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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

For the fiscal year ended December 31, 2002

or

For the transition period from:    Not Applicable        

Commission file number 1-14776

Hearst-Argyle Television, Inc.

(Exact Name of Registrant as Specified in Its Charter)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

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 x No ¨

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act  Rule 12-b2). Yes x No ¨

The aggregate market value of the registrant’s voting common stock held by non-affiliates on March 18, 2003, based on the closing price for the registrant’s Series A Common Stock on such date as reported on the New York Stock Exchange (the “NYSE”), was approximately $611,094,241.36.

Shares of the registrant’s Common Stock outstanding as of March 18, 2003: 92,510,756 shares (consisting of 51,212,108 shares of Series A Common Stock and 41,298,648 shares of Series B Common Stock).

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s Proxy Statement relating to the 2003 Annual Meeting of Stockholders are incorporated by reference into Part III (Items 10, 11, 12 and 13).

FORWARD-LOOKING STATEMENTS

THIS REPORT INCLUDES OR INCORPORATES FORWARD-LOOKING STATEMENTS. THE COMPANY HAS BASED THESE FORWARD-LOOKING STATEMENTS ON THE COMPANY’S CURRENT EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT, CONCERNING, AMONG OTHER THINGS, TRENDS INVOLVING NET REVENUES, CASH FLOW AND OPERATING EXPENSES, INVOLVE RISKS AND UNCERTAINTIES, AND ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS, INCLUDING THE IMPACT OF CHANGES IN NATIONAL AND REGIONAL ECONOMIES, THE COMPANY’S ABILITY TO SERVICE AND REFINANCE ITS OUTSTANDING DEBT, SUCCESSFUL INTEGRATION OF ACQUIRED TELEVISION STATIONS (INCLUDING ACHIEVEMENT OF SYNERGIES AND COST REDUCTIONS), PRICING FLUCTUATIONS IN LOCAL AND NATIONAL ADVERTISING, FUTURE REGULATORY ACTIONS AND CONDITIONS IN THE TELEVISION STATIONS’ OPERATING AREAS, COMPETITION FROM OTHERS IN THE BROADCAST TELEVISION MARKETS SERVED BY THE COMPANY, VOLATILITY IN PROGRAMMING COSTS, THE EFFECTS OF GOVERNMENTAL REGULATION OF BROADCASTING, INDUSTRY CONSOLIDATION, TECHNOLOGICAL DEVELOPMENTS, AND MAJOR WORLD NEWS EVENTS. OTHER MATTERS SET FORTH IN THIS REPORT, OR IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE MAY ALSO CAUSE ACTUAL RESULTS IN THE FUTURE TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. IN LIGHT OF THESE RISKS, UNCERTAINTIES AND ASSUMPTIONS, THE FORWARD-LOOKING EVENTS DISCUSSED IN THIS REPORT MIGHT NOT OCCUR.

PART I

ITEM 1.    BUSINESS

General

Hearst-Argyle Television, Inc. (the “Company”) owns or manages 27 television stations that reach approximately 17.7% of U.S. television households, as well as two radio stations. The Company is one of the country’s largest independent, or non-network-owned, television station groups. The Company’s 12 ABC affiliated television stations cover 8.1% of U.S. television households and comprise the largest ABC affiliate group. The Company’s 10 NBC affiliated television stations cover 7.1% of U.S. television households and comprise the second largest NBC affiliate group. The Company also owns two CBS affiliated television stations and one WB station, and manages one UPN station and one independent station. The Company’s network relationships have expanded over the years to include several strategic joint ventures in the areas of programming, production, syndication, cable retransmission and the Internet, among others.

The Company provides, through its local television stations, free over-the-air programming to television viewing audiences in the communities it serves. The Company’s programming includes network produced programs, locally produced news and entertainment and acquired syndication programs. The Company’s television stations serve the public interest of the local communities in which they operate. Public service announcements, community service projects and political coverage are among the many activities in which the Company is actively engaged.

The Company’s primary source of revenue is the sale of commercial air time to its advertising customers. The Company’s objective is to meet the needs of its advertising customers by delivering mass audiences in key demographics, primarily in the top 100 U.S. markets. The Company’s strategy is to achieve this objective through leadership in local news programming and by providing compelling network and syndicated programs to its viewing audience. Our leadership in local news is driven by the journalistic excellence our stations have demonstrated in the areas of national and local event programming, breaking news, major weather stories and political coverage of issues, candidates, debates, and elections. The leadership of the Company’s television stations is measured by share of demographic audience. The Company typically ranks either first or second in local evening news in 18 of the 23 markets where the Company produces news.

In addition to offering advertising customers over-the-air commercial time, the Company offers customers a variety of marketing programs, including events, sponsorships, fairs, and Internet advertising. Each of the Company’s stations operate a local, Internet-accessed website which provides viewing audiences with additional programming content and advertising customers with an additional distribution channel to reach customers.

For the period ending December 31, 2002, the Company had revenues of $721.3 million, employed 3,179 employees and operated in 24 U.S. markets. The Company is organized under the laws of the State of Delaware and its principal executive offices are located at 888 Seventh Avenue, New York, New York 10106, and its telephone number is (212) 887-6800. The Company’s Series A Common Stock is listed on the New York Stock Exchange under the symbol “HTV”.

Company Background

On August 29, 1997, the Company consummated a merger transaction (the “Hearst Transaction”) whereby The Hearst Corporation (“Hearst”) contributed its television broadcast group and related broadcast operations (the “Hearst Broadcast Group”) to the Company and the Company merged with a wholly-owned subsidiary of Hearst. The Company, which was formed in 1994 as a Delaware corporation under the name Argyle Television, Inc. (“Argyle”), was the surviving corporation of the merger and was renamed “Hearst-Argyle Television, Inc.” The Company began its business operations in January 1995 with the acquisition of three television stations.

Hearst entered the broadcasting business in 1928 with its acquisition of radio station WSOE in Milwaukee, Wisconsin. In the 1930s, Hearst acquired radio station WTAE in Pittsburgh, Pennsylvania, and radio station WBAL in Baltimore, Maryland. In 1948, Hearst launched its first television station, WBAL-TV, in Baltimore, Maryland, which was the nation’s 19^th television station. That same year, WLWT-TV, in Cincinnati, Ohio, later to become an Argyle station, was launched as the nation’s 20^th television station. WDSU-TV, New Orleans, Louisiana, later to become a Company station, was also launched in 1948. In the 1950s, television licenses were granted to Hearst for WTAE-TV, Pittsburgh, Pennsylvania and WISN-TV, Milwaukee, Wisconsin. In the 1980s, Hearst acquired WDTN-TV, in Dayton, Ohio, KMBC-TV, in Kansas City, Missouri, and WCVB-TV, in Boston, Massachusetts. (WDTN-TV was exchanged for another television station in 1998 to comply with Federal Communications Commission (“FCC”) ownership rules then in effect. See “Federal Regulation of Television Broadcasting”). In the 1990s, Hearst acquired WTMV-TV (now WMOR-TV), in Tampa, Florida, and WPBF-TV, in West Palm Beach, Florida, and launched KCWB-TV (now KCWE-TV), in Kansas City, Missouri through a local marketing agreement.

Since the Hearst Transaction, the Company has acquired additional television stations through certain asset purchase, asset exchange or merger transactions, including merger transactions in 1999 with Pulitzer Publishing Company (“Pulitzer”), whereby the Company acquired Pulitzer’s nine television stations and five radio stations, and with Kelly Broadcasting Company applicable to the Company’s television stations in Sacramento, California, and an asset acquisition in 2001 of WMUR-TV, Manchester, New Hampshire (an Imes Communications television station), from WMUR-TV, Inc.

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The Company also holds certain equity investments in Internet Broadcasting Systems, Inc. (“IBS”), ProAct Technologies Corp. (“ProAct”) (formerly Consumer Financial Network, Inc.) and NBC/Hearst-Argyle Syndication, LLC. The Company and IBS have formed a series of local partnerships for the development and management of local news/information/entertainment websites. ProAct provides on-line human resources support to corporations. NBC/Hearst-Argyle Syndication, LLC is a limited liability company formed by NBC Enterprises and the Company as a joint venture to produce and syndicate first-run broadcast and original-for-cable programming. In addition, the Company acquired a minor interest in the Arizona Diamondbacks major league baseball team in connection with the merger transaction with Pulitzer.

As of March 18, 2003, Hearst owned, through its wholly-owned subsidiaries, Hearst Holdings, Inc., a Delaware corporation (“Hearst Holdings”), and Hearst Broadcasting, Inc., a Delaware corporation (“Hearst Broadcasting”), 100% of the issued and outstanding shares of Series B Common Stock, par value $.01 per share, of the Company (the “Series B Common Stock,” and together with the Series A Common Stock, par value $.01 per share, of the Company, the “Series A Common Stock,” the “Common Stock”) and approximately 37.72% of the issued and outstanding shares of the Series A Common Stock, representing in the aggregate approximately 65.52% of the outstanding voting power of the Common Stock. On March 18, 2003, Hearst Broadcasting also owned 300,000 Series A Redeemable Convertible Preferred Securities due 2016 and 500,000 Series B Redeemable Convertible Preferred Securities due 2021 that were issued by Hearst-Argyle Capital Trust, a wholly-owned subsidiary trust of the Company. Hearst Broadcasting may convert the Series A Redeemable Convertible Preferred Securities and Series B Redeemable Convertible Preferred Securities for securities of the Company that are convertible into 1,587,670 shares of the Company’s Series A Common Stock, representing in the aggregate approximately 1.69% of the outstanding voting power of the Common Stock as of March 18, 2003.

Through its ownership of the Series B Common Stock, Hearst Broadcasting is entitled to elect as a class all but two members of the Board of Directors of the Company (the “Board”). Holders of the Series A Common Stock, together with the Company’s Series A Preferred Stock, par value $.01 per share, and Series B Preferred Stock, par value $.01 per share, are entitled to elect the remaining two members of the Board. In connection with Hearst’s contribution of its broadcast group to Argyle on August 29, 1997, Hearst agreed that, for as long as it held any shares of Series B Common Stock and to the extent that Hearst during such time also held any shares of Series A Common Stock, it would vote its shares of Series A Common Stock with respect to the election of directors only in the same proportion as the shares of Series A Common Stock not held by Hearst are so voted.

The Stations

Of the 27 television stations the Company owns or manages, 20 are in the top 50 of the 210 generally recognized geographic designated market areas (“DMAs”) according to Nielsen Media Research (“Nielsen”) estimates for the 2002-2003 television broadcasting season. The Company owns 24 television stations. In addition, the Company manages three television stations (WMOR-TV in the Tampa, Florida market, WPBF-TV in the West Palm Beach, Florida market and KCWE-TV in the Kansas City, Missouri market) and two radio stations (WBAL (AM) and WIYY (FM) in Baltimore, Maryland), all of which, except KCWE-TV, are owned by Hearst. The Company’s management of KCWE-TV allows Hearst to fulfill its obligations under a Program Service and Time Brokerage Agreement between Hearst and the licensee of KCWE-TV (the “Missouri LMA”).

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The following table sets forth certain information for each of the Company’s owned and managed television stations:

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The following table sets forth certain information for each of the Company’s managed radio stations:

The Company has an option to acquire WMOR-TV and Hearst’s interests and option with respect to KCWE-TV (together with WMOR-TV, the “Option Properties”), as well as a right of first refusal with respect to WPBF-TV (if such station is proposed by Hearst to be sold to a third party). The right of first refusal and the option period for each Option Property terminate in August 2003. The purchase price for the Option Properties is the fair market value of the station as determined by the parties, or an independent third-party appraisal, subject to certain specified parameters. If Hearst elects to sell an Option Property prior to the commencement of, or during, the option period, the Company will have a right of first refusal to acquire such Option Property. The exercise of the option and the right of first refusal will be by action of the independent directors of the Company, and any option exercise may be withdrawn by the Company after receipt of the third-party appraisal.

Network Affiliations

General.    Each of the Company’s owned or managed television stations (collectively, the “Stations”) is affiliated with one of the following networks pursuant to a network affiliation agreement: ABC, NBC, CBS, UPN and WB (each, a “Network”), except WMOR-TV in Tampa, Florida, which was for two years a WB affiliate and is currently operating as an independent station. Each affiliation agreement provides the affiliated Station with the right to rebroadcast all programs transmitted by the Network with which the Station is affiliated. In return, the Network has the right to sell a substantial majority of the advertising time during such broadcasts. The long established networks have traditionally paid compensation to an affiliate in exchange for the broadcasting of network programming. In recent years, network compensation has been sharply reduced and in the future it may be eliminated. The Company’s affiliation agreements with NBC referred to below provide for compensation that is weighted toward the first part of the term and declines to zero by the end of the term. The more recently established networks (FOX, UPN, WB and PAX) generally pay little or no cash compensation for the clearance of network programming. The Company seeks to maintain business relationships with the Networks which are broader than the matters covered by the terms of the affiliation agreements. The affiliation agreements focus on specific operational matters that include provisions for renewal, term, program time periods and network compensation, among other provisions. Affiliate agreements have been modified over time to reflect the adaptation and evolution of the relationship to ensure competitiveness and viability in a very dynamic industry. With a few exceptions, the Company’s network affiliation relationships span many decades. These relationships have evolved to include new strategic partnerships and ventures, providing ongoing and mutual benefits to both the Company and its Network partners.

Twelve of the Stations have network affiliation agreements with ABC, 10 of the Stations have agreements with NBC, two of the Stations have agreements with CBS, one of the Stations has an agreement with WB and one of the Stations has an agreement with UPN. In addition, the Company’s two radio stations have an affiliation agreement with a network that provides certain content (i.e., news, sports, etc.) for the stations. The Company’s radio stations are less dependent on their affiliation agreement for programming. As noted below, the affiliation relationships for the majority of the Stations exceed 40 years duration and, for certain Stations, have continued for more than 50 years. Although the Company does not expect that its network affiliation agreements will be terminated and expects to continue to be able to renew its network affiliation agreements, no assurance can be given that such agreements will not be terminated or that renewals will be obtained on as favorable terms or at all.

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ABC.    The period of affiliation, as of December 2002, for the Company’s ABC-TV Network affiliated stations is as follows: KMBC-47 years; WISN-25 years; WCVB-30 years; WTAE-44 years; KETV-45 years; KOAT-49 years; WAPT-32 years; KITV-43 years; WPBF-13 years; WMUR-48 years; KHBS/KHOG-24 years and KOCO-48 years.

The term of the affiliation agreements for the Company’s ABC-TV Network affiliated stations expire as follows: KMBC, WISN, WCVB, and WTAE-August 28, 2004; KETV and KOAT-November 1, 2004; WAPT-March 6, 2005; KITV-January 2, 2005; WPBF-August 31, 2003; WMUR-August 7, 2005; KHBS/KHOG-August 29, 2004 and KOCO-December 31, 2004. The agreements were amended in October 2002 to provide, among other things, certain modifications in the compensation package with ABC for the broadcast rights to Monday Night Football and the programming exclusivity and for KETV, KOAT, WAPT, KITV, WPBF, WMUR, KHBS/KHOG and KOCO the assignability provisions of the agreements. The Company and ABC have commenced discussions for the renewal of the affiliation agreements.

NBC.    The period of affiliation, as of December 2002, for the Company’s NBC-affiliated stations is as follows: WBAL-7 years; WLWT-54 years; WYFF-49 years; WGAL-53 years; WXII-49 years; WPTZ/WNNE-48 years; KSBW-49 years; KCRA-47 years; WESH-45 years and WDSU-54 years.

The term of each affiliation agreement with NBC for its current roster of NBC-affiliated stations—WBAL, WLWT, WYFF, WGAL, WXII, WPTZ/WNNE, KSBW, KCRA, WESH and WDSU—is for a period of nine years, six months, terminating December 31, 2009. In December 2000, the Company entered into a program development and distribution arrangement with the NBC Owned and Operated Stations and Gannett Broadcasting. That arrangement is in addition to the NBC/Hearst-Argyle Syndication, LLC formed by NBC and the Company in 2001. In addition, Internet Broadcasting Systems (IBS) provides website development and operating services to the NBC Television Stations Division (as noted above, the Company has an equity investment in IBS and IBS also provides similar services to the Company). In June 2001, the Company entered into Joint Sales Agreements with affiliates or subsidiaries of Paxson Communications Corporation (“Paxson”), pursuant to which Company stations serving Sacramento, California (KCRA-TV), Orlando, Florida (WESH-TV), New Orleans, Louisiana (WDSU-TV) and Greensboro, North Carolina (WXII-TV) provide local advertising sales and related services to the respective Paxson stations in those markets in return for compensation from Paxson. Paxson entered into separate arrangements with NBC.

CBS.    The period of affiliation, as of December 2002, for the Company’s CBS-affiliated stations is as follows: KCCI-47 years and WLKY-12 years. The term of the CBS affiliation agreements with KCCI and WLKY are for an initial term of 10 years (through June 30, 2005) and are subject to successive five year renewals unless either party gives notice of intent not to renew at least six months prior to the end of the initial or any successive term.

UPN and WB.    The period of affiliation, as of December 2002, for KCWE, the Company’s UPN affiliate, is four years and the period of affiliation for KQCA, the Company’s WB affiliate, is four years. The UPN affiliation agreement with KCWE is for an initial 10-year term (through August 31, 2008). The WB affiliation agreement with KQCA is for a term of five years (through September 30, 2003). Unlike affiliates of ABC or NBC, WB affiliates may be required to pay the network compensation based upon ratings generated by the station in return for the broadcast rights to the network’s programming. Both UPN and WB have the right to terminate their affiliation agreements in the event of a material breach of such agreement by a station and in certain other circumstances.

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The Commercial Television Broadcasting Industry

General.    Commercial television broadcasting began in the United States on a regular basis in the 1940s. Currently, a limited number of channels are available for broadcasting in any one geographic area, and a license to operate a television station must be granted by the FCC. Television stations that broadcast over the VHF band (channels 2-13) of the spectrum generally have some competitive advantage over television stations that broadcast over the UHF band (channels above 13) of the spectrum because the former usually have better signal coverage and operate at a lower transmission cost. The improvement of UHF transmitters and receivers, the complete elimination from the marketplace of VHF-only receivers and the expansion of cable television and satellite delivery systems, however, have reduced to some extent the VHF signal advantage. The FCC reports that as of December 31, 2002, there were 1,338 commercial television stations on the air in the United States, of which 755 were UHF and 583 were VHF.

All television stations in the country are grouped by Nielsen, a national audience measuring service, into 210 generally recognized television markets that are ranked in size according to various formulae based upon actual or potential audience. Each market is designated as an exclusive geographic area consisting of all counties in which the home-market commercial stations receive the greatest percentage of total viewing hours. These specific geographic markets are referred to by Nielsen as Designated Market Areas (“DMAs”). Nielsen periodically publishes data on estimated audiences for the television stations in the various markets throughout the country.

Historically, three broadcast networks—ABC, NBC and CBS—dominated broadcast television. Fox effectively has evolved into the fourth network, even though it produces less prime time programming than the other major networks. In addition, UPN, WB and, more recently, PAX have launched television networks. Stations that operate without network affiliations are referred to as “independent” stations. All of the Stations are affiliated with networks, except WMOR-TV, which is an independent station.

The affiliation by a station with a network has an impact on the composition of the station’s programming, revenues, expenses and operations, with the significance of the impact determined by the network, the station and its market. A typical affiliate of a major network receives significant programming, including prime time programming, from the network. This programming, along with network compensation, if paid, is provided to the affiliate by the network in exchange for a substantial majority of the advertising time sold during the airing of network programs. The network then sells this advertising time for its own account. Non-network programming typically consists of syndicated programs, original locally produced programs, and often most significantly, local news. The affiliate retains the revenues from time sold during breaks in and between network programs and during programs produced by the affiliate or purchased from non-network sources. In addition, a television station may acquire programming though barter arrangements. Under barter arrangements, a national program distributor may receive advertising time in exchange for the programming it supplies, with the station paying either a reduced fee or no fee for such programming.

An independent station, unlike a network-affiliated station, purchases or produces all of the programming that it broadcasts, resulting in generally higher programming costs. The independent station, however, may retain its entire inventory of advertising time and all of the revenues obtained from the sale of such inventory (subject to barter arrangements).

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Television station revenues are derived primarily from local, regional and national advertising (significantly, from local news advertising) and, to a much lesser extent, from network compensation and other sources. Advertising rates are set based upon a variety of factors, including a program’s popularity among the viewers an advertiser wishes to attract, the number of advertisers competing for the available time, the size and demographic makeup of the market served by the station and the availability of alternative advertising media in the market area. Rates also are determined by a station’s overall ratings and share in its market, as well as the station’s ratings and share among particular demographic groups that an advertiser may be targeting. Because television stations rely on advertising revenues, they are sensitive to cyclical changes in the economy. The size of advertisers’ budgets, which are affected by broad economic trends, affect the broadcast industry in general and the revenues of individual broadcast television stations. The advertising revenues of the stations are generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to and including the holiday season. Additionally, advertising revenues in even -numbered years benefit from advertising placed by candidates for political offices, and demand for advertising time in Olympic broadcasts.

Cable-originated programming is a significant competitor for viewers of broadcast television programming, although no single cable programming network regularly attains audience levels equivalent to any of the major broadcast networks and, collectively, the broadcast-originated signals still constitute the majority of viewing in most cable homes. The advertising share of cable networks has increased during the 1980s and 1990s as a result of the growth in cable penetration (the percentage of television households that are connected to a cable system), increases in made-for-cable programming and increases in cable channels or networks. Notwithstanding such increases in cable viewership and advertising, over-the-air broadcasting remains the major distribution system locally and nationally for mass market television advertising.

Competition

General.    The television broadcast industry is highly competitive. Some of the stations that compete with the Stations are owned and operated by large national or regional companies that may have greater resources, including financial resources, than the Company. Competition in the television industry takes place on three primary levels:

Additional factors material to a television station’s competitive position include signal strength and coverage within a geographic area and assigned frequency or channel position.

Audience.    The Stations compete for audience on the basis of program popularity, which has a direct effect on advertising rates. A significant portion of the daily programming on the Stations is supplied by the network with which each such Station is affiliated. In time periods in which the network provides programming, the Stations are primarily dependent upon the performance of the network programs in attracting viewers. Each Station competes in non-network time periods based on the performance of its programming during such time periods, using a combination of locally-produced news, public affairs and other entertainment programming, including news and syndicated programs, that such Station believes will be attractive to viewers.

Advances in technology may increase competition for household audiences and advertisers. Video compression techniques, now in use with direct broadcast satellites and, potentially soon, in development for cable and wireless cable, are expected to permit greater numbers of channels to be carried within existing bandwidth. These compression techniques, as well as other technological developments, are applicable to all video delivery systems, including over-the-air broadcasting, and have the potential to provide vastly expanded programming to highly targeted audiences. Reduction in the cost of creating additional channel capacity could lower entry barriers for new channels and encourage the development of increasingly specialized niche programming. This ability to reach very narrowly defined audiences is expected to alter the competitive dynamics for advertising expenditures. The Company is unable to predict the effect that technological changes will have on the broadcast television industry or the future results of the Stations.

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Other sources of competition for the Stations include home entertainment systems (including video cassette recorder and playback systems, DVDs, personal video recorders and television game devices), the Internet, multipoint distribution systems, multichannel multipoint distribution systems or “wireless cable” satellite master antenna television systems and other sources of home entertainment. The Stations also face competition from direct broadcast satellite services, such as EchoStar (DISH Network) and DIRECTV, which transmit programming directly to homes equipped with special receiving antennas. The Stations compete with these services both on the basis of service and product performance (quality of reception and number of channels that may be offered) and price (the relative cost to utilize these systems compared to broadcast television viewing).

Programming.    Competition for non-network programming involves negotiating with national program distributors or syndicators that sell first-run and off-network packages of programming. The Stations compete against in-market broadcast stations for exclusive access to off-network reruns (such as Seinfeld) and first-run product (such as the Oprah Winfrey Show). Cable systems generally do not compete with local stations for programming, although various national cable networks from time to time have acquired programs that otherwise would have been offered to local television stations.

Advertising.    Broadcast television stations compete for advertising revenues with other broadcast television stations and with the print media, radio stations, Internet websites and cable system operators serving the same market. Additional competitors for advertising revenues include a variety of other media, including direct marketing. Since greater amounts of advertising time are available for sale by independent stations, independent stations typically achieve a greater proportion of television market advertising revenues relative to their share of the market’s audience. Public broadcasting outlets in most communities compete with commercial broadcasters for viewers but not generally for significant advertising dollars.

Federal Regulation of Television Broadcasting

General.    Broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the “Communications Act of 1934”), most recently amended further by the Telecommunications Act of 1996. The Communications Act of 1934 requires the FCC to regulate broadcasting so as to serve “the public interest, convenience and necessity.” The Communications Act of 1934 prohibits the operation of television broadcasting stations except pursuant to licenses issued by the FCC and empowers the FCC, among other things, to issue, renew, revoke and modify broadcasting licenses; assign frequency bands; determine stations’ frequencies, locations and power; regulate the equipment used by stations; adopt other regulations to carry out the provisions of the Communications Act of 1934; impose penalties for violation of such regulations; and, impose fees for processing applications and other administrative functions. The Communications Act of 1934 prohibits the assignment of a license or the transfer of control of a licensee without prior approval of the FCC. Under the Communications Act of 1934, the FCC also regulates certain aspects of the operation of cable television systems and other electronic media that compete with broadcast stations.

License Renewals.    The process for renewal of broadcast station licenses as set forth under the Communications Act of 1934 has undergone significant change as a result of the Telecommunications Act of 1996. Prior to the passage of the Telecommunications Act of 1996, television broadcasting licenses generally were granted or renewed for a period of five years upon a finding by the FCC that the “public interest, convenience and necessity” would be served thereby. Under the Telecommunications Act of 1996, the statutory restriction on the length of broadcast licenses has been amended to allow the FCC to grant broadcast licenses for terms of eight years. The Telecommunications Act of 1996 requires renewal of a broadcast license if the FCC finds that (i) the station has served the public interest, convenience and necessity; (ii) there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee; and (iii) there have been no other serious violations that taken together constitute a pattern of abuse. In making its determination, the FCC may consider petitions to deny but cannot consider whether the public interest would be better served by issuing the license to a person other than the renewal applicant. Under the Telecommunications Act of 1996, competing applications for the same frequency may be accepted only after the FCC has denied an incumbent’s application for renewal of license.

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The following table provides the expiration dates for the full power station licenses of the Company’s owned and managed television stations: