used in investing activities, continuing
    operations
            
            
            (14,333
            )
            
            (13,264
            )Net
      cash provided by (used in) investing activities, discontinued
      operations
            
            
            5,875
            
            
            (693
            )Net
      cash used in investing activities
            
            
            (8,458)
            
            
            (13,957
            )FINANCING
      ACTIVITIES:Net
      proceeds on exercises of employee and director stock based
      compensation
            
            
            -
            
            
            1,183Proceeds
      from borrowings on long-term debt
            
            
            81,000
            
            
            115,000Principal
      payments on long-term debt
            
            
            (93,280
            )
            
            (190,025
            )Payment
      of long-term debt financing costs
            
            
            (3,662)
            
            
            (1,232)Net
      cash used in financing activities, continuing
    operations
            
            
            (15,942
            )
            
            (75,074
            )Net
      cash used in financing activities, discontinued
      operations
            
            
            (2,644
            )
            
            -Net
      cash used in financing activities
            
            
            (18,586
            )
            
            (75,074
            )Net
      decrease in cash and cash equivalents
            
            
            (8,344
            )
            
            (23,761
            )Cash
      and cash equivalents at the beginning of the period
            
            
            20,106
            
            
            40,031Cash
      and cash equivalents at the end of the period
            
            $
            11,762
            
            $
            16,270Supplemental
      schedule of non-cash investing activities:
                Accrual
      for estimated loan to the joint venture with NBC Universal for cash flow
      shortfalls
            
            $
            2,000
            
            $
            -The
      accompanying notes are an integral part of the unaudited consolidated
      financial statements.








43
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LIN
Television Corporation


Notes to Unaudited Consolidated Financial
Statements





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





Description
of Business


LIN
Television Corporation (“LIN Television”), together with its subsidiaries, is a
television station group operator in the United States. In these notes, the
terms “Company,” “LIN Television,” “we,” “us” or “our” mean LIN Television
Corporation and all subsidiaries included in our unaudited consolidated
financial statements.  LIN Television is the wholly-owned subsidiary
of LIN TV Corp. (“LIN TV”).


Financial
Condition





Our
operating plan for the next 12 months requires that we generate cash from
operations, utilize borrowings, and repay amounts, including mandatory
repayments of term loans under our credit facility. Our ability to borrow under
our revolving credit facility is contingent on our compliance with certain
financial covenants, which are measured, in part, by the level of earnings
before interest expense, taxes, depreciation and amortization (“EBITDA”) we
generate from our operations.   During the six months ended June 30,
2009, we experienced declines in revenues compared to the same periods in 2008,
which were in excess of our original 2009 plan.  As a result, and to
ensure continued compliance with the financial covenants in our credit
agreement, on July 31, 2009 we entered into an Amended and Restated Credit
Agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as
Administrative Agent, and banks and financial institutions party
thereto. For further information regarding the terms of the Amended Credit
Agreement see Note 5 – “Debt”.  As of September 30, 2009, we were in
compliance with all financial and non-financial covenants in our credit
agreement.





During
the three months ended September 30, 2009, we continued to experience declines
in revenues compared to the same periods in 2008.  These declines in
revenues were in excess of our original 2009 plan and we anticipate continued
weakness in revenues during the remainder of this year.





Our joint venture with NBC Universal
continues to be adversely impacted by the current economic
downturn.Under
an agreement we reached with NBC Universal, the joint venture may access the
existing $15.0 million debt service reserve fund, defer management fees to
conserve cash balances, and borrow funds under shortfall loans provided by us
and NBC Universal through April 1, 2010, if the joint venturedoes not have sufficient cash to cover
interest obligations under the General Electric Capital Corporation (“GECC”)
Note.  Our obligation under the shortfall funding agreement is to
provide the joint venture with a shortfall loan on the basis of our 20.38
percentage of economic interest in the joint venture.During the nine months ended September
30, 2009, the joint venture used approximately $12.9 million of the existing
debt service cash reserves, leaving approximately $2.2 million
available.Based on the most recent 2009 forecast
provided by the joint venture, there will be an estimated debt service shortfall
through December 31, 2009 of $3.0 to $5.0 million.  Additionally,
based on current discussions with the joint venture, we estimate an additional
shortfall of $5.0 to $7.0 million for the first quarter of 2010.  As a
result, as ofSeptember
30, 2009, we have accrued $2.0 million for our portion of the estimable and
probable obligations under the shortfall funding agreement which expires on
April 1, 2010.  Due to the uncertainty surrounding the joint venture’s
ability to repay the shortfall loan, we have concurrently impaired the loan as
of September 30, 2009.We plan to use our available cash
balances or available borrowings under our credit facility to fund any shortfall
loan.





The joint
venture has not provided a forecast for 2010, and we have not had any
discussions with NBC Universal regarding how, if at all, we and NBC Universal
may share responsibility for any shortfall in cash at the joint venture to cover
interest obligations under the GECC Note after April 1, 2010.  If the joint
venture experiences further cash shortfalls beyond April 1, 2010, it is possible
that we could decide to fund a portion of such cash shortfalls through further
loans or equity contributions to the joint venture, subject to compliance with
restrictions under our senior credit facility and the indentures governing our
senior notes.  We have not accrued for any shortfalls beyond April 1,
2010 as these amounts have been determined to be neither probable nor
estimable.  If the joint venture defaults on its obligations to pay
interest under the GECC Note, GECC would have the right to exercise its remedies
under such note, including enforcing our guarantee of such
note.  Refer to Note 14 – "Commitments and Contingencies" in our
Annual Report on Form 10-K for further information on the organization of the
joint venture and the consequences of an event of default under the GECC Note by
the joint venture to us as it relates to our guarantee of the GECC
Note.





44
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Basis
of Presentation





Our
consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States (“GAAP”). Our
significant accounting policies are described below.





On July
1, 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Codification (“ASC”) 105-10, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles”,
(collectively, the “Codification”). The Codification establishes the exclusive
authoritative reference for U.S. GAAP for use in financial statements, except
for Securities and Exchange Commission (“SEC”) rules and interpretive releases,
which are also authoritative GAAP for SEC registrants. The Codification
supersedes all existing non-SEC accounting and reporting standards relating to
U.S. GAAP.





Our
consolidated financial statements have been prepared without audit, pursuant to
the rules and regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted pursuant to such rules and regulations.
Certain financial statement accounts have been reclassified in the prior
period financial statements to conform to the current period financial statement
presentation.





In the
opinion of management, the accompanying unaudited interim financial statements
contain all normal recurring adjustments necessary to present fairly our
financial position, results of operations and cash flows for the periods
presented. Due to seasonal fluctuations and other factors, the interim results
of operations are not necessarily indicative of the results to be expected for
the full year.





Use
of Estimates





The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts reported in the
unaudited consolidated financial statements and the notes to the unaudited
consolidated financial 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 and intangible assets, stock-based-compensation, pension costs,
barter transactions, income taxes, employee medical insurance claims, useful
lives of property and equipment, contingencies, litigation and net assets of
businesses acquired.





Changes
in Classifications





In
December 2007, the FASB issued ASC 810-10 “Non-controlling Interests in
Consolidated Financial Statements”, which amends ARB 51, “Consolidated Financial
Statements”. (“ASC 810-10”). ASC 810-10 is effective for quarterly and annual
reporting periods that begin after December 15, 2008. ASC 810-10
establishes accounting and reporting standards with respect to non-controlling
interests (also called minority interests) in an effort to improve the
relevance, comparability and transparency of financial information that a
company provides with respect to its non-controlling interests. The significant
requirements under ASC 810-10 are the reporting of the non-controlling interests
separately in the equity section of the balance sheet and the reporting of the
net income or loss of the controlling and non-controlling interests separately
on the face of the statement of operations. We adopted ASC 810-10 effective
January 1, 2009, and as a result, reclassified the preferred stock of Banks
Broadcasting, Inc. (“Banks Broadcasting”), representing a non-controlling
interest, to the equity section of our balance sheet.





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Recently
Issued Accounting Pronouncements





In
October 2009, the FASB issued ASU 2009-15 “Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging
Issues Task Force” (“ASC 470-20”). ASC 470-20 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. ASC 470-20 addresses how to separate
deliverables and how to measure and allocate arrangement consideration to one or
more units of accounting. We plan to adopt ASC 470-20 effective June 30, 2010,
and we do not expect it to have a material impact on our financial position or
results of operations.





In August
2009, the FASB issued ASU 2009-05 “Measuring Liabilities at Fair Value” (“ASC
820-10”). ASC 820-10 is effective for the first reporting period, including
interim periods, beginning after issuance. ASC 820-10 clarifies the application
of certain valuation techniques in circumstances in which a quoted price in an
active market for the identical liability is not available and clarifies that
when estimating the fair value of a liability, the fair value is not adjusted to
reflect the impact of contractual restrictions that prevent its transfer. ASC
820-10 becomes effective for us on October 1, 2009.  We adopted ASC
820-10 effective September 30, 2009, and it did not have a material impact on
our financial position or results of operations.





In June
2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)”
(“FAS 167”).  FAS 167 is effective for interim and annual reporting
periods beginning after November 15, 2009. FAS 167 amends certain guidance in
FIN 46(R) to eliminate the exemption for special purpose entities, require a new
qualitative approach for determining who should consolidate a variable interest
entity and change the requirement for when to reassess who should consolidate a
variable interest entity. We plan to adopt FAS 167 effective January 1,
2010, and we do not expect it to have a material impact on our financial
position or results of operations.





In June 2009, the FASB issued FAS 166
“Accounting for Transfers of Financial Assets – an amendment of FAS Statement
No. 140” (“FAS 166”). FAS 166 is effective for interim and annual reporting
periods beginning after November 15, 2009 and must be applied to transfers
occurring on or after the effective date.  FAS 166 clarifies that the
objective of paragraph 9 of Statement 140 is to determine whether a transferor
and all of the entities included in the transferor’s financial statements being
presented have surrendered control over transferred financial
assets.We plan to adopt FAS 166 effective
January 1, 2010, and we do not expect it to have a material impact on our
financial position or results of operations.





In May
2009, the FASB issued ASC 855-10 “Subsequent Events” (“ASC 855-10”). ASC 855-10
is effective for interim and annual reporting periods ending after June 15,
2009. ASC 855-10 introduces the concept of financial statements being available
to be issued and requires disclosure of the date through which an entity has
evaluated subsequent events and the basis for that date. We adopted ASC 855-10
effective June 30, 2009 and included the required disclosure in Note 14 –
“Subsequent Events”. ASC 855-10 did not have a material impact on our financial
position or results of operations.





In April
2009, the FASB issued ASC 825-10, “Interim Disclosures about Fair Value of
Financial Instruments” (“ASC 825-10”), which requires public entities to
disclose in their interim financial statements the fair value of all financial
instruments within the scope of FASB Statement No. 107, “Disclosures about Fair
Value of Financial Instruments”, as well as the method(s) and significant
assumptions used to estimate the fair value of those financial instruments.
 We adopted the provisions of ASC 825-10 by including the required
additional financial statement disclosures as of June 30, 2009 in Note 6 –
Derivative Financial Instruments and Note 7 - Fair Value Measurement.  The
adoption of ASC 825-10 had no financial impact on our financial position or
results of operations.





Also in
April 2009, the FASB issued ASC 320-10, “Recognition and Presentation of
Other-Than-Temporary Impairments” (“ASC 320-10”), to change the method for
determining whether an other-than-temporary impairment exists for debt
securities and the amount of an impairment charge to be recorded in earnings.
 ASC 320-10 also requires enhanced disclosures, including the Company’s
methodology and key inputs used for determining the amount of credit losses
recorded in earnings. We adopted ASC 320-10 during the second quarter of 2009
and the adoption had no impact on our financial position or results of
operations.





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 Table of Contents


Additionally,
in April 2009 the FASB issued ASC 820-10, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (“ASC 820-10”). ASC
820-10 provides additional guidance to highlight and expand on the factors that
should be considered in estimating fair value when there has been a significant
decrease in market activity for a financial asset. ASC 820-10 also requires new
disclosures relating to fair value measurement inputs and valuation techniques
(including changes in inputs and valuation techniques). We adopted ASC 820-10
during the second quarter of 2009.  The adoption of ASC 820-10 had no
impact on our financial position or results of operations.  See Note 4
(Fair Value) for further detail.





Effective
January 1, 2009, the Company adopted ASC 805-10, “Business Combinations” (“ASC
805-10”). ASC 805-10 establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any non-controlling interest in the
acquiree; how the acquirer recognizes and measures the goodwill acquired in a
business combination; and how the acquirer determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The adoption of ASC 805-10 did
not have a material impact on our financial position or results of operations as
of or for the period ended September 30, 2009.





In
December 2008, the FASB issued ASC 715-10, “Employers’ Disclosures about
Postretirement Benefit Plan Assets” (“ASC 715-20”). ASC 715-20 is effective for
fiscal years ending after December 15, 2009. ASC 715-20 increases disclosure
requirements related to an employer’s defined benefit pension or other
postretirement plans.  We plan to adopt ASC 715-10 effective December
31, 2009, and we do not expect it to have a material impact on our financial
position or results of operations.





In
November 2008, the FASB issued ASC 605-25, “Revenue Arrangements with Multiple
Deliverables” (“ASC 605-25”). ASC 605-25 is effective for revenue arrangements
entered into or materially modified in fiscal years beginning on or after
December 31, 2009 and shall be applied on a prospective
basis.  Earlier application is permitted as of the beginning of a
fiscal year. ASC 605-25 addresses some aspects of the accounting by a vendor for
arrangements under which it will perform multiple revenue-generating activities.
We plan to adopt ASC 605-25 effective December 31, 2009, and we do not expect it
to have a material impact on our financial position or results of
operations.





Note
2 — Discontinued Operations





Our
consolidated financial statements reflect the operations, assets and liabilities
of Banks Broadcasting as discontinued for all periods presented.





Banks
Broadcasting





On April
23, 2009, Banks Broadcasting completed the sale of KNIN-TV, a CW affiliate in
Boise, for $6.6 million to Journal Broadcast Corporation. As a result of the
sale we received, on the basis of our economic interest in Banks
Broadcasting, a distribution of $2.6 million during the quarter ended June
30, 2009. The operating loss for the nine months ended September 30, 2009
includes an impairment charge of $1.9 million to reduce the carrying value of
broadcast licenses to fair value based on the final sale price of KNIN-TV of
$6.6 million. Net loss included within discontinued operations for the nine
months ended September 30, 2009 reflects our 50% share of net losses of Banks
Broadcasting, net of taxes, through the April 23, 2009 disposal
date.





Banks
Broadcasting distributed $2.5 million to us for the nine months ended September
30, 2008.  We provided no capital contributions to Banks Broadcasting
during either the three or nine months ended September 30, 2009 and
2008.





Following
the sale of KNIN-TV on April 23, 2009, substantially all of the assets of Banks
Broadcasting had been liquidated.





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 Table of Contents


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








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      revenues
            
            $
            -
            
            
            $
            680
            
            
            $
            823
            
            
            $
            2,247Operating
      (loss) income
            
            
            -
            
            
            
            (190
            )
            
            
            (3,141
            )
            
            
            919Net
      (loss) income
            
            
            -
            
            
            
            (196
            )
            
            
            (446
            )
            
            
            184







Note
3 — Equity Investments





Joint
Venture with NBC Universal





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








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Cash
      distributions to SVH from SVO
            
            $
            9,150
            
            
            $
            23,940
            
            
            $
            36,402
            
            
            $
            62,888Income
      to SVH from SVO
            
            $
            9,180
            
            
            $
            19,922
            
            
            $
            18,409
            
            
            $
            53,879Other
      expense, net (primarily interest on the GECC note)
            
            
            (16,491
            )
            
            
            (16,672
            )
            
            
            (49,473
            )
            
            
            (49,655
            )Net
      (loss) income of SVH
            
            $
            (7,311
            )
            
            $
            3,250
            
            
            $
            (31,064
            )
            
            $
            4,224Cash
      distributions to us
            
            $
            -
            
            
            $
            1,630
            
            
            $
            -
            
            
            $
            2,649





During
the three and nine months ended September 30, 2009, we did not recognize our
20.38% share of SVH’s net loss, because the investment was written down to zero
during the year ended December 31, 2008. SVH had
cash on hand of $2.2 million and $15.1 million as of September 30, 2009 and
December 31, 2008, respectively.





During
the quarter ended September 30, 2009, we recognized a contingent liability of
$2.0 million based on our estimate of amounts that we expect to loan to the SVH
joint venture pursuant to our shortfall funding agreement with NBC Universal, as
discussed further in Note 1 and Note 13 – “Commitments and
Contingencies”.  Because of uncertainty surrounding the joint
venture’s ability to repay the shortfall loan, we concluded that it is more
likely than not that the amount of the accrued shortfall loan will not be
recovered within a reasonable period of time, and therefore, the loan was fully
impaired.  Accordingly, we recognized a charge of $2.0 million, which
has been classified as Share of loss (income) in equity investments during the
quarter ended September 30, 2009 to reflect the impairment of the
loan.





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 Table of Contents


Note
4 — Intangible Assets





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








September
      30, 2009
            
            
            December
      31, 2008Gross
      Carrying Amount
            
            
            Accumulated
      Amortization
            
            
            Gross
      Carrying Amount
            
            
            Accumulated
      AmortizationGoodwill
            
            $
            114,486
            
            
            $
            -
            
            
            $
            117,159
            
            
            $
            -Broadcast
      licenses
            
            
            391,803
            
            
            
            -
            
            
            
            429,024
            
            
            
            -Intangible
      assets subject to amortization (1)
            
            
            7,796
            
            
            
            (6,743
            )
            
            
            7,796
            
            
            
            (6,678
            )Total
      intangible assets
            
            $
            514,085
            
            
            $
            (6,743
            )
            
            $
            553,979
            
            
            $
            (6,678
            )


_________





(1)
            Intangibles
      subject to amortization are amortized on a straight line basis and include
      acquired advertising contracts, advertiser lists, advertiser
      relationships, favorable operating leases, tower rental income
      leases, option agreements and network
    affiliations.





We
recorded an impairment charge of $39.9 million during the second quarter of
2009 that included an impairment to the carrying values of our broadcast
licenses of $37.2 million, relating to 26 of our television stations; and
an impairment to the carrying values of our goodwill of $2.7 million, relating
to two of our television stations. As required by ASC 350-10, “Goodwill and
Other Intangible Assets”, we tested for impairment of our indefinite lived
intangible assets at June 30, 2009, between the required annual tests,
because we believed events had occurred and circumstances changed that would
more likely than not reduce the fair value of our broadcast licenses and
goodwill below their carrying amounts. The need for an impairment analysis at
June 30, 2009 was triggered by the continued decline in advertising revenue at
certain of our stations, due to the ongoing effects of the economic downturn,
that resulted in downward adjustments to their respective
forecasts.





We used
the income approach to test our broadcast licenses for impairments as of
June 30, 2009 and we used the same assumptions as disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2008, except for the
following adjustments: a) the discount rate was adjusted from 11.0% to 12.0%; b)
average market growth rate was adjusted from 1.0% to 0.2%; and c) average
operating profit margins were adjusted from 26.6% to 30.5%.





We used
the income approach to test goodwill for impairments as of June 30, 2009
and we used the same assumptions as disclosed in our Annual Report on Form 10-K
for the year ended December 31, 2008, except for the following adjustments:
a) the discount rate was adjusted from 14.5% to 15.0%; b) average market growth
rate was adjusted from 1.0% to 0.5%; and c) average operating profit margins
were adjusted from 34.0% to 36.4%.





These
assumptions are based on the actual historical performance of our stations and
management’s estimates of future performance of our stations. The increase in
the discount rate used for our broadcast licenses and goodwill reflects an
increase in the average beta for the public equity of companies in the
television and media sector since December 31, 2008. The changes in the market
growth rates and operating profit margins for both our broadcast licenses and
goodwill reflect changes in the outlook for advertising revenues in certain
markets where our stations operate.





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Determining
the fair value of our television stations requires our management to make a
number of judgments about assumptions and estimates that are highly subjective
and that are based on unobservable inputs or assumptions. The actual results may
differ from these assumptions and estimates; and it is possible that such
differences could have a material impact on our financial
statements.





The
changes in the carrying amount of goodwill for the nine months and year ended
September 30, 2009 and December 31, 2008 respectively, are as
follows:








2009
            
            
            2008Goodwill
            
            $
            666,812
            
            
            $
            664,103Accumulated
      impairment losses
            
            
            (549,653
            )
            
            
            (128,685
            )Balance
      as of January 1
            
            $
            117,159
            
            
            $
            535,418Tax
      Adjustments
            
            
            -
            
            
            
            2,709Impairments
            
            
            (2,673
            )
            
            
            (420.968
            )Goodwill
            
            $
            666,812
            
            
            $
            666,812Accumulated
      impairment losses
            
            
            (552,326
            )
            
            
            (549,653
            )Balance
      as of September 30, 2009 and December 31, 2008,
    respectively
            
            $
            114,486
            
            
            $
            117,159








As of
September 30, 2009 there were no indicators that our tangible or intangible
assets were impaired. For
further discussion of our accounting policy related to impairments refer to Note
1 – Basis of Presentation and Summary of Significant Accounting Policies in our
Annual Report on Form 10-K for the year ended December 31, 2008.





Note
5 — Debt





Debt
consisted of the following (in thousands):




September
      30,
            
            
            December
      31,2009
            
            
            2008Credit
      Facility:Revolving
      credit loans
            
            $
            203,000
            
            
            $
            135,000Term
      loans
            
            
            65,950
            
            
            
            77,87561⁄2%
      Senior Subordinated Notes due 2013
            
            
            275,883
            
            
            
            355,583$141,316
      and $183,285, 61⁄2% Senior Subordinated Notes due 2013 - Class B, net of
      discount of $5,325 and $8,390 at September 30, 2009 December 31, 2008,
      respectively
            
            
            135,991
            
            
            
            174,895Total
      debt
            
            
            680,824
            
            
            
            743,353Less
      current portion
            
            
            15,900
            
            
            
            15,900Total
      long-term debt
            
            $
            664,924
            
            
            $
            727,453





We repaid
$11.9 million of principal of the term loans, related to mandatory quarterly
payments, under our credit facility, from operating cash balances during the
nine months ended September 30, 2009.





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During
2008, we commenced a plan under Rule 10b5-1 of the Securities Exchange Act of
1934 to purchase a portion of our 61⁄2% Senior Subordinated Notes and 61⁄2% 
Senior Subordinated Notes – Class B at market prices using available balances
under our revolving credit facility and available cash balances. During the nine
months ended September 30, 2009, we purchased a total principal amount of $79.7
million and $42.0 million of our 61⁄2% Senior Subordinated Notes and 61⁄2% Senior
Subordinated Notes – Class B, respectively, under this plan. The total purchase
price for the transactions was $68.4 million, resulting in a gain on
extinguishment of debt of $50.1 million, net of a write-off of deferred
financing fees and discount related to the notes of $1.3 million and $1.9
million, respectively.





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








September
      30, 2009
            
            December
      31, 2008Carrying
      amount
            
            $
            680,824
            
            
            $
            743,353Fair
      value
            
            
            568,630
            
            
            
            402,524








On July
31, 2009, we entered into an Amended Credit Agreement, which provides that our
aggregate revolving credit commitments are $225.0 million and our outstanding
term loans remained at $69.9 million (as of July, 31 2009). The terms of
the Amended Credit Agreement include, but are not limited to, changes
to financial covenants, including our consolidated leverage ratio, consolidated
interest coverage ratio and consolidated senior leverage ratio, a general
tightening of the exceptions to our negative covenants (principally by means of
reducing the types and amounts of permitted transactions) and an increase in the
interest rates and fees payable with respect to the borrowings under the Amended
Credit Agreement.  Certain revised financial condition covenants, and
other key terms, are as follows:








Prior
            
            
            As
      AmendedConsolidated
      Leverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            7.00
            x
            
            
            9.00
            xOctober
      1, 2009 to December 31, 2009
            
            
            7.00
            x
            
            
            10.50
            xJanuary
      1, 2010 through March 31, 2010
            
            
            6.50
            x
            
            
            10.00
            xApril
      1, 2010 through June 30, 2010
            
            
            6.50
            x
            
            
            9.00
            xJuly
      1, 2010 through September 30, 2010
            
            
            6.00
            x
            
            
            7.50
            xOctober
      1, 2010 and thereafter
            
            
            6.00
            x
            
            
            6.00
            xConsolidated
      Interest Coverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            2.00
            x
            
            
            1.75
            xOctober
      1, 2009 through December 31, 2009
            
            
            2.00
            x
            
            
            1.50
            xJanuary
      1, 2010 through June 30, 2010
            
            
            2.25
            x
            
            
            1.75
            xJuly
      1, 2010 through September 30, 2010
            
            
            2.25
            x
            
            
            2.00
            xOctober
      1, 2010 and thereafter
            
            
            2.25
            x
            
            
            2.25
            xConsolidated
      Senior Leverage Ratio:July
      1, 2009 through September 30, 2009
            
            
            3.50
            x
            
            
            3.75
            xOctober
      1, 2009 through December 31, 2009
            
            
            3.50
            x
            
            
            4.25
            xJanuary
      1, 2010 through March 31, 2010
            
            
            3.50
            x
            
            
            4.00
            xApril
      1, 2010 through June 30, 2010
            
            
            3.50
            x
            
            
            3.75
            xJuly
      1, 2010 through September 30, 2010
            
            
            3.50
            x
            
            
            3.00
            xOctober
      1, 2010 and thereafter
            
            
            3.50
            x
            
            
            2.25
            xInterest
      rate on borrowings
            
            LIBOR
      + 150bps*
            
            LIBOR
      + 375bps*
      At consolidated leverage of 7x or greater.





The
Amended Credit Agreement revises the calculation of Consolidated Total Debt used
in our consolidated leverage ratios to exclude the netting of cash and cash
equivalents against total debt.





On an
annual basis following the delivery of our year-end financial statements,
the Amended Credit Agreement requires mandatory prepayments of principal,
as well as a permanent reduction in revolving credit commitments, subject to
a computation of excess cash flow for the preceding fiscal year, as more
fully set forth in the Amended Credit Agreement. In addition, the Amended Credit
Agreement restricts the use of proceeds from asset sales or from the issuance of
debt (with the result that such proceeds, subject to certain exceptions, must be
used for mandatory prepayments of principal and permanent reductions in
revolving credit commitments), and includes an anti-cash hoarding provision
which requires that LIN Television utilize unrestricted cash and cash equivalent
balances in excess of $12.5 million to repay principal amounts outstanding, but
not permanently reduce capacity, under our revolving credit
facility.





In
connection with the Amended Credit Agreement, we incurred costs of approximately
$3.9 million during the third quarter related primarily to lender, arrangement
and legal fees, of which, $3.8 million was capitalized as deferred financing
costs and $0.1 million was recognized as expense during the quarter ended
September 30, 2009. Additionally, as a result of the Amended Credit Agreement,
we expect cash interest expense, on an annualized basis, to increase by
approximately $7.0 million, based on the total principal amounts outstanding as
of July 31, 2009.





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Note
6 — Derivative Financial Instruments





We use
derivative financial instruments in the management of our interest rate exposure
for our long-term debt, principally our credit facility. In accordance with our
policy, we do not use derivative instruments unless there is an underlying
exposure. We do not hold or enter into derivative financial instruments for
speculative trading purposes.





During
the second quarter of 2006, we entered into a contract to hedge a notional
amount of the declining balances of our term loan (“2006 interest rate hedge”).
To mitigate changes in our cash flows resulting from fluctuations in interest
rates, we entered into the 2006 interest rate hedge that effectively converted
floating LIBOR rate-based-payments to fixed payments at 5.33% plus the
applicable margin rate calculated under our credit facility, which expires in
November 2011. We designated the 2006 interest rate hedge as a cash flow hedge.
The fair value of the 2006 interest rate hedge liability was $4.9 million and
$6.5 million at September 30, 2009 and December 31, 2008, respectively. The
effective portion of this amount will be released into earnings over the life of
the 2006 interest rate hedge through periodic interest payments. The notional
amount of the 2006 interest rate hedge was $70.0 million and $81.3 million at
September 30, 2009 and December 31, 2008, respectively. During the three
and nine months ended September 30, 2009, we recorded a charge of
$17,000 and $12,000, respectively, to the Other Expense line within
statement of operations, associated with the ineffective portion of this
hedge.





The 2006
interest rate hedge is carried on our consolidated balance sheet as other
liabilities at fair value, which is calculated using the discounted expected
future cash outflows from a series of three-month LIBOR strips through November
4, 2011, the same maturity date as our credit facility. The fair value of this
derivative was calculated by using observable inputs (Level 2) as defined under
ASC 820-10 as noted in Note 7 – “Fair Value Measurements”.





The 2.50%
Exchangeable Senior Subordinated Debentures that we repurchased in 2008 had
certain embedded derivative features that were required to be separately
identified and recorded at fair value each period. The fair value of these
derivatives upon issuance of the debentures was $21.1 million and this amount
was recorded as an original issue discount and accreted through interest expense
from the date of issuance through May 15, 2008 when they were all tendered to us
and purchased. As a result of the purchase of the debentures, we recorded a gain
of $0.4 million during the first quarter of 2008 to earnings for the remaining
fair value of these derivatives.





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





Loss
      (gain) on Derivative InstrumentsThree
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Mark-to-Market
      Adjustments on:2.50%
      Exchangeable Senior Subordinated Debentures
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            (375
            )2006
      interest rate hedge
            
            
            17
            
            
            
            -
            
            
            
            12
            
            
            
            -$
            17
            
            
            $
            -
            
            
            $
            12
            
            
            $
            (375
            )











Comprehensive
      Income, Net of TaxThree
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Mark-to-Market
      Adjustments on:2006
      interest rate hedge
            
            $
            153
            
            
            $
            32
            
            
            $
            984
            
            
            $
            184$
            153
            
            
            $
            32
            
            
            $
            984
            
            
            $
            184











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The
following table summarizes the balances for our derivative liability included in
other liabilities in our consolidated balance sheet (in thousands):








September
      30, 2009
            
            December
      31, 20082006
      interest rate hedge
            
            $
            4,867
            
            
            $
            6,493








Note
7 – Fair Value Measurement





We record
certain financial assets and liabilities at fair value on a recurring basis
consistent with ASC 820-10. The following table summarizes the financial assets
and liabilities measured at fair value in the accompanying financial statements
using the three-level fair value hierarchy established by ASC 820-10 as of
September 30, 2009 (in thousands):








September
      30, 2009Quoted
      prices in active markets
            
            
            Significant
      observable inputs
            
            
            Total(Level
      1)
            
            
            (Level
      2)Assets:Deferred
      compensation related investments
            
            $
            1,323
            
            
            $
            -
            
            
            $
            1,323Liabilities:2006
      interest rate hedge
            
            
            -
            
            
            
            4,867
            
            
            
            4,867Deferred
      compensation related liabilities
            
            
            1,323
            
            
            
            -
            
            
            
            1,323





The fair
value of our deferred compensation plan is determined based on the fair value of
the investments selected by employees.





Note
8 — Retirement Plans





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








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      periodic pension benefit cost:Service
      cost
            
            $
            -
            
            
            $
            538
            
            
            $
            385
            
            
            $
            1,614Interest
      cost
            
            
            1,587
            
            
            
            1,592
            
            
            
            4,765
            
            
            
            4,776Expected
      return on plan assets
            
            
            (1,641
            )
            
            
            (1,705
            )
            
            
            (4,969
            )
            
            
            (5,115
            )Amortization
      of prior service cost
            
            
            -
            
            
            
            30
            
            
            
            31
            
            
            
            90Amortization
      of net loss
            
            
            -
            
            
            
            48
            
            
            
            165
            
            
            
            144Curtailment
            
            
            -
            
            
            
            -
            
            
            
            438
            
            
            
            -Net
      periodic benefit cost
            
            $
            (54
            )
            
            $
            503
            
            
            $
            815
            
            
            $
            1,509Contributions401(k)
      Plan
            
            $
            56
            
            
            $
            532
            
            
            $
            393
            
            
            $
            1,206Retirement
      plans
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,250Total
      contributions
            
            $
            56
            
            
            $
            532
            
            
            $
            393
            
            
            $
            3,456





We do not
expect to make any contributions to our defined benefit retirement plans during
the remainder of 2009. See Note 11 — “Retirement Plans” included in Item 15 of
our Annual Report on Form 10-K for the year ended December 31, 2008 for a full
description of our retirement plans.





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





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As of
September 30, 2009, our pension plan was underfunded by greater than 20%
primarily due to the significant decline in the equity markets over the last
twelve months. At this funding level, withdrawal restrictions are required by
the Internal Revenue Service for those cash balance participants who request
lump sum distributions. Former employees who request a lump sum distribution
including rollovers will receive 50% of their account balance until the funded
status of our plan increases to above 80%.





Note
9 — Stock-Based Compensation


On June
2, 2009, we completed an exchange offer which enabled employees and non-employee
directors to exchange some or all of their outstanding options to purchase
shares of LIN TV’s Class A common stock, for new options to purchase shares of
LIN TV’s Class A common stock, on a one for one basis.  A total of 257
employees participated in the exchange, in which options to purchase an
aggregate of 2,931,285 shares of LIN TV’s Class A common stock were
exchanged.  The new options have an exercise price of $1.99 per share,
equal to the closing price per share of LIN TV’s Class A common stock on June 2,
2009. The new stock options vest ratably over three years. As a result of the
exchange offer, we will recognize an incremental charge of $2.1 million over the
vesting period of the new grants.
  Note
10 — Restructuring





During
the second quarter of 2009, we recorded a restructuring charge of $0.5 million
as a result of the consolidation of certain activities at our stations which
resulted in the termination of 28 employees.  We made cash payments of
$0.3 million and $0.5 million during the three and nine months ended September
30, 2009 related to this restructuring.





During
the fourth quarter of 2008, we effected a restructuring that included a
workforce reduction and the cancellation of certain syndicated television
program contracts. The total charge for the plan was $12.9 million,
including $4.3 million for a workforce reduction of 144 employees and $8.6
million for the cancellation of the contracts. We made cash payments of
$0.2 million and $8.8 million for the three and nine months ended September
30, 2009, respectively, related to these restructuring activities. Cumulatively
under the plan, we have made payments of $12.4 million through September 30,
2009. As of September 30, 2009, we had $0.5 million in accrued expenses and
accounts payable in the consolidated balance sheet for this restructuring and
expect to make cash payments of $0.1 million during the remainder of 2009 and
the remaining $0.4 million during 2010 and thereafter.





The
following table details the amounts for both of these restructurings for the
three and nine months ended September 30, 2009.




Balance
      as of
              June30,
      2009
            
            
            Three
      Months Ended September 30, 2009
            
            
            Balance
      as of
              September 30,
      2009Charge
            
            
            PaymentsSeverance
      and related
            
            $
            319
            
            
            $
            -
            
            
            $
            319
            
            
            $
            -Contractual
      and other
            
            
            747
            
            
            
            -
            
            
            
            257
            
            
            
            490Total
            
            $
            1,066
            
            
            $
            -
            
            
            $
            576
            
            
            $
            490  Balance
      as of
                December 31,
      2008
              
              
              Nine
      Months Ended September 30, 2009
              
              
              Balance
      as of
                September 30,
      2009Charge
              
              
              PaymentsSeverance
      and related
              
              $
              3,493
              
              
              $
              (498)
              
              
              $
              3,991
              
              
              $
              -Contractual
      and other
              
              
              5,868
              
              
              
              -
              
              
              
              5,378
              
              
              
              490Total
              
              $
              9,361
              
              
              $
              (498)
              
              
              $
              9,369
              
              
              $
              490







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Note
11 – Concentration of Credit Risk





On April
30, 2009, Chrysler LLC (“Chrysler”) filed for Chapter 11 bankruptcy
protection.  On June 1, 2009, General Motors Corporation (“GM”) filed
for Chapter 11 bankruptcy protection.  We currently have a
concentration of credit risk within our accounts receivable due from both
Chrysler and GM.  We have reviewed our reserves related to receivables
from these customers and auto dealers whose advertising campaigns are subsidized
by both Chrysler and GM.  As of September 30, 2009, we have determined
that we are adequately reserved for all receivables due from these customers and
their affiliates.





Note
12 — Income Taxes





We
recorded a provision for income taxes of $1.6 million and $9.9 million for the
three and nine months ended September 30, 2009, respectively, compared to a
provision for income taxes of $.2 million and a benefit of $70.7 million for the
three and nine months ended September 30, 2008, respectively.  Our
effective income tax rate was 215.1% and 2.1% for the three months ended
September  30, 2009 and 2008, respectively.  Our effective income
tax rate was 113.7% and 25.7% for the nine months ended September 30, 2009 and
2008, respectively.





The
increase in the effective tax rate during the three and nine months ended
September 30, 2009, is due primarily to the impact of 2008 impairment
charges on our pretax income, which resulted in an effective tax rate that was
larger in 2009 as a percentage of pretax income as compared to the same periods
in 2008.





Note
13 — Commitments and Contingencies





GECC
Note





GECC
provided debt financing for the joint venture between NBC Universal and us, in
the form of an $815.5 million non-amortizing senior secured note due 2023
bearing interest at an initial rate of 8% per annum until March 2, 2013 and 9%
per annum thereafter. We have a 20.38% equity interest in the joint venture
and NBC Universal has the remaining 79.62% equity interest, in which we and NBC
Universal each have a 50% voting interest.  NBC Universal operates the
two television stations, KXAS-TV, an NBC affiliate in Dallas, and KNSD-TV, an
NBC affiliate in San Diego, pursuant to a management agreement.  NBC
Universal and GECC are both majority-owned subsidiaries of General Electric
Co. LIN TV has guaranteed the payment of principal and interest on the GECC
Note.





The GECC
Note is an obligation of the joint venture and is not an obligation of LIN TV or
LIN Television or any of its subsidiaries. GECC’s only recourse, upon an event
of default under the GECC Note, is to the joint venture, our equity interest in
the joint venture and, after exhausting all remedies against the assets of the
joint venture and the other equity interests in the joint venture, to LIN TV
pursuant to its guarantee of the GECC Note. An event of default under the
GECC Note will occur if the joint venture fails to make any scheduled interest
payment within 90 days of the date due and payable, or to pay the principal
amount on the maturity date.  If the joint venture fails to pay
interest on the GECC Note, and neither NBC Universal nor we make a shortfall
loan 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 the
entire amount due under the GECC Note.





Our joint venture with NBC Universal
continues to be adversely impacted by the current economic
downturn.Under
an agreement we reached with NBC Universal, the joint venture may access the
existing $15.0 million debt service reserve fund, defer management fees to
conserve cash balances, and borrow funds under shortfall loans provided by us
and NBC Universal through April 1, 2010, if the joint venturedoes not have sufficient cash to cover
interest obligations under the GECC Note.  Our obligation under the
shortfall funding agreement is to provide the joint venture with a shortfall
loan on the basis of our 20.38 percentage of economic interest in the joint
venture.During
the nine months ended September 30, 2009, the joint venture used approximately
$12.9 million of the existing debt service cash reserves, leaving approximately
$2.2 million available.Based on the most recent 2009 forecast
provided by the joint venture, there will be an estimated debt service shortfall
through December 31, 2009 of $3.0 to $5.0 million.  Additionally,
based on current discussions with the joint venture, we estimate an additional
shortfall of $5.0 to $7.0 million for the first quarter of 2010.  As a
result, as ofSeptember
30, 2009, we have accrued $2.0 million for our estimable and probable
obligations under the shortfall funding agreement which expires on April 1,
2010.  Due to the uncertainty surrounding the joint venture’s ability
to repay the shortfall loan, we have concurrently impaired the loan as of
September 30, 2009 (see further discussion in Note 3 – Equity
Investments).We plan to
use our available cash balances or available borrowings under our credit
facility to fund any shortfall loan.





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The joint
venture has not provided a forecast for 2010, and we have not had any
discussions with NBC Universal regarding how, if at all, we and NBC Universal
may share responsibility for any shortfall in cash at the joint venture to cover
interest obligations under the GECC Note after April 1, 2010.  If the joint
venture experiences further cash shortfalls beyond April 1, 2010, it is possible
that we could decide to fund a portion of such cash shortfalls through further
loans or equity contributions to the joint venture, subject to compliance with
restrictions under our senior credit facility and the indentures governing our
senior notes.  We have not accrued for any shortfalls beyond April 1,
2010 as these amounts have been determined to be neither probable nor
estimable.  If the joint venture defaults on its obligations to pay
interest under the GECC Note, GECC would have the right to exercise its remedies
under such note, including enforcing our guarantee of such note.





Under the
terms of its guarantee of the GECC Note, LIN TV would be required to make a
payment for an amount to be determined upon occurrence of the following events:
a) there is an event of default; b) neither NBC Universal nor we remedy the
default; and c) after GECC exhausts all remedies against the assets of the joint
venture, the total amount realized upon exercise of those remedies is less than
the $815.5 million principal amount of the GECC Note. Upon the occurrence
of such events, the amount owed by LIN TV to GECC 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) the principal amount and any unpaid
interest due under the GECC Note.  As of December 31, 2008, we
estimated the fair value of the television stations in the joint venture to be
approximately $300 million less than the outstanding balance of the GECC Note of
$815.5 million. During 2009, the joint venture's operating results indicate that
the deficit to fair value as of September 30, 2009 could now be greater than the
estimated $300 million deficit as of December 31, 2008. We fully impaired our
goodwill associated with these television stations during the fourth quarter of
2008.





We
believe the probability is remote that there would be an event of default and
therefore an acceleration of the principal amount of the GECC Note during 2009
and through the expiry of our agreement with NBC Universal on April 1, 2010,
although there can be no assurances that such an event of default will not
occur.  There are no financial or similar covenants in the GECC Note
and, since both NBC Universal and we have agreed to fund interest payments if
the joint venture is unable to do so in 2009 and through the first quarter of
2010, NBC Universal and we are able to control the occurrence of a default under
the GECC Note.





However,
if an event of default under the GECC Note occurs, LIN TV, which conducts all of
its operations through its subsidiaries, could experience material adverse
consequences, including:





·
            GECC, after exhausting all
      remedies against the joint venture, could enforce its rights under the
      guarantee, which could cause LIN TV to determine that LIN Television
      should seek to sell material assets owned by it in order to satisfy LIN
      TV’s obligations under the
guarantee;





·
            GECC’s initiation of proceedings
      against LIN TV under the guarantee, if they result in material adverse
      consequences to LIN Television, would cause an acceleration of LIN
      Television’s credit facility and other outstanding
      indebtedness; and





·
            if the GECC Note is prepaid
      because of an acceleration on default or otherwise, we would incur a
      substantial tax liability of approximately $271.3 million related to our
      deferred gain associated with the formation of the joint
      venture.








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Note
14 — Subsequent Events





Acquisition
of RM Media LLC


On
October 2, 2009, we acquired RM Media LLC, formerly Red McCombs Media, LP ("RM
Media"), an online advertising and media services company based in Austin,
Texas. The acquisition was effected through the merger of RM Media with and into
Primeland Television, Inc., a wholly owned subsidiary of LIN Television
("Primeland"). The aggregate consideration paid by us in connection with the
merger was approximately $7.9 million, which was comprised of approximately $1.2
million paid in cash, $4.5 million paid in the form of shares of LIN’s Class A
common stock, and approximately $2.2 million in the form of an unsecured
promissory note. In addition, in connection with the transaction, Primeland
assumed an aggregate of approximately $2.8 million of RM Media's existing
indebtedness and satisfied certain expenses incurred by RM Media and its former
owners.  As part of the merger consideration, LIN TV issued 933,610
shares of LIN TV’s Class A common stock, from shares held within treasury, to
the former owners of RM Media.  The LIN TV Class A common stock was
issued in a private placement transaction that was exempt from registration
under the Securities Act of 1933, as amended.


The
number of shares of Class A common stock issued by LIN TV to the sellers is
subject to adjustment in the event that LIN TV’s Class A common stock has
decreased in value as of the six month anniversary of the
acquisition.  If the value of the LIN TV Class A common stock as of
the six-month anniversary of the acquisition is less than $4.5 million (such
difference, the “Equity Value Shortfall Amount”), we are obligated, at our
option, to a) issue to the sellers a number of additional shares of LIN TV Class
A common stock having a value as of the six-month anniversary of the
acquisition, equal to the Equity Value Shortfall Amount, b) make a cash payment
to the sellers in an amount equal to the Equity Value Shortfall Amount, or c)
satisfy the Equity Value Shortfall Amount through any combination of the
foregoing we determine appropriate.  In the event that we choose to
issue additional shares of LIN TV Class A common stock to the sellers to satisfy
all or a portion of the Equity Value Shortfall Amount, a final adjustment will
be made at the twelve month anniversary of the acquisition in the event that the
value of such shares as of the 12-month anniversary of the acquisition is less
than or exceeds the Equity Value Shortfall Amount by at least $0.25 per
share.  The merger consideration is also subject to customary
adjustments for working capital and indemnification for claims against the
sellers related to the period prior to the merger.


As of the
date of these Unaudited Consolidated Financial Statements, the initial
allocation of the merger consideration to the assets acquired and liabilities
assumed is not complete, and as such we have not yet determined an estimate for
the amount of goodwill and other intangible assets acquired in the
transaction.  Accordingly, certain disclosures required by ASC 805-10 have
been omitted from these Unaudited Consolidated Financial
Statements.





Disclosure





Our
Unaudited Consolidated Financial Statements for the quarter ended September
30, 2009 were issued on November 3, 2009.  We have determined that no other
events or transactions have occurred through the date of issuance that would
require recognition or disclosure within the Unaudited Consolidated Financial
Statements.




57