10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2005
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to

Commission File Number 000-22439

FISHER COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Washington	91-0222175
(State of Incorporation)	(IRS Employer Identification No.)
100 4th Avenue N., Suite 510 Seattle, Washington (Address of principal executive offices)	98109 (Zip Code)

(206) 404-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
None	Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1.25 par value

(Title of Class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes o         No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes o         No þ

     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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ         No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.406 of this chapter) is not contained herein, and will not be contained, to the best of the 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.    o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

     Large accelerated filer o         Accelerated filer þ         Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o         No þ

     As of June 30, 2005, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $323,400,000 based on the closing sale price as reported on the National Association of Securities Dealers Automated Quotation System National Market System.

     The number of shares outstanding of each of the registrant’s classes of common stock as of March 1, 2006 was:

Title of Class	Number of Shares Outstanding
Common Stock, $1.25 Par Value	8,705,041

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2006	Part III

TABLE OF CONTENTS

PART I
	ITEM 1. BUSINESS
	ITEM 1A. RISK FACTORS
	ITEM 1B. UNRESOLVED STAFF COMMENTS
	ITEM 2. DESCRIPTION OF PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6. SELECTED FINANCIAL DATA.
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	ITEM 9A. CONTROLS AND PROCEDURES
	ITEM 9B. OTHER INFORMATION
PART III
	ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
	ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Report of Independent Registered Public Accounting Firm
		CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Schedule II
SIGNATURES
EXHIBIT INDEX
EXHIBIT 2.1
EXHIBIT 10.1
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 10.15
EXHIBIT 10.16
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

PART I

ITEM 1. BUSINESS

      This annual report on Form 10-K contains forward-looking statements that involve known and unknown risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Words such as “may,” “could,” “would,” “should,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” and variations of such words and similar expressions are intended to identify such forward-looking statements. You should not place undue reliance on these forward-looking statements, which are based on our current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties, and assumptions (including those described herein) and apply only as of the date of this report. Our actual results could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” as well as those discussed elsewhere in this annual report.

      Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this annual report to conform such statements to actual results or to changes in our expectations.

Company Description

      Fisher Communications, Inc. is an integrated media company that has been in the broadcasting business since 1926. We own and operate nine network-affiliated television stations and 27 radio stations. We also own a 50% interest in a company that owns a tenth television station. We have long-standing network affiliations with ABC and CBS. Our television and radio stations are located in Washington, Oregon, Idaho and Montana. Seattle and Portland are our two largest markets for both television and radio. We own ABC network affiliates in Seattle and Portland, which are both within the top 25 DMA television markets as determined by Nielsen Media Research. We also own three radio stations in Seattle, the 14th largest radio market, ranked by population, as determined by the Arbitron Company. Our television stations reach 3.6 million households (approximately 3.3% of U.S. television households) according to Nielsen Media Research. Our stations produce quality local programming and have received numerous awards for broadcasting excellence.

      In December 2005 we announced that we signed an agreement to purchase a full-power television station in the Portland, Oregon DMA, as well as low-power television stations and construction permits in certain Idaho communities. The purchase price of $20.3 million may be paid through the use of existing cash and the use of our $20 million revolving line of credit. If we successfully close this transaction, we would have the ability to operate duopolies in three of the markets in which we have existing television stations, with the corresponding potential to share fixed infrastructure expenditures over multiple stations.

      We conduct our operations through two subsidiaries, Fisher Broadcasting Company and Fisher Media Services Company. Our broadcasting operations provided approximately 95% of consolidated revenue from continuing operations in 2005, with television broadcasting accounting for approximately 65% and radio broadcasting accounting for approximately 35% of our 2005 broadcasting revenue.

      Fisher Media Services Company owns and operates Fisher Plaza, a facility located near downtown Seattle that is designed to enable companies to distribute analog and digital media content through numerous distribution channels, including broadcast, satellite, cable, Internet and broadband, as well as other wired and wireless communication systems. Fisher Plaza serves as the home of our corporate offices and our Seattle television and radio stations. Fisher Plaza also houses a variety of companies, including media and communications companies. Fisher Plaza was completed in the summer of 2003 and had a net book value of $117.1 million as of December 31, 2005.

      We also own approximately 3.0 million shares of the common stock of Safeco Corporation, a publicly traded insurance and financial services corporation. We have been a stockholder of Safeco Corporation since

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1923. The market value of our investment in Safeco Corporation common stock as of December 31, 2005 was approximately $169.6 million.

      Fisher Communications, Inc. was founded in 1910, and is incorporated in the state of Washington. We employed 931 full-time employees as of December 31, 2005. Approximately 19% of our workforce, located primarily at our KOMO TV, KATU, and KBCI TV operations, are subject to collective bargaining agreements. We believe we have good working relations with our employees. Note 12 to the Consolidated Financial Statements contains information regarding our industry segments for the years ended December 31, 2005, 2004, and 2003. We report financial data for three reportable segments: television, radio and Fisher Plaza.

Television Broadcasting

      The following table sets forth selected information about our television stations:

										Number of
							Average			Commercial
			DMA(1)		Network		Audience			Stations in		Rank in		Expiration Date of
Station	Market Area		Rank		Affiliation		Share(2)			DMA		Market(2)		Affiliation Agreement
KOMO		Seattle-Tacoma, WA		13		ABC		10.0	%		11		2		August 31, 2009
KATU		Portland, OR		23		ABC		10.0	%		6		3		August 31, 2009
KVAL		Eugene, OR		121		CBS		19.0	%		5		1		February 29, 2016
KCBY		Coos Bay, OR		121		CBS		19.0	%		2		1		February 29, 2016
KPIC(3)		Roseburg, OR		121		CBS		19.0	%		3		1		February 29, 2016
KBCI		Boise, ID		119		CBS		10.8	%		6		2		February 29, 2016
KIMA(4)		Yakima, WA		126		CBS		17.0	%		5		1		February 29, 2016
		Pasco/Richland/
KEPR(4)		Kennewick, WA		126		CBS		10.0	%		5		2		February 29, 2016
KLEW(5)		Lewiston, ID Idaho		NA		CBS		NA			1		NA		February 29, 2016
KIDK		Falls-Pocatello, ID		163		CBS		12.0	%		5		2		February 29, 2016

(1)  DMA represents an exclusive geographic area of counties in which the home market stations are estimated to have the largest quarter-hour audience share. DMA Rank represents the DMA ranking by size of the market area in which our station is located. DMA Rank is based on January 2006 estimates published by Nielsen Media Research. “NA” refers to Not Available.

(2)  Except for the Eugene, Oregon market, average audience share and rank in market are based on Nielsen Media Research data for the February, May, July and November 2005 rating periods, Sunday to Saturday, 6 a.m. to 2 a.m. With respect to the Eugene, Oregon market, average audience share and rank in market are based on BIA Financial Network, Inc. data for the February and May 2005 rating periods, Sunday to Saturday, 9 a.m. to midnight.

(3)	Fisher Broadcasting owns a 50% interest in South West Oregon Television Broadcasting Corporation, licensee of KPIC.
(4)	Station ranking is for two-station group designated as KIMA+ by Nielsen Media Research.
(5)	Although included as part of the Spokane, Washington DMA, KLEW primarily serves the Lewiston, Idaho, Clarkston, Washington audience that is only a small portion of the Spokane DMA.

      We have been affiliated with ABC since 1958 and with CBS since 1999.

Television Markets and Stations

KOMO TV, Seattle-Tacoma, Washington

      Market Overview. KOMO TV operates in the Seattle-Tacoma market, which has approximately 1.7 million television households and a population of approximately 4.2 million. This station has been

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operating since 1953. In 2005, approximately 73% of the population subscribed to cable and 15% subscribed to alternative delivery systems (alternative delivery service includes program delivery via satellite, satellite master antenna systems or multipoint distribution systems) (Nielsen Media Research). The 2005 television revenue for the Seattle-Tacoma DMA was estimated to be $289.7 million, as reported by Miller Kaplan. Of that number, approximately $7.0 million was attributable to political advertising. Major industries in the market include software, aerospace, manufacturing, biotechnology, forestry, telecommunications, transportation, retail and international trade. Major employers include Microsoft, Boeing, Safeco, Paccar, Nintendo, the University of Washington, Washington Mutual, Inc. and Weyerhaeuser.

      Station Performance. KOMO TV’s commitment to be the market leader in local news is manifested on multiple distribution platforms. KOMO TV produces 41.5 hours of live local television news per week on its analog and digital channels. KOMO TV produces Northwest Afternoon, a Monday-Friday, 60-minute talk program, which has been the top-rated local talk show in the Northwest region since its premiere in 1984. The Radio and Television News Directors Association (“RTNDA”) honored KOMO TV News with two Edward R. Murrow national awards — Best News Series and Best Feature in 2003. The National Association of Television Arts and Sciences awarded 14 Emmys to the station for program and individual excellence in 2005.

KATU, Portland, Oregon

      Market Overview. KATU serves the Portland market, which has approximately 1.1 million television households and a population of approximately 2.8 million. Approximately 57% of Portland’s population subscribed to cable in 2005, while approximately 22% of households are listed as subscribers to alternative delivery systems (Nielsen Media Research). The 2005 television revenue for the Portland DMA was estimated to be $163 million, as reported by Miller Kaplan. Of that number, approximately $584,000 was attributable to political advertising. The Portland metro area has a broad base of manufacturing, distribution, wholesale and retail trade, regional government and business services. Major employers in the Portland area include Intel, Nike, Hewlett Packard Development Company, Legacy Health System and Kaiser Permanente.

      Station Performance. KATU currently broadcasts 33 hours of live local news weekly. For over 27 years, KATU has provided local program production for the Portland market. Central to this commitment, the station produces and airs AM Northwest, one of the country’s longest running live Monday-Friday local talk/ information programs. In 2005, KATU won 15 Associated Press awards, including six first place awards for Best Hard News Reporting, Best Continuing Coverage, Best Photojournalist-Breaking News, Best Sports Reporting, Best Sportscast and Best Investigative Reporting. In addition, KATU News received 19 Emmy nominations, winning three, and was honored with six awards from The Society of Professional Journalists, including two First Place Awards.

KVAL TV, KCBY TV, KPIC TV, Eugene, Coos Bay and Roseburg, Oregon

      Market Overview. The KVAL TV broadcast studios are located in Eugene, Oregon. KCBY TV, in Coos Bay, and KPIC TV, in Roseburg, are KVAL’s satellite stations which are defined as full-power terrestrial broadcast stations authorized to retransmit all or part of the programming of a parent station that is ordinarily commonly owned. The population of the Eugene/ Springfield, Roseburg and Coos Bay/ North Bend area is approximately 546,000. The area’s economic base includes forest products, agriculture, high-tech manufacturing, regional hospital and medical services, packaging, tourism and fishing. Major employers include the state’s two major universities — University of Oregon in Eugene and Oregon State University in Corvallis, as well as Hynix Semiconductor, Hewlett-Packard Development Company, Symantec Software, Sacred Heart Medical Center, Monaco Motor Coach, Levi Strauss Company, The Dell Computer Call Center and Roseburg Forest Products.

      Station Performance. KVAL has some of the top nationally syndicated programs including Live with Regis and Kelly, Dr. Phil, The Oprah Winfrey Show, Wheel of Fortune and Jeopardy, as well as the longest tenured local newscast in the market. KVAL does not subscribe to Nielsen Media Research data at this time, but does have access to ongoing qualitative marketing information, including local rating information from The Media Audit, an audience survey that provides various media exposure information, including television

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channels viewed in total and by day parts. KVAL broadcasts 17 hours of live local news per week and rebroadcasts its 6 PM newscast at 6:30 PM on cable Channel 12 on the Eugene/ Springfield Comcast Cable System. KVAL TV produces a local news window on CNN Headline News 17 times per day, every day. KVAL has a long tradition of award-winning news, public affairs programming and information. KVAL, KCBY and KPIC are unique in their broadcast community in that they can broadcast news, information, weather and commercials regionally. In addition to broadcasting its signal throughout the DMA, KVAL has the ability to distribute local content to each of the Eugene, Roseburg, Coos Bay, Florence and Corvallis/ Albany areas.

KIMA TV, KEPR TV, KLEW TV, Yakima and Tri-Cities, Washington and Lewiston, Idaho.

      Market Overview. KEPR TV and KLEW TV are KIMA TV’s satellite stations. KIMA TV serves the Yakima, Washington area and KEPR TV serves the Pasco-Richland-Kennewick (the “Tri-Cities”), Washington area. Yakima and the Tri-Cities areas comprise the Yakima DMA, which serves approximately 588,000 people in approximately 212,000 TV households and has a 51% cable penetration. KLEW TV is the exclusive local station in Lewiston, Idaho and is part of the Spokane, Washington DMA. Lewiston’s KLEW TV serves approximately 165,000 people in approximately 65,000 TV households. Approximately 57% of the population subscribed to cable in 2005, while approximately 30% of households are listed as subscribers to alternative delivery systems.

      The area covered by KIMA, KEPR and KLEW has an economic base that consists primarily of agriculture, nuclear technology, government, manufacturing and the wholesale food processing, retail service and tourism industries, as well as being the core of “Washington Wine Country.” Major employers include Battelle, Con Agra, Duratek, Tyson, Energy NW, CH2M Hill, Fluor Hanford, Bechtel, Lockheed Martin, Potlatch, Siemens Power Corporation, Shields Bag and Printing, Tree Top, Noel Corp., ATK Mfg. and Boise Corp.

      Station Performance. KIMA and KEPR each broadcast 14.5 hours per week of scheduled live local news programs. KIMA is a leader in its market. According to Nielsen Media Research, KIMA/ KEPR reaches 42% of all of the local news audience at 6 PM against both ABC and NBC local news, and KIMA TV alone has double the households of the other two news stations combined. KLEW TV broadcasts five hours of scheduled live, local news per week.

KBCI TV, Boise, Idaho

      Market Overview. KBCI serves the Boise, Idaho DMA, which has a total population of approximately 604,000 and approximately 230,000 TV households. An estimated 37% of the television households in the Boise DMA subscribe to cable television with another 33% subscribing to an alternative delivery system (Nielsen Media Research). Boise is the state capital and regional center for business, government, education, health care and the arts. Major employers include high-tech companies such as Micron Technology, Inc. and its subsidiaries, Hewlett-Packard Company, Boise State University, Albertson’s, Saint Alphonsus Regional Medical Center, St. Luke’s Regional Medical Center, DirecTV, U.S. Bank, J.R. Simplot Company, Idaho Power Company, Boise Cascade (formerly Boise/ Office Max), Sears Boise Regional Credit Card Operations Center, Washington Group International (formerly Morrison Knudson), Mountain Home Air Force Base, and the Idaho State government. Boise has been recognized by Forbes Magazine in 2005 as the Best Place in the United States for business and careers and as the seventh best area in the nation to do business. It was ranked as the second best city in the United States to do business by INC. Magazine in 2005.

      Station Performance. KBCI currently broadcasts 12 hours per week of live local news programs. The station has won numerous awards for excellence in television broadcasting, including the 2005 Idaho Press Club Award for “Best Newscast” and the 2003 Alfred I. DuPont Award for Investigative Journalism for “Shake Up at City Hall.”

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KIDK TV, Idaho Falls-Pocatello, Idaho

      Market Overview. KIDK serves the Idaho Falls-Pocatello market, which has approximately 115,000 TV households and a population of approximately 316,000. In 2005, an estimated 39% of the television households subscribed to cable, with another 44% subscribing to an alternative delivery system (Nielsen Media Research). The Idaho Falls-Pocatello DMA consists of 14 counties located in Eastern Idaho and Western Wyoming. Idaho Falls and Pocatello, 50 miles apart, are the two largest cities in the DMA. Battelle Inc., the contractor for operation of the Idaho National Engineering & Environmental Laboratory, is the largest employer in the region. Other major employers include Melaluca, Inc., J.R. Simplot Company, American Microsystems, Idaho State University, BYU-Idaho, EIRMC, Negra Modelo, Qwest, American Microsystems, Portneuf Medical Center, Converges Corporation and Ballard Medical Products.

      Station Performance. KIDK broadcasts 14 hours per week of live local news programs. KIDK operates from its main studio in Idaho Falls. Effective January 2006, KIDK will be the only station in the market with a designated Upper Valley reporter.

Television Broadcasting Industry

      Commercial television broadcasting began in the United States on a regular basis in the 1940s. The Federal Communications Commission (“FCC”) grants licenses to build and operate broadcast television stations, and currently, a limited number of channels are available for television broadcasting in any one geographic area. Television stations that broadcast over the VHF band generally have some competitive advantage over those that broadcast over the UHF band (channels above 13) because VHF channels usually have better signal coverage and operate at a lower transmission cost. However, the improvement of UHF transmitters and receivers, the complete elimination from the marketplace of VHF-only television receivers and the expansion of cable and satellite television systems have reduced the competitive advantage of stations broadcasting over the VHF band. In addition, as television stations are required to broadcast digital signals, the historical competitive advantage of VHF signals is further diminished.

      There are approximately 101 million television households in the United States (household universe estimates), of which approximately 72 million are cable households, and a total of approximately 94 million receive television via cable or an alternative delivery service. Overall household television viewing is 57 hours per week, on average (Nielsen Media Research).

      Television stations primarily receive revenue from the sale of local, regional and national advertising and, to a much lesser extent, from network compensation, tower rental and commercial production activities. Broadcast television stations’ relatively high fixed costs of operation and heavy reliance on advertising revenue render the stations vulnerable to cyclical changes in the economy. The size of advertisers’ budgets, which are sensitive to broad economic trends, affects the broadcast industry in general and, specifically, the revenue of individual broadcast television stations. We are dependent on advertising revenue, which can be influenced by events such as declines in the national, regional, or local economies, employment levels, network ratings, consumer confidence and the success of national time sales representatives. Political and advocacy advertising can constitute, and in the past has constituted, a significant revenue source in some years, particularly national election years. The amount of our revenue in election years depends on many factors, such as whether Washington, Oregon, and Idaho are contested states in a presidential election and the extent of local and regional ballot initiatives.

Television Broadcasting Competition

      Competition within the media/communications industry, including the markets in which our stations compete, is considerable. This competition takes place on several levels: competition for audience, competition for programming (including news), competition for advertisers and competition for local staff and management. Additional factors material to a television station’s competitive position include signal coverage and assigned frequency. The television broadcasting industry faces continuing technological change and innovation, the possible rise in popularity of competing entertainment and communications media, changing business practices such as television “duopolies” (owning and operating two stations in the same market), use of local

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marketing agreements (“LMAs”) and joint sales agreements (“JSAs”) and governmental restrictions or actions of federal regulatory bodies, including the FCC and the Federal Trade Commission. Any of these factors could change and materially harm the television broadcasting industry and our business in particular.

      Audience. Stations compete for audience on the basis of program popularity, which has a direct effect on advertising rates. During periods of network programming, the stations are totally dependent on the performance of the network programs in attracting viewers. The competition between the networks is keen and the success of any network’s programming can vary significantly over time. During non-network time periods, each station competes on the basis of the performance of its local and syndicated programming using a combination of self-produced news, public affairs and other entertainment or informational programming to attract viewers. The competition between stations in non-network time periods is intense, and here, too, success can vary over time.

      Our stations compete for television viewership share against local network-affiliated and independent stations, as well as against cable programming and alternate methods of television program distribution, such as direct broadcast satellite program services. These other transmission methods can increase competition for a station by bringing into its market distant broadcasting signals not otherwise available to the station’s audience, and also by serving as a distribution system for nonbroadcast programming originated on the cable system. To the extent cable operators and broadcasters increase the amount of local news programming, the heightened competition for local news audiences could have a material adverse effect on our advertising revenue.

      Other sources of competition for our television stations include home entertainment systems (including video cassette recorder and playback systems, DVD players, digital video recorders and television game devices), Internet websites, wireless cable, satellite master antenna television systems, and program downloads to handheld or other playback devices. Our television stations also face competition from direct broadcast satellite services, which transmit programming directly to homes equipped with special receiving antennas or to cable television systems for transmission to their subscribers. We compete with these sources of competition both on the basis of product performance (quality, variety, information and entertainment value of content) and price (the cost to utilize these systems).

      Programming. Competition for syndicated programming involves negotiating with national program distributors, or producers. Our stations compete against in-market broadcast stations, as well as station groups, for exclusive access to syndicated programming. Cable system operators generally do not compete with local stations for programming; however, various national cable networks acquire programs that might have otherwise been offered to local television stations.

      Advertising. Television advertising rates are based on the size of the market in which a station operates, a program’s popularity among the viewers an advertiser wishes to attract in that market, the number of advertisers competing for the available time, the demographic make-up of the market served by the station, the availability of alternative advertising media in the market area, the presence of aggressive and knowledgeable sales forces and the development of projects, features and programs that tie advertiser messages to programming. Our stations compete for advertising revenue with other television stations in their respective markets, as well as with other advertising media, such as newspapers, direct broadcast satellite services, radio, magazines, Internet websites, outdoor advertising, transit advertising, yellow page directories, direct mail and local cable systems. In addition, another source of revenue is paid political and advocacy advertising, the amount of which fluctuates significantly, particularly being higher in national election years and very low in years in which there is little election or other ballot activity. Competition for advertising dollars in the television broadcasting industry occurs primarily within individual markets on the basis of the above factors as well as on the basis of advertising rates charged by competitors. Generally, a television broadcasting station in one market area does not compete with stations in other market areas. Our television stations are located in highly competitive markets.

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Radio Markets and Stations

Seattle Radio

      The following table sets forth certain information regarding our radio stations located in Seattle, Washington.

Audience Listening

National

Market

Rank in

Station

Market

Station

Dial Position

Power

Rank(1)

Market(2)

Share(2)

Format

Seattle, WA

14

KOMO AM

1000 kHz

50 kW

6

3.8%

News

KVI AM

570 kHz

5 kW

12T

2.9%

Talk

KPLZ FM

101.5 MHz

100 kW

21

2.2%

Hot Adult Contemporary

(1)

National Market Rank for Seattle, WA is based on 2005 data from the Arbitron Company.

(2)

Rank and station information in the above chart refers to average quarter-hour share of listenership to commercial stations among total persons, age 12+, Monday through Sunday, 6 a.m. to midnight, and is subject to the qualifications listed in each report. Source: Seattle, Washington: Arbitron Radio market Report four-book average — Winter 2005 — Fall 2005. There are 56 radio stations in the Seattle market. “T” refers to tie. Source: BIA Financial Network, Inc.

      Our Seattle radio stations broadcast to a six-county metropolitan population of approximately 3,200,000 with news and entertainment radio services. The 2005 radio revenue for the Seattle-Tacoma Metropolitan Statistical Area (“MSA”) was estimated to be $210 million, as reported by Miller Kaplan. KOMO AM, KVI AM and KPLZ FM have been in operation since 1926, 1926 and 1959, respectively. Since November 2002, KOMO AM, which utilizes an all news format, has been the flagship station for Seattle Mariners baseball serving 39 network affiliate radio stations in five states. KVI AM is the market’s Fox News and Talk radio station with a mix of local and national issue-oriented programming. KPLZ FM programs Adult Contemporary/ Top 40 music with veteran morning personalities Kent Phillips and Alan Budwill.

      Effective March 1, 2002, Fisher Broadcasting Seattle Radio LLC entered into a Joint Sales Agreement with classical music station KING FM. Pursuant to the agreement, the licensee of the station, Classic Radio, Inc., retains all operating accountability, while we pay KING FM a flat fee, subject to annual adjustment, and a share of the net revenue generated by the sale of advertising time for the right to sell substantially all the commercial advertising on the station. This agreement runs through 2007 unless sooner terminated pursuant to its terms.

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Fisher Radio Regional Group

      The following table sets forth general information for Fisher Radio Regional Group Inc.’s stations and the markets they serve.

Audience Listening

Dial

Rank in

Station

Market

Station

Position

Power

Market(1)

Share(1)

Format

Billings, MT

KRKX

94.1 FM

100kW

8

4.7%

Classic Rock

KRZN

96.3 FM

100kW

3T

7.1%

Active Rock

KYYA

93.3 FM

100kW

9T

4.1%

Hot Adult Contemporary

KBLG (2)

910 AM

1kW (2

)

9T

4.1%

News/Talk

Missoula, MT

KZOQ

100.1 FM

13.5 kW

4

6.0%

Classic Rock

KXDR

98.7 FM

100kW

8

4.4%

Hot Adult Contemporary

KGGL

93.3 FM

43 kW

1

11%

Country

KYLT

1340 AM

1 kW

bmrs

Talk

KGRZ

1450 AM

1 kW

13

1.8%

Sports/Talk

KBQQ

106.7 FM

13.5 kW

6

5.8%

Oldies

Great Falls, MT

KAAK

98.9 FM

100 kW

1T

11.2%

Hot Adult Contemporary

KINX

107.3 FM

94 kW

8T

5.1%

Variety

KQDI (FM)

106.1 FM

100 kW

6

7.1%

Classic Rock

KXGF

1400 AM

1 kW

12

2.0%

E.S.P.N. Sports

KQDI (AM)

1450 AM

1 kW

8T

5.1%

News/Talk

KIKF

104.9 FM

94 kW

4T

8.2%

Country

Butte, MT

KMBR

95.5 FM

50 kW

5T

7.3%

Classic Rock

KAAR

92.5 FM

4.5 kW

1

23.4%

Country

KXTL

1370 AM

5 kW

4

7.7%

Oldies/Talk

Wenatchee, WA

KYSN

97.7 FM

9.3 kW

5

6.6%

Country

KWWW(3)

96.7 FM

0.4 kW

3

7.9%

Hot Adult Contemporary

KZPH

106.7 FM

6kW

7

4.7%

Classic Rock

KAAP

99.5 FM

5.3 kW

9

2.5%

Soft Adult Contemporary

KWWX

1340 AM

1 kW

10

1.8%

Spanish

(1)	Rank and station information in the above chart refers to average quarter-hour share of listenership to commercial stations among total persons, age 12+, Monday through Sunday, 6 a.m. to midnight, and is subject to the qualifications listed in each report. Sources: (a) Billings, Montana: Arbitron Ratings, Fall, 2005; (b) Missoula, Montana: Eastlan Resources, Fall, 2005 Missoula/ Hamilton Market Report; (c) Great Falls, Montana: Arbitron Ratings, Fall, 2005; (d) Butte, Montana: Arbitron Ratings 2005 Montana County Coverage Study, Silver Bow County; and (e) Wenatchee, Washington: Eastlan Resources Audience Measurement, Fall 2005 Wenatchee Market Report. “T” refers to tie. “bmrs” refers to “below minimum reporting standards.”
(2)	KBLG, Billings, operates with power of 1,000 watts during the day and 64 watts during the night.
(3)	KWWW serves the city of Wenatchee via a translator, owned by an outside party. The translator broadcasts at 103.9 on the FM dial, with a licensed output power of 10 watts.

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      We own and operate 19 stations in four Montana markets (Billings, Missoula, Great Falls and Butte), and 5 stations in the Wenatchee, Washington area.

      Billings is the largest city in Montana, with a metropolitan population of approximately 135,000. It serves as a retail hub for portions of three states and home to a regional medical center and three colleges. Primary industries include agriculture and oil refining.

      Missoula is the second largest city in Montana. The Missoula market area is comprised of two counties, with a combined population of approximately 138,000. One of those counties, Ravalli, was the state’s fastest growing during the 1990’s. Missoula is home to the University of Montana, with approximately 14,000 students. The region’s other primary industry is timber.

      Great Falls is Montana’s third largest market, with a population of approximately 80,000. The largest single employer is Malmstrom Air Force Base. Agriculture is the other primary industry.

      Butte, Montana has a population of approximately 33,000. The city is home to one of the largest open-pit copper mines in the United States. Other large employers include ASiMI (a silicon manufacturer), a regional medical center and tourism. Butte is at the junction of the two Interstate highways that serve Montana, and is only about 150 miles from Yellowstone National Park.

      We operate 5 radio stations in an area including Wenatchee, Quincy and Moses Lake, Washington. These three cities in central Washington have a regional population of approximately 183,000. Agriculture is the primary industry, and Wenatchee is known as “the apple capital of America.” The region has no local television stations, so radio stations play an important role in the lives of these communities. Approximately one-quarter of the region’s population is Hispanic, and one of our stations is the heritage Spanish-language station.

Radio Broadcasting Industry

      Commercial radio broadcasting began in the United States in the early 1920s. Only a limited number of frequencies are available for broadcasting in any one geographic area. The FCC grants the license to operate a radio station. Currently, two commercial radio broadcast bands provide free, over-the-air radio service, each of which employs different methods of delivering the radio signal to radio receivers. The AM band (amplitude modulation) consists of frequencies from 530 kHz to 1700 kHz. The FM (frequency modulation) band consists of frequencies from 88.1 MHz to 108 MHz.

      Radio station revenue is generally affected by the same economic trends and factors as television station revenues, as described in the section entitled “Television Broadcasting Industry” above.

Radio Broadcasting Competition

      A small number of companies control a large number of radio stations within the United States. Some of these companies syndicate radio programs or own networks whose programming is aired by our stations. Some of these companies also operate radio stations in markets in which we operate, have greater overall financial resources available for their operations and may control large national networks of radio sales representatives.

      Competition in the radio industry, including each of the markets in which our radio stations compete, takes place on several levels: competition for audience, competition for advertisers, competition for programming and competition for staff and management. Additional significant factors affecting a radio station’s competitive position include assigned frequency and signal strength. The radio broadcasting industry is continually faced with technological change and innovation and the possible rise in popularity of competing entertainment and communications media, as well as governmental restrictions or actions of federal regulatory bodies, including the FCC and the Federal Trade Commission, any of which could have a material adverse effect on the broadcasting business.

      The FCC has authorized Direct Audio Radio from Satellite (“DARS”) to broadcast over a separate frequency spectrum (the S-Band, between 2.31 and 2.36 GHz). Two companies, XM Satellite Radio, Inc. and Sirius Satellite Radio Inc., are currently offering programming via S-Band satellite channels. Each

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company offers numerous programming channels on a monthly fee basis. Some of their program channels contain commercial announcements, but their systems do not presently have the capability of inserting local commercials. Radios capable of receiving these new digital signals are available as after-market equipment and in selected new vehicles. While DARS stations are not currently expected to significantly compete for local advertising revenue, they will compete for listenership, and may dilute the overall radio audience. Recently, XM announced that they are providing traffic and weather reports into select local markets, including Seattle. On October 20, 2004, Major League Baseball announced an agreement with XM Satellite Radio to rebroadcast every Major League Baseball team nationwide beginning with the 2005 regular season. We retain broadcast rights under our rights agreement with the Seattle Mariners and during 2005 XM Satellite Radio transmitted the KOMO-AM fully produced broadcast. Such a rebroadcast may have caused decreased listenership for our stations, the loss of regional sales growth opportunities and the loss of local advertisers that may not want their advertisements broadcast on a national scale.

      Audience. Our radio stations compete for audience on the basis of programming popularity, which has a direct effect on advertising rates. As a program or station grows in audience, the station is capable of charging a higher rate for advertising. Formats, stations and music are often researched through large-scale perceptual studies, auditorium-style music tests and weekly call-outs. All are designed to evaluate the distinctions and unique tastes of formats and listeners. New formats and audience niches have created targeted advertising vehicles and programming that are focused to appeal to a narrow segment of the population. Tactical and strategic plans are utilized to attract larger audiences through marketing campaigns and promotions. Marketing campaigns using television, Internet, transit, outdoor, telemarketing or direct mail advertising are designed to improve a station’s cumulative audience (total number of people listening) while promotional tactics such as cash giveaways, trips and prizes are utilized by stations to extend the time spent listening, both of which are intended to establish a station’s share of audience. In the effort to increase audience, the format of a station may be changed. Format changes can result in increased costs and create disruptions that can harm the performance of the station, especially in the time period immediately following a format change. We have experienced this effect in the past.

      The proliferation of radio stations and other companies streaming their programming over the Internet has created additional competition for local radio stations, as have “podcasts” which contain programming compilations intended to be recorded on personal audio devices and replayed later. These Internet channels provide further choice for listeners, in addition to the existing over-the-air radio stations and the DARS stations. The number of entities streaming audio abated somewhat several years ago, as some traditional broadcasters and Internet broadcasters temporarily curtailed their streaming, due to uncertainty relating to music royalties. As of January 2005 according to the Arbitron Company and Edison Media Research, 15% of Americans said they had listened to Internet radio in the last month. The Copyright Act provides for a compulsory copyright license which covers the performance rights in the sound recordings used in Internet streaming audio transmissions by radio stations and other music providers. The rates that will apply for sound recording performance royalties for webcasting for the period January 1, 2006 through December 31, 2012 have not yet been established. An arbitration proceeding has been commenced before the Copyright Royalty Board to determine what those rates will be, but a determination is not expected until late 2006. Those rates, once established, will be retroactive to January 1, 2006. Prior to the establishment of new rates, services making transmissions of copyrighted sound recordings after December 31, 2005 are required to continue paying royalties at the rates in effect for 2005.

      Advertising. Radio advertising rates are based on the number and mix of media outlets, the audience size of the market in which a radio station operates, the total number of listeners the station attracts in a particular demographic group that an advertiser may be targeting, the number of advertisers competing for available time, the demographic make-up of the market served by the station, the availability of alternative advertising media in the market area, the presence of aggressive and knowledgeable sales forces and the development of projects, features and programs that tie advertisers’ messages to programming. Our radio stations compete for revenue primarily with other radio stations and, to a lesser degree, with other advertising media such as television, cable, newspapers, yellow page directories, direct mail, Internet and outdoor and transit advertising. Competition for advertising dollars in the radio broadcasting industry occurs primarily

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within the individual markets on the basis of the above factors, as well as on the basis of advertising rates charged by competitors. Generally, a radio station in one market area does not compete with stations in other market areas.

Federal Regulation

      The ownership, operation and sale of broadcast stations are subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the “Communications Act”). FCC rules cover many areas of station ownership and operation, including but not limited to allotment of TV and FM channels to particular communities, approval of station operating parameters, issuance, renewal, revocation or modification of licenses, changes in the ownership or control of licensees, regulation of equipment, and the ownership, operation, and employment practices of stations. The FCC has the power to impose penalties, including fines or license revocations, for violations of its rules.

      Programming and Operation. The Communications Act requires broadcasters to serve the “public interest.” Stations must periodically document their presentation of programming responsive to local community problems, needs and interests. Complaints concerning programming may be considered by the FCC at any time. Stations also must follow various laws and rules that regulate, among other things, political advertising, sponsorship identification, the advertisement of contests and lotteries, the quantity of educational and informational programming directed to children, the amount of content of commercials in and adjacent to children’s programming, the advertising of cigarettes or smokeless tobacco, obscene and indecent broadcasts and technical operations.

      New Licenses. TV and FM channels are allotted to particular communities. The FCC may change such allotments from time to time. The FCC periodically accepts applications for authority to construct new TV and FM stations on unused allotted channels. New AM stations are approved based upon a sophisticated engineering demonstrating compliance with the complex technical rules designed to limit interference with existing stations. Auctions are held by the FCC if more than one party files an application for the same unused FM or TV allotment and for any new AM facility. A petition to deny a winning application must be resolved through FCC consideration of the applicant’s qualifications and the application’s compliance with FCC rules.

      Assignments and Transfers. Assignment of a license or transfer of control of a broadcast licensee requires prior FCC consent. An application seeking such consent must be filed with the FCC. Public notice of such filings is provided, and interested parties may petition to deny such applications. The FCC considers the qualifications of the purchaser, the compliance of the transaction with rules, and other factors in order to determine whether the public interest would be served by such change in ownership. An evidentiary hearing may be conducted if there are unresolved substantial and material questions of fact.

      License Renewal. Broadcast licenses initially are issued for a period specified in the license. Broadcast licenses are normally renewed for an eight-year term (subject to short-term renewals in certain circumstances). Licensees seeking renewal must file an application containing certain required information. During the consideration of that application, interested parties may petition to deny the renewal application. The FCC will grant the renewal application and dismiss any petitions to deny if it determines that the licensee meets statutory renewal standards based on a review of the preceding license term. Competing applications for the frequency licensed to the renewal applicant may not be filed unless and until the FCC has determined that the incumbent is not qualified to hold the license.

      Failure to observe FCC rules and policies, including, but not limited to, those discussed in this document, can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly egregious violations, the denial of a license renewal application or revocation of a license.

      While the vast majority of such licenses are renewed by the FCC, there can be no assurance that our licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years.

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      The expiration date for the licenses of our television stations are as follows:

Station	Market Area		Expiration Date
KOMO		Seattle-Tacoma, WA		February 1, 2007
KATU		Portland, OR		February 1, 2007
KVAL		Eugene, OR		February 1, 2007
KCBY		Eugene, OR		February 1, 2007
KPIC		Roseburg, OR		February 1, 2007
KIMA		Yakima, WA		February 1, 2007
KEPR		Pasco/Richland/Kennewick, WA		February 1, 2007
KLEW		Lewiston, ID		October 1, 2006
KBCI		Boise, ID		October 1, 2006
KIDK		Idaho Falls-Pocatello, ID		October 1, 2006

      The license terms for all of our Montana radio stations expire on April 1, 2013. The license terms of our radio stations in Washington expire February 1, 2014. The non-renewal or revocation of one or more of our FCC licenses could harm our radio broadcasting operations.

      Ownership Restrictions. Complex FCC regulations limit the “cognizable interest” (also called “attributable interests”) that may be held by a single party. In general, officers, directors, general partners and parties with the power to vote or control the vote of 5% or more of the outstanding voting power of a licensee are considered to hold an “attributable interest” in that entity, although certain passive investors must have a 20% or greater voting interest to be considered to have an “attributable interest.” Also, any party that holds a financial interest (whether equity or debt) in excess of 33% of a licensee’s total capital is “attributable” if such party is either a significant program supplier to the licensee or has another media interest in the same market. In addition, a licensee that provides more than 15% of the programming of another station in the local market is considered to have an attributable interest in that station.

National Television Ownership Limits

      FCC rules prohibit a single entity from holding an attributable interest in TV stations that have an aggregate national audience reach exceeding 39% of television households (the “National Television Ownership Limits”). The FCC counts the television households in each Nielsen DMA in which a party has an attributable interest in a television station as a percentage of the total television households in the DMAs. Only 50% of the television households in a DMA are counted toward the 39% national restriction if the owned station is a UHF station.

Local Television Ownership Limits

      Detailed FCC rules regulate the extent to which a party may have an attributable interest in more than one full-power TV station in the same area (the “Local Television Ownership Limits”). Common ownership of multiple TV stations is permitted where the stations are in different Nielsen DMAs. Common ownership of two TV stations in the same DMA is permitted where there is no Grade B contour overlap among the stations, where a specified number of separately-owned full-power TV stations will remain after the combination is created, or where certain waiver criteria are met. A party may have attributable interests in both TV and radio stations in the same local market. The specific number of such stations is governed by FCC rules, depending primarily on the number of independent media voices in the market.

Local Radio Ownership Limits

      Similarly, FCC rules regulate the extent to which a party may have an attributable interest in more than one radio station in the same market, as defined by Arbitron, or, in the case of communities outside all rated markets, certain overlapping signal contours (the “Local Radio Ownership Limits”). Depending on the size of market, a single entity may have an attributable interest in from two to eight commercial radio stations.

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Cross-Ownership Restrictions

      A party may have attributable interests in both TV and radio stations in the same local market. The specific number of such stations is governed by FCC rules, depending on the number of independent media voices in the market (the Television-Radio Cross-Ownership Rule”). Depending on the number of independent competitive media outlets in the market, a single entity may own attributable interests from as few as one TV and one radio station in the market to as many as two TV and six radio stations (or one TV and seven radio stations).

      The FCC’s current rules effectively prohibit a radio or television broadcast station to be licensed to an entity that, directly or indirectly, owns, operates or controls a daily English-language newspaper that is published in a community within certain defined signal strength contours of the broadcast station (the “Broadcast-Newspaper Cross-Ownership Rule”). FCC rules limit the ability of an entity to own an attributable interest in broadcast and daily English-language newspapers in the same market.

      If an attributable stockholder of the Company has or acquires an attributable interest in other television or radio stations, or in daily newspapers or cable systems, depending on the size and location of such stations, newspapers or cable systems, or if a proposed acquisition by us would cause a violation of the FCC’s multiple ownership rules or cross-ownership restrictions, we may be unable to obtain from the FCC one or more authorizations needed to conduct our business and may be unable to obtain FCC consents for certain future acquisitions.

      Local Marketing Agreements. A number of television and radio stations have entered into local marketing agreements (“LMAs”). Such agreements typically permit a third party to provide the programming and sell the advertising time during a substantial portion of the broadcast day of a station, subject to the requirement that the station’s programming content and operations remain at all times under the independent control of the station licensee. At present, FCC rules permit LMAs, but the licensee of a broadcast station brokering more than 15% of the time on another station in the same market is generally considered to have an attributable interest in the brokered station. When the FCC decided to attribute LMAs for ownership purposes, it grandfathered LMAs that were entered into prior to November 5, 1996, permitting the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCC’s 2004 biennial review. The FCC stated that at the conclusion of the 2004 biennial review it would conduct a case-by-case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering period. To date, the FCC has not commenced that review, although recently, the FCC invited comments as to whether it should begin its review of the grandfathered LMAs in 2006. We cannot predict when or whether the FCC will begin its review of those LMAs.

      Joint Sales Agreements. Some television and radio stations have entered into cooperative arrangements commonly known as joint sales agreements (“JSAs”). Typically these involve the assignment, for a fee, of the right to sell substantially all the commercial advertising on a station. The typical JSA is distinct from an LMA in that a JSA (unlike an LMA) normally does not involve programming. Currently, radio station JSAs involving more than 15% of the advertising of a radio station in the same market are deemed by the FCC to give the broker an attributable interest in the brokered station. We currently broker the sale for advertising time on an FM station in Seattle pursuant to a JSA. While that will result in us being considered to have an attributable interest in that station, such attribution will not cause us to exceed the FCC’s local radio ownership or cross-ownership limitations. In contrast, television stations for which a licensee sells time under a JSA are not deemed by the FCC to be attributable interests of that licensee at this time. An FCC proceeding to extend attribution to television JSAs was initiated in 2004 but remains unresolved. We are a party to two television JSAs in Oregon and Idaho.

      Biennial Regulatory Reviews. The FCC concluded its Biennial Regulatory Review of Broadcast Ownership Rules in June, 2003, by adoption of a decision which modified a number of its media ownership limits. Those rules set forth a new radio market definition, based upon geographic areas, rather than contour overlaps. That decision significantly modified the multiple ownership rules related to television. It modified the National Television Ownership Limits to permit an entity to have a 45% national aggregate audience reach. The new rules modified the Local Television Ownership Rules to permit a single party to have an

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attributable interest in up to three television stations in certain very large DMAs; and reduced the number of separately-owned full-power TV stations that must exist in a DMA to justify a party holding an attributable interest in two TV stations in the same DMA. The FCC also eased the Television-Radio Cross-Ownership Rules relating to the ownership of interests in both radio and TV stations in the same market, and modified the Broadcast-Newspaper Cross-Ownership Rule to permit common ownership of television stations and newspapers in many markets. The FCC decision adopted rules relating to radio JSAs under which stations for which a licensee sells time would be deemed to be attributable interests of that licensee, and the FCC has undertaken a proceeding whether to establish a similar standard for television JSAs. Legislation adopted in January 2004 lowered the National Television Ownership Limits to 39% national aggregate audience reach. In June 2004, the U.S. Court of Appeals issued a decision upholding portions of the FCC decision, but concluded that the decision failed to adequately support numerous aspects of those rules, including the specific numeric ownership limits adopted by the FCC. The court remanded the matter to the FCC for revision or further justification of the rules, retained jurisdiction over the matter, and maintained its existing stay of the effectiveness of those rules. It subsequently allowed those portions of the new rules relating to radio ownership to go into effect. The U.S. Supreme Court has declined to review the matter. The matter is currently awaiting action at the FCC. This may result in a request for further comments, or issuance of a revised order, which will then be subject to further review on appeal. We cannot predict, whether, how or when the new rules will be modified, ultimately implemented as modified or repealed in their entirety.

      Omnibus Appropriations Act. In January 2004, the Fiscal Year 2004 Omnibus Appropriations Act became effective. That law overrides the existing FCC rules and the FCC’s June 2003 decision to modify the National Television Ownership Limits by creating a statutory 39% cap on the national aggregate audience reach by any television licensee.

      Alien Ownership. The Communications Act generally prohibits foreign parties from having a 20% or greater interest in a broadcast licensee entity, or more than a 25% interest in the parent entity of a licensee. We believe that, as presently organized, we comply with the FCC’s foreign ownership restrictions.

      Network Affiliate Issues. FCC rules affect the network-affiliate relationship. Among other things, these rules require network affiliation agreements to (i) prohibit networks from requiring affiliates to clear time previously scheduled for other use, (ii) permit an affiliate to preempt network programs it believes are unsuitable for its audience, and (iii) permit affiliates to substitute programs believed to be of greater local or national importance than for network programming. An FCC proceeding to review certain of these rules remains outstanding.

      Other Matters. The FCC has numerous other regulations and policies that affect its licensees, including rules requiring close-captioning to assist television viewing by the physically handicapped, requirements for visual display of emergency information, minimum amounts of television intended for viewing by children, limitations on the amount of advertising within children’s television programming, and equal employment opportunities (“EEO”) rules requiring broadcast licensees to provide equal opportunity in employment to all qualified job applicants and prohibiting discrimination against any person by broadcast stations based on race, color, religion, national origin or gender. The EEO rules also require each station to (i) widely disseminate information concerning its full-time job vacancies, with limited exceptions, (ii) provide notice of each full-time vacancy to certain recruitment organizations and (iii) periodically complete a certain number of recruitment initiatives. Licensees are also required to collect, submit to the FCC and/or maintain for public inspection extensive documentation regarding a number of aspects of its station operations, including its EEO performance. Other FCC rules prohibit the broadcast of indecent or profane material from 6 a.m. through 10 p.m., and the willful or repeated violation of these rules could result in substantial fines, renewal of a station license for less than the normal term, loss of a station’s license to operate, or even criminal penalties.

      Cable and satellite carriage of broadcast television signals is also affected by FCC rules. An election is made by TV stations every third year specifying, on a system-by-system basis, whether cable systems “must-carry” their signal on a specific channel, subject to certain limitations set forth in the rules, or whether the system must contract for “retransmission consent” in order to carry their signal. Under the Satellite Home Improvement Act, satellite carriers are permitted to retransmit a local television station’s signal into its local

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market with the consent of the local television station. If a satellite carrier elects to carry one local station in a market, the satellite carrier must carry the signals of all local television stations that also request carriage.

      Proposed Legislation and Regulation. Congress and the FCC may in the future adopt new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation and ownership of our broadcast properties. Such matters include, for example, equal employment opportunities regulations, spectrum use fees, political advertising rates, standardized and enhanced public interest disclosure requirements and potential restrictions on the advertising of certain products. Other matters that could affect our broadcast properties include assignment by the FCC of channels for additional broadcast stations or wireless cable systems, as well as technological innovations and developments generally affecting competition in the mass communications industry.

Digital/ High Definition Television (“HDTV”)

      The Digital Television, or DTV standard, developed after years of research, and approved by the FCC in December 1996, was the breakthrough that made possible the transmission of vast amounts of information in the same size channel (6 MHz) as the current analog standard television system.

      DTV brings with it four major changes to the way viewers experience television. First, DTV sets display pictures using a rectangular, wide-screen format, as opposed to the nearly square screens used by current analog TV sets. Because of this screen shape, watching programs on digital TV sets can be similar to watching a movie at the theater, giving more lifelike images and allowing the viewer to feel more involved in the action on screen. Second, DTV can deliver six channels of CD-quality, digital surround sound using the same Dolby Digital technology heard in many movie theaters. Third, DTV can deliver high definition pictures with crisp, photographic quality, and greatly enhanced detail. Fourth, DTV can provide multiple channels that can transmit data and/or “standard definition” pictures equivalent or better than the quality delivered by existing analog transmissions.

      The FCC required all commercial television broadcasters to begin transmitting in DTV format by May 1, 2002. The following table sets forth the DTV capabilities for each of our television stations.

			Digital		Currently
			Channel		Broadcasting in
Station	Market Area		Allocation		Digital Format(1)
KOMO		Seattle-Tacoma, WA		38		Yes (HDTV	)
KATU		Portland, OR		43		Yes (HDTV	)
KVAL		Eugene, OR		25		Yes (HDTV	)
KCBY		Coos Bay, OR		21		Yes
KPIC		Roseburg, OR		19		Yes
KBCI		Boise, ID		28		Yes (HDTV	)
KIMA		Yakima, WA		33		Yes
KEPR		Pasco/Richland/Kennewick, WA		18		Yes
KLEW		Lewiston, ID		32		Yes
KIDK		Idaho Falls-Pocatello, ID		36		Yes

(1)  The FCC set May 1, 2002 as the deadline for initial DTV operations by all commercial TV stations. We met that date with respect to each of our stations. We have constructed and commenced DTV operation of stations KOMO-DT, Seattle, KATU-DT, Portland, KVAL-DT, Eugene and KBCI-DT, Boise with full power facilities pursuant to authorizations issued by the FCC. Each of the remaining stations operated by us has commenced DTV operations with reduced facilities pursuant to special temporary authority (“STA”) granted by the FCC. The FCC’s rules require that permanent digital facilities be in place for each of these stations by July 1, 2006, or the station will lose interference protection beyond the areas served on that date. Congress recently passed legislation setting a “hard” analog to digital transition date of February 17, 2009. On that date, all analog television stations must cease analog transmissions

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and operate only using digital technology, and all stations that were given a “paired” channel must cease operation on one channel so that the spectrum may be made available for other use.

      The FCC has acknowledged that DTV channel allotment may involve displacement of existing low-power TV stations and translators, particularly in major television markets. Accordingly, translators that rebroadcast our television station signals may be materially adversely affected. The FCC recently announced that applications will be received during a period in May, 2006, seeking authority to construct paired digital facilities for such low-power television and translator stations; stations which do not receive a paired channel will be permitted to convert directly from analog to digital transmissions in the future

      In addition, it is not yet clear when and to what extent DTV will become available through the various media; whether and how TV broadcast stations will be able to avail themselves of or profit by the transition to DTV, the extent of any potential interference, whether viewing audiences will make choices among services upon the basis of such differences, whether and how quickly the viewing public will embrace the new digital TV sets, and to what extent the DTV standard will be compatible with the digital standards adopted by cable and other multi-channel video programming services. On February 10, 2005, the FCC adopted an Order in which it ruled that cable operators are not required to simultaneously carry a television station’s analog and digital signals and that cable operators are not required to carry more than one digital programming stream from any particular station. We cannot predict whether that Order will be appealed or reconsidered, or whether Congress will adopt legislation on the subject.

      The foregoing does not purport to be a complete summary of all of the provisions of the Communications Act, or of the regulations and policies of the FCC thereunder. Proposals for additional or revised regulations and requirements are pending before, and are considered by, Congress and federal regulatory agencies from time to time. We are unable at this time to predict the outcome of any of the pending FCC rulemaking proceedings, the outcome of any reconsideration or appellate proceedings concerning any changes in FCC rules or policies, the possible outcome of any proposed or pending Congressional legislation, or the impact of any of those changes on our broadcast operations.

      Excluding revenue derived from seasonal sports rights, the advertising revenue of our stations is 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. In addition, advertising revenue is generally higher during national election years due to spending by political candidates and advocacy groups. This political spending typically is heaviest during the fourth quarter.

Fisher Plaza

      Through Fisher Media Services Company, we own and manage Fisher Plaza, a full-block, mixed-use facility located near downtown Seattle that serves as the home of our corporate offices and our Seattle television and radio stations. Fisher Plaza also houses a variety of office, retail, technology and other media and communications companies. Fisher Plaza is designed to support the production and distribution of media content through numerous channels, including broadcast, satellite, cable, Internet and broadband, as well as other wired and wireless communication systems. A total of 14 telecommunications bandwidth providers are resident within the facility. Fisher Plaza’s retail occupants provide a diverse mix of services including commercial banking, specialty wines & cheeses, a bridal salon, an optometry clinic and a variety of food establishments. In addition, Fisher Plaza also houses many companies with complementary needs for the mission critical infrastructure provided at the facility. Major non-Fisher occupants include Internap Network Services, Playstream, Inc., Verizon Communications, Sport Restaurant, Ironstone Bank, Elaine’s Bridal, HealthTalk Interactive, Rustic Canyon Management, and Big Fish Games. Fisher Plaza was completed in the summer of 2003 and had a net book value of $117.1 million at December 31, 2005. We seek to produce a return on our total investment in Fisher Plaza by offering and leasing office and technology space to companies that complement the vision and capabilities of the facility, as well as using the facility for our Seattle-based operations.

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Investment in Safeco Corporation

      We own approximately 3.0 million shares of the common stock of Safeco Corporation, an insurance and financial services corporation. We have been a stockholder of Safeco Corporation since 1923. The market value of our investment in Safeco Corporation common stock as of December 31, 2005 was approximately $169.6 million.

Available Information

      Our website address is www.fsci.com. We make available on this website under “Investor Relations — SEC Filings,” free of charge, our code of ethics, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission.

ITEM 1A.     RISK FACTORS

      The following risk factors and other information included in this annual report should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition and future results could be harmed.

     We depend on advertising revenues, which fluctuate as a result of a number of factors.

      Our main source of revenue is sales of advertising. Our ability to sell advertising depends on many factors, including the following:

•  the health of the national economy, and particularly the economy of the Northwest region and Seattle, Washington and Portland, Oregon;

•  the popularity of our programming;

•  changes in the makeup of the population in the areas where our stations are located;

•  pricing fluctuations in local and national advertising;

•  the activities of our competitors, including increased competition from other forms of advertising-based mediums, particularly network, cable television, direct satellite television and radio, and the Internet;

•  the use of new services and devices which allow viewers to minimize commercial advertisements, such as satellite radio and personal digital video recorders; and

•  other factors that may be beyond our control.

      A decrease in advertising revenue from an adverse change in any of the above factors could negatively affect our operating results and financial condition.

      In addition, our results are subject to seasonal fluctuations. Excluding revenue from our Seattle Radio agreement to broadcast Seattle Mariners baseball games during the regular baseball season, seasonal fluctuations typically result in second and fourth quarter broadcasting revenue being greater than first and third quarter broadcasting revenue. This seasonality is primarily attributable to increased consumer advertising in the spring and then increased retail advertising in anticipation of holiday season spending. Furthermore, revenue from political advertising is typically higher in election years. Revenue from broadcasting Seattle Mariners baseball games is greatest in the second and third quarters of each year.

We have incurred losses in the past. We cannot assure you that we will be able to achieve profitability.

      We incurred a net loss of $5.1 million in 2005. In 2004 we had a loss from continuing operations of $11.8 million, and in 2003 we had a loss from continuing operations of $14.8 million. We cannot assure you

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that our plans to improve operating performance will be successful or that we will be able to achieve profitability in the future.

Our operating results are dependent on the success of programming aired by our television and radio stations.

      Our advertising revenues are substantially dependent on the success of our network and syndicated programming. We make significant commitments to acquire rights to television and radio programs under multi-year agreements. The success of such programs is dependent partly upon unpredictable factors such as audience preferences, competing programming, and the availability of other entertainment activities. If a particular program is not popular in relation to its costs, we may not be able to sell enough advertising to cover the costs of the program. In some instances, we may have to replace or cancel programs before their costs have been fully amortized, resulting in write-offs that increase operating costs. Our Seattle and Portland television stations, which account for approximately three-fourths of our television broadcasting revenue, are affiliated with the ABC Television Network, with the remainder of our television stations affiliated with the CBS Television Network. Weak performance by ABC, a decline in performance by CBS, or a change in performance by other networks or network program suppliers, could harm our business and results of operations.

      In May 2002, we acquired the radio broadcast rights for the Seattle Mariners baseball team for a term of six years, beginning with the 2003 baseball season. The success of this programming is dependent on some factors beyond our control, such as the competitiveness of the Seattle Mariners and the successful marketing of the team by the team’s owners. If the Seattle Mariners fail to maintain a significant fan base, the number of listeners to our radio broadcasts may decrease, which would harm our ability to generate anticipated advertising dollars. In October 2004, Major League Baseball announced an agreement with XM Satellite Radio to rebroadcast every Major League Baseball game nationwide beginning with the 2005 regular season. We retain broadcast rights under the Rights Agreement; however, these rebroadcasts could result in decreased listenership for our stations, the loss of regional sales growth opportunities and the loss of local advertisers that may not want their advertisements broadcast on a national scale.

Competition in the broadcasting industry and the rise of alternative entertainment and communications media may result in loss of audience share and advertising revenue by our stations.

      Our television and radio stations face intense competition, including competition from the following sources:

•  local network affiliates and independent stations;

•  cable, direct broadcast satellite and alternative methods of broadcasting brought about by technological advances and innovations, such as pay-per-view and home video and entertainment systems; and

•  other sources of news, information and entertainment, such as streaming video broadcasts over the Internet, podcasting, newspapers, movie theaters and live sporting events.

      In addition to competing with other media outlets for audience share, we also compete for advertising revenue that comprises our primary source of revenue. Our stations compete for such advertising revenue with other television and radio stations in their respective markets, as well as with other advertising media such as newspapers, the Internet, magazines, outdoor advertising, transit advertising, yellow page directory, direct mail and local cable systems.

      The results of our operations will be dependent upon the ability of each station to compete successfully in its market, and there can be no assurance that any one of our stations will be able to maintain or increase its current audience share or revenue share. To the extent that certain of our competitors have, or may in the future obtain, greater resources, our ability to compete successfully in our broadcasting markets may be impeded.

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Because significant portions of our cost of services are relatively fixed, downturns in the economy harm our operations, revenue, cash flow and earnings.

      Our operations are concentrated in the Northwest. The Seattle, Washington and Portland, Oregon markets are particularly important for our financial well-being. Operating results over the past several years were adversely impacted by a soft regional economy, and any weak economic conditions in these markets would harm our operations and financial condition. Because significant portions of our costs of services are relatively fixed, we may be unable to materially reduce costs if our revenues decline. If our revenues do not increase or if they decline, we could continue to suffer net losses, or such net losses could increase. In addition, downturns in the national economy or downturns in significant categories of national advertising segments have historically resulted (and may in the future result) in decreased national advertising sales. This could harm our results of operations because national advertising sales represent a significant portion of our television advertising net revenue.

We may experience disruptions in our business if we acquire and integrate new television or radio stations.

      As part of our business strategy, we plan to continue to evaluate opportunities to acquire television and radio stations. In December 2005 we announced that we signed an agreement to purchase a full-power television station in the Portland, Oregon DMA, as well as low-power television stations and construction permits in certain Idaho communities. The purchase price of $20.3 million may be paid through the use of existing cash and the use of our $20 million revolving line of credit. There can be no assurance that we will receive FCC approval to complete this transaction, or that we will otherwise meet all of the conditions to complete the transaction. Further, we cannot provide assurance that we will find other attractive acquisition candidates or effectively manage the integration of acquired stations into our existing business. If the expected operating efficiencies from acquisitions do not materialize, if we fail to integrate new stations or recently acquired stations into our existing business, if the costs of such integration exceed expectations or if undertaking such acquisitions diverts management’s attention from normal daily operations of the business, our operating results and financial condition could be harmed. If we make acquisitions in the future, we may need to incur more debt or issue more equity securities, and we may incur contingent liabilities and amortization and/or impairment expenses related to intangible assets. Any of these occurrences could harm our operating results and financial condition.

Radio and television programming revenue may be negatively affected by the cancellation of syndication agreements.

      Syndication agreements are licenses to broadcast programs that are produced by production companies. Such programming can form a significant component of a station’s programming schedule. Syndication agreements are subject to cancellation, and such cancellations may affect a station’s programming schedule. We cannot assure you that we will continue to be able to acquire rights to syndicated programs once our current contracts for these programs expire. We may enter into syndication agreements for programs that prove unsuccessful, and our payment commitment may extend until or if the syndicator cancels the program.

Our indebtedness could materially and adversely affect our business and prevent us from fulfilling our obligations under our 8.625% senior notes due 2014

      We currently have a substantial amount of debt. Our indebtedness could have a material adverse effect on our business. For example, it could:

•  increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

•  reduce the availability of our cash flow to fund working capital, capital expenditures and other general business purposes;

•  reduce the funds available to purchase the rights to television and radio programs;

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•  limit our flexibility in planning for, or reacting to, changes in our industries, making us more vulnerable to economic downturns; and

•  place us at a competitive disadvantage compared to our competitors that have less debt.

•  limit our ability to make certain asset dispositions.

      If our indebtedness affects our operations in these ways, our business, financial condition, cash flow and results of operations could suffer, making it more difficult for us to satisfy our obligations under the notes. Furthermore, the indenture governing our 8.625% senior notes due 2014 and our senior credit facility may permit us to incur additional debt only if we meet certain financial and other covenants.

The non-renewal or modification of affiliation agreements with major television networks could harm our operating results.

      Each of our television stations’ affiliation with one of the four major television networks has a significant impact on the composition of the station’s programming, revenue, expenses and operations. Our two largest television stations, KOMO, which broadcasts in Seattle, Washington, and KATU, which broadcasts in Portland, Oregon, have affiliation agreements with ABC through August 2009. In 2005, approximately three-fourths of our television broadcasting revenues (and nearly half of our total revenues) were derived from our ABC affiliated stations. During May 2005, we renewed our affiliation agreements with ABC Television Network, the terms of which included reduced network compensation from ABC. In January 2006, we renewed our affiliation agreements with CBS through February 2016. The terms of our agreements with CBS likewise include reduced network compensation.

      If a network acquires a television station in a market in which we own a station affiliated with that network, the network will likely decline to renew the affiliation agreement for our station in that market. The non-renewal or modification of any of the network affiliation agreements could harm our operating results.

Changes in FCC regulations regarding ownership have increased the uncertainty surrounding the competitive position of our stations in the markets we serve.

      In June 2003, the FCC amended its multiple ownership rules, including, among other things, its local television ownership limitations, its prohibition on common ownership of newspapers and broadcast stations in the same market, as well as its local radio ownership limitations. Under the amended rules, a single entity would be permitted to own up to three television stations in a single market, to own more than one television station in markets with fewer independently owned stations, and the rules would allow consolidated newspaper and broadcast ownership and operation in several of our markets. The new radio multiple ownership rules could limit our ability to acquire additional radio stations in existing markets that we serve. The effectiveness of these new rules was stayed pending appeal. In June 2004, a federal court of appeals issued a decision which upheld portions of the FCC decision adopting the rules, but concluded that the order failed to adequately support numerous aspects of those rules, including the specific numeric ownership limits adopted by the FCC. The court remanded the matter to the FCC for revision or further justification of the rules, retaining jurisdiction over the matter. The court has partially maintained its stay of the effectiveness of those rules, particularly as they relate to television. The rules are now largely in effect as they relate to radio. The Supreme Court has declined to review the matter at this time, and the FCC must review the matter and issue a revised order. We cannot predict whether, how or when the new rules will be modified, ultimately implemented as modified, or repealed in their entirety.

      Legislation went into effect in January 2004 that permits a single entity to own television stations serving up to 39% of U.S. television households, an increase over the previous 35% cap. Large broadcast groups may take advantage of this law to expand further their ownership interests on a national basis.

      We expect that the consolidation of ownership of broadcasting and newspapers in the hands of a smaller number of competitors would intensify the competition in our markets.

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The FCC’s extensive regulation of the broadcasting industry limits our ability to own and operate television and radio stations and other media outlets.

      The broadcasting industry is subject to extensive regulation by the FCC under the Communications Act of 1934, as amended. Compliance with and the effects of existing and future regulations could have a material adverse impact on us. Issuance, renewal or transfer of broadcast station operating licenses requires FCC approval, and we cannot operate our stations without FCC licenses. Our television FCC licenses expire in 2006 and 2007, and our radio station FCC licenses expire in 2013 and 2014. Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly egregious violations, the denial of a license renewal application or revocation of a license. While the majority of such licenses are renewed by the FCC, we cannot assure you that our licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If the FCC decides to include conditions or qualifications in any of our licenses, we may be limited in the manner in which we may operate the affected stations.

      The Communications Act and FCC rules impose specific limits on the number of stations and other media outlets an entity can own in a single market. The FCC attributes interests held by, among others, such entity’s officers, directors, certain stockholders, and in some circumstances, lenders, to that entity for purposes of applying these ownership limitations. The ownership rules may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in a swap transaction if the swap would cause the other company to violate these rules. We may also be prevented from implementing certain joint operations with competitors which might make the operation of our stations more efficient. Federal legislation and FCC rules have changed significantly in recent years and can be expected to continue to change. These changes may limit our ability to conduct our business in ways that we believe would be advantageous and may thereby affect our operating results.

We will be required to make additional investments in HDTV technology, which could harm our ability to fund other operations or repay debt.

      Although our Seattle, Portland, Eugene and Boise television stations currently comply with FCC rules requiring stations to broadcast in high definition television (“HDTV”), our stations in smaller markets do not, because they are operating pursuant to special temporary authorizations issued by the FCC to utilize low power digital facilities. We must construct full power digital facilities for our other stations by July 1, 2006, or they will lose interference protection for their digital channel. These additional digital broadcasting investments by our smaller market stations could result in less cash being available to fund other aspects of our business. The FCC has adopted a multi-step channel election and repacking process through which broadcast licenses and permittees will select their ultimate DTV channel. The process is currently underway, and we have requested specific digital channels for each of our stations. We are unable to predict at this time whether our channel requests will be granted or which DTV channels we will be able to obtain through this process. We have been advised by the FCC of a potential conflict between the channel requested for permanent use by our Coos Bay, Oregon, Television Station, KCBY, and the request of a television station owned by another company, but are unable to predict whether that potential conflict will be resolved in a manner satisfactory to the Company and acceptable to the FCC.

We may lose audience share and advertising revenue if we are unable to reach agreement with cable and satellite companies regarding the retransmission of signals of our television stations.

      By October 1, 2005, each of our television stations sent notices to cable systems in their market electing must-carry or retransmission consent status for the period from January 1, 2006 through December 31, 2008. Stations electing must-carry may require carriage of their signal on certain channels on cable systems within their market, whereas cable companies are prohibited from carrying the signals of stations electing retransmission consent unless an agreement between the station and the cable provider has been negotiated. We have elected must-carry for some stations in certain markets for the election period ending December 31, 2008. We have elected retransmission consent status with respect to a number of key cable systems.

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      Some of our television stations are located in markets in which direct-to-home satellite operators are distributing local television signals to their subscribers (“local into local”). Television stations in such markets had the opportunity to elect must- carry status by sending written elections to such satellite operators by October 1, 2005. Stations not sending such elections automatically elect retransmission consent status, in which case the satellite operator may not retransmit that station’s signal without the permission of the station after January 1, 2006. Our stations in “local into local” markets are presently being carried by both major direct-to-home satellite operators pursuant to existing retransmission consent agreements, one of which will expire December 17, 2008, and the other on May 31, 2009. Failure to reach agreement with the relevant satellite operators prior to the expiration of the existing contracts may harm our business. There is no assurance that we will be able to agree on terms acceptable to us prior to contract expiration dates.

Dependence on key personnel may expose us to additional risks.

      Our business is dependent on the performance of certain key employees, including executive officers and senior operational personnel. We do not enter into employment agreements with all of our key executive officers and senior operational personnel. We also employ several on-air personalities who have significant loyal audiences in their respective markets, with whom we have entered into employment agreements. We cannot assure you that all such key personnel or on-air personalities will remain with us or that our on-air personalities will renew their contracts. The loss of any key personnel could harm our operations and financial results. On January 6, 2005, we announced the resignation of William Krippaehne, Jr. as our president and chief executive officer and that Benjamin W. Tucker was selected as acting president and chief executive officer. On October 4, 2005, we announced the appointment of Colleen B. Brown as president and chief executive officer effective October 10, 2005, and that Mr. Tucker would leave the Company in October 2005. In December 2005, we made certain other changes in our executive management team.

A reduction on the periodic dividend on the common stock of Safeco Corporation may adversely affect our other income, cash flow and earnings. A reduction in the share price of Safeco Corporation may adversely affect our total assets and stockholders’ equity.

      We own approximately 3.0 million shares of the common stock of Safeco Corporation, which, at December 31, 2005, represented 39% of our assets and approximately 52% of our stockholders’ equity (the appreciation in Safeco stock is presented, after estimated taxes, as “unrealized gain on marketable securities” within stockholders’ equity). Our investment in Safeco Corporation provided $2.8 million in dividend income in 2005, $2.3 million in 2004, and $2.2 million in 2002. If Safeco Corporation reduces its periodic dividends, it will negatively affect our cash flow and earnings.

Failure of our information technology systems would disrupt our operations, which could reduce our customer base and result in lost revenue. Our computer systems are vulnerable to viruses, unauthorized tampering, system failures and potential obsolescence.

      Our operations depend on the continued and uninterrupted performance of our information technology systems. Despite our implementation of network security measures, our servers and computer systems are vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. Our computer systems are also subject to potential system failures and obsolescence. Any of these events could cause system interruption, delays and loss of critical data that would adversely affect our reputation and result in a loss of customers. Our recovery planning may not be sufficient for all eventualities.

Our ownership and operation of Fisher Plaza is subject to risks, including those relating to the economic climate, local real estate conditions, potential inability to provide adequate management, maintenance and insurance, potential collection problems, reliance on significant tenants, and regulatory risks.

      Revenue and operating income from, and the value of, Fisher Plaza may be adversely affected by the general economic climate, the Seattle economic climate and real estate conditions, including prospective tenants’ perceptions of attractiveness of the property and the availability of space in other competing properties. In addition, the economic conditions in the telecommunications and high-tech sectors may

22

significantly affect our ability to attract tenants to Fisher Plaza, since space at Fisher Plaza is marketed in significant part to organizations from these sectors. Other risks relating to the operation of Fisher Plaza include the potential inability to provide adequate management, maintenance and insurance, and the potential inability to collect rent, due to bankruptcy or insolvency of tenants or otherwise. Real estate income and values may also be adversely affected by such factors as applicable laws and regulations, including tax and environmental laws, interest rate levels and the availability of financing. We carry comprehensive liability, fire, extended coverage and rent loss insurance with respect to Fisher Plaza. There are, however, certain losses that may be either uninsurable, not economically insurable, or in excess of our current insurance coverage limits. If an uninsured loss occurs with respect to Fisher Plaza, it could harm our operating results.

We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002. Material weaknesses in internal control, if identified in future periods, could indicate a lack of proper controls to generate accurate financial statements.

      Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and related Securities and Exchange Commission rules, we are required to furnish a report of management’s assessment of the effectiveness of our internal controls as part of our Annual Report on Form 10-K. Our independent registered public accountants are required to audit and report on management’s assessment, as well as provide a separate opinion on their evaluation of our internal controls over financial reporting. To issue our report, we document our internal control design and the testing processes that support our evaluation and conclusion, and then we test and evaluate the results. There can be no assurance, however, that we will be able to remediate material weaknesses, if any, that may be identified in future periods, or maintain all of the controls necessary for continued compliance. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement. If we or our auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. We may not be able to effectively and timely implement necessary control changes and employee training to ensure continued compliance with the Sarbanes-Oxley Act and other regulatory and reporting requirements. There likewise can be no assurance that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

Our operations may be adversely affected by earthquakes and other natural catastrophes in the Northwest.

      Our corporate headquarters and all of our operations are located in the Northwest. The Northwest has from time to time experienced earthquakes and experienced a significant earthquake on February 28, 2001. We do not know the ultimate impact on our operations of being located near major earthquake faults, but an earthquake could harm our operating results. Our broadcasting towers may also be affected by other natural catastrophes, such as forest fires. Our insurance coverage may not be adequate to cover the losses and interruptions caused by earthquakes or other natural catastrophes.

A write-down of goodwill would harm our operating results.

      Approximately $38 million, or 9% of our total assets as of December 31, 2005, consists of goodwill. Goodwill is tested at the reporting unit level annually or whenever events or circumstances occur indicating that goodwill might be impaired. If impairment is indicated as a result of future evaluations, we would record an impairment charge in accordance with accounting rules.

Foreign hostilities and terrorist attacks may affect our revenue and results of operations.

      Terrorist attacks and foreign hostilities cause regularly scheduled programming to be pre-empted by commercial-free network news coverage of these events, which would result in lost advertising revenue. In the future, we may experience a loss of advertising revenue and incur additional broadcasting expenses in the event that there is a terrorist attack against the United States or if the United States engages in foreign hostilities. As a result, advertising may not be aired, and the revenue for the advertising on such days would be

23

lost, adversely affecting our results of operations for the period in which this occurs. In addition, there can be no assurance that advertisers will agree to run such advertising in future time periods or that space will be available for such advertising. We cannot predict the duration of such pre-emption of local programming if it occurs. In addition, our broadcasting stations may incur additional expenses as a result of expanded local news coverage of the local impact of a war or terrorist attack. The loss of revenue and increased expenses could harm our results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

      None.

ITEM 2. DESCRIPTION OF PROPERTIES

      Our television stations operate from offices and studios owned by our Fisher Broadcasting subsidiary, other than KOMO TV, which operates from offices and studios in Fisher Plaza. Television transmitting facilities and towers are also generally owned by Fisher Broadcasting, although some towers are sited on leased land. KATU Television in Portland, Oregon is a participant with three other broadcast companies in the Sylvan Tower LLC formed to construct and operate a joint use tower and transmitting site for the broadcast of radio and digital television signals. The land on which this facility is sited is leased by the LLC from one of the participants under the terms of a 30-year lease with two options to extend the term for an additional five years. KBCI Television in Boise, Idaho is a participant with four other broadcast companies in the Deer Point Tower Venture LLC formed to construct and operate a joint use tower and transmitting site for the broadcast of radio and digital television signals. The lease agreement is for a period of 15 years, expiring in December 2016. Radio studios, except for the Seattle stations, are generally located in leased space. Our corporate offices and the offices and studios of KOMO TV and the Seattle radio stations are located in Fisher Plaza, which is owned by Fisher Media Services Company. Radio transmitting facilities and towers are owned by Fisher Broadcasting, except KPLZ FM and some of the stations operated by Fisher Radio Regional Group, where such facilities are situated on leased land.

      Fisher Media Services Company owns and manages Fisher Plaza, a facility located near downtown Seattle that serves as the home of our corporate offices and our Seattle television and radio stations. Fisher Plaza also houses a variety of companies, including communications and media companies. See the section entitled “Business  — Fisher Plaza” for a description of Fisher Plaza.

      We believe that the properties owned or leased by our operating subsidiaries are generally in good condition and well maintained, and are adequate for present operations.

ITEM 3. LEGAL PROCEEDINGS

      We are parties to various claims, legal actions and complaints in the ordinary course of our businesses. In our opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on our consolidated financial position or results of operations.

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

      No matters were submitted to a vote of securities holders in the fourth quarter of 2005.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

      Our Common Stock is traded on the Nasdaq National Market under the symbol “FSCI.” The following table sets forth the high and low prices for the Common Stock for the periods indicated. In determining the high and low prices we used the high and low sales prices as reported on the Nasdaq National Market.

	Quarterly Common Stock Price Ranges
	2005				2004
Quarter	High		Low		High		Low
1st	$	52.60	$	46.46	$	52.50	$	45.80
2nd		51.90		46.91		52.00		45.61
3rd		49.28		42.56		51.09		45.02
4th		49.89		41.43		49.86		46.03

The Company estimates that at March 1, 2006, there were approximately 1,700 holders of the Company’s common stock, as estimated by the number of record holders, including holders represented by brokers and other institutions.

Dividends

      On July 3, 2002, the board of directors suspended quarterly dividends. It is not known whether payment of quarterly dividends will resume.

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ITEM 6. SELECTED FINANCIAL DATA.

      The following financial data of the Company are derived from the Company’s historical audited financial statements and related footnotes. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related footnotes contained elsewhere in this Form 10-K.

		Year Ended December 31,
		2005			2004			2003			2002			2001
		(In thousands, except per-share amounts)
Revenue from continuing operations		$	149,319		$	153,866		$	138,387		$	126,696		$	134,008
Income (loss)
	From continuing operations	$	(5,072	)	$	(11,821	)	$	(14,804	)	$	(7,546	)	$	(1,437	)
	From discontinued operations					(132	)		23,032			5,173			(6,826	)
	Cumulative effect of change in accounting principle											(64,373	)
	Net income (loss)	$	(5,072	)	$	(11,953	)	$	8,228		$	(66,746	)	$	(8,263	)
Per share data
Income (loss) per share — basic
	From continuing operations	$	(0.58	)	$	(1.37	)	$	(1.72	)	$	(0.88	)	$	(0.16	)
	From discontinued operations					(0.02	)		2.68			0.61			(0.80	)
	Cumulative effect of change in accounting principle											(7.50	)
	Net income (loss)	$	(0.58	)	$	(1.39	)	$	0.96		$	(7.77	)	$	(0.96	)
Income (loss) per share assuming dilution
	From continuing operations	$	(0.58	)	$	(1.37	)	$	(1.72	)	$	(0.88	)	$	(0.16	)
	From discontinued operations					(0.02	)		2.68			0.61			(0.80	)
	Cumulative effect of change in accounting principle											(7.50	)
	Net income (loss)	$	(0.58	)	$	(1.39	)	$	0.96		$	(7.77	)	$	(0.96	)
	Cash dividends declared	$	—		$	—		$	—		$	0.52		$	0.78

	December 31,
	2005		2004		2003		2002		2001
Working capital	$	35,562	$	33,181	$	23,219	$	60,437	$	9,380
Total assets		440,393		435,872		396,685		545,991		623,117
Total debt(1)		150,000		150,053		128,857		292,607		286,949
Stockholders’ equity		209,621		202,453		187,804		172,735		237,155

(1)  Includes discontinued operations.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

      This annual report on Form 10-K contains forward-looking statements that involve known and unknown risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Words such as “may,” “could,” “would,” “should,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” and variations of such words and similar expressions are intended to identify such forward-looking statements. You

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should not place undue reliance on these forward-looking statements, which are based on our current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties, and assumptions (including those described herein) and apply only as of the date of this report. Our actual results could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” as well as those discussed in this section and elsewhere in this annual report.

      This discussion is intended to provide an analysis of significant trends and material changes in our financial position and operating results during the period 2003 through 2005.

Overview

      We are an integrated media company. We own and operate nine network-affiliated television stations and 27 radio stations. We also own a 50% interest in a company that owns a tenth television station. Our television and radio stations are located in Washington, Oregon, Idaho and Montana. We also own and operate Fisher Plaza, a communications facility located near downtown Seattle that serves as the home for our corporate offices and our Seattle television and radio stations, and also houses a variety of companies, including media and communications companies. We also own approximately 3.0 million shares of common stock of Safeco Corporation, a publicly traded insurance company.

      Our broadcasting operations receive revenue from the sale of local, regional and national advertising and, to a much lesser extent, from network compensation, satellite and fiber transmission services, tower rental and commercial production activities. Our operating results are therefore sensitive to broad economic trends that affect the broadcasting industry in general, as well as local and regional trends, such as those affecting the Northwest economy. Excluding revenue derived from seasonal sports rights, the advertising revenue of our stations is 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. In addition, advertising revenue is generally higher during national election years due to spending by political candidates and advocacy groups. This political spending typically is heaviest during the fourth quarter.

      Our television revenue is significantly affected by network affiliation and the success of programming offered by those networks. Our two largest television stations, representing approximately three-fourths of our television revenue, are affiliated with ABC, and the remaining eight television stations (including 50%-owned KPIC TV) are affiliated with CBS. Our broadcasting operations are subject to competitive pressures from traditional broadcasting sources, as well as from alternative methods of delivering information and entertainment, and these pressures may cause fluctuations in operating results.

      In December 2005 we announced that we signed an agreement to purchase a full-power television station in the Portland, Oregon DMA, as well as low-power television stations and construction permits in certain Idaho communities. The purchase price of $20.3 million may be paid through the use of existing cash and the use of our $20 million revolving line of credit. As of December 31, 2005, a deposit of $1.0 million was held in escrow on this transaction and is included in prepaid expenses in the Consolidated Balance Sheet. If we successfully close this transaction, we would have the ability to operate duopolies in three of the markets in which we have existing television stations, with the corresponding potential to share fixed infrastructure expenditures over multiple stations.

      In May 2002, we entered into a radio rights agreement (the “Rights Agreement”) to broadcast Seattle Mariners baseball games on KOMO AM for the 2003 through 2008 baseball seasons. The impact of the Rights Agreement is greater during periods that include the broadcast of Mariners baseball games; therefore, the impact on the first and fourth quarters of each year is less than what is expected for the second and third quarters of the calendar year. We also changed to an all-news format for KOMO AM in September 2002. These changes have led to improved ratings for KOMO AM in the Seattle market over the past few years. Nevertheless, the success of this programming is dependent, in part, on factors beyond our control, such as the competitiveness of the Seattle Mariners and the successful marketing of the team.

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      In addition to our broadcasting operations, we own and operate Fisher Plaza, and we lease space to other companies that are attracted by the property location and the infrastructure provided at this facility. Fisher Plaza was first opened for occupancy in May 2000, and the second phase of the project was opened for occupancy in the summer of 2003. As of December 31, 2005, approximately 91% of Fisher Plaza was occupied or committed for occupancy (42% was occupied by Fisher entities), compared to 89% occupied or committed for occupancy at December 31, 2004. Revenue and operating income from Fisher Plaza are dependent upon the general economic climate, the Seattle economic climate, the outlook of the telecommunications and technology sectors and real estate conditions, including the availability of space in other competing properties.

      On September 20, 2004 we completed an offering of $150.0 million of 8.625% senior notes due 2014 and used the net cash proceeds to retire our previous debt facilities and terminate the forward sales contract covering shares of our investment in Safeco Corporation. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year.

      Management focuses on key metrics from operational data within our broadcasting and Fisher Plaza operations. Information on significant trends is provided in the section entitled “Consolidated Results of Operations.”

Critical Accounting Policies

      The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies below. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results. For a detailed discussion on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements. We have discussed the development and selection of these critical accounting estimates with the Audit Committee of our board of directors and the Audit Committee has reviewed our disclosures relating to them, as presented in this report.

      Goodwill and indefinite-lived intangible assets. Goodwill represents the excess of purchase price of certain broadcast properties over the fair value of tangible and identifiable intangible net assets acquired and is accounted for under the provisions of Statement of Financial Accounting Standards No. 142 (“SFAS 142”), which we adopted as of January 1, 2002. Under SFAS 142, goodwill and intangible assets with indefinite useful lives are tested for impairment at least on an annual basis.

      The goodwill impairment test involves a comparison of the fair value of each of our reporting units with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying amount of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested. Fair values are determined based on valuations that rely primarily on the discounted cash flow method. This method uses future projections of cash flows from each of our reporting units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of our weighted average cost of capital. To the extent they have been separately identified, our indefinite-lived assets (broadcast licenses), which are not subject to amortization, are tested for impairment on an annual basis by applying a fair-value-based test as required by SFAS 142. Our evaluations of fair values include analyses based on the estimated future cash flows generated by the underlying assets, estimated trends, and other relevant determinants of fair value for these assets. If the fair value of the asset is less than its carrying amount, a loss is recognized for the difference between the fair value and its carrying value. Changes in any of these estimates, projections and assumptions could have a material effect on the fair value of these assets in future measurement periods and result in an impairment of goodwill or indefinite-lived intangibles which could materially affect our results of operations.

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      Tangible Long-Lived Assets. We evaluate the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable as required by SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” We use our judgment when applying the impairment rules to determine when an impairment test is necessary. Factors we consider which could trigger an impairment review include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant negative cash flows or industry trends.

      Impairment losses are measured as the amount by which the carrying value of an asset exceeds its estimated fair value, which is primarily based on estimated future discounted cash flows. In estimating these future cash flows, we use future projections of cash flows directly associated with, and that were expected to arise as a direct result of, the use and eventual disposition of the assets. These projections rely on significant assumptions. If it is determined that a long-lived asset is not recoverable, an impairment loss would be calculated based on the excess of the carrying amount of the long-lived asset over its fair value. Changes in any of our estimates could have a material effect on the estimated future cash flows expected to be generated by the asset and could result in a future impairment of the involved assets with a material effect on our future results of operations.

      Derivative instruments. We had no derivative instruments outstanding during 2005; however, derivative instruments had a significant impact on our operating results in previous years. We utilized an interest rate swap in the management of our variable rate exposure and as was required under one of our prior borrowing agreements. The interest rate swap was held at fair value, with the change in fair value being recorded in the Consolidated Statement of Operations. The interest rate swap expired in the first quarter of 2004.

      In 2002, we entered into a variable forward sales transaction with a financial institution. Our obligations under the forward transaction were collateralized by up to 3,000,000 shares of Safeco Corporation common stock owned by us. A portion of the forward transaction was considered a derivative and, as such, we periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the Consolidated Statements of Operations. The variable forward sales transaction was terminated in November 2004.

      We determined the fair value of derivative instruments based on external-party valuations, which relied on significant assumptions. The value of the interest rate swap changed based primarily on changes in market interest rates. The value of the variable forward sales transaction fluctuated based primarily on changes in the value of Safeco Corporation common stock, changes in underlying assumptions concerning the volatility of Safeco common stock, and changes in interest rates.

      Television and radio broadcast rights. Television and radio broadcast rights are recorded as assets when the license period begins and the programs are available for broadcast, at the gross amount of the related obligations (or, for non-sports first-run programming, at the amount of the annual obligation). Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast after one year are considered non-current. These programming costs are charged to operations over their estimated broadcast periods using either the straight-line method or in proportion to estimated revenue. Program obligations are classified as current or non-current in accordance with the payment terms of the license agreement. We periodically assess net realizable value for our capitalized broadcast rights, in which we compare estimated future revenues on a program-by-program basis to the carrying value of the related asset; impairments, if any, are charged to programming expenses.

      Pensions. We maintain a noncontributory supplemental retirement program that was established for key management. No new participants have been admitted to this program since 2001, and the benefits of active participants were frozen in 2005. The program provides for vesting of benefits under certain circumstances. Funding is not required, but generally the Company has acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of such policies; accordingly, the cash values of the policies as well as the accrued liability are reported in the financial statements. The program requires continued employment or disability through the

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date of expected retirement. The cost of the program is recognized over the participants’ remaining years of service at the Company.

      The cost of this program is reported and accounted for in accordance with accounting rules that require significant assumptions regarding such factors as discount rates. We use actuarial consulting services to assist in estimating the supplemental retirement obligation and related periodic expenses. The discount rate used in determining the actuarial present value of the projected benefit obligation was 5.48% at December 31, 2005, and 5.74% at December 31, 2004. The rate of increase in future compensation was no longer applicable at December 31, 2005 (due to freezing plan benefits for active participants), and 3.00% at December 31, 2004. Although we believe that our estimates are reasonable for these key actuarial assumptions, future actual results could differ from our estimates. Changes in benefits provided by the Company may also affect future plan costs.

      Tax Accruals. Our federal and state income tax returns are subject to periodic examination, and the tax authorities may challenge certain of our tax positions as a result of examinations. We believe our tax positions comply with applicable tax law, and we would vigorously defend these positions if challenged. The final disposition of any positions challenged by the tax authorities could require us to make additional tax payments. Valuation allowances are established when we determine that there exists significant uncertainty that we will realize our deferred tax assets.

      Allowance for doubtful accounts. We evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected. Our allowance for doubtful accounts is based on factors such as our historical experience of bad debts as a percent of past-due balances for each business unit, as well as changes in current economic conditions.

      Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidated Results of Operations

      We report financial data for three reportable segments: television, radio and Fisher Plaza. The television reportable segment includes the operations of our nine network-affiliated wholly owned television stations, and a tenth television station 50% owned by us. The radio reportable segment includes the operations of our 27 radio stations. Corporate expenses of the broadcasting business unit are allocated to the television and radio reportable segments either based on actual expenditures incurred or based on a ratio that approximates historical revenue and operating expenses of the segments. The Fisher Plaza reportable segment consists of the operations of Fisher Plaza. Fisher-owned entities that reside at Fisher Plaza do not pay rent; however, these entities do pay common-area maintenance expenses. The segmental data includes additional allocation of depreciation and certain operating expenses from Fisher Plaza to the Seattle-based television and radio operations.

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      Percentage comparisons have been omitted within the following table where they are not considered meaningful.

			Year Ended						2005-2004						Year Ended			2004-2003
			December 31,						Variance						December 31,			Variance
			2005			2004			$			%			2003			$			%
			(Dollars in thousands)
Revenue
	Television		$	93,083		$	101,190		$	(8,107	)		(8.0	)%	$	88,676		$	12,514			14.1	%
	Radio			48,334			48,253			81			0.2	%		44,221			4,032			9.1	%
	Fisher Plaza			8,061			4,555			3,506			77.0	%		5,494			(939	)		(17.1	)%
	Corporate and eliminations			(159	)		(132	)		(27	)					(4	)		(128	)
		Consolidated		149,319			153,866			(4,547	)		(3.0	)%		138,387			15,479			11.2	%
Cost of services sold
	Television			46,293			43,621			2,672			6.1	%		44,602			(981	)		(2.2	)%
	Radio			23,192			22,239			953			4.3	%		22,438			(199	)		(0.9	)%
	Fisher Plaza			2,751			1,657			1,094			66.0	%		1,499			158			10.5	%
	Corporate and eliminations			1,562			1,606			(44	)		(2.7	)%		644			962			149.4	%
		Consolidated		73,798			69,123			4,675			6.8	%		69,183			(60	)		(0.1	)%
Selling expenses
	Television			17,224			11,995			5,229			43.6	%		11,283			712			6.3	%
	Radio			14,722			14,730			(8	)		(0.1	)%		13,753			977			7.1	%
	Fisher Plaza			398			901			(503	)		(55.8	)%		223			678			304.0	%
		Consolidated		32,344			27,626			4,718			17.1	%		25,259			2,367			9.4	%
General and administrative expenses
	Television			16,949			17,110			(161	)		(0.9	)%		17,430			(320	)		(1.8	)%
	Radio			7,748			7,637			111			1.5	%		7,995			(358	)		(4.5	)%
	Fisher Plaza			730			979			(249	)		(25.4	)%		1,073			(94	)		(8.8	)%
	Corporate and eliminations			8,647			8,956			(309	)		(3.5	)%		13,331			(4,375	)		(32.8	)%
		Consolidated		34,074			34,682			(608	)		(1.8	)%		39,829			(5,147	)		(12.9	)%
Depreciation and amortization
	Television			7,940			10,588			(2,648	)		(25.0	)%		11,700			(1,112	)		(9.5	)%
	Radio			1,356			1,460			(104	)		(7.1	)%		1,535			(75	)		(4.9	)%
	Fisher Plaza			3,544			3,762			(218	)		(5.8	)%		2,588			1,174			45.4	%
	Corporate and eliminations			245			207			38			18.4	%		357			(150	)		(42.0	)%
		Consolidated		13,085			16,017			(2,932	)		(18.3	)%		16,180			(163	)		(1.0	)%
Income (loss) from operations
	Television			4,677			17,876			(13,199	)					3,661			14,215
	Radio			1,316			2,187			(871	)					(1,500	)		3,687
	Fisher Plaza			638			(2,744	)		3,382						111			(2,855	)
	Corporate and eliminations			(10,613	)		(10,901	)		288						(14,336	)		3,435
		Consolidated		(3,982	)		6,418			(10,400	)					(12,064	)		18,482
Net loss on derivative instruments							(12,656	)		12,656						(6,911	)		(5,745	)
Loss from extinguishment of long-term debt							(5,034	)		5,034						(2,204	)		(2,830	)
Other income, net				3,674			3,421			253						6,427			(3,006	)
Interest expense, net				(13,726	)		(11,776	)		(1,950	)					(13,081	)		1,305
Loss from continuing operations before income taxes				(14,034	)		(19,627	)		5,593						(27,833	)		8,206
Benefit for federal and state income taxes				(8,962	)		(7,806	)		(1,156	)					(13,029	)		5,223
Loss from continuing operations				(5,072	)		(11,821	)		6,749						(14,804	)		2,983
Income (loss) from discontinued operations, net of income taxes							(132	)		132						23,032			(23,164	)
Net income (loss)			$	(5,072	)	$	(11,953	)	$	6,881					$	8,228		$	(20,181	)

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Comparison of Fiscal Years Ended December 31, 2005, December 31, 2004, and December 31, 2003

Revenue

      Television revenue decreased in 2005, as compared to 2004, due primarily to lower political advertising in 2005. This overall decrease in revenue was partially offset by improved local and non-political national advertising at our two largest stations (KOMO TV in Seattle and KATU in Portland), and improved local advertising at most of our small-market CBS-affiliated television stations. KOMO TV and KATU account for approximately three-fourths of our television revenue, and these stations experienced total revenue decreases of 9.6% and 14.0%, respectively, in 2005, as compared to 2004.

      Network compensation revenue decreased $1.3 million in 2005, as compared to 2004. In May 2005, we signed agreements with ABC to renew ABC’s affiliation at KOMO TV and KATU through August 2009. The terms of the renewal include decreasing network compensation, and we are recognizing network compensation revenue on a straight-line basis over the term of the agreements. In January 2006, we renewed our affiliation agreements with CBS through February 2016. The terms of our agreements with CBS likewise include reduced network compensation.

      Television revenue increased significantly during 2004 — the 14.1% increase over 2003 was due primarily to strong candidate and advocacy advertising leading up to the November 2004 elections. Over 90% of our total political revenue was generated from our television operations. We also recorded generally improved local advertising in 2004, as compared to 2003; however, non-political national advertising was soft during 2004, in particular at our two ABC-affiliated stations. This decline in national non-political advertising affected many broadcasters in the industry. Our Seattle and Portland television stations experienced total revenue increases of 15.3% and 16.1%, respectively, in 2004, as compared to 2003. All of our smaller-market CBS-affiliated television operations reported increased revenue in 2004, as compared to 2003.

      The decline in broadcasting revenue in 2005 occurred primarily in the television segment, as most of our political advertising revenue is generated from television advertising. Our radio operations showed flat revenue in 2005, as compared to 2004. We noted increases in local spot revenue for our Seattle-based stations and for our small-market radio stations in Western Washington and Montana. However, these increases were offset by lower national revenue. Radio revenue from the Seattle Mariners Broadcast Rights was lower in 2005, as compared to 2004, due in some degree to the on-field performance of the Seattle Mariners. Though overall radio revenue in 2005 was flat, KOMO AM improved performance in the Seattle market. Excluding revenue specifically attributable to Seattle Radio’s agreement with the Seattle Mariners to broadcast baseball games, KOMO AM’s revenue increased 15.8% in 2005, compared to 2004. We attribute the increase primarily to the synergistic effect of the Seattle Mariners programming and KOMO AM’s all-news format gaining greater recognition in the Seattle market. Revenue from our Seattle Radio operations comprised approximately three-fourths of our total radio revenue in 2005.

      Our radio operations showed strong revenue growth of 9.1% in 2004, compared to 2003, due primarily to our continued focus on leveraging our multi-year agreement with the Seattle Mariners to broadcast its baseball games on KOMO AM. We changed to an all-news format on KOMO AM in September 2002, and we also acquired the Seattle Mariners broadcasting rights beginning in the 2003 baseball season. Our small-market radio stations in Eastern Washington and Montana also experienced strong growth in 2004, as compared to 2003, and increased net revenue by 7.4% during the year.

      Fisher Plaza first opened in May of 2000, and the second phase of the project was open for occupancy in the summer of 2003. Occupancy levels have increased at Fisher Plaza over the past three years, and recurring third-party rental and service revenues have also increased. Fisher Plaza occupancy was at 91% as of December 31, 2005, compared to 89% as of January 1, 2005, and 70% as of January 1, 2004. Fisher Plaza revenue in 2005 increased as compared to 2004 due to the aforementioned increased rental and service fees, as well as increased electrical infrastructure fees, tenant reimbursements, and parking garage fees. Fisher Plaza revenues decreased in 2004, as compared to 2003, due primarily to a $1.4 million penalty paid by a tenant during the first quarter of 2003 for an early lease termination.

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Cost of services sold

      The cost of services sold consists primarily of costs to acquire, produce, and promote broadcast programming for the television and radio segments, and costs to operate Fisher Plaza. Many of these costs are relatively fixed in nature and do not necessarily vary on a proportional basis with revenue. The increase in the television segment cost of services sold 2005, as compared to 2004, is primarily the result of higher costs to obtain syndicated programming rights, as well as certain increased talent and labor costs. Higher cost of services sold at our radio segment in 2005, as compared 2004, was primarily attributable to increased talent and labor expenses.

      The increase in cost of services sold at Fisher Plaza in 2005, as compared to 2004, was primarily attributable to higher third-party tenant occupancy, for which expense reimbursements are classified as revenue under applicable accounting rules.

      Broadcasters have significant fixed costs in their overall cost structure, including amounts classified as cost of services sold. Therefore, despite significant increases in revenues in 2004, as compared to 2003, our cost of services sold for the television and radio segments declined somewhat. The decline was due, in part, to lower allocations of Fisher Plaza facilities expenses to our Seattle-based broadcasting operations. We also made changes in programming during 2004 — from certain changes in syndicated programming, to successfully launching a 4:00 PM newscast at KOMO TV in Seattle, to changing our Seattle KVI AM radio station to a Fox-news-affiliated station — but overall broadcasting cost of services sold declined in 2004, due in part to our focus on controlling costs.

      The corporate and eliminations category consists primarily of the reclassification and elimination of certain operating expenses between operating segments. For example, KOMO TV and Seattle Radio recognize facilities-related expenses as general and administrative, while Fisher Plaza records the reimbursement of these intercompany expenses as a reduction of cost of services sold.

Selling expenses

      The increases in selling expenses in the television segment in 2005, as compared to 2004, was due primarily to a $4.3 million non-cash charge resulting from our December 2005 decision to change our national advertising representation firm for our television stations, as well as increased commission-based labor based on the mix of revenue at our television stations. We also had increased promotional expense, which offset decreases that would be expected at somewhat lower revenue levels.

      Broadcasters may periodically terminate existing agreements with national advertising representation firms; under such circumstances, the successor firm generally satisfies the broadcaster’s contractual termination obligation to the predecessor firm with no cash payment made by the broadcaster. When we terminate national advertising representation agreements with contractual termination penalties, we recognize a non-cash termination charge to selling expense and amortize the resulting liability over the term of the new agreement. In the fourth quarter of 2005, we recognized a non-cash termination charge of $4.3 million and will recognize a non-cash benefit over the five-year term of the new agreement.

      Decreased selling expenses at Fisher Plaza in 2005, as compared to 2004, were due primarily to greater required marketing efforts in 2004, including marketing the second phase of the facility which was first available for occupancy in the summer of 2003. As of December 31, 2004, approximately 89% of Fisher Plaza was occupied or committed for occupancy (91% at December 31, 2005) and, consequently, broad-based selling and marketing initiatives have been reduced.

      The increases in selling expenses in the television and radio segments in 2004, as compared to 2003, were due primarily to increased sales commission expenditures on higher revenue levels.

      The increase in Fisher Plaza selling expenses in 2004, as compared to 2003, was due primarily to greater 2004 efforts to market Fisher Plaza, including the second phase of the facility, which was first available for occupancy in the summer of 2003.

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General and administrative expenses

      The television and radio segments had relatively flat general and administrative costs in 2005, as compared to 2004. Television and radio segments incurred employee termination expenses of approximately $1.0 million in 2005 compared to $700,000 in 2004. This increase in expense was offset primarily by decreased net pension-related expenses in 2005, including higher increase in cash value of life insurance and retirement deposits (which offset pension expense).

      In the Fisher Plaza segment, the decrease in general and administrative expenses over the past two years was primarily attributable to decreased staffing levels. In 2004, we also incurred lower consulting fees, as compared to 2003.

      The corporate group incurred lower general and administrative expenses in 2005, as compared to 2004, primarily as a result of reductions in employee benefit-related expenses for an inactive corporate entity, lower overall costs associated with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as well as severance expenses totaling $471,000 incurred in the second quarter of 2004 for the retirement of the Company’s former chief financial officer. Overall corporate general and administrative expense reductions in 2005 were partially offset by severance expenses totaling approximately $1.0 million for the Company’s former chief executive officer recognized in the first quarter of 2005, a pension curtailment loss of $451,000 recognized in the second quarter of 2005, and separation expenses totaling $1.4 million in the fourth quarter of 2005.

      Our television and radio segments had lower general and administrative expenses in 2004, as compared to 2003, due primarily to our continued emphasis on cost control. Specifically, we had lower expenses due to the suspension of our 401(k) plan matching contributions, as well as lower consulting and professional expenses. These reductions were offset somewhat as a result of employee termination expenses that were incurred primarily in the first quarter of 2004 in which, as a result of operational decisions and cost control measures, we eliminated 23 positions in our broadcast operations. We also had higher health insurance expenses in 2004, as compared to 2003.

      Corporate and eliminations general and administrative expenses include a consolidating elimination of facilities-related expenses that our Seattle broadcasting operations recognize within the general and administrative category but that Fisher Plaza includes as a reduction in cost of services sold. The elimination entry has the effect of decreasing the amount of general and administrative expenses shown for this category; the amount of the elimination increased by approximately $500,000 in 2004, as compared to 2003.

      The corporate group incurred lower expenses in 2004, as compared to 2003, primarily as a result of reduced retention costs, the absence of certain pension-related expenses that were recognized in 2003 in connection with a pension plan settled in the first quarter of 2003, a three-year charitable contribution commitment that resulted in a quarterly expense of $250,000 that concluded in 2003, as well as lower legal expenses. These decreases were offset in part by costs associated with additional finance and accounting personnel, as well as consulting and auditing fees relating to regulatory requirements under the Sarbanes-Oxley Act of 2002. In addition, in the second quarter of 2004, we recognized expenses totaling 471,000 relating to the early retirement of the Company’s former chief financial officer.

Depreciation and amortization

      Depreciation for the television and radio segments declined in 2005, as compared to 2004, and declined in 2004, as compared to 2003, primarily as a result of certain assets becoming fully depreciated.

      The decrease in depreciation in the Fisher Plaza segment in 2005, as compared to 2004, is primarily due to certain assets at the first building becoming fully depreciated. The increase in depreciation in the Fisher Plaza segment in 2004, as compared to 2003, is primarily due to commencing depreciation on the second building of the facility in July 2003 when the building was placed in service.

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Net loss on derivative instruments

      We had no derivative instruments outstanding during 2005; however, derivative instruments had a significant impact on our operating results in previous years. On March 21, 2002, we entered into a variable forward sales transaction (the “Forward Transaction”) with a financial institution. Our obligations under the Forward Transaction were collateralized by 3.0 million shares of Safeco Corporation common stock owned by us. A portion of the Forward Transaction was considered a derivative and, as such, we periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the statement of operations. Changes in the value of the Forward Transaction were based primarily on changes in the value of Safeco Corporation common stock, changes in underlying assumptions concerning the volatility of Safeco common stock, and changes in interest rates.

      On April 28, 2004, we terminated one tranche of the Forward Transaction with a maturity date of March 15, 2007. In connection with the termination, the Company paid a termination fee of $2.5 million, which consisted of losses recorded in previous periods of $2.1 million and an additional loss of $436,000 recorded in the quarter ended June 30, 2004.

      On November 4, 2004, we terminated all remaining tranches of the Forward Transaction. In connection with the termination, we paid a termination fee of $16.1 million. As a result of the termination, all shares of Safeco Corporation common stock owned by us became unencumbered.

      In connection with borrowings for our broadcasting operations that were repaid in 2004, the broadcasting subsidiary entered into an interest rate swap agreement (the “Swap Agreement”) fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under these borrowings. The change in value of the Swap Agreement was recorded in the statement of operations. The interest rate swap expired in March 2004.

      Net loss on derivative instruments in 2004 consisted of losses resulting from changes in fair value of the Forward Transaction derivative amounting to $13.6 million, offset in part by a gain from changes in fair value of the Swap Agreement amounting to $907,000. The loss on the Forward Transaction was primarily attributable to the increased value of Safeco Corporation common stock during the period from January 1, 2004 through the date of its termination.

      Net loss on derivative instruments in 2003 consisted of losses resulting from changes in fair value of the Forward Transaction derivative amounting to $10.3 million, offset in part by a gain from changes in fair value of the Swap Agreement amounting to $3.4 million. The loss on the Forward Transaction was primarily attributable to the increased value of Safeco Corporation common stock during 2003.

Loss from extinguishment of long-term debt

      On September 20, 2004, we completed the private placement of $150 million of 8.625% senior notes due 2014 and used the net cash proceeds to retire our previous debt facilities. As a result, we wrote off deferred loan costs totaling $2.0 million relating to our broadcasting and media services debt facilities, and paid an additional amount of $3.0 million to retire obligations under our variable Forward Transaction.

      As a result of significant reductions in our long-term debt during the fourth quarter of 2003, we wrote off deferred loan costs totaling $2.2 million

Other income, net

      Other income, net, includes dividends received on marketable securities and, to a lesser extent, interest and miscellaneous income. The increase in 2005, as compared to 2004, was due in part to an increase in the dividend rate of our investment in Safeco shares. The decrease in 2004, in comparison to 2003, was due primarily to gains on the sales of marketable securities amounting to $3.7 million in the first quarter of 2003.

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Interest expense, net

      Interest expense includes interest on borrowed funds, amortization of loan fees, and net payments under the Swap Agreement that expired in the first quarter of 2004. Interest expense in 2003 relating to debt that was required to be repaid from the net proceeds from certain asset sales has been reclassified to discontinued operations (see Note 2 to the Consolidated Financial Statements).

      The increase in interest expense in 2005, compared to 2004, is due primarily to higher average debt balances outstanding in 2005 at a higher interest rate. Interest expense decreased in 2004, as compared to 2003, despite our $150 million bond offering that was completed in September 2004 at a higher interest rate than had been in place for the prior debt facilities. This decrease in interest expense was due in part to the expiration of the Swap Agreement in the first quarter of 2004; therefore, Swap Agreement expenses were incurred and charged to interest expense for all of 2003, and for only one quarter of 2004.

Benefit for federal and state income taxes

      The benefit for federal and state income taxes generally varies directly with pre-tax loss. Therefore, the changes in benefit for federal and state income taxes were primarily due to fluctuating losses from continuing operations before income taxes for each of 2005, 2004 and 2003. In addition, the 2005 benefit includes a $3.4 million benefit for worthless stock that became available upon the dissolution of an inactive subsidiary in December 2005. The tax benefit from continuing operations in 2003 was offset by tax provisions in discontinued operations resulting primarily from gains on sales of assets. The tax benefit in 2004 primarily reflected our ability to utilize net operating loss carrybacks. The effective tax rate varies from the statutory rate primarily due to the 2005 deduction for worthless stock, deduction for dividends received from our investment in Safeco corporate common stock, increases in cash surrender value of life insurance policies held by the Company (for which proceeds are received tax-free if held to maturity), and the impact of state income taxes. Due to the uncertainty of the Company’s ability to generate sufficient state taxable income to realize its deferred state tax assets, a valuation allowance has been established for financial reporting purposes (see Note 10 to the Consolidated Financial Statements).

     Liquidity and Capital Resources

      In September 2004, we completed a $150.0 million offering of 8.625% senior notes due 2014 and used $143.9 million of the initial $144.5 million net proceeds to retire existing debt and to settle the outstanding obligations under the Forward Transaction. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by our current and future material domestic subsidiaries. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year. In September 2004, we also entered into a new six-year senior credit facility with a financial institution for borrowings of up to $20.0 million. The credit facility is collateralized by substantially all of the Company’s assets, excluding certain real property and our investment in shares of Safeco Corporation common stock. In November 2004, we terminated all remaining tranches of the Forward Transaction and paid a termination fee of $16.1 million. As a result of the termination, all shares of Safeco Corporation common stock owned by us became unencumbered.

      Our current assets as of December 31, 2005 included cash and cash equivalents totaling $19.6 million, and we had working capital of $35.6 million. As of December 31, 2004, our current assets included cash and cash equivalents totaling $16.0 million, and we had working capital of $33.2 million. We intend to finance working capital, debt service, capital expenditures, and dividend requirements, if any, primarily through operating activities. However, we may use the credit facility to meet operating needs. As of December 31, 2005, the entire $20.0 million was available under the credit facility. In December 2005 we announced that we signed an agreement to purchase a full-power television station in the Portland, Oregon DMA, as well as low-power television stations and construction permits in certain Idaho communities. The purchase price of $20.3 million may be paid through the use of existing cash and the use of our $20 million revolving line of credit. We believe that existing cash and cash equivalents, combined with access to our credit facility, are

36

adequate to fund our operations for at least the next twelve months as well as our plan to purchase the television stations referred to in the previous sentence.

      Net cash provided by operating activities during 2005 was $5.6 million, compared to net cash provided by operations of $19.1 million in 2004 and $6.3 million in 2003. Net cash provided by operating activities consists of our net income (loss), adjusted by non-cash expenses such as depreciation and amortization, net loss on derivative instruments (for the 2004 and 2003 periods) and loss from extinguishment of long-term debt (for the 2004 and 2003 periods), adjusted by changes in deferred income tax and changes in operating assets and liabilities.

      Net cash used in investing activities during 2005 consisted primarily of $7.5 million to purchase property, plant and equipment, partially offset by the collection of two notes receivable totaling $1.6 million related to prior year asset sales. In 2004, we purchased $6.8 million of property, plant and equipment, compared to $12.4 million in 2003. The higher level of capital purchases in 2003 was due primarily to completion of the second phase of Fisher Plaza in that year. Cash flows from investing activities in 2003 included proceeds from the sale of operating assets (see Note 2 to the Consolidated Financial Statements). Cash flows from investing activities in 2003 also included $3.2 million from the collection of notes receivable and $5.2 million in proceeds from the sale of marketable securities. Broadcasting is a capital-intensive business; however, we have no significant commitments for the purchase of capital items. By July 1, 2006, we must construct full power digital broadcasting facilities for certain of our smaller market television stations to be in compliance with FCC rules; therefore, we anticipate higher capital costs in 2006, as compared to 2005.

      Net cash provided by financing activities in 2005 was $3.3 million, comprised primarily of $3.4 million in proceeds from the exercise of stock options. These cash receipts were partially offset by payments of notes payable and deferred loan costs. Net cash provided by financing activities in 2004 was comprised primarily of the $150.0 million senior notes offering and $11.0 million in borrowings under our former credit facilities. Those amounts were offset by payments and retirements of borrowing agreements of $142.7 million, payments totaling $21.6 million to terminate the Forward Transaction and pay additional amounts to settle our obligations under the Forward Transaction, and $5.9 million in transaction costs related to the senior notes offering and new senior credit facility, resulting in net cash used in financing activities of $9.6 million.

      We are subject to various debt covenants and other restrictions — including the requirement for early payments upon the occurrence of certain events, including the sale of assets — the violation of which could require repayment of outstanding borrowings and affect our credit rating and access to other financing (see Note 7 of the Consolidated Financial Statements). The Company was in compliance with all debt covenant requirements at December 31, 2005.

      As of December 31, 2005, the following table presents our contractual obligations:

Future contractual obligations are as follows (in thousands):

							Operating
	Debt		Broadcast		Other		Lease
12 Months Ending December 31	Maturities		Rights		Obligations		Obligations		Total
2006	$		$	17,478	$	5,022	$	1,007	$	23,507
2007				16,717		5,259		956		22,932
2008				15,059		2,440		690		18,189
2009				4,802				488		5,290
2010				2,608				412		3,020
Thereafter		150,000		398				2,425		152,823
	$	150,000	$	57,062	$	12,721	$	5,978	$	225,761

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      Commitments for broadcasting rights consist of $5.5 million recorded in the Consolidated Balance Sheet as television and radio broadcast rights payable as of December 31, 2005 and $51.6 million for future rights to broadcast television and radio programs. Other obligations consist of $6.9 million in related fees primarily associated with our contract to broadcast Seattle Mariners baseball games and $5.8 million for commitments under a joint sales agreement. The Company has also agreed to purchase a full-power television station in the Portland, Oregon DMA, as well as low-power television stations and construction permits in certain Idaho communities for a purchase price of $20.3 million.

Recent Accounting Pronouncements

      In September 2004, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force discussed Topic D-108, “Use of the Residual Method to Value Acquired Assets Other Than Goodwill.” EITF Topic D-108 clarifies that a residual valuation method is not appropriate to value acquired assets other than goodwill. The guidance is to be applied no later than the beginning of the first fiscal year that begins after December 15, 2004. The Company has accounted for its past business combinations in a manner that resulted in the allocation of such residual amounts to goodwill, and not to any identifiable intangible assets (such as FCC licenses). Accordingly, it was not appropriate to reclassify amounts out of goodwill into identifiable intangible assets, and the adoption of EITF Topic D-108 had no impact on the Company’s financial statements.

      In December 2004, the FASB issued SFAS No. 123 (Revised), “Share-Based Payment,” which amended SFAS No. 123, “Accounting for Stock-Based Compensation” and SFAS No. 95, “Statement of Cash Flows”. The new accounting standard requires the expensing of new stock options, as well as outstanding unvested stock options, issued by us using a fair-value-based method and is effective for fiscal years beginning after June 15, 2005 and will become effective for us beginning in the first quarter of fiscal year 2006. In March 2005 the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107, which provides guidance regarding the application of SFAS No. 123 (Revised). See Stock-based compensation section in Note 1 of the Consolidated Financial Statements for pro forma disclosures regarding the effect on net income (loss) and income (loss) per share had we applied the fair value recognition provisions of SFAS No. 123.

      SFAS No. 123 (Revised) provides for different transition methods for past award grants. We have elected to apply the modified prospective transition method to all past awards outstanding and unvested as of the effective date. This means that we will recognize the associated compensation expense over the remaining requisite service period based on the fair values previously determined and disclosed as part of our pro-forma disclosure. Although the pro forma effects of applying the original SFAS No. 123 may be indicative of the effects of adopting SFAS No. 123 (Revised), the provisions of these two statements differ in several respects. The actual effects of adopting SFAS No. 123 (Revised) will be dependent on numerous factors including, but not limited to, the valuation model chosen by us to value stock-based awards; the assumed award forfeiture rate; the accounting policies adopted concerning the method of recognizing the fair value of awards over the requisite service period; and the transition method selected in adopting SFAS No. 123 (Revised).

      In December 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions.” The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. The new rules are effective for interim and annual periods beginning after June 15, 2005. The adoption of this new rule had no impact on the Company’s financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

      The market risk in our financial instruments represents the potential loss arising from adverse changes in financial rates. We are exposed to market risk in the areas of interest rates and securities prices. These exposures are directly related to our normal funding and investing activities.

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Interest Rate Exposure

      As a result of our September 2004 placement of $150.0 million of 8.625% senior notes due 2014, substantially all of our debt as of December 31, 2005, is at a fixed rate. As of December 31, 2005, our fixed-rate debt totaled $150.0 million. The fair market value of long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The estimated fair value of our long-term debt at December 31, 2005 was approximately $158.0 million, which was approximately $8.0 million more than its carrying value. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10% change in interest rates and, as of December 31, 2005, amounted to approximately $7.7 million. Fair market values are determined based on estimates made by investment bankers. For fixed rate debt, interest rate changes do not impact book value, operations, or cash flows.

Marketable Securities Exposure

      The fair value of our investments in marketable securities as of December 31, 2005 was $170.1 million. Marketable securities consist primarily of 3.0 million shares of Safeco Corporation common stock, valued based on the closing per-share sale price on the specific-identification basis as reported on the Nasdaq stock market. As of December 31, 2005, these shares represented 2.4% of the outstanding common stock of Safeco Corporation. We have classified the investments as available-for-sale under applicable accounting standards. A hypothetical 10% change in market prices underlying these securities would result in a $17.0 million change in the fair value of the marketable securities portfolio. Although changes in securities prices would affect the fair value of the marketable securities and cause unrealized gains or losses, such gains or losses would not be realized unless the investments are sold.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The financial statements and related documents listed in the index set forth in Item 15 in this report are filed as part of this report.

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

      None.

ITEM 9A. CONTROLS AND PROCEDURES

      The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2005, these disclosure controls and procedures are effective in ensuring that the information that the Company is required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that, as of December 31, 2005, the disclosure controls and procedures are effective in ensuring that the information required to be reported is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

      During the fourth quarter of 2005, changes to our internal controls included the following:

•  On October 4, 2005, we announced the appointment of Colleen B. Brown as president and chief executive officer effective October 10, 2005, and that Benjamin W. Tucker, who had been our acting president and chief executive officer, would leave the Company in October 2005.

•  Effective October 2005, we implemented a new, centralized payroll and human resources system.

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•  On December 7, 2005, we announced the appointment of Judith A. Endejan as Senior Vice President General Counsel, responsible for both legal and human resource affairs.

Management’s Report on Internal Control Over Financial Reporting

      Fisher Communications, Inc.’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. We assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on our assessment using those criteria, we determined that as of December 31, 2005, Fisher Communications, Inc.’s internal control over financial reporting was effective.

      Our management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears elsewhere in this report.

      Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

ITEM 9B. OTHER INFORMATION

Renewal of CBS Affiliation Agreements

      Effective March 1, 2006, our broadcasting subsidiaries renewed affiliation agreements regarding the affiliation with the CBS Television Network of KIDK in Idaho Falls, Idaho, KIMA in Yakima, Washington (including satellite stations KEPR in Pasco, Washington and KLEW in Lewiston, Idaho), KVAL in Eugene, Oregon (including satellite stations KPIC in Roseburg and KCBY in Coos Bay), and KBCI in Boise, Idaho. A copy of the complete text (excluding material covered by a confidential treatment request filed with the Securities and Exchange Commission concurrently with this annual report) of the renewed agreements is included in the Exhibits to this annual report, and the following description is qualified in its entirety by reference to the text of the renewed Agreements.

      In addition to extending the terms of the Agreements to February 29, 2016, the renewed Agreements clarify, among other things, that the Broadcaster’s “first call” rights to network programs extend to such Programs in digital format and that the Broadcaster’s non-duplication rights apply to digital as well as analog broadcasting of network programs.

Amended and Restated Supplemental Pension Plan

      On December 31, 2005, we amended and restated the Fisher Communications, Inc. Supplemental Pension Plan for the benefit of a select group of management employees of the Company. No new participants have been added to this program since 2001. Three supplemental pension plans previously maintained by the Company and its subsidiaries were merged into the Amended and Restated Supplemental Pension Plan. A copy of the complete text of the Amended and Restated Supplemental Pension Plan is included in the Exhibits to this annual Report.

      The Amended and Restated Supplemental Pension Plan is a non-funded, non-qualified, non-contributory defined benefit plan. The plan does not require funding, but generally the Company has acquired annuity contracts and life insurance policies on the lives of the individual participants to assist in payment of retirement benefits. Participants who terminate voluntarily prior to age 65 are not entitled to any benefits under the plan. The plan provides that the benefits under the plan, together with all other pension and retirement benefits provided by the Company, including an amount equal to one-half of the participant’s primary Social Security benefits, will represent a specified percentage (between 50% and 70%) of the participant’s average annual compensation. “Average annual compensation” for purposes of the plan is

40

determined by averaging the participant’s base salary over a period of the three consecutive fiscal years ending June 30, 2005 that will provide the highest average. The plan provides for payment of accrued benefits in the event of involuntary termination prior to age 65, and for death or disability benefits in the event of death or permanent disability prior to age 65.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 27, 2006, and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

      The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 27, 2006, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Except for the discussion below, the information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 27, 2006, and is incorporated herein by reference.

Securities authorized for issuance under equity compensation plans

      We maintain two equity incentive compensation plans (the “Plans”), the Amended and Restated Fisher Communications Incentive Plan of 1995 (the “1995 Plan”) and the Fisher Communication Incentive Plan of 2001 (the “2001 Plan”). The 1995 Plan provided that up to 560,000 shares of the Company’s common stock could be issued to eligible key management employees pursuant to stock options, restricted stock rights and performance stock rights through 2002. As of December 31, 2005 options and rights for 211,000 shares, net of forfeitures, had been issued. No further options and rights will be issued pursuant to the 1995 Plan. The 2001 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to eligible key management employees pursuant to stock options, restricted stock rights and performance stock rights through 2008. As of December 31, 2005 options for 244,000 shares had been issued, net of forfeitures. The Plans were approved by shareholders and no non-Plan awards are outstanding (see Note 9 to the Consolidated Financial Statements for further information).

      The number of securities to be issued upon exercise of outstanding options and rights, the weighted average exercise price of outstanding options and rights, and the number of securities remaining for future issuance under the Plans are summarized as follows:

Number of Securities to be Issued		Weighted Average Exercise		Number of Securities
Upon Exercise of Outstanding		Price of Outstanding		Remaining Available
Options and Rights		Options and Rights		for Future Issuance
	279,430	$	52.12		356,100

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 27, 2006, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 27, 2006, and is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (a) (1) Consolidated Financial Statements:

•  Report of Independent Registered Public Accounting Firm

•  Consolidated Statements of Operations for the years ended December 31, 2005, 2004, and 2003

•  Consolidated Balance Sheets at December 31, 2005 and 2004

•  Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2005, 2004, and 2003

•  Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003

•  Consolidated Statements of Comprehensive Income for the years ended December 31, 2005, 2004, and 2003

•  Notes to Consolidated Financial Statements

      (2) Financial Statement Schedules:

•  Schedule II — Valuation and Qualifying Accounts for the years ended December 31, 2005, 2004, and 2003

      (3) Exhibits: See “Exhibit Index.”

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Fisher Communications, Inc:

      We have completed integrated audits of Fisher Communications Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its December 31, 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

      In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Fisher Communications, Inc. and its subsidiaries at December 31, 2005 and December 31, 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

      Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A of this annual report on Form 10-K, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records

43

that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington

March 14, 2006

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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

		Year Ended December 31
		2005			2004			2003
		(In thousands, except per-share
		amounts)
Revenue		$	149,319		$	153,866		$	138,387
Costs and expenses
	Cost of services sold (exclusive of annual depreciation and amortization reported separately below, amounting to $10,965, $13,272 and $14,356 respectively)		73,798			69,123			69,183
	Selling expenses		32,344			27,626			25,259
	General and administrative expenses		34,074			34,682			39,829
	Depreciation and amortization		13,085			16,017			16,180
			153,301			147,448			150,451
Income loss from operations			(3,982	)		6,418			(12,064	)
Net loss on derivative instruments						(12,656	)		(6,911	)
Loss from extinguishment of long-term debt						(5,034	)		(2,204	)
Other income, net			3,674			3,421			6,427
Interest expense, net			(13,726	)		(11,776	)		(13,081	)
Loss from continuing operations before income taxes			(14,034	)		(19,627	)		(27,833	)
Benefit for federal and state income taxes			(8,962	)		(7,806	)		(13,029	)
Loss from continuing operations			(5,072	)		(11,821	)		(14,804	)
Income (loss) from discontinued operations, net of income taxes:
	Real estate operations								10,276
	Property management business								(831	)
	Georgia television stations					(132	)		8,189
	Portland radio stations								7,090
	Media Services operations closed								(1,692	)
Income (loss) from discontinued operations, net of income taxes			—			(132	)		23,032
Net income (loss)		$	(5,072	)	$	(11,953	)	$	8,228
Income (loss) per share:
	From continuing operations	$	(0.58	)	$	(1.37	)	$	(1.72	)
	From discontinued operations					(0.02	)		2.68
	Net income (loss) per share	$	(0.58	)	$	(1.39	)	$	0.96
Income (loss) per share assuming dilution:
	From continuing operations	$	(0.58	)	$	(1.37	)	$	(1.72	)
	From discontinued operations					(0.02	)		2.68
	Net income (loss) per share assuming dilution	$	(0.58	)	$	(1.39	)	$	0.96
Weighted average shares outstanding			8,678			8,617			8,599
Weighted average shares outstanding assuming dilution			8,678			8,617			8,599

See accompanying notes to consolidated financial statements.

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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

				December 31			December 31
				2005			2004
				(In thousands, except share
				and per-share amounts)
ASSETS
Current Assets
	Cash and cash equivalents			$	19,622		$	16,025
	Receivables, net				28,166			28,539
	Income taxes receivable				986			3,355
	Deferred income taxes				665			631
	Prepaid expenses				4,295			3,653
	Television and radio broadcast rights				6,519			8,398
			Total current assets		60,253			60,601
Marketable securities, at market value					170,053			157,102
Cash value of life insurance and retirement deposits					15,303			14,971
Television and radio broadcast rights					2,075			3,086
Goodwill, net					38,354			38,354
Intangible assets					1,244			1,244
Investment in equity investee					2,759			2,825
Prepaid financing fees and other assets					6,040			7,396
Property, plant and equipment, net					144,312			150,293
Total Assets				$	440,393		$	435,872
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Notes payable			$	—		$	53
	Trade accounts payable				3,483			3,755
	Accrued payroll and related benefits				7,355			7,331
	Interest payable				3,809			3,630
	Television and radio broadcast rights payable				5,524			7,419
	Other current liabilities				4,520			5,232
			Total current liabilities		24,691			27,420
Long-term debt					150,000			150,000
Accrued retirement benefits					19,644			18,967
Deferred income taxes					31,381			36,133
Other liabilities					5,056			899
Commitments and Contingencies
Stockholders’ Equity
	Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,705,041 in 2005 and 8,618,781 in 2004				10,881			10,773
	Capital in excess of par				8,590			4,535
	Deferred compensation				(159	)
	Accumulated other comprehensive income — net of income taxes:
		Unrealized gain on marketable securities			109,600			101,400
		Minimum pension liability			(2,172	)		(2,208	)
	Retained earnings				82,881			87,953
Total Stockholders’ Equity					209,621			202,453
Total Liabilities and Stockholders’ Equity				$	440,393		$	435,872

See accompanying notes to consolidated financial statements.

46

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

											Accumulated
		Common Stock				Capital in					Other
						Excess of		Deferred			Comprehensive		Retained			Total
		Shares		Amount		Par		Compensation			Income		Earnings			Equity
		(In thousands except share amounts)
Balance December 31, 2002			8,594,060	$	10,743	$	3,488	$	(11	)	$	66,837	$	91,678		$	172,735
	Net income													8,228			8,228
	Other comprehensive income											6,252					6,252
	Amortization of deferred compensation								9								9
	Compensation expense for accelerated option vesting						90										90
	Issuance of common stock under rights and options, and related tax benefit		14,228		17		473										490
Balance December 31, 2003			8,608,288		10,760		4,051		(2	)		73,089		99,906			187,804
	Net loss													(11,953	)		(11,953	)
	Other comprehensive income											26,103					26,103
	Amortization of deferred compensation								2								2
	Compensation expense for accelerated option vesting						41										41
	Issuance of common stock under rights and options, and related tax benefit		10,493		13		443										456
Balance December 31, 2004			8,618,781		10,773		4,535		—			99,192		87,953			202,453
	Net loss													(5,072	)		(5,072	)
	Other comprehensive income											8,236					8,236
	Issuance of common stock rights						188		(188	)							—
	Amortization of deferred compensation								29								29
	Compensation expense for accelerated option vesting						340										340
	Issuance of common stock under rights and options, and related tax benefit		86,260		108		3,527										3,635
Balance December 31, 2005			8,705,041	$	10,881	$	8,590	$	(159	)	$	107,428	$	82,881		$	209,621

See accompanying notes to consolidated financial statements.

47

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Year Ended December 31
				2005			2004			2003
				(In thousands)
Cash flows from operating activities
	Net income (loss)			$	(5,072	)	$	(11,953	)	$	8,228
	Adjustments to reconcile net income (loss) to net cash provided by operating activities
			Depreciation and amortization		13,085			16,017			18,801
			Deferred income taxes		(8,991	)		(4,578	)		(5,470	)
			Equity in operations of equity investees		(46	)		(139	)		(27	)
			Amortization of deferred loan costs		646			742			1,376
			Decrease in fair value of derivative instruments					12,656			6,911
			Interest accrued on forward sale transaction					3,564			5,039
			Gain on sale of marketable securities								(3,675	)
			Loss from extinguishment of long-term debt					5,034			2,204
			Amortization of television and radio broadcast rights		19,959			19,227			19,498
			Payments for television and radio broadcast rights		(18,953	)		(18,524	)		(18,078	)
			Gain on sale of Georgia television stations								(12,460	)
			Gain on sale of Portland radio stations								(12,616	)
			Gain on sale of commercial property								(16,724	)
			Loss on sale of property management business								215
			Gain on sales of other real estate properties								(1,555	)
			Dividends from equity investee		112			138			125
			Other		229			245			134
Change in operating assets and liabilities
	Receivables				(573	)		(319	)		3,235
	Prepaid expenses				(642	)		502			2,323
	Cash value of life insurance and retirement deposits				(332	)		(278	)		(817	)
	Other assets				(260	)		834			(33	)
	Trade accounts payable, accrued payroll and related benefits, interest payable, and other current liabilities				(781	)		3,294			569
	Income taxes receivable and payable				2,369			(7,060	)		9,711
	Accrued retirement benefits				677			274			(399	)
	Other liabilities				4,146			(586	)		(231	)
		Net cash provided by operating activities			5,573			19,090			6,284
Cash flows from investing activities
	Proceeds from collection of notes receivable				1,585			428			3,235
	Proceeds from sale of marketable securities				247						5,169
	Proceeds from sale of Georgia television stations										40,725
	Proceeds from sale of Portland radio stations										42,033
	Proceeds from sale of commercial property and property, plant and equipment				418			112			61,050
	Restricted cash										12,778
	Purchase of property, plant and equipment				(7,523	)		(6,791	)		(12,413	)
	Purchase of radio station licenses							(204	)		(468	)
		Net cash provided by (used in) investing activities			(5,273	)		(6,455	)		152,109
Cash flows from financing activities
	Net payments under notes payable				(53	)		(662	)		(122	)
	Borrowings under borrowing agreements							161,000
	Payments on borrowing agreements and mortgage loans							(142,709	)		(168,667	)
	Payments to terminate forward transaction tranche and additional amount to retire outstanding balances							(21,589	)
	Payment of deferred loan costs				(87	)		(6,074	)		(613	)
	Proceeds from exercise of stock options				3,437			428			490
		Net cash provided by (used in) financing activities			3,297			(9,606	)		(168,912	)
Net increase (decrease) in cash and cash equivalents					3,597			3,029			(10,519	)
Cash and cash equivalents, beginning of period					16,025			12,996			23,515
Cash and cash equivalents, end of period				$	19,622		$	16,025		$	12,996

See accompanying notes to consolidated financial statements.

48

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			Year Ended December 31
			2005			2004			2003
			(In thousands)
Net income(loss)			$	(5,072	)	$	(11,953	)	$	8,228
Other comprehensive income:
	Unrealized gain on marketable securities			12,779			40,136			12,793
		Effect of income taxes		(4,473	)		(14,048	)		(4,477	)
	Minimum pension liability			56			23			(63	)
		Effect of income taxes		(20	)		(8	)		23
	Reclassification adjustment for gains included in net income(loss)			(163	)					(3,114	)
		Effect of income taxes		57						1,090
				8,236			26,103			6,252
Comprehensive income			$	3,164		$	14,150		$	14,480

See accompanying notes to consolidated financial statements.

49

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

Operations and Accounting Policies

      The principal operations of Fisher Communications, Inc. and subsidiaries (the Company) are television and radio broadcasting. The Company also owns and operates Fisher Plaza, a digital communications hub facility that houses a variety of office, retail, technology and other media and communications companies. As explained in Note 2 to the Consolidated Financial Statements, in 2003 the Company sold the remaining commercial properties held by its property subsidiary, and also sold its property management business. The Company conducts its business primarily in Washington, Oregon, Idaho, and Montana. A summary of significant accounting policies is as follows:

      Principles of consolidation The Consolidated Financial Statements include the accounts of Fisher Communications, Inc. and its wholly-owned subsidiaries. Television and radio broadcasting are conducted through Fisher Broadcasting Company. Fisher Media Services Company operates Fisher Plaza. All material intercompany balances and transactions have been eliminated.

      Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

      Television and radio broadcast licenses The Company’s broadcast operations are subject to the jurisdiction of the Federal Communications Commission (the “FCC”) under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act empowers the FCC to regulate many aspects of the broadcasting industry, including the granting and renewal of broadcast licenses. Broadcasting licenses for certain indefinite-lived radio licenses purchased in Montana are included in Intangible Assets in the Consolidated Balance Sheets.

      Revenue recognition Television and radio revenue is recognized when the advertisement is broadcast. The Company may barter unsold advertising time for products or services; barter transactions are reported at the estimated fair value of the product or service received. Barter revenue is reported when commercials are broadcast, and expense for goods or services received are reported when received or used. Revenue from production of broadcast media content is recognized when a contracted production is available for distribution. Revenue from satellite transmission services is recognized when the service is performed. Rentals from real estate leases are recognized on a straight-line basis over the term of the lease.

      Termination of national advertising representation firms Broadcasters may periodically terminate existing agreements with national advertising representation firms; under such circumstances, the successor firm generally satisfies the broadcaster’s contractual termination obligation to the predecessor firm with no cash payment made by the broadcaster. When the Company terminates national advertising representation agreements with contractual termination penalties, the Company recognizes a non-cash termination charge to selling expense and amortizes the resulting liability over the term of the new agreement. In the fourth quarter of 2005, the Company recognized a non-cash termination charge of $4.3 million and will recognize a non-cash benefit over the five year term of the new agreement.

      Short-term cash investments Short-term cash investments are comprised of repurchase agreements collateralized by U.S. Government securities held by major banks. The Company considers short-term cash investments that have remaining maturities at date of purchase of 90 days or less to be cash equivalents.

      Marketable securities Marketable securities at December 31, 2005 consist primarily of shares of Safeco Corporation common stock, valued based on the closing per-share sale price on the specific-identification basis as reported on the Nasdaq stock market. As of December 31, 2005, these shares represented 2.4% of the

50

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

outstanding common stock of Safeco Corporation. The Company has classified its investments as available-for-sale under applicable accounting standards, and those investments are reported at fair market value. Unrealized gains and losses are a separate component of stockholders’ equity, net of any related tax effect.

      Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily accounts receivable. Concentrations of credit risk with respect to the receivables are limited due to the large number of customers in the Company’s customer base and their dispersion across different industries and geographic areas. The Company does not generally require collateral or other security for its accounts receivable.

      Television and radio broadcast rights Television and radio broadcast rights are recorded as assets when the license period begins and the programs are available for broadcast, at the gross amount of the related obligations (or, for non-sports first-run programming, at the amount of the annual obligation). Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast after one year are considered non-current. These programming costs are charged to operations over their estimated broadcast periods using either the straight-line method or in proportion to estimated revenue. Program obligations are classified as current or non-current in accordance with the payment terms of the license agreement. The Company periodically assesses impairment of broadcast rights on a program-by-program basis; any impairment found is charged to operations in the period of the impairment.

      Investments in equity investees Investments in equity investees represent investments in entities over which the Company does not have control, but has significant influence and owns 50% or less. Such investments are accounted for using the equity method (See Note 4).

      Goodwill and indefinite-lived intangible assets Goodwill represents the excess of purchase price of certain broadcast properties over the fair value of tangible and identifiable intangible net assets acquired. Indefinite-lived intangible assets consist of certain radio licenses purchased in Montana. The Company tests goodwill and indefinite-lived intangible assets at least annually, or whenever events indicate that an impairment may exist.

      The goodwill impairment test involves a comparison of the fair value of each of the Company’s reporting units with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying amount of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested. Fair values are determined based on valuations that rely primarily on the discounted cash flow method. This method uses future projections of cash flows from each of the Company’s reporting units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of the Company’s weighted average cost of capital. To the extent they have been separately identified, the Company’s indefinite-lived assets (broadcast licenses), which are not subject to amortization, are tested for impairment on an annual basis by applying a fair-value-based test as required by Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” The Company’s evaluations of fair values include analyses based on the estimated future cash flows generated by the underlying assets, estimated trends, and other relevant determinants of fair value for these assets. If the fair value of the asset is less than its carrying amount, a loss is recognized for the difference between the fair value and its carrying value. Changes in any of these estimates, projections and assumptions could have a material effect on the fair value of these assets in future measurement periods and result in an impairment of goodwill or indefinite-lived intangibles which could materially affect the Company’s results of operations.

      Property, plant and equipment Replacements and improvements are capitalized, while maintenance and repairs are charged as expense when incurred. Property, plant and equipment are stated at historical cost, net

51

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of related accumulated depreciation. Gains or losses on dispositions of property, plant and equipment are included in other income, net, or in discontinued operations, based on the nature of the disposition.

      Real estate taxes, interest expense, and certain other costs related to real estate projects constructed for lease to third parties are capitalized as a cost of such projects until the project, including major tenant improvements, is substantially completed. A project is generally considered to be substantially completed when a predetermined occupancy level has been reached or the project has been available for occupancy for a period of one year. Costs, including depreciation, applicable to a project are charged to expense based on the ratio of occupied space to total rentable space until the project is substantially completed, after which such costs are expensed as incurred.

      For financial reporting purposes, depreciation of plant and equipment is determined primarily by the straight-line method over the estimated useful lives of the assets as follows:

Buildings and improvements	5-55 years
Machinery and equipment	3-25 years
Land improvements	10-55 years

      Tangible Long-Lived Assets The Company evaluates the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable as required by SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Company uses its judgment when applying the impairment rules to determine when an impairment test is necessary. Factors the Company considers which could trigger an impairment review include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant negative cash flows or industry trends.

      Impairment losses are measured as the amount by which the carrying value of an asset exceeds its estimated fair value, which is primarily based on estimated future discounted cash flows. In estimating these future cash flows, the Company uses future projections of cash flows directly associated with, and that were expected to arise as a direct result of, the use and eventual disposition of the assets. These projections rely on significant assumptions. If it is determined that a long-lived asset is not recoverable, an impairment loss would be calculated based on the excess of the carrying amount of the long-lived asset over its fair value. Changes in any of the Company’s estimates could have a material effect on the estimated future cash flows expected to be generated by the asset and could result in a future impairment of the involved assets with a material effect on the Company’s future results of operations.

      Fair value of financial instruments The carrying amount of cash and short-term cash investments, receivables, marketable securities, trade accounts payable, and broadcast rights payable approximate fair value due to their short maturities.

      The fair value of notes payable approximate the recorded amount based on borrowing rates currently available to the Company. The estimated fair value of the Company’s long-term debt at December 31, 2005 and 2004 was $158.0 million and $150.0 million, respectively. The fair value of long-term debt is based on estimates made by investment bankers. Currently, the Company does not anticipate settlement of long-term debt at other than book value.

      Deferred financing costs The Company capitalizes costs associated with financing activities and amortizes such costs to interest expense on a straight-line basis over the term of the underlying financing arrangements. Such costs associated with the senior notes issued in September 2004 are amortized over the 10-year life of the notes; costs corresponding to the Company’s $20 million revolving credit facility are amortized over the 6-year availability of this financing agreement.

52

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Advertising The Company expenses advertising costs at the time the advertising first takes place. Advertising expense was $3,825,000, $4,026,000 and $4,343,000 in 2005, 2004, and 2003, respectively.

      Operating leases The Company has operating leases for television and radio transmitting facilities, tower locations, administrative offices and certain other operational and administrative equipment. The television and radio transmitting facilities lease agreements are for periods up to 30 years, with certain renewal options. The Company recognizes lease expense on a straight-line basis when cash payments fluctuate over the term of the lease.

      Income taxes Deferred income taxes are provided for temporary differences in reporting for financial reporting purposes versus income tax reporting purposes. The Company provides valuation allowances for deferred taxes when it does not consider realization of such assets to be more likely than not.

      Earnings per share Net income (loss) per share represents net income (loss) divided by the weighted average number of shares outstanding during the year. Net income (loss) per share assuming dilution represents net income (loss) divided by the weighted average number of shares outstanding, including the potentially dilutive impact of stock options and restricted stock rights issued under the Company’s incentive plans. Common stock options and restricted stock rights are converted using the treasury stock method.

      A reconciliation of net income (loss) per share and net income (loss) per share assuming dilution is as follows (in thousands, except per-share amounts):

Year Ended December 31	2005			2004			2003
Net income (loss)	$	(5,072	)	$	(11,953	)	$	8,228
Weighted average shares outstanding — basic		8,678			8,617			8,599
Weighted effect of dilutive options and rights		—			—			—
Weighted average shares outstanding assuming dilution		8,678			8,617			8,599
Basic and diluted net income (loss) per share	$	(0.58	)	$	(1.39	)	$	0.96

      The dilutive effect of 4,000 restricted stock rights and options to purchase 275,430 shares are excluded from the calculation of weighted average shares outstanding for the year ended December 31, 2005 because such rights and options were anti-dilutive due to the Company’s net loss. The dilutive effect of 60 restricted stock rights and options to purchase 487,490 shares are excluded for the year ended December 31, 2004 because such rights and options were anti-dilutive due to the Company’s net loss. The dilutive effect of 460 restricted stock rights and options to purchase 456,263 shares are excluded for the year ended December 31, 2003 because such rights and options were also anti-dilutive due to the Company’s net loss from continuing operations.

53

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Stock-based compensation The Company accounts for common stock options and restricted common stock rights issued to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations (“APB 25”). No stock-based compensation is generally reflected in net loss, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in thousands, except per-share amounts):

Year Ended December 31		2005			2004			2003
Net income (loss), as reported		$	(5,072	)	$	(11,953	)	$	8,228
Add stock-based employee compensation expense included in net income (loss) as reported, net of related income taxes			221			41			90
Deduct total stock-based employee compensation expense determined under the fair value based method for all awards, net of related income tax effect			(1	)		(1,090	)		(134	)
Adjusted net income (loss)		$	(4,852	)	$	(13,002	)	$	8,184
Income (loss) per share:
	As reported	$	(0.58	)	$	(1.39	)	$	0.96
	Adjusted	$	(0.56	)	$	(1.51	)	$	0.95
Income (loss) per share assuming dilution:
	As reported	$	(0.58	)	$	(1.39	)	$	0.96
	Adjusted	$	(0.56	)	$	(1.51	)	$	0.95

Recent accounting pronouncements

      In September 2004, the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force discussed Topic D-108, “Use of the Residual Method to Value Acquired Assets Other Than Goodwill.” EITF Topic D-108 clarifies that a residual valuation method is not appropriate to value acquired assets other than goodwill. The guidance is to be applied no later than the beginning of the first fiscal year that begins after December 15, 2004. The Company has accounted for its past business combinations in a manner that resulted in the allocation of such residual amounts to goodwill, and not to any identifiable intangible assets (such as FCC licenses). Accordingly, it was not appropriate to reclassify amounts out of goodwill into identifiable intangible assets, and the adoption of EITF Topic D-108 had no impact on the Company’s financial statements.

      In December 2004, the FASB issued SFAS No. 123 (Revised), “Share-Based Payment,” which amended SFAS No. 123 and SFAS No. 95, “Statement of Cash Flows.” The new accounting standard requires the expensing of new stock options, as well as outstanding unvested stock options, issued by the Company using a fair-value-based method and is effective for fiscal years beginning after June 15, 2005 and will become effective for the Company beginning in the first quarter of fiscal year 2006. In March 2005 the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107, which provides guidance regarding the application of SFAS No. 123 (Revised). See Stock-based compensation section above for pro forma disclosures regarding the effect on net income (loss) and income (loss) per share had the Company applied the fair value recognition provisions of SFAS No. 123.

      SFAS No. 123 (Revised) provides for different transition methods for past award grants. The Company has elected to apply the modified prospective transition method to all past awards outstanding and unvested as of the effective date. This means that the Company will recognize the associated compensation expense over

54

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the remaining requisite service period based on the fair values previously determined and disclosed as part of the Company’s pro-forma disclosure. Although the pro forma effects of applying the original SFAS No. 123 may be indicative of the effects of adopting SFAS No. 123 (Revised), the provisions of these two statements differ in several respects. The actual effects of adopting SFAS No. 123 (Revised) will be dependent on numerous factors including, but not limited to, the valuation model chosen by the Company to value stock-based awards; the assumed award forfeiture rate; the accounting policies adopted concerning the method of recognizing the fair value of awards over the requisite service period; and the transition method selected in adopting SFAS No. 123 (Revised).

      In December 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions.” The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. The new rules are effective for interim and annual periods beginning after June 15, 2005. The adoption of this new rule had no impact on the Company’s financial statements.

NOTE 2

Discontinued Operations

      The Company’s real estate subsidiary sold its final two commercial office properties in October 2003. In December 2003, the Company then sold the property management operations conducted by the real estate subsidiary to a third party created by former employees of the Company’s real estate subsidiary.

      On December 1, 2003, Fisher Broadcasting Company completed the sale of substantially all of the assets of its two Georgia television stations, WFXG-TV, Augusta and WXTX-TV, Columbus; net proceeds from the sale were $40,725,000.

      On December 18, 2003, Fisher Broadcasting Company completed the sale of substantially all of the assets of its two Portland, Oregon radio stations, KWJJ FM and KOTK AM; net proceeds from the sale were $42,033,000.

      During the second quarter of 2003, two of the businesses operated by the Company’s Media Services subsidiary — Fisher Entertainment LLC (“Fisher Entertainment”) and Civia, Inc. (“Civia”) — ceased operations and those businesses were closed.

      The aforementioned real estate properties that were sold in October 2003, the sale of property management operations, the sale of the Company’s Georgia and Portland broadcasting stations, as well as the closure of Fisher Entertainment and Civia, meet the criteria of a “component of an entity” as defined in SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” The operations and cash flow of those components were eliminated from the ongoing operations of the Company as a result of the disposals, and the Company does not have any significant involvement in the operations of those components after the disposal transactions. Accordingly, in accordance with the provisions of SFAS 144, the results of operations of these components are reported as discontinued operations in the accompanying financial statements.

      In accordance with Emerging Issues Task Force Issue No. 87-24, “Allocation of Interest to Discontinued Operations,” the income or loss from discontinued operations of certain of these components includes an allocation of interest expense relating to debt that was required to be repaid from the net proceeds from sales, in addition to interest expense relating to mortgage loans on the properties sold.

55

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Operational data for discontinued real estate properties is summarized as follows (in thousands):

Year Ended December 31		2003
Revenue		$	5,120
Income (loss) from discontinued operations:
	Discontinued operating activities	$	(33	)
	Gain on sale		16,724
			16,691
	Income tax effect		(6,059	)
			10,632
	Interest allocation, net of income taxes		(356	)
Income from discontinued properties		$	10,276

      The interest allocation in 2003 is based on $14,000,000 in net proceeds (after income taxes, closing costs, reimbursement from the buyer of certain other items, and retirement of mortgage obligations) that was required to pay down debt as a result of the October 2003 sale of real estate properties.

      Operational data for the property management operations sold is summarized as follows (in thousands):

Year Ended December 31		2003
Revenue		$	502
Loss from discontinued operations:
	Discontinued operating activities	$	(513	)
	Loss on sale		(215	)
			(728	)
	Income tax effect		(103	)
Loss from discontinued property management operations		$	(831	)

      Operational data for the Georgia television stations sold is summarized as follows (in thousands):

Year Ended December 31		2004			2003
Revenue		$			$	7,805
Income (loss) from discontinued operations:
	Discontinued operating activities	$	(207	)	$	2,292
	Gain on sale					12,460
			(207	)		14,752
	Income tax effect		75			(5,248	)
			(132	)		9,504
	Interest allocation, net of income taxes					(1,315	)
Income (loss) from discontinued Georgia television stations		$	(132	)	$	8,189

      The interest allocation is based on $39,300,000 in net proceeds (including working capital at closing, net of closing costs) that was required to pay down debt as a result of the sale. The gain on sale is net of $23,514,000 in goodwill relating to the Georgia television stations.

56

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Operational data for the Portland radio stations sold is summarized as follows (in thousands):

Year Ended December 31		2003
Revenue		$	2,474
Income from discontinued operations:
	Discontinued operating activities	$	338
	Gain on sale		12,616
			12,954
	Income tax effect		(4,702	)
			8,252
	Interest allocation, net of income taxes		(1,162	)
Income from discontinued Portland radio stations		$	7,090

      Upon signing the agreement to sell the Portland radio stations, the Company entered into a separate agreement whereby the buyer operated the radio stations under a separate agreement prior to closing the transaction and remitted monthly amounts specified in the contract. Such payments commenced in June 2003 and totaled $1,034,000 in 2003; this amount is included within income from discontinued operations but is not reported as revenue in the table shown above.

      The interest allocation is based on $32,900,000 in net proceeds (after income taxes and closing costs) that was required to pay down debt as a result of the sale. The gain on sale is net of $28,230,000 in goodwill relating to the Portland radio stations.

      Prior to closing the sale, the Company entered into an agreement with the purchaser whereby the Company was required to further investigate certain environmental conditions at a transmission tower site in Portland that was included in the sale transaction. As a result, $1,000,000 was withheld from the purchase price and is included within accounts receivable at December 31, 2004. The Company completed all requirements under the agreement, and in February 2005 the Company received the full amount withheld from the purchase price.

      Operational data for the media businesses closed is summarized as follows (in thousands):

Year Ended December 31		2003
Revenue		$	1,557
Loss from discontinued operations:
	Discontinued operating activities	$	(2,426	)
	Income tax effect		734
Loss from discontinued media businesses		$	(1,692	)

57

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 3

     Receivables

      Receivables are summarized as follows (in thousands):

December 31		2005		2004
Trade accounts		$	27,273	$	25,606
Other			1,396		3,584
			28,669		29,190
Less-Allowance for doubtful accounts			503		651
	Total receivables	$	28,166	$	28,539

      The Company makes estimates of the uncollectability of accounts receivables, specifically analyzing accounts receivable and historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts. In addition to the identification of specific doubtful accounts receivable, the Company provides allowances based on percentages of past-due balances based on historical collection experience.

NOTE 4

     Investments in Equity Investee

      Investments in entities over which the Company does not have control, but has significant influence, are accounted for using the equity method. The Company’s investments are reported in the Consolidated Balance Sheet as investment in equity investee and its share of income or losses is reported as equity in operations of equity investee in the Consolidated Statements of Operations.

      The Company owns 50% of the outstanding stock of South West Oregon Broadcasting Corporation (“South West Oregon Television”), licensee of a television station in Roseburg, Oregon. The broadcasting subsidiary serves as manager of the station. The Company’s investment in South West Oregon Television is carried at the initial allocated purchase price, increased by the Company’s 50% share of net operating income, and decreased by distributions received.

      Investment in South West Oregon Television is summarized as follows (in thousands):

Balance, December 31, 2002	$	2,922
Dividends		(125	)
Equity in net income		27
Balance, December 31, 2003		2,824
Dividends		(138	)
Equity in net income		139
Balance, December 31, 2004		2,825
Dividends		(112	)
Equity in net income		46
Balance, December 31, 2005	$	2,759

58

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 5

     Goodwill and Intangible Assets

      The Company’s goodwill totals $38,354,000; intangible assets totaling $1,244,000 at December 31, 2005 and 2004, consist of amounts incurred to acquire certain radio broadcast licenses. The goodwill and broadcast licenses are considered indefinite-lived assets for which no periodic amortization is recognized. The radio broadcast licenses are issued by the FCC and provide the Company with the exclusive right to utilize certain radio frequency spectrum to air its radio stations’ programming. While FCC licenses are issued for only a fixed time, renewals of FCC licenses have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of its FCC licenses.

      The Company follows SFAS No. 142, which requires the Company to test goodwill and intangible assets for impairment at least annually, or whenever events indicate that an impairment may exist. The Company has determined that the impairment test should be conducted at the operating segment level, which, with respect to the broadcast operations, requires separate assessment of each of the Company’s television and radio station groups. The Company determines fair value based on valuation methodologies that include an analysis of market transactions for comparable businesses, discounted cash flows, and a review of the underlying assets of the reporting unit. The required annual impairment test was performed in the fourth quarter of 2005 and 2004, resulting in no impairment.

      There were no changes to the carrying amount of goodwill in 2004 and 2005.

NOTE 6

     Property, Plant and Equipment

      Property, plant and equipment are summarized as follows (in thousands):

December 31	2005		2004
Building and improvements	$	132,869	$	130,384
Machinery and equipment		103,448		113,671
Land and improvements		8,233		8,470
		244,550		252,525
Less-Accumulated depreciation		100,238		102,232
Total	$	144,312	$	150,293

      Property, plant and equipment includes property leased to third parties and to other subsidiaries of the Company. The investment in property held for lease to third parties as of December 31, 2005, consists of Fisher Plaza and includes buildings, equipment and improvements of $133,426,000, and land and improvements of $4,354,000, less accumulated depreciation of $20,643,000. The Company receives rental income principally from the lease of office and retail space under leases and agreements which expire at various dates

59

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

through 2019. These leases and agreements are accounted for as operating leases. Minimum future rentals from leases and agreements which were in effect at December 31, 2005 are as follows (in thousands):

Year	Rentals
2006	$	2,124
2007		2,024
2008		1,954
2009		1,326
2010		1,028
Thereafter		3,331
	$	11,787

      Interest capitalized relating to construction of property, plant and equipment amounted to approximately $2,006,000 in 2003. The Company did not capitalize any interest expense in 2005 or 2004.

NOTE 7

Notes Payable, Long Term Debt, and Derivative Instruments

Notes payable

      The Company previously had certain outstanding notes payable to directors, stockholders and others that were due on demand. These notes were paid in full during 2005. Such notes bore interest at rates equivalent to those available to the Company for short-term cash investments. At December 31, 2004, $53,000 was outstanding under such notes at an interest rate of 2.99%. The weighted average interest rate on borrowings outstanding during 2004 was 0.82%. Interest on such notes amounted to $506, $3,900 and $4,200 in 2005, 2004, and 2003, respectively.

Long-term debt and borrowing agreements

      On September 20, 2004 the Company completed the private placement of $150.0 million of 8.625% senior notes due 2014 to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933 (the “Securities Act”). The Company filed a registration statement in December 2004 with the Securities and Exchange Commission with respect to an offer to exchange the notes for freely tradable notes registered under the Securities Act. The offer to exchange became effective on February 2, 2005. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year, commencing March 15, 2005.

      Except as described below the notes are not redeemable at the Company’s option prior to September 15, 2009. On or after September 15, 2009, the Company may redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on September 15 of the years indicated below:

Year	Percentage
2009		104.3125	%
2010		102.8750	%
2011		101.4375	%
2012 and thereafter		100.0000	%

60

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Notwithstanding the foregoing, at any time prior to September 15, 2007, the Company may redeem up to 35% of the aggregate principal amount of notes issued under the indenture at a redemption price of 108.625% of the principal amount thereof, plus accrued and unpaid interest thereon to the redemption date, with the net cash proceeds of one or more public equity offerings as further described in the indenture under which the notes were issued.

      The indenture under which the notes were issued contains covenants that, among other things, limit the Company’s ability to:

•  incur additional indebtedness;

•  make certain asset dispositions;

•  make investments or other restricted payments;

•  pay dividends or make other distributions on, redeem or repurchase, capital stock;

•  issue capital stock of our restricted subsidiaries;

•  enter into transactions with affiliates or related persons;

•  incur certain liens on assets to secure debt; and

•  enter into a merger, sale or consolidation.

      These covenants are subject to a number of important qualifications and exceptions as described in the indenture. As of December 31, 2005, the Company was in compliance with these covenants.

      Of the total initial cash proceeds of $144.5 million, net of transaction costs, $143.9 million was used to retire the Company’s broadcasting subsidiary’s credit facility and the Company’s media services subsidiary’s credit facility, and to settle the outstanding obligations under the Company’s variable forward sales transaction. The variable forward sales transaction was later terminated effective November 4, 2004. The Company recorded a total loss on extinguishment of debt of $5,034,000, which includes the loss on termination of the variable forward sales transaction of $3,019,000.

      On September 20, 2004 the Company also entered into a new six-year senior credit facility (the “Revolver”). The Revolver provides for borrowings up to $20.0 million and is secured by substantially all of the Company’s assets (excluding certain real property and the Company’s investment in shares of Safeco Corporation common stock) and by all of the voting stock of its subsidiaries. The Revolver places limitations on various aspects of the Company’s operations (including, among other things, the payment of dividends to Company stockholders and the Company’s ability to consolidate, merge or sell a substantial part of its assets), requires compliance with a cash flow ratio, and requires prepayment upon the occurrence of certain events. Amounts borrowed under the Revolver bear interest at variable rates based at the Company’s option, on either (1) the LIBOR rate plus a margin of 250 basis points, or (2) the higher of the prime rate plus 175 basis points or the overnight federal funds rate plus 225 basis points. The Company was in compliance with all debt covenant requirements at December 31, 2005, and no amounts were outstanding under the Revolver at December 31, 2005.

      Total transaction costs of $5,978,000 were capitalized, of which $5,457,000 related to the senior notes, and $521,000 related to the Revolver. The capitalized balances are amortized to interest expense on a straight line basis over 10 years for the Senior notes and over 6 years for the Revolver.

      During 2003, the real estate subsidiary paid $37,979,000 on mortgage loans from proceeds from sales of real estate and has had no mortgage loans outstanding since that time. As a result of loan repayments in 2003 resulting from the Company’s sale of certain properties and broadcast operations, the Company wrote off

61

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

deferred loan costs amounting to $2,204,000, which is reported as loss from extinguishment of long-term debt in the accompanying financial statements.

Derivative Instruments

      In connection with a previous broadcast borrowing facility, the broadcasting subsidiary entered into an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under the broadcast borrowing facility. The swap expired in the first quarter of 2004, resulting in a gain of $907,000 which included in the total net loss on derivative instruments in the accompanying Consolidated Statement of Operations. In 2003, a gain of $3,388,000 was included in net gain (loss) on derivative instruments relating to the interest rate swap agreement.

      On March 21, 2002, the Company entered into a variable forward sales transaction (the “Forward Transaction”) with a financial institution. Proceeds from the Forward Transaction were used to repay prior debt, to finance construction of the Fisher Plaza project, and for general corporate purposes. The Company’s obligations under the Forward Transaction were collateralized by shares of Safeco Corporation common stock owned by the Company. A portion of the Forward Transaction was considered a derivative and, as such, the Company periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the statement of operations.

      On April 28, 2004, the Company terminated one tranche of the Forward Transaction with a maturity date of March 15, 2007. In connection with the termination, the Company paid a termination fee of $2.5 million, of which $2.1 million had been recognized as a derivative instrument liability as of March 31, 2004. The remaining $436,000 was recognized as a loss on termination in the second quarter of 2004 and is included within net gain (loss) on derivative instruments in the accompanying Consolidated Statement of Operations. In addition, the Company recognized $212,000 in interest expense to write-off the remaining unamortized expenses related to the terminated tranche.

      On November 4, 2004, the Company terminated all remaining tranches of the Forward Transaction. In connection with the termination, the Company paid a termination fee of $16,070,000. As a result of the termination, all shares of Safeco Corporation common stock owned by the Company became unencumbered. The termination was accounted for as an adjustment to net loss on derivative instruments.

Debt Maturities

      Future maturities of long term debt are as follows (in thousands):

2006	$
2007
2008
2009
2010
Thereafter		150,000
	$	150,000

      Cash paid for interest (net of amounts capitalized) during 2005, 2004, and 2003 was $12,804,000, $4,200,000 and $11,885,000, respectively. The Company’s September 2004 retirement of prior debt included payments to retire obligations under the Forward Transaction, a portion of which had been recognized as interest expense since the inception of this financing arrangement. Of the total 2004 payments to retire the obligations, $11,638,000 represented cumulative interest recognized on the Forward Transaction.

62

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 8

Television and Radio Broadcast Rights and Other Broadcast Commitments

      The Company acquires television and radio broadcast rights and may make commitments for program rights where the cost exceeds the projected direct revenue from the program. The impact of such contracts on the Company’s overall financial results is dependent on a number of factors, including popularity of the program, increased competition from other programming, and strength of the advertising market. Estimates of future revenues can change significantly and, accordingly, are reviewed periodically to determine whether impairment is expected over the life of the contract.

      At December 31, 2005 the Company had commitments under license agreements amounting to $51,516,000 for future rights to broadcast television and radio programs through 2011 and $6,933,000 in related fees primarily associated with the Company’s contract to broadcast Seattle Mariners baseball games. As these programs will not be available for broadcast until after December 31, 2005, they have been excluded from the financial statements in accordance with provisions of SFAS No. 63, “Financial Reporting by Broadcasters.” In 2002, the broadcasting subsidiary acquired exclusive rights to sell available advertising time for a radio station in Seattle (“Joint Sales Agreement”). Under the Joint Sales Agreement, the broadcasting subsidiary has commitments for monthly payments totaling $5,787,000 through 2007.

      Television and radio broadcast rights acquired under contractual arrangements were $17,069,000 and $19,968,000 in 2005 and 2004, respectively. The Company periodically performs impairment tests of its capitalized broadcast rights and as a result recorded a charge of $84,000 and $105,000 in 2005 and 2004, respectively, to write the asset balance down to its estimated net realizable value.

NOTE 9

Stockholders’ Equity

      The Company maintains two incentive plans (the “Plans”), the Amended and Restated Fisher Communications Incentive Plan of 1995 (the “1995 Plan”) and the Fisher Communication Incentive Plan of 2001 (the “2001 Plan”). The 1995 Plan provided that up to 560,000 shares of the Company’s common stock could be issued to eligible key management employees pursuant to options and rights through 2002. As of December 31, 2005 options and rights for 211,000 shares, net of forfeitures, had been issued. No further options and rights will be issued pursuant to the 1995 Plan. The 2001 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to eligible key management employees pursuant to options and rights through 2008. As of December 31, 2005 options for 244,000 shares had been issued, net of forfeitures.

      Stock options The Plans provide that eligible key management employees may be granted options to purchase the Company’s common stock at the fair market value on the date the options are granted. The options generally vest over five years and generally expire ten years from the date of grant. During 2005, 2004 and 2003, the vesting on certain previously granted options was accelerated as part of separation agreements with certain management personnel; as a result, the Company recognized non-cash compensation expense of $340,000, $41,000 and $90,000, respectively.

      Restricted stock rights The Plans also provide that eligible key management employees may be granted restricted stock rights which entitle such employees to receive a stated number of shares of the Company’s common stock. The rights generally vest over five years and expire upon termination of employment. Non-cash compensation expense of $29,000, $2,000 and $9,000 related to the rights was recorded during 2005, 2004, and 2003, respectively.

63

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      A summary of stock options and restricted stock rights is as follows:

							Restricted
		Stock Options					Stock Rights
					Weighted
		Number of			Average Exercise		Number of
		Shares			Price Per Share		Shares
Balance, December 31, 2002			422,798		$	53.88		1,504
	Options granted		77,300			46.88
	Options exercised		(13,300	)		36.86
	Stock rights vested							(976	)
	Options and stock rights forfeited		(30,535	)		57.71		(68	)
Balance, December 31, 2003			456,263			52.93		460
	Options granted		77,800			51.50
	Options exercised		(10,100	)		42.35
	Stock rights vested							(400	)
	Options forfeited		(36,473	)		60.94
Balance, December 31, 2004			487,490			52.32		60
	Options and stock rights granted		69,600			50.33		4,000
	Options exercised		(86,200	)		40.11
	Stock rights vested							(60	)
	Options forfeited		(195,460	)		56.21
Balance, December 31, 2005			275,430		$	52.88		4,000

      The following table summarizes stock options outstanding and exercisable at December 31, 2005:

	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
			Remaining		Exercise				Exercise
Range of Exercise Prices	Number		Life(Yrs.)		Price		Number		Price
$36.86-$47.75		86,600		7.0	$	42.82		48,850	$	42.28
$47.76-$57.50		89,170		6.7	$	53.06		40,770	$	54.88
$57.51-$65.50		99,660		4.0	$	61.46		95,710	$	61.52
		275,430		5.8	$	52.88		185,330	$	54.99

      The Company accounts for common stock options and restricted common stock rights issued to employees pursuant to the Plans in accordance with APB 25 and related interpretations. SFAS 123 requires companies that elect to adopt its provisions to utilize a fair value approach for accounting for stock compensation. The Company has elected to continue to apply the provisions of APB 25 in its financial statements. Beginning in the first quarter of 2006, the Company plans to adopt SFAS 123R, which requires recognition of non-cash expense for stock options.

64

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model as follows:

Year Ended December 31		2005			2004			2003
Assumptions:
	Weighted average risk-free interest rate		4.1	%		3.7	%		4.4	%
	Expected dividend yield		0.00	%		0.00	%		0.00	%
	Expected volatility		30.8	%		27.5	%		38.0	%
	Expected life of options		6 years			7 years			5 years
Weighted average fair value at date of grant		$	19.27		$	19.63		$	18.87

NOTE 10

     Income Taxes

      Income taxes have been provided as follows (in thousands):

Year Ended December 31		2005			2004			2003
Current tax expense (benefit)
	Continuing operations	$	29		$	(3,228	)	$	(5,734	)
	Discontinued operations					(75	)		11,959
			29			(3,303	)		6,225
Deferred tax expense (benefit)
	Continuing operations		(8,991	)		(4,578	)		(7,295	)
	Discontinued operations								1,825
			(8,991	)		(4,578	)		(5,470	)
	Total	$	(8,962	)	$	(7,881	)	$	755
Income taxes are allocated as follows:
	Continuing operations	$	(8,962	)	$	(7,806	)	$	(13,029	)
	Discontinued operations					(75	)		13,784
		$	(8,962	)	$	(7,881	)	$	755

65

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Reconciliation of income taxes computed at federal statutory rates to the reported provisions for income taxes on continuing operations is as follows (in thousands):

Year Ended December 31	2005			2004			2003
Normal benefit computed at 35% of pretax income	$	(4,912	)	$	(6,869	)	$	(9,742	)
Dividends received deduction		(690	)		(565	)		(960	)
State taxes, net of federal tax benefit		(119	)		(8	)		(1,682	)
Change in state tax valuation allowance		119			8			(391	)
Pension death and disability benefits, and increases in pension values		(291	)		(438	)		(362	)
Non-deductible expenses		252			283			249
Worthless stock deduction of liquidated subsidiary		(3,437	)
Impact of rate differences in income taxes allocated to discontinued operations								(419	)
Other		116			(217	)		278
	$	(8,962	)	$	(7,806	)	$	(13,029	)

      Deferred tax liabilities are summarized as follows (in thousands):

December 31		2005			2004
Assets
	Accrued employee benefits	$	8,154		$	8,095
	Allowance for doubtful accounts		187			241
	Goodwill		9,053			12,081
	Net operating loss carryforwards		10,271			651
	Contract termination charge		1,607
	Other		518
			29,790			21,068
Liabilities
	Accumulated other comprehensive income		(47,416	)		(43,000	)
	Property, plant and equipment		(11,306	)		(11,745	)
	Prepaid insurance		(454	)		(540	)
	Other					(74	)
			(59,176	)		(55,359	)
	Valuation allowance		(1,330	)		(1,211	)
Net		$	(30,716	)	$	(35,502	)
Current			665			631
Noncurrent			(31,381	)		(36,133	)
		$	(30,716	)	$	(35,502	)

      Due to the uncertainty of the Company’s ability to generate sufficient state taxable income to realize its deferred state tax assets, a valuation allowance has been established for financial reporting purposes. The valuation allowance was $1,330,000 and $1,211,000 at December 31, 2005 and 2004, respectively. As of

66

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2005, the Company had estimated net operating losses totaling $10,271,000, as tax-effected, which expire through 2025.

      In addition, the 2005 income tax benefit includes a $3.4 million benefit for worthless stock that became available upon the dissolution of an inactive subsidiary in December 2005.

      Net cash received from income tax refunds during 2005 was $2.3 million, and net cash paid for income taxes during 2004 was $3.6 million.

NOTE 11

Retirement Benefits

      The Company maintained qualified defined benefit pension plans covering substantially all employees not covered by union plans. Benefits were based on years of service and, in one of the pension plans, on the employees’ compensation at retirement. The Company annually accrued the normal costs of the pension plans plus the amortization of prior service costs over periods ranging to 15 years. Such costs were funded in accordance with provisions of the Internal Revenue Code. In June 2000 benefit accruals ceased under the pension plan for employees of the broadcasting subsidiary, and that plan was terminated, with substantially all plan assets distributed to participants in January 2002. In July 2001 benefit accruals ceased under the pension plan for non-broadcasting employees, and all plan assets were distributed to participants between 2001 and the first half of 2003.

      The net periodic pension cost for the Company’s terminated qualified defined benefit pension plans is as follows (in thousands):

Year Ended December 31	2003
Service cost	$	44
Settlement		607
Net periodic pension cost	$	651

      The Company has a noncontributory supplemental retirement program for key management. No new participants have been admitted to this program since 2001. The program provides for vesting of benefits under certain circumstances. Funding is not required, but generally the Company has acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of such policies; accordingly, the cash values of the policies as well as the accrued liability are reported in the financial statements. The program requires continued employment or disability through the date of expected retirement. The cost of the program is accrued over the participants’ remaining years of service at the Company.

      In June 2005, the program was amended to freeze accrual of all benefits to active participants provided under the program. As a result, the Company recorded a charge of $451,000 in the second quarter of 2005 as a curtailment loss associated with an unrecognized transition obligation that was required to be recognized at the effective date of the program amendment. The Company will continue to recognize periodic pension cost related to the program, but the amount is expected to be lower as a result of the curtailment. The curtailment loss was calculated based on a current discount rate of 5.02% and no future compensation increases. The program amendment in June 2005 resulted in a decrease of our projected benefit obligation of $597,000. Pursuant to the provisions of SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS 88), this gain was netted against unrecognized actuarial losses resulting in no impact in our Consolidated Statement of Operations.

67

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following provides a reconciliation of benefit obligation and funded status of the Company’s supplemental retirement program (in thousands):

Year Ended December 31	2005			2004
Projected benefit obligation, beginning of year	$	20,012		$	19,654
Service cost		80			291
Interest cost		1,028			1,096
Assumption changes		696			1,124
Termination benefits					471
Actuarial gains		(469	)		(1,493	)
Curtailment gain		(597	)
Benefit payments		(1,191	)		(1,131	)
Projected benefit obligation, end of year	$	19,559		$	20,012

December 31	2005			2004
Unfunded status	$	19,559		$	20,012
Unrecognized transition obligation					(503	)
Unrecognized net loss		(3,341	)		(4,024	)
Net amount recognized	$	16,218		$	15,485

      Amounts recognized in Consolidated Balance Sheets consist of (in thousands):

December 31	2005			2004
Accrued pension liability	$	19,559		$	18,882
Accumulated other comprehensive loss		(3,341	)		(3,397	)
Net amount recognized	$	16,218		$	15,485

      Assumptions used to determine pension obligations are as follows:

	2005		2004
Discount rate		5.48		5.74	%
Rate of compensation increase		N/A		3.00	%

      In selecting the discount rate, the Company’s policy is to refer to yields available on high-quality, long-term US corporate bonds on the measurement date, and is intended to reflect prevailing market conditions. At December 31, 2005, the Company has estimated its discount rate based on the Moody’s Aa long-term corporate bond yield, which is a well established and credible source based upon bonds of appropriate credit quality and similar duration to the Company’s pension obligations.

68

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The net periodic pension cost for the Company’s supplemental retirement program is as follows (in thousands):

Year Ended December 31	2005		2004		2003
Service cost	$	80	$	291	$	539
Interest cost		1,028		1,096		1,243
Amortization of transition obligation		52		104		89
Recognition of remaining transition obligation, curtailment loss		451
Amortization of loss		267		213		290
Net periodic pension cost		1,878		1,704		2,161
Cost of termination benefits				471
Total cost, including termination benefits	$	1,878	$	2,175	$	2,161

      Assumptions used to determine net periodic pension costs are as follows:

	2005		2004
Discount Rate		5.02% - 5.74%		6.25	%
Rate of Compensation increase		0.00% - 3.00%		3.00	%

      The accumulated benefit obligation of the Company’s supplemental retirement program was $19,559,000 and $18,882,000 as of December 31, 2005 and 2004, respectively. At December 31, 2005 and 2004, the accumulated benefit obligation of the Company’s supplemental retirement program exceeded plan assets. Accordingly, as of December 31, 2005 an additional minimum liability was recorded with an increase in accrued retirement benefits and other comprehensive loss of $3,341,000. As of December 31, 2004 an additional minimum liability was recorded with an increase in accrued retirement benefits of and other comprehensive loss of $3,397,000. During 2005, the minimum liability decreased $56,000. The Company estimates that benefits expected to be paid to participants in the years 2006 through 2010 will average $1,100,000 to $1,125,000 annually, and $6,390,000 in total for the five fiscal years thereafter.

      During the second quarter of 2004, the Company entered into an early retirement agreement with its former Chief Financial Officer. The early retirement agreement provided for early payment of his pension benefits under the Company’s supplemental retirement plan in monthly installments beginning on August 1, 2004. The Company accounted for the early employment termination of this officer following the provisions of SFAS 88, which resulted in the recognition of a liability and a loss of $471,000 in the second quarter of 2004. This expense is in addition to the net periodic pension cost for 2004.

      The Company has a defined contribution retirement plan which is qualified under Section 401(k) of the Internal Revenue Code. All U.S. employees are eligible to participate. The Company may make a discretionary profit-sharing contribution. The Company did not make a contribution during 2005 or 2004. Employer contributions to the plans were $1,108,000 in 2003.

      Health insurance benefits are provided to certain employees who retire before age 65 and, in certain cases, spouses of retired employees. The accrued postretirement benefit cost was $266,000 and $286,000 as of December 31, 2005 and 2004, respectively. The Company has not accepted new participants into this benefit program since 2001.

69

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 12

Segment Information

      The Company reports financial data for three reportable segments: television, radio, and Fisher Plaza. The television reportable segment includes the operations of the Company’s nine network-affiliated television stations, and a 50% interest in a company that owns a tenth television station. The radio reportable segment includes the operations of the Company’s 27 radio stations. Corporate expenses of the broadcasting business unit are allocated to the television and radio reportable segments based on actual expenditures incurred or based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment includes the operations of a communications center located near downtown Seattle that serves as home of the Company’s Seattle television and radio operations, the Company’s corporate offices, and third-party tenants.

      Operating results and other financial data for each segment are as follows (in thousands):

Revenue

Year Ended December 31		2005			2004			2003
Television		$	93,083		$	101,190		$	88,676
Radio			48,334			48,253			44,221
Fisher Plaza			8,061			4,555			5,494
Corporate and eliminations			(159	)		(132	)		(4	)
	Continuing operations		149,319			153,866			138,387
Discontinued operations									17,458
		$	149,319		$	153,866		$	155,845

Depreciation and amortization

Year Ended December 31		2005		2004		2003
Television		$	7,940	$	10,588	$	11,700
Radio			1,356		1,460		1,535
Fisher Plaza			3,544		3,762		2,588
Corporate and eliminations			245		207		357
	Continuing operations		13,085		16,017		16,180
Discontinued operations							2,621
		$	13,085	$	16,017	$	18,801

70

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table shows segment income (loss) from continuing operations before interest and income taxes (in thousands):

Year Ended December 31	2005			2004			2003
Television	$	5,032		$	17,698		$	4,755
Radio		1,452			2,106			(996	)
Fisher Plaza		627			(2,851	)		(107	)
Corporate and eliminations		(7,419	)		(24,804	)		(18,404	)
Total segment loss from continuing operations before interest and income taxes		(308	)		(7,851	)		(14,752	)
Discontinued operations					(207	)		41,243
	$	(308	)	$	(8,058	)	$	26,491

      The following table reconciles total segment loss from continuing operations before interest and income taxes shown above to consolidated loss from continuing operations before income taxes (in thousands):

Year Ended December 31	2005			2004			2003
Total segment loss from continuing operations before interest and income taxes	$	(308	)	$	(7,851	)	$	(14,752	)
Interest expense		(13,726	)		(11,776	)		(13,081	)
Consolidated loss from continuing operations before income taxes	$	(14,034	)	$	(19,627	)	$	(27,833	)

      The following tables provide further segment data, as indicated (in thousands):

Total assets

December 31	2005		2004
Television	$	92,543	$	93,799
Radio		41,487		44,048
Fisher Plaza		118,611		122,579
Corporate and eliminations		187,752		175,446
	$	440,393	$	435,872

Goodwill

December 31	2005		2004
Television	$	21,453	$	21,453
Radio		16,901		16,901
	$	38,354	$	38,354

71

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capital expenditures

Year Ended December 31	2005		2004		2003
Television	$	4,260	$	3,069	$	1,859
Radio		595		440		593
Fisher Plaza		2,361		3,093		9,263
Corporate and eliminations		307		189		29
Continuing operations		7,523		6,791		11,744
Discontinued operations						669
	$	7,523	$	6,791	$	12,413

      Intersegment sales amounted to $173,000, $220,000 and $597,000 in 2005, 2004 and 2003, respectively, related primarily to telecommunications fees charged from Fisher Plaza. Corporate assets are principally marketable securities. Capital expenditures are reported exclusive of acquisitions.

      No geographic areas outside the United States were significant relative to consolidated sales and other revenue, income from operations or identifiable assets.

NOTE 13

Commitments and Contingencies

      The Company leases office space and equipment under non-cancelable leases. Rental expense was $1,211,000, $1,683,000 and $1,654,000 in 2005, 2004, and 2003, respectively. Minimum future payments as of December 31, 2005 are as follows (in thousands):

	Lease
Year	Commitments
2006	$	1,007
2007		956
2008		690
2009		488
2010		412
Thereafter		2,425
	$	5,978

      In December 2005 the Company announced that it had signed an agreement to purchase a full-power television station in the Portland, Oregon DMA, as well as low-power television stations and construction permits in certain Idaho communities. The purchase price of $20.3 million may be paid through the use of existing cash and the use of the $20 million revolving line of credit. As of December 31, 2005, a deposit of $1.0 million was held in escrow on this transaction and is included in prepaid expenses in the Consolidated Balance Sheet. If the Company successfully closes this transaction, the Company would have the ability to operate duopolies in three of the markets in which it has existing television stations, with the corresponding potential to share fixed infrastructure expenditures over multiple stations.

      The Company is subject to certain legal proceedings that have arisen in the ordinary course of its business. Management does not anticipate that disposition of these proceedings will have a material effect on the consolidated financial position, results of operations, or cash flows of the Company.

72

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 14

Interim Financial Information (Unaudited)

      Quarterly financial information is presented in the following table. Data may not add due to rounding (in thousands, except per-share amounts).

			First			Second			Third			Fourth
			Quarter			Quarter			Quarter			Quarter		Annual
Revenue
	2005		$	30,957		$	40,122		$	38,804		$	39,436	$	149,319
	2004		$	30,892		$	40,374		$	40,251		$	42,349	$	153,866
Income (loss) from continuing operations
	2005		$	(5,068	)	$	(1,090	)	$	(790	)	$	1,876	$	(5,072	)
	2004		$	(9,713	)	$	(1,444	)	$	(5,212	)	$	4,548	$	(11,821	)
Income (loss) from discontinued operations
	2005		$	—		$			$			$		$	—
	2004		$	(132	)	$			$			$		$	(132	)
Net income (loss)
	2005		$	(5,068	)	$	(1,090	)	$	(790	)	$	1,876	$	(5,072	)
	2004		$	(9,845	)	$	(1,444	)	$	(5,212	)	$	4,548	$	(11,953	)
Income (loss) per share — basic:
	From continuing operations
		2005	$	(0.59	)	$	(0.13	)	$	(0.09	)	$	0.22	$	(0.58	)
		2004	$	(1.13	)	$	(0.17	)	$	(0.60	)	$	0.53	$	(1.37	)
	From discontinued operations
		2005	$	—		$			$			$		$	—
		2004	$	(0.01	)	$			$			$		$	(0.02	)
	Net income (loss)
		2005	$	(0.59	)	$	(0.13	)	$	(0.09	)	$	0.22	$	(0.58	)
		2004	$	(1.14	)	$	(0.17	)	$	(0.60	)	$	0.53	$	(1.39	)
Income (loss) per share, assuming dilution:
	From continuing operations
		2005	$	(0.59	)	$	(0.13	)	$	(0.09	)	$	0.22	$	(0.58	)
		2004	$	(1.13	)	$	(0.17	)	$	(0.60	)	$	0.53	$	(1.37	)
	From discontinued operations
		2005	$	—		$			$			$		$	—
		2004	$	(0.01	)	$			$			$		$	(0.02	)
	Net income (loss)
		2005	$	(0.59	)	$	(0.13	)	$	(0.09	)	$	0.22	$	(0.58	)
		2004	$	(1.14	)	$	(0.17	)	$	(0.60	)	$	0.53	$	(1.39	)

      Income from continuing operations for the fourth quarter of 2005 is net of a $4.3 million pre-tax non-cash charge resulting from the change in national advertising representation firm and includes a $3.4 million tax benefit for worthless stock upon dissolution of an inactive subsidiary.

73

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Loss from continuing operations for the third quarter of 2004 includes a loss on extinguishment of debt totaling $5,034,000.

      The Company had entered into an interest rate swap agreement and was party to a variable forward sales transaction (see Note 7 to the Consolidated Financial Statements). The Company had no remaining derivative instruments as of December 31, 2004. Changes in the value of the derivative portions of these arrangements were reported as net gain (loss) on derivative instruments. Loss from continuing operations for the first quarter of 2004 includes a net loss on derivative instruments of $9,172,000.

NOTE 15

Financial Information for Guarantors

      On September 20, 2004 the Company completed the private placement of $150.0 million of 8.625% senior notes due 2014 to qualified institutional buyers pursuant to Rule 144A of the Securities Act. The Company filed a registration statement in December 2004 with the Securities and Exchange Commission with respect to an offer to exchange the notes for freely tradable notes registered under the Securities Act. The offer to exchange became effective on February 2, 2005. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year, commencing March 15, 2005.

      Presented below are condensed consolidated statements of operations and cash flows for the years ended December 31, 2005, 2004 and 2003 and the condensed consolidated balance sheets as of December 2005 and 2004. The condensed consolidated information is presented for the Company (issuer) with its investments accounted for under the equity method, the wholly owned guarantor subsidiaries, eliminations, and the Company on a consolidated basis. The Company (issuer) information consists primarily of corporate oversight and administrative personnel and related activities, as well as certain investments in marketable securities.

74

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the year ended December 31, 2005

					Wholly						Fisher
		Fisher			Owned						Communications,
		Communications,			Guarantor						Inc. and
		Inc.			Subsidiaries			Eliminations			Subsidiaries
		(In thousands)
Revenue		$			$	149,492		$	(173	)	$	149,319
Costs and expenses
	Cost of services sold					72,239			1,559			73,798
	Selling expenses					32,344						32,344
	General and administrative expenses		10,018			25,788			(1,732	)		34,074
	Depreciation and amortization		243			12,842						13,085
			10,261			143,213			(173	)		153,301
Income (loss) from operations			(10,261	)		6,279						(3,982	)
Other income, net			2,936			738						3,674
Equity in income of subsidiaries			4,543						(4,543	)		—
Interest expense, net			(13,703	)		(23	)					(13,726	)
Income (loss) from continuing operations before income taxes			(16,485	)		6,994			(4,543	)		(14,034	)
Provision (benefit) for federal and state income taxes			(11,413	)		2,451						(8,962	)
Net income (loss)		$	(5,072	)	$	4,543		$	(4,543	)	$	(5,072	)

75

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the Year Ended December 31, 2004

					Wholly						Fisher
		Fisher			Owned						Communications,
		Communications,			Guarantor						Inc. and
		Inc.			Subsidiaries			Eliminations			Subsidiaries
		(In thousands)
Revenue		$			$	154,086		$	(220	)	$	153,866
Costs and expenses
	Cost of services sold					67,651			1,472			69,123
	Selling expenses					27,626						27,626
	General and administrative expenses		10,057			26,317			(1,692	)		34,682
	Depreciation and amortization		204			15,813						16,017
			10,261			137,407			(220	)		147,448
Income (loss) from operations			(10,261	)		16,679						6,418
Net gain (loss) on derivative instruments			(13,563	)		907						(12,656	)
Loss from extinguishment of long-term debt			(3,170	)		(1,864	)					(5,034	)
Other income, net			2,326			1,095						3,421
Equity in income of subsidiaries			8,104						(8,104	)		—
Interest expense, net			(7,476	)		(4,300	)					(11,776	)
Income (loss) from continuing operations before income taxes			(24,040	)		12,517			(8,104	)		(19,627	)
Provision (benefit) for federal and state income taxes			(12,087	)		4,281						(7,806	)
Income (loss) from continuing operations			(11,953	)		8,236			(8,104	)		(11,821	)
Loss from discontinued operations net of income taxes						(132	)					(132	)
Net income (loss)		$	(11,953	)	$	8,104		$	(8,104	)	$	(11,953	)

76

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the Year Ended December 31, 2003

					Wholly						Fisher
		Fisher			Owned						Communications,
		Communications,			Guarantor						Inc. and
		Inc.			Subsidiaries			Eliminations			Subsidiaries
					(In thousands)
Revenue		$			$	138,978		$	(591	)	$	138,387
Costs and expenses
	Cost of services sold					68,569			614			69,183
	Selling expenses					25,259						25,259
	General and administrative expenses		13,469			27,565			(1,205	)		39,829
	Depreciation and amortization		354			15,826						16,180
			13,823			137,219			(591	)		150,451
Income (loss) from operations			(13,823	)		1,759						(12,064	)
Net gain (loss) on derivative instruments			(10,299	)		3,388						(6,911	)
Loss from extinguishment of long-term debt						(2,204	)					(2,204	)
Other income, net			5,972			455						6,427
Equity in income of subsidiaries			21,104						(21,104	)		—
Interest expense, net			(5,210	)		(7,871	)					(13,081	)
Loss from continuing operations before income taxes			(2,256	)		(4,473	)		(21,104	)		(27,833	)
Benefit for federal and state income taxes			(10,484	)		(2,545	)					(13,029	)
Income (loss) from continuing operations			8,228			(1,928	)		(21,104	)		(14,804	)
Income (loss) from discontinued operations net of income taxes						23,032						23,032
Net income (loss)		$	8,228		$	21,104		$	(21,104	)	$	8,228

77

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Balance Sheet

as of December 31, 2005

							Wholly					Fisher
				Fisher			Owned					Communications,
				Communications,			Guarantor					Inc. and
				Inc.			Subsidiaries		Eliminations			Subsidiaries
				(In thousands)
ASSETS
Current Assets
	Cash and cash equivalents			$	3,660		$	15,962	$			$	19,622
	Receivables, net				105			28,061					28,166
	Due from affiliate				6,184					(6,184	)		—
	Income taxes receivable				1,538					(552	)		986
	Deferred income taxes				7			658					665
	Prepaid expenses				414			3,881					4,295
	Television and radio broadcast rights							6,519					6,519
			Total current assets		11,908			55,081		(6,736	)		60,253
Marketable securities, at market value					169,634			419					170,053
Investment in consolidated subsidiaries					225,057					(225,057	)
Cash value of life insurance and retirement deposits					5,115			10,188					15,303
Television and radio broadcast rights								2,075					2,075
Goodwill, net								38,354					38,354
Intangible assets								1,244					1,244
Investment in equity investee								2,759					2,759
Prepaid financing fees and other assets					5,169			871					6,040
Property, plant and equipment, net					904			143,408					144,312
Total Assets				$	417,787		$	254,399	$	(231,793	)	$	440,393
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Trade accounts payable			$	693		$	2,790	$			$	3,483
	Due to affiliate							6,184		(6,184	)		—
	Accrued payroll and related benefits				1,113			6,242					7,355
	Interest payable				3,809								3,809
	Television and radio broadcast rights payable							5,524					5,524
	Income taxes payable							552		(552	)		—
	Other current liabilities				2,058			2,462					4,520
			Total current liabilities		7,673			23,754		(6,736	)		24,691
Long-term debt					150,000								150,000
Accrued retirement benefits					19,560			84					19,644
Deferred income taxes					30,868			513					31,381
Other liabilities					65			4,991					5,056
Stockholders’ Equity
Common stock					10,881			1,131		(1,131	)		10,881
	Capital in excess of par				8,590			164,234		(164,234	)		8,590
	Deferred compensation				(159	)							(159	)
	Accumulated other comprehensive income — net of income taxes:
		Unrealized gain on marketable securities			109,600								109,600
		Minimum pension liability			(2,172	)							(2,172	)
	Retained earnings				82,881			59,692		(59,692	)		82,881
Total Stockholders’ Equity					209,621			225,057		(225,057	)		209,621
Total Liabilities and Stockholders’ Equity				$	417,787		$	254,399	$	(231,793	)	$	440,393

78

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Balance Sheet

as of December 31, 2004

							Wholly						Fisher
				Fisher			Owned						Communications,
				Communications,			Guarantor						Inc. and
				Inc.			Subsidiaries			Eliminations			Subsidiaries
				(In thousands)
ASSETS
Current Assets
	Cash and cash equivalents			$	1,007		$	15,018		$			$	16,025
	Receivables, net				6			28,533						28,539
	Due from affiliate				10,379						(10,379	)		—
	Income taxes receivable				5,234						(1,879	)		3,355
	Deferred income taxes				92			539						631
	Prepaid expenses				222			3,431						3,653
	Television and radio broadcast rights							8,398						8,398
			Total current assets		16,940			55,919			(12,258	)		60,601
Marketable securities, at market value					156,925			177						157,102
Investment in consolidated subsidiaries					218,380						(218,380	)
Cash value of life insurance and retirement deposits					5,454			9,517						14,971
Television and radio broadcast rights								3,086						3,086
Goodwill, net								38,354						38,354
Intangible assets								1,244						1,244
Investment in equity investee								2,825						2,825
Deferred income taxes								6,125			(6,125	)
Prepaid financing fees and other assets					5,995			1,401						7,396
Property, plant and equipment, net					838			149,455						150,293
Total Assets				$	404,532		$	268,103		$	(236,763	)	$	435,872
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Notes payable			$	44		$	9		$			$	53
	Trade accounts payable				633			3,122						3,755
	Due to affiliate							10,379			(10,379	)		—
	Accrued payroll and related benefits				1,068			6,263						7,331
	Interest payable				3,630									3,630
	Television and radio broadcast rights payable							7,419						7,419
	Income taxes payable							1,879			(1,879	)		—
	Other current liabilities				2,964			2,268						5,232
			Total current liabilities		8,339			31,339			(12,258	)		27,420
Long-term debt					150,000									150,000
Accrued retirement benefits					1,482			17,485						18,967
Deferred income taxes					42,258						(6,125	)		36,133
Other liabilities								899						899
Stockholders’ Equity Common stock					10,773			1,131			(1,131	)		10,773
	Capital in excess of par				4,535			164,234			(164,234	)		4,535
	Deferred compensation
	Accumulated other comprehensive income — net of income taxes:
		Unrealized gain on marketable securities			101,400			75			(75	)		101,400
		Minimum pension liability			(2,208	)		(2,208	)		2,208			(2,208	)
	Retained earnings				87,953			55,148			(55,148	)		87,953
Total Stockholders’ Equity					202,453			218,380			(218,380	)		202,453
Total Liabilities and Stockholders’ Equity				$	404,532		$	268,103		$	(236,763	)	$	435,872

79

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the Year Ended December 31, 2005

					Wholly				Fisher
		Fisher			Owned				Communications,
		Communications,			Guarantor				Inc. and
		Inc.			Subsidiaries			Eliminations	Subsidiaries
		(In thousands)
Net cash (used in) provided by operating activities		$	(417	)	$	5,990		$	$	5,573
Cash flows from investing activities
	Proceeds from collection of notes receivable					1,585				1,585
	Proceeds from sale of marketable securities		73			174				247
	Proceeds from sale of property, plant and equipment					418				418
	Purchase of property, plant and equipment		(309	)		(7,214	)			(7,523	)
Net cash used in investing activities			(236	)		(5,037	)			(5,273	)
Cash flows from financing activities
	Net payments under notes payable		(44	)		(9	)			(53	)
	Payment of deferred loan costs		(87	)						(87	)
	Proceeds from exercise of stock options		3,437							3,437
Net cash provided by (used in) financing activities			3,306			(9	)			3,297
Net increase in cash and cash equivalents			2,653			944				3,597
Cash and cash equivalents, beginning of period			1,007			15,018				16,025
Cash and cash equivalents, end of period		$	3,660		$	15,962		$	$	19,622

80

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the Year Ended December 31, 2004

					Wholly						Fisher
		Fisher			Owned						Communications,
		Communications,			Guarantor						Inc. and
		Inc.			Subsidiaries			Eliminations			Subsidiaries
		(In thousands)
Net cash (used in) provided by operating activities		$	12,591		$	13,999		$	(7,500	)	$	19,090
Cash flows from investing activities
	Proceeds from collection of notes receivable					428						428
	Proceeds from sale of property, plant and equipment					112						112
	Purchase of radio station license					(204	)					(204	)
	Purchase of property, plant and equipment		(784	)		(6,007	)					(6,791	)
Net cash used in investing activities			(784	)		(5,671	)					(6,455	)
Cash flows from financing activities
	Net payments under notes payable		(662	)								(662	)
	Borrowings under borrowing agreements		158,000			3,000						161,000
	Payments on borrowing agreements		(142,709	)								(142,709	)
	Payment to terminate forward transaction tranche and additional amount to retire outstanding balances		(21,589	)								(21,589	)
	Payment of deferred loan costs		(5,907	)		(167	)					(6,074	)
	Dividends Paid					(7,500	)		7,500			—
	Proceeds from exercise of stock options		428									428
Net cash provided by (used in) financing activities			(12,439	)		(4,667	)		7,500			(9,606	)
Net increase in cash and cash equivalents			(632	)		3,661						3,029
Cash and cash equivalents, beginning of period			1,639			11,357						12,996
Cash and cash equivalents, end of period		$	1,007		$	15,018		$			$	16,025

81

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the Year Ended December 31, 2003

					Wholly				Fisher
		Fisher			Owned				Communications,
		Communications,			Guarantor				Inc. and
		Inc.			Subsidiaries			Eliminations	Subsidiaries
		(In thousands)
Net cash (used in) provided by operating activities		$	(750	)	$	7,034		$	$	6,284
Cash flows from investing activities
	Proceeds from collection of notes receivable					3,235				3,235
	Proceeds from sale of marketable securities		5,169							5,169
	Proceeds from sale of Georgia television					40,725				40,725
	Proceeds from sale of Portland radio stations					42,033				42,033
	Proceeds from sale of real estate and property, plant and equipment					61,050				61,050
	Release of restricted cash					12,778				12,778
	Purchase of radio station license					(468	)			(468	)
	Purchase of property, plant and equipment		(27	)		(12,386	)			(12,413	)
Net cash provided by investing activities			5,142			146,967				152,109
Cash flows from financing activities
	Net payments under notes payable		(122	)						(122	)
	Payments on borrowing agreements and mortgage loans		(18,669	)		(149,998	)			(168,667	)
	Payment of deferred loan costs					(613	)			(613	)
	Proceeds from exercise of stock options		490							490
Net cash used in financing activities			(18,301	)		(150,611	)			(168,912	)
Net (decrease) increase in cash and cash equivalents			(13,909	)		3,390				(10,519	)
Cash and cash equivalents, beginning of period			15,548			7,967				23,515
Cash and cash equivalents, end of period		$	1,639		$	11,357		$	$	12,996

82

Schedule II

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

Year Ended December 31		2005			2004			2003
		(In thousands)
Allowance for doubtful accounts
	Balance at beginning of year	$	651		$	930		$	1,274
	Additions charged to expense		492			318			728
	Balances written off, net of recoveries		(640	)		(597	)		(1,072	)
	Balance at end of year	$	503		$	651		$	930

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th day of March, 2006.

Fisher Communications, Inc.

(Registrant)

By:  /s/ Colleen B. Brown

Colleen B. Brown

President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated:

Signatures	Title	Date
Principal Executive Officer:
/s/ Colleen B. Brown Colleen B. Brown	President and Chief Executive Officer	March 14, 2006
Chief Financial and Accounting Officer:
/s/ Robert C. Bateman Robert C. Bateman	Senior Vice President and Chief Financial Officer (Principal Accounting Officer)	March 14, 2006
A Majority of the Board of Directors:
/s/ Deborah L. Bevier Deborah L. Bevier	Director	March 14, 2006
/s/ James W. Cannon James W. Cannon	Director	March 14, 2006
/s/ Phelps K. Fisher Phelps K. Fisher	Director	March 14, 2006
Carol H. Fratt	Director
/s/ Donald G. Graham, Jr. Donald G. Graham, Jr.	Director	March 14, 2006
/s/ Donald G. Graham, III Donald G. Graham, III	Director	March 14, 2006
/s/ Richard L. Hawley Richard L. Hawley	Director	March 14, 2006

Signatures	Title	Date
/s/ Jerry A. St. Dennis Jerry A. St. Dennis	Director	March 14, 2006
/s/ George F. Warren, Jr. George F. Warren, Jr.	Director	March 14, 2006
/s/ William W. Warren, Jr. William W. Warren, Jr.	Director	March 14, 2006

EXHIBIT INDEX

Exhibit No.			Description
	2	.1	Asset Purchase Agreement between Fisher Radio Regional Group, Inc. and Equity Broadcasting Corporation, dated December 7, 2005.
	3	.1*	Articles of Incorporation (filed as Exhibit 3.1 of the Company’s Registration Statement on Form 10 (File No. 000-22439)).
	3	.2*	Articles of Amendment to the Amended and Restated Articles of Incorporation filed December 10, 1997 (filed as Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 000-22439)).
	3	.3*	Articles of Amendment to the Amended and Restated Articles of Incorporation filed March 8, 2001 (filed as Exhibit 3.3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 000-22439)).
	3	.4*	Bylaws amended as of July 28, 2005 (filed as Exhibit 3.1 of the Company’s Current Report on Form 8-K dated August 2, 2005 (File No. 000-22439)).
	4	.1*	Indenture relating to Fisher Communications, Inc.’s 8.625% Senior Notes Due 2014, dated as of September 20, 2004 (filed as Exhibit 4.1 to the Current Report on Form 8-K dated September 20, 2004).
	4	.2*	Registration Rights Agreement among Fisher Communications, Inc., its domestic subsidiaries listed on Schedule 1 thereto and Wachovia Securities, Inc., dated September 20, 2004 (filed as Exhibit 4.2 to the Current Report on Form 8-K dated September 20, 2004).
	4	.3*	Form of Fisher Communications, Inc.’s 8.625% Exchange Note due 2014 (filed as Exhibit 4.3 to the Registration Statement on Form S-4 filed on December 20, 2004).
	10	.1+	Amended and Restated Fisher Communications, Inc. Supplemental Pension Plan, dated December 31, 2005.
	10	.2*	Form of Affiliation Agreement between CBS Television Network and Retlaw Enterprises, Inc. regarding KJEO-TV, KJEO-TV, KIMA-TV, KBCI-TV, KIDK-TV, KVAL-TV, KCBY-TV and KPIC-TV (filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 000-22439)).
	10	.3*+	Amended and Restated Fisher Communications Incentive Plan of 1995. (Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 000-22439)).
	10	.4*+	Fisher Communications Incentive Plan of 2001. (Filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 000-22439)).
	10	.5*+	Retirement Agreement with David Hillard, dated April 16, 2004 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2004).
	10	.6*+	Compensation Committee Letter to David D. Hillard dated May 3, 2004 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2004).
	10	.7*+	Employment Separation Agreement with William W. Krippaehne, Jr., dated March 8, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 14, 2005).
	10	.8*	Credit Agreement, dated September 20, 2004, among Fisher Communications, Inc., certain subsidiary guarantors, the lenders thereto and Wachovia Bank, National Association, as administrative agent (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on September 21, 2004 (File No. 000-22439).
	10	.9*	Termination Agreement, dated October 21, 2004, between Merrill Lynch International and Fisher Communications, Inc. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on November 5, 2004 (File No. 000-22439).
	10	.10*+	Form of Non-Qualified Stock Option Contract (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 13, 2005 (File No. 000-22439)).
	10	.11*+	Form of Restricted Stock Rights Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 13, 2005 (File No. 000-22439)).
	10	.12*†	Renewal Letter Agreements dated May 6, 2005 between American Broadcasting Companies, Inc. (“ABC”) and Fisher Broadcasting Company, Inc. (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2005 (File No. 000-22439)).

Exhibit No.			Description
	10	.13†	Renewal Letter Agreement dated January 6, 2006 between CBS Television and Fisher Broadcasting — Oregon TV LLC.
	10	.14†	Renewal Letter Agreement dated January 6, 2006 between CBS Television and Fisher Broadcasting — Washington TV LLC.
	10	.15†	Renewal Letter Agreement dated January 6, 2006 between CBS Television and Fisher Broadcasting — Idaho TV LLC.
	10	.16†	Renewal Letter Agreement dated January 6, 2006 between CBS Television and Fisher Broadcasting — S.E. Idaho TV LLC.
	10	.17*+	Employment Separation Agreement with Laura Boyd, dated December 2, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 17, 2006 (File No. 000-22439)).
	10	.18*+	Employment Separation Agreement with Sharon J. Johnston, dated December 20, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 6, 2006 (File No. 000-22439)).
	10	.19*+	Change in Control Severance Agreement with Colleen B. Brown, dated October 10, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 7, 2005 (File No. 000-22439)).
	10	.20*+	Offer Letter to Colleen B. Brown, dated October 3, 2005 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 7, 2005 (File No. 000-22439)).
	10	.21*+	Employment Separation Agreement with Benjamin W. Tucker, dated October 3, 2005 (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated October 7, 2005 (File No. 000-22439)).
	10	.22*+	Employment Separation Agreement with Kirk G. Anderson, dated July 1, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 15, 2005 (File No. 000-22439)).
	10	.23*+	Letter Agreement with Robert C. Bateman, date June 16, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 20, 2005 (File No. 000-22439)).
	10	.24*	Restricted Stock Rights Grant Agreement with Robert C. Bateman, dated June 14, 2005 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2005 (File No. 000-22439)).
	21	.1	Subsidiaries of the Registrant.
	23	.1	Consent of PricewaterhouseCoopers LLP.
	31	.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*  Incorporated by reference.

  + Management contract or arrangement.

†  Certain information in this exhibit has been omitted and filed separately with the Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.406.

EX-2.1

EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

Dated as of December 7, 2005

Between

FISHER RADIO REGIONAL GROUP, INC.

and

EQUITY BROADCASTING CORPORATION

LA GRANDE BROADCASTING, INC.

EBC BOISE, INC.

EBC POCATELLO, INC.

TABLE OF CONTENTS

			Page
ARTICLE 1. DEFINITIONS				2
	Section 1.1	Definitions		2
ARTICLE 2. PURCHASE AND SALE OF PURCHASED ASSETS				8
	Section 2.1	Purchase and Sale of Purchased Assets		8
	Section 2.2	Excluded Assets		10
	Section 2.3	Assumption of Liabilities; Excluded Liabilities		11
	Section 2.4	Closing Date; Bifurcated Closings		13
	Section 2.5	Earnest Money		13
	Section 2.6	Purchase Price		14
	Section 2.7	Payment of Purchase Price		14
	Section 2.8	Closing Date Deliveries		15
	Section 2.9	Further Assurances		16
	Section 2.10	Allocation		16
	Section 2.11	Prorations and Adjustments		17
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE EQUITY ENTITIES				18
	Section 3.1	Organization		18
	Section 3.2	Authority of the Equity Entities		18
	Section 3.3	Financial Statements		19
	Section 3.4	Operations Since Balance Sheet Date		19
	Section 3.5	No Undisclosed Liabilities		21
	Section 3.6	Taxes		21
	Section 3.7	Sufficiency of Assets		21
	Section 3.8	Governmental Permits		21
	Section 3.9	FCC Licenses; Construction Permits		22
	Section 3.10	Real Property; Real Property Leases		23
	Section 3.11	Personal Property		24
	Section 3.12	Personal Property Leases		25
	Section 3.13	Intellectual Property		25
	Section 3.14	Title to Purchased Assets		26
	Section 3.15	Employees		26
	Section 3.16	Employee Relations		26
	Section 3.17	Contracts		27
	Section 3.18	Status of Contracts		28
	Section 3.19	No Violation, Litigation or Regulatory Action		29
	Section 3.20	Insurance		30
	Section 3.21	Employee Plans; ERISA		30
	Section 3.22	Environmental Protection		31
	Section 3.23	Insolvency Proceedings		32
	Section 3.24	Citizenship		33
	Section 3.25	No Misleading Statements		33

i

			Page
	Section 3.26	Transactions with Affiliates		33
	Section 3.27	No Finder		33
	Section 3.28	Cable and Satellite Matters		33
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER				33
	Section 4.1	Organization		33
	Section 4.2	Authority of Buyer		34
	Section 4.3	Litigation		34
	Section 4.4	No Finder		34
	Section 4.5	Qualifications as FCC Licensee		34
ARTICLE 5. ACTION PRIOR TO THE CLOSING DATE				35
	Section 5.1	Investigation of the Business		35
	Section 5.2	Preserve Accuracy of Representations and Warranties		35
	Section 5.3	FCC Consent; Other Consents and Approvals		35
	Section 5.4	Operations of the Stations Prior to the Closing Date		36
	Section 5.5	Third Party Consents		38
	Section 5.6	FCC Matters		39
	Section 5.7	Public Announcement		39
	Section 5.8	Administrative Violations		39
	Section 5.9	Adverse Developments		40
	Section 5.10	Additional Covenant		40
	Section 5.11	No Solicitation Covenant		40
	Section 5.12	Estoppel Certificates		40
	Section 5.13	Trade Agreements		40
ARTICLE 6. ADDITIONAL AGREEMENTS				41
	Section 6.1	Taxes; Sales, Use and Transfer Taxes		41
	Section 6.2	Employees; Employee Benefit Plans		41
	Section 6.3	Control of Operations Prior to Closing Date		42
	Section 6.4	Covenant Not to Compete		43
	Section 6.5	Termination of Certain Arrangements		44
	Section 6.6	Public Filings		44
	Section 6.7	Bulk Sales Act		44
	Section 6.8	Section 1031 Exchange		44
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EQUITY ENTITIES				45
	Section 7.1	No Misrepresentation or Breach of Covenants and Warranties		45
	Section 7.2	No Restraint or Litigation		45
	Section 7.3	FCC Consent		45
	Section 7.4	Payment		45
	Section 7.5	Closing Documents		46
	Section 7.6	Affiliation		46
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER				46

ii

			Page
	Section 8.1	No Misrepresentation or Breach of Covenants and Warranties		46
	Section 8.2	No Restraint or Litigation		46
	Section 8.3	FCC Consent		47
	Section 8.4	Affiliate Agreement		47
	Section 8.5	Closing Documents		47
	Section 8.6	Third Party Consents		47
	Section 8.7	Broadcast Transmissions and MVPD Carriage		47
ARTICLE 9. INDEMNIFICATION				47
	Section 9.1	Indemnification by Equity Entities		47
	Section 9.2	Indemnification by Buyer		48
	Section 9.3	Additional Indemnification Matters; Notice of Claims		48
	Section 9.4	Third Person Claims		49
	Section 9.5	Treatment of Indemnity Payments		50
	Section 9.6	Indemnity Escrow Agreement		50
ARTICLE 10. TERMINATION AND REMEDIES				50
	Section 10.1	Termination		50
	Section 10.2	Equity Entities’ Remedies		52
	Section 10.3	Buyer’s Remedies		52
ARTICLE 11. GENERAL PROVISIONS				52
	Section 11.1	Survival of Representations, Warranties and Obligations		52
	Section 11.2	Confidential Nature of Information		52
	Section 11.3	Governing Law		53
	Section 11.4	Notices		53
	Section 11.5	Assignment; Successors and Assigns		54
	Section 11.6	Entire Agreement; Amendments		54
	Section 11.7	Interpretation		54
	Section 11.8	Waivers		54
	Section 11.9	Expenses		55
	Section 11.10	Partial Invalidity		55
	Section 11.11	Execution in Counterparts		55
	Section 11.12	Risk of Loss; Damage to Facilities		55
	Section 11.13	No Third Party Beneficiaries		56
	Section 11.14	Attorneys’ Fees		56

iii

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”), is entered into as of December 7, 2005, by and among FISHER RADIO REGIONAL GROUP, INC., a Washington corporation (“Buyer”), and the following parties:

EQUITY BROADCASTING CORPORATION
(for the limited purpose set forth in Section 9.1(b))	an Arkansas corporation (“Equity”)
LA GRANDE BROADCASTING, INC.	an Arkansas corporation (“La Grande”)
EBC BOISE, INC.	an Arkansas corporation (“EBC Boise”)
EBC POCATELLO, INC.	a Nevada corporation (“EBC Pocatello”)

W I T N E S S E T H:

     WHEREAS, La Grande, EBC Boise and EBC Pocatello (sometimes collectively referred to as the “Sellers” or the “Equity Entities”) are the respective licensees and own or lease or have the right to use all of the assets used in the operation of the television stations (the “Stations”) set forth opposite their respective names below:

Seller	Station	Community
La Grande	KPOU	La Grande, Oregon
	KPOU LP	Salem, Oregon
EBC Boise	KUNS LP	Boise, Idaho
EBC Pocatello	KUNP LP	Idaho Falls/Pocatello, Idaho

     WHEREAS, the Federal Communications Commission has issued to EBC Boise one construction permit for a low power station to serve Twin Falls, Idaho, four construction permits for low power stations to serve Idaho Falls, Idaho, and has issued to La Grande one construction permit for KPOU LP, a licensed facility authorized to serve Salem, Oregon, which permit will be modified to provide coverage to Portland, Oregon (collectively, the “Construction Permits”);

     WHEREAS, the Equity Entities desire to sell to Buyer, and Buyer desires to purchase from the Equity Entities, the Construction Permits and all of the assets used or held for use in the operation of the Stations, on the terms and conditions set forth herein; and

     NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and with the intention of being legally bound, it is hereby agreed among the Equity Entities and Buyer as follows:

ARTICLE 1.
DEFINITIONS

          Section 1.1 Definitions. As used in this Agreement, the following terms have the meanings specified or referred to in this Section 1.1:

          “Accounting Firm” has the meaning specified in Section 2.11.

          “Additional Filings” has the meaning specified in Section 5.6.

          “Adjustment Time” has the meaning specified in Section 2.11.

          “Administrative Violation” has the meaning specified in Section 5.8.

          “Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person.

          “Agreement” means this Agreement and the Exhibits, Schedules and Recitals hereto.

          “Appraisal Firm” has the meaning specified in Section 2.10.

          “Asset Allocation” has the meaning specified in Section 2.10.

          “Assumed Liabilities” has the meaning specified in Section 2.3(a).

          “Balance Sheet Date” has the meaning specified in Section 3.3(a).

          “Balance Sheets” has the meaning specified in Section 3.3(a).

          “Barter Agreements” shall mean contracts for the sale of time on the Stations in exchange for programming.

          “Bifurcated Closing” has the meaning specified in Section 2.4(b).

          “Build-out Permits” has the meaning specified in Section 6.4(a).

          “Business” has the meaning specified in Section 2.1.

          “Buyer” has the meaning specified in the introductory paragraph hereof.

          “Buyer Ancillary Agreements” has the meaning specified in Section 4.2(a).

          “COBRA Coverage” has the meaning specified in Section 2.3(b)(v).

          “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., any amendments thereto, any successor statutes, and any regulations promulgated thereunder.

          “Claim Notice” has the meaning specified in Section 9.3(b).

          “Closing Date” has the meaning specified in Section 2.4(b).

2

          “Closing Date Adjustments” has the meaning specified in Section 2.11.

          “Closing” means the purchase and sale of the Purchased Assets provided for in Section 2.1, including either or both of the Oregon Closing and the Idaho Closing.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Communications Act” means the Communications Act of 1934, as amended.

          “Construction Permit” has the meaning specified in the second recital hereof.

          “Construction Permit Stations” are the following stations which are the subject of the Construction Permits:

               K28II, Idaho Falls, ID

               K52IT, Idaho Falls, ID

               K54JF, Idaho Falls, ID

               K69IS, Idaho Falls, ID

               W64FX, Twin Falls, ID

          “Contaminant” means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, or any constituent of any such substance or waste.

          “Covenantor” has the meaning specified in Section 6.4(a).

          “Damaged Assets” has the meaning specified in Section 11.12.

          “Deposit” has the meaning specified in Section 2.5.

          “Deposit Escrow Agent” has the meaning specified in Section 2.5.

          “Deposit Escrow Agreement” has the meaning specified in Section 2.5.

          “EBC Boise” has the meaning specified in the introductory paragraph hereof.

          “EBC Pocatello” has the meaning specified in the introductory paragraph hereof.

          “Employee Plans” has the meaning specified in Section 3.21(a).

          “Encumbrance” means any lien, claim, charge, security interest, mortgage, pledge, easement, conditional sale or other title retention agreement, defect in title, covenant or other restrictions on transfer, assignment or use of any kind.

          “Environmental Conditions” means the state of the environment, including natural resources (e.g. flora and fauna), soil, surface water, ground water, any drinking water supply, subsurface strata or ambient air.

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          “Environmental Laws” means all applicable federal, state and local laws, all applicable rules, regulations, ordinances, guidance, and written guidelines promulgated thereunder, and all applicable orders, consent decrees, judgments, governmental notices, permits and governmental demand letters issued, promulgated or entered pursuant thereto, relating to pollution or protection of the environment (including, without limitation, ambient air, surface water, ground water, land surface, or subsurface strata), including, without limitation, (i) laws relating to emissions, discharges, releases or threatened releases of Hazardous Materials into the environment and (ii) laws relating to the identification, generation, manufacture, processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of Hazardous Materials. Environmental Laws shall include, without limitation, CERCLA, as amended, RCRA, as amended, the Toxic Substances Control Act, as amended, the Hazardous Materials Transportation Act, as amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Occupational Safety and Health Act, as amended, the National Environmental Policy Act of 1969, as amended, the National Historic Preservation Act of 1966, the FCC Nationwide Programmatic Agreement, and the FCC Collocation Agreement, and all analogous laws promulgated or issued by any Governmental Body that are enacted and currently in effect.

          “Environmental Reports” means any and all written analyses, summaries or explanations, known by, or in the possession of, the Equity Entities relating to (i) any Environmental Conditions in, on or about the Real Property or facilities, improvements, structures, or equipment thereon, or (ii) Equity Entities’ compliance with, or liability under, any Environmental Laws.

          “Equity” has the meaning specified in the introductory paragraph hereof.

          “Equity Entities” has the meaning specified in the first recital hereof.

          “ERISA Affiliate” means any person which is (or at any relevant time was) a member of a controlled group of corporations within the meaning of Code Section 414(b), any trade or business which is under common control within the meaning of Code Section 414(c), and any affiliated service group, within the meaning of Code Section 414(m) or (o), of which any Equity Entity is (or at any relevant time was) a member.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “Equity Ancillary Agreements” has the meaning specified in Section 3.2(a).

          “Excluded Assets” has the meaning specified in Section 2.2.

          “Excluded Liabilities” has the meaning specified in Section 2.3(b).

          “Expense” means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).

          “FAA” means the Federal Aviation Administration.

          “FCC Consent” means action by the FCC granting its consent to the assignment to Buyer (or Affiliates of Buyer if assigned as permitted pursuant to Section 11.5) of the FCC Licenses as

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contemplated by this Agreement pursuant to appropriate applications filed by the parties with the FCC, subject to administrative or judicial reconsideration or review.

          “FCC Licenses” has the meaning specified in Section 3.9(a).

          “FCC” means the Federal Communications Commission.

          “Final Order” means an order or action of the FCC as to which the time within which any party in interest other than the FCC may seek administrative or judicial reconsideration or review of such consent or grant has expired and no petition for such reconsideration or review has been timely filed with the FCC or with a court of competent jurisdiction, and the normal time within which the FCC may review such consent or grant on its own motion has expired and the FCC has not undertaken such review.

          “Governmental Body” means any foreign, federal, tribal, state, local or other governmental authority or regulatory body.

          “Governmental Permits” has the meaning specified in Section 3.8.

          “Hazardous Materials” means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic, infectious, radioactive or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws but excluding materials occurring naturally at background levels at or about any facility. By way of example only, the term Hazardous Materials includes petroleum, urea formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides, herbicides, asbestos, acids, metals, solvents and waste waters.

          “Idaho Closing” means the purchase and sale of the Purchased Assets that are used, held for use, or otherwise relate to the Idaho Stations.

          “Idaho Stations” means KUNS LP, KUNP LP and the Construction Permit Stations.

          “Indemnified Party” has the meaning specified in Section 9.3.

          “Indemnitor” has the meaning specified in Section 9.3.

          “Indemnity Deposit” has the meaning specified in Section 2.7(a).

          “Indemnity Escrow Account” has the meaning set forth in the Indemnity Escrow Agreement.

          “Indemnity Escrow Agent” has the meaning set forth in the Indemnity Escrow Agreement.

          “Indemnity Escrow Agreement” means an Indemnity Escrow Agreement, dated as of the Date, among the Equity Entities, Buyer and a party identified as the Escrow Agent, substantially in the form of Exhibit A.

          “Intellectual Property” has the meaning specified in Section 3.13(a).

          “IRS” means the Internal Revenue Service.

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          “Knowledge” with respect to the Equity Entities has the following meaning: the Equity Entities will be deemed to have “Knowledge” of a particular fact or matter if any of the following persons has actual knowledge of such fact or matter or if any such person could reasonably be expected to discover or otherwise become aware of such fact or matter in the course of making a reasonable inquiry into such areas of the Business that are under such individual’s general area of responsibility: the President, Chief Financial Officer, Engineer and General Counsel of Equity, and the General Managers of the Stations.

          “La Grande” has the meaning specified in the introductory paragraph hereof.

          “Liability” means any and all claims, debts, liabilities, obligations and commitments of any nature whatsoever, whether known or unknown, asserted or unasserted, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to become due, whenever or however arising (including those arising out of any contract or tort, whether based on negligence, strict liability or otherwise) and whether or not the same would be required by generally accepted accounting principles to be reflected as a liability in financial statements or disclosed in the notes thereto.

          “Liquidated Damages Amount” has the meaning set specific in Section 10.2.

          “Loss” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.

          “Material Adverse Effect” means a material adverse effect on the business, operations or financial condition of the Stations, the Business, the Purchased Assets, or on the ability of the Equity Entities to consummate the transactions contemplated hereby, or any event or condition which would reasonably be expected, with the passage of time, to constitute such a material adverse effect, other than changes generally applicable to the economy or the television broadcasting industry in general; provided, however, that the termination of the Joint Sales Agreement by and among WatchTV, Inc., La Grande and King Broadcasting Company, dated as of February 11, 2003, as amended, or any later amendments or extensions thereto, shall not be deemed a Material Adverse Effect.

          “Material Station Agreements” has the meaning specified in Section 5.5.

          “MVPD” means any multichannel video programming distributor, including any cable television system or satellite carrier.

          “Oregon Closing” means the purchase and sale of the Purchased Assets that are used, held for use, or otherwise relate to the Oregon Stations.

          “Oregon Stations” means KPOU and KPOU LP.

          “Payment Date” has the meaning specified in Section 2.11.

          “Permitted Encumbrance” means (a) a lien for Taxes, assessments or other governmental charges which are not yet due and payable, (b) a lien for mechanic’s, materialmen’s and similar encumbrances with respect to any amounts not yet due and payable, and (c) a lien securing payments under the Personal Property Leases set forth in Schedule 3.12.

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          “Person” means any person, employee, individual, corporation, limited liability company, partnership, trust, or any other non-governmental entity or any governmental or regulatory authority or body.

          “Personal Property” has the meaning specified in Section 3.11.

          “Personal Property Leases” has the meaning specified in Section 3.12.

          “Pre-Closing Straddle Period” means the portion of any Straddle Period that ends on the Closing Date.

          “Program Rights” means all rights of the Equity Entities presently existing or obtained after the date of this Agreement and prior to the Closing Date in accordance with the terms of this Agreement, to broadcast television programs or shows as part of the Stations’ programming, including all film and Barter Agreements, sports rights agreements, news rights or service agreements and syndication agreements.

          “Proposed Acquisition Transaction” has the meaning specified in Section 5.11.

          “Purchase Price” has the meaning specified in Section 2.6.

          “Purchased Assets” has the meaning specified in Section 2.1.

          “Public Filings” has the meaning specified in Section 6.6.

          “RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and any successor statute, and any regulations promulgated thereunder.

          “Real Property” has the meaning specified in Section 3.10(a).

          “Real Property Leases” has the meaning specified in Section 3.10(d).

          “Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or property.

          “Required Consent” has the meaning specified in Section 8.6.

          “Requirements of Law” means any foreign, federal, state or local law, rule or regulation, Governmental Permit or other binding determination of any Governmental Body.

          “Sellers” has the meaning specified in the introductory paragraph hereof.

          “Specified Event” has the meaning specified in Section 11.12(b).

          “Station Agreements” has the meaning specified in Section 3.18(a).

          “Station Licenses” has the meaning specified in Section 2.1(a).

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          “Station” has the meaning specified in the first recital hereof and shall include the Construction Permit Stations.

          “Straddle Period” means any taxable period that begins before and ends after the Closing Date.

          “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

          “Tax” or “Taxes” means any federal, state, local or foreign, net or gross income, gross receipts, sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, personal property, real property, capital stock, profits, social security (or similar), unemployment, disability, registration, value added, estimated, alternative or add-on minimum taxes, customs duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Body.

          “Trade Agreements” shall mean contracts for the sale of time on the Stations in exchange for merchandise or services used or useful for the benefit of the Stations, excluding Barter Agreements.

          “Transfer Application” has the meaning specified in Section 5.3(a).

ARTICLE 2.
PURCHASE AND SALE OF PURCHASED ASSETS

          Section 2.1 Purchase and Sale of Purchased Assets. Upon the terms and subject to the conditions of this Agreement, on the Closing Date, the Equity Entities shall sell, transfer, assign, convey, and deliver to Buyer, and Buyer shall purchase from the Equity Entities, free and clear of all Encumbrances (except for Permitted Encumbrances), all of the Equity Entities’ right, title and interest in, to and under the assets, properties, and business (excepting only the Excluded Assets) of every kind and description, wherever located (except for those assets and properties located on the date of this Agreement in the master control facilities in Little Rock, Arkansas), real, personal or mixed, tangible or intangible, used, held for use, or otherwise relating to the Stations or the business of the Stations (the “Business”) (herein collectively referred to as the “Purchased Assets”), including, without limitation, all right, title and interest of the Equity Entities in, to and under:

          (a) All licenses, permits, permissions and other authorizations (including all digital licenses and authorizations) relating to the operation of the Stations issued by the FCC or any other governmental agency, including but not limited to those listed on Schedule 3.9(a) (the “Station Licenses”), all rights to use of the Stations’ call letters, and all applications for modification, extension or renewal of the Station Licenses, and any pending applications for any modified licenses, permits, permissions or authorizations pertaining to the Stations and pending on the Closing Date, including, but not limited to, those listed on Schedule 3.9(a);

          (b) All rights to and under the Construction Permits;

          (c) All options, rights or contracts to purchase, lease, possess or occupy real property described in Schedule 3.10(d);

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          (d) The machinery, equipment (including computers and office equipment), auxiliary and translator facilities, transmitters, broadcast equipment, antennae, supplies, inventory (including all programs, records, tapes, recordings, compact discs, cassettes, spare parts and equipment), advertising and promotional materials, engineering plans, records and data, vehicles, furniture and other personal property owned by the Equity Entities used in or relating to the Stations or the Business, that are listed or referred to in Schedule 3.11(a) (excluding any such property disposed of by the Equity Entities or Buyer between the date hereof and the Closing Date in accordance with the terms of this Agreement);

          (e) The Personal Property Leases and the personal property leased thereunder listed in Schedule 3.12;

          (f) The trademarks, trade names, service marks, and copyrights (and all goodwill associated therewith), registered or unregistered, relating to the Stations or the Business, any applications for registration thereof, any patents and applications therefor, and any licenses relating to any of the foregoing or to any intellectual property of any third party, including, without limitation, the items listed in Schedule 3.13(a);

          (g) (i) The contracts, agreements or understandings set forth on Schedule 3.17(a) and designated on such Schedule as an “Assumed Contract,” and (ii) any other contract, agreement or understanding (evidenced in writing) entered into by the Equity Entities in respect of the Business that (A) is of the nature described in subsection (ii), (iii) or (vi) of Section 3.17(b) but which, by virtue of its specific terms, is not required to be listed in Schedule 3.17(a); or (B) is entered into after the date hereof consistent with the provisions of Section 5.4 of this Agreement; or (C) Buyer specifically agrees to assume;

          (h) All advertising customer lists, mailing lists, processes, trade secrets, know-how and other proprietary or confidential information used in or relating exclusively to the Business, the Purchased Assets or the Stations;

          (i) All rights, claims or causes of action of the Equity Entities against third parties arising under warranties from manufacturers, vendors and others in connection with the Purchased Assets, the Stations or the Business;

          (j) All prepaid rentals and other prepaid expenses (except for prepaid insurance) arising from payments made by the Equity Entities in connection with the operation of the Business prior to the Closing Date for goods or services, including prepayments made by the Equity Entities under advertising sales contracts for advertising on the Stations that has not run prior to the Closing Date;

          (k) All books and records (including all computer programs used primarily in connection with the operation of the Business, the Purchased Assets or the Stations and copies of all records relating to Taxes that pertain to the Stations or the Purchased Assets) of the Equity Entities relating solely to the assets, properties, business and operations of the Business, the Purchased Assets, or the Stations including, without limitation, all files, logs, programming information and studies, technical information and engineering data, news and advertising studies or consulting reports and sales correspondence, but excluding any books and records (including computer programs) relating to a business of the Equity Entities unrelated to the Business, the Purchased Assets, or the Stations or otherwise described in Section 2.2; and

          (l) Subject to the other provisions of this Agreement, all other assets or properties not referred to above which are reflected on the September 30, 2005 Balance Sheets of the Stations or

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acquired by the Equity Entities primarily for use by the Stations or in connection with the operation of the Business in the ordinary course of the Business after the Balance Sheet Date but prior to Closing, except (i) any such assets or properties disposed of after the Balance Sheet Date in the ordinary course of the Business consistent with the terms of this Agreement, and (ii) Excluded Assets.

          Notwithstanding the foregoing, if a Bifurcated Closing occurs pursuant to Section 2.4(b), then at each of the Oregon Closing and the Idaho Closing, as applicable, the Equity Entities shall sell, transfer, assign, convey, and deliver to Buyer, and Buyer shall purchase from the Equity Entities, the Purchased Assets that are used, held for use, or otherwise relate to, respectively, the Oregon Stations and the Idaho Stations.

          Section 2.2 Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include the following (herein referred to as the “Excluded Assets”):

          (a) All cash, monies on deposit, and cash equivalents (including any marketable securities or certificates of deposit) of the Equity Entities;

          (b) All claims, rights and interests of the Equity Entities in and to any refunds for Taxes paid in respect of the Stations or the Business for periods ending on or prior to the Closing Date (subject to claims of Buyer for proration of property and other Taxes or fees of any nature whatsoever under this Agreement);

          (c) Any rights, claims or causes of action of the Equity Entities against third parties relating to the assets, properties, business or operations of the Business, the Purchased Assets or the Stations, to the extent they relate to the period prior to the Closing;

          (d) All bonds, letters of credit, intercompany notes and similar items, contracts or policies of insurance and prepaid insurance with respect to such contracts or policies;

          (e) Each Equity Entity’s corporate seal, corporate minute books, stock record books, corporate records relating to incorporation and capitalization, Tax Returns and related documents and supporting work papers and any other records and returns relating to Taxes, assessments and similar governmental levies (other than real and personal property Taxes, assessments and levies imposed on the Purchased Assets);

          (f) (i) The contracts, agreements or understandings of the Equity Entities listed in Schedule 3.17(a) and not designated on such Schedule as an “Assumed Contract,” and (ii) any contract, agreement or understanding either listed on Schedule 3.17(a) or not required to be listed thereon which has expired prior to the Closing Date;

          (g) All records and documents relating to Excluded Assets or to liabilities other than Assumed Liabilities and not relating to the Business, the Purchased Assets, the Stations or the Assumed Liabilities;

          (h) All trusts, trust assets, trust accounts, reserves, insurance policies, or other assets, including, but not limited to, those listed in Schedule 3.21 relating to employees or to funding the employee benefit plans, agreements or arrangements sponsored, maintained, contributed to, or administered by the Equity Entities;

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          (i) Any rights of, or payment due to, the Equity Entities under or pursuant to this Agreement or the other agreements with Buyer contemplated hereby;

          (j) The assets and properties described on Schedule 2.2;

          (k) All accounts receivables of the Equity Entities; and

          (l) All equipment located on the date of this Agreement in the master control facility in Little Rock, Arkansas.

          Section 2.3 Assumption of Liabilities; Excluded Liabilities.

          (a) Upon the terms and subject to the conditions of this Agreement, on the Closing Date, Buyer shall deliver to the Equity Entities an undertaking and assumption, in a form reasonably acceptable to the Equity Entities, pursuant to which Buyer shall assume and be obligated for, and shall agree to pay, perform and discharge in accordance with their terms, the following obligations and liabilities of the Equity Entities (except to the extent such obligations and liabilities constitute Excluded Liabilities):

          (i) All liabilities and obligations that accrue after the Closing under the Governmental Permits, Station Licenses, Real Property Leases, Personal Property Leases, Station Agreements, and the other Purchased Assets assigned to and assumed by Buyer at Closing; and

          (ii) All liabilities and obligations that arise with respect to events occurring after the Closing relating to Buyer’s operation of the Stations and Buyer’s ownership of the Purchased Assets.

          All of the foregoing to be assumed by Buyer hereunder are referred to herein as the “Assumed Liabilities.” Notwithstanding the foregoing, if a Bifurcated Closing occurs pursuant to Section 2.4(b), then at each of the Oregon Closing and the Idaho Closing, as applicable, Buyer shall assume only those Assumed Liabilities of, respectively, the Oregon Stations and the Idaho Stations.

          (b) Notwithstanding anything to the contrary in Section 2.3(a) or elsewhere in this Agreement, Buyer shall not assume or be obligated for any, and the Equity Entities shall solely retain, pay, perform, defend and discharge all, liabilities or obligations of any and every kind whatsoever, direct or indirect, known or unknown, absolute or contingent, not expressly assumed by Buyer under Section 2.3(a), including, without limitation the following (herein referred to as “Excluded Liabilities”):

          (i) All liabilities and obligations arising or relating to events prior to the Closing in connection with the operation of the Stations, the Business and the ownership of the Purchased Assets;

          (ii) Any Taxes that arise from the operation of the Stations, the Business or the ownership of the Purchased Assets for periods or portions of periods that end on or prior to the Adjustment Time, other than any such liabilities and obligations for Taxes in respect of which, and only to the extent that, an adjustment is made to the Purchase Price in favor of Buyer pursuant to Section 2.11, which are included in the Assumed Liabilities;

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          (iii) Any liability or obligation in respect of indebtedness for borrowed money or any intercompany payable of the Equity Entities or any of their Affiliates;

          (iv) All liabilities and obligations under Environmental Laws related to, associated with or arising out of (A) the occupancy, operation, use or control of any of the Real Property at any time or by any party prior to the Closing or (B) the operation of the Business prior to the Closing, including, without limitation, any Release or storage of any Hazardous Materials prior to the Closing on, at or from (1) any such real property (including, without limitation, all facilities, improvements, structures and equipment thereon, surface water thereon or adjacent thereto and soil or groundwater thereunder) or any conditions whatsoever on, under or in such real property or (2) any real property or facility owned by a third party to which Hazardous Materials generated by the Business were sent for recycling or disposal prior to the Closing;

          (v) Any liabilities or obligations, whenever arising (i) related to, associated with or arising out of (A) any pension, profit sharing, retirement, health and welfare employee benefit plan or other employee benefit plan, program or arrangement of the Equity Entities providing any of the benefits described in 3(1) or 3(2) of ERISA, (B) any collective bargaining agreement; and (C) any agreement, arrangement, or practice, whether written or oral, for employment, consulting, severance, vacation, retirement, post-retirement, bonus, stay bonus, deferred compensation, cash- or stock-based, incentive compensation, stock ownership, stock options, stock appreciation rights, stock purchase rights, phantom stock rights, insurance, worker’s compensation, disability, unemployment, medical, or other benefit, including any agreement, arrangement, or practice relating to accrued salary, payroll and wages, overtime rates, accrued sick pay, accrued comp. time, accrued vacation, and the proper classification of individuals providing services to the Equity Entities or the Stations as independent contractors or employees, as the case may be; and (ii) relating to any current, former or retired employees, including but not limited to those plans, programs or arrangements listed in Schedule 3.21, the obligation to provide continuation coverage as defined in Section 4980B of the Code (“COBRA Coverage”) to any employee of the Equity Entities or any of their Affiliates arising prior to or as of Closing, the obligation to provide notice or payment in lieu of notice or any applicable penalties under the Workers Adjustment and Retaining Notification Act or any other state or local law or regulation, any claim of an unfair labor practice, any claim under any state unemployment compensation or worker’s compensation law or regulation or under any federal, state or local employment discrimination law or regulation;

          (vi) Any costs and expenses incurred by the Equity Entities incident to the negotiation and preparation of this Agreement and the Equity Entities’ performance and compliance with the agreements and conditions contained herein or therein;

          (vii) Any of the Equity Entities’ liabilities or obligations under this Agreement or any of the Equity Ancillary Agreements;

          (viii) Any liabilities or obligations to be paid or performed after the Closing in connection with the operation of the Stations, the Business and the ownership of the Purchased Assets, to the extent such liabilities and obligations, but for a breach or default, would have been paid, performed or otherwise discharged prior to the Closing or to the extent the same arise out of any such breach or default;

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          (ix) Any liabilities or obligations relating to the Excluded Assets;

          (x) Any liabilities or obligations arising out of or relating to the employment of employees or independent contractors of the Stations or the Business prior to the Closing, including, without limitation, accrued salary, payroll and wages, accrued sick pay, accrued commissions, accrued “comp” time, accrued vacation time, and the proper classification of individuals providing services to the Equity Entities as independent contractors or as employees, as the case may be;

          (xi) Any obligations or liabilities relating to or arising out of any claims, litigation proceedings or Administrative Violations to the extent relating to actions of the Equity Entities or the conduct of the Business on or prior to the Closing;

          (xii) Any obligations or liabilities relating to or arising out of applications for employment or out of the employment and/or termination of employees or independent contractors employed at the Stations or in connection with the Business prior to the Closing; and

          (xiii) Any obligations or liabilities arising out of or in connection with any contracts not assumed by Buyer under this Agreement.

          Section 2.4 Closing Date; Bifurcated Closings.

          (a) Subject to Section 2.4(b), the purchase and sale of the Purchased Assets provided for in Section 2.1 shall be consummated at 10:00 A.M., local time, and effective as of 12:01 A.M., local time, on the first day of the month following the date on which the last of the conditions set forth in Articles 7 and 8 are satisfied or, if permissible, waived (disregarding for this purpose any such conditions to be satisfied by actions to be taken at the Closing), or such other date as may be agreed upon by the Equity Entities and Buyer, at the offices of Graham & Dunn, PC, Pier 70, 2801 Alaskan Way, Suite 300, Seattle, Washington 98102, or at such other place or time or in such other manner as shall be agreed upon by the Equity Entities and Buyer, but in no event later than ten days following issuance of the Final Order. The Equity Entities and Buyer shall use reasonable efforts to effect Closing by means of facsimile and overnight delivery services.

          (b) Notwithstanding Section 2.4(a), if the Closing has not occurred on or prior to May 31, 2006, but the conditions set forth in Articles 7 and 8 are satisfied or, if permissible, waived, such that the Oregon Closing may occur on or prior to September 29, 2006 (disregarding for this purpose any such conditions to be satisfied by actions to be taken at the Oregon Closing), then the Closing will be bifurcated as follows (the “Bifurcated Closing”): (i) the Oregon Closing will occur, regardless of whether the conditions to the Idaho Closing have been satisfied; and (ii) the Idaho Closing will occur only if the Oregon Closing has occurred and all other conditions to the Idaho Closing have been satisfied. The failure of the Idaho Closing to occur will have no effect on the Oregon Closing, and the Oregon Closing shall not be unwound or otherwise rescinded as a result of such failure. If there is a Bifurcated Closing, then in no event shall the parties be required to hold the Idaho Closing prior to the Oregon Closing. The actual day on which a Closing occurs, whether it be the Oregon Closing, the Idaho Closing or both, is the “Closing Date.”

          Section 2.5 Earnest Money. Within twenty-four (24) hours following the execution and delivery of this Agreement, Buyer shall deliver to U.S. Bank National Association (the “Deposit Escrow Agent”) One Million Dollars ($1,000,000) (the “Deposit”), to be held in accordance with an

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escrow agreement to be executed contemporaneously with this Agreement, by and among the Equity Entities, Buyer and the Deposit Escrow Agent (the “Deposit Escrow Agreement”), in a form reasonably acceptable to the parties thereto. The Deposit shall be held and disbursed in accordance with the terms of the Deposit Escrow Agreement and the provisions of this Section 2.5.

          (a) At the first Closing to occur, the Equity Entities and Buyer shall jointly instruct the Deposit Escrow Agent to deliver the Deposit to Seller as partial payment of the Purchase Price.

          (b) If this Agreement is terminated and Section 2.5(c) does not apply, the Equity Entities and Buyer shall jointly instruct the Deposit Escrow Agent to return the Deposit to Buyer.

          (c) If this Agreement is terminated as a result of Buyer’s breach pursuant to Section 10.1(a)(ii), and the Equity Entities are not in breach of this Agreement, the Equity Entities and Buyer shall jointly instruct the Deposit Escrow Agent to deliver the Deposit to the Equity Entities, and the Equity Entities will disburse the Deposit pursuant to Section 3.27.

          Section 2.6 Purchase Price. The purchase price for the Purchased Assets shall be equal to Twenty Million Three Hundred Thousand Dollars ($20,300,000), as adjusted pursuant to Section 2.11 for Closing Date Adjustments and Section 11.12 for any Damaged Assets (as adjusted, the “Purchase Price”); provided, however, that if a Bifurcated Closing occurs pursuant to Section 2.4(b), the term “Purchase Price” with respect to the Oregon Closing shall mean Nineteen Million Three Hundred Thousand Dollars ($19,300,000), as adjusted pursuant to Sections 2.11 and 11.12, and the term “Purchase Price” with respect to the Idaho Closing shall mean One Million Dollars ($1,000,000), as adjusted pursuant to Sections 2.11 and 11.12.

          Section 2.7 Payment of Purchase Price. Buyer shall pay the Purchase Price to Seller by executing wire transfers as follows:

          (a) At the first Closing to occur, one wire transfer equal to Seven Hundred Fifty Thousand Dollars ($750,000) delivered to the Indemnity Escrow Account administered by the Indemnity Escrow Agent in accordance with the Indemnity Escrow Agreement attached to this Agreement as Exhibit A (the balance held in the Indemnity Escrow Agreement is referred to herein as the “Indemnity Deposit”).

          (b) At the first Closing to occur, one wire transfer to an account designated by the Equity Entities equal to the applicable Purchase Price, minus (i) the amount of the Deposit that is delivered to the Equity Entities pursuant to Section 2.5(a) and (ii) the amount wired under Section 2.7(a) above.

          (c) If there is a Bifurcated Closing pursuant to Section 2.4(b), then at the Idaho Closing, if any, one wire transfer to an account designated by the Equity Entities equal to the Purchase Price for the Idaho Closing. If there is a Bifurcated Closing and the Idaho Closing does not occur, then the Purchase Price shall be deemed reduced by the One Million Dollars ($1,000,000) that would have otherwise been paid at the Idaho Closing.

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          Section 2.8 Closing Date Deliveries.

          (a) On each Closing Date, the Equity Entities shall execute and deliver or cause to be delivered to Buyer:

          (i) a bill of sale and assignments, in a form reasonably acceptable to Buyer, conveying all of the Purchased Assets for such Closing,

          (ii) all of the documents and instruments required to be delivered by the Equity Entities pursuant to Article 8,

          (iii) a certificate of good standing for each Equity Entity, issued as of a recent date by the Secretary of State of each Equity Entity’s state of formation,

          (iv) a certificate of good standing for La Grande, issued as of a recent date by the Secretary of State of Oregon,

          (v) a certificate of good standing for each of EBC Boise and EBC Pocatello, issued as of a recent date by the Secretary of State of Idaho,

          (vi) a certificate of the secretary or assistant secretary of Equity and each Equity Entity certifying the resolutions of its directors authorizing the execution and delivery of this Agreement and the transactions contemplated hereby and the incumbency and signatures of each officer executing this Agreement and any Equity Ancillary Agreement,

          (vii) the opinions of Equity Entities’ legal and communications counsel, substantially in the forms of Exhibit 2.8(a)(vii)-1 and Exhibit 2.8(a)(vii)-2, provided that, in any event, such opinions shall permit the reliance thereon by Buyer’s senior lenders,

          (viii) a certification of non-foreign status for each Equity Entity, in form and substance reasonably satisfactory to Buyer, in accordance with Treas. Reg. § 1.1445-2(b),

          (ix) such documents and instruments as may be reasonably requested by Buyer necessary to evidence that the Purchased Assets at Closing are free and clear of all Encumbrances other than Permitted Encumbrances, and

          (x) the books and records included in the Purchased Assets (provided that delivery of the foregoing will be deemed made to the extent such books and records are then located at any of the offices or premises included in the Purchased Assets).

          (b) On each Closing Date, Buyer shall deliver or cause to be delivered to the Equity Entities the applicable Purchase Price, payable in the manner described in Section 2.7, and execute and deliver (i) all of the documents and instruments required to be delivered by the Buyer pursuant to Article 7, (ii) a certificate of good standing of Buyer, issued as of a recent date by the Secretary of State of Washington, (iii) a certificate of the secretary or assistant secretary of Buyer certifying the resolutions of its sole director authorizing the execution and delivery of this Agreement and the transactions contemplated hereby and the incumbency and signatures of its officer(s) executing this Agreement and any Buyer Ancillary Agreement, (iv) the opinion of Buyer’s legal counsel substantially in the form of Exhibit 2.8(b), and (v) the undertaking and assumption described in Section 2.3(a).

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          Section 2.9 Further Assurances.

          (a) On each Closing Date, the Equity Entities shall (i) deliver to Buyer such other bills of sale, endorsements, assignments and other good and sufficient instruments of conveyance and transfer as Buyer may reasonably request or as may be otherwise reasonably necessary to vest in Buyer all the right, title and interest of the Equity Entities in, to or under any or all of the Purchased Assets that are the subject of such Closing in accordance with this Agreement and (ii) take all steps as may be reasonably necessary to put Buyer in actual possession and control of all such Purchased Assets. From time to time following any Closing, the Equity Entities shall execute and deliver, or cause to be executed and delivered, to Buyer such other instruments of conveyance and transfer as Buyer may reasonably request or as may be otherwise necessary to more effectively convey and transfer to, and vest in, Buyer and put Buyer in possession of, any part of the Purchased Assets in accordance with this Agreement. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any license, certificate, approval, authorization, agreement, contract, lease, easement or other commitment included in the Purchased Assets if an attempted assignment thereof without the consent of a third party thereto would constitute a breach thereof.

          (b) On each Closing Date, Buyer shall deliver to the Equity Entities such other undertakings and assumptions and other good and sufficient instruments of conveyance, transfer and assumption as the Equity Entities may reasonably request or as may be otherwise reasonably necessary to evidence Buyer’s assumption of and obligation to pay, perform and discharge the Assumed Liabilities that are the subject of such Closing. From time to time following each Closing, Buyer shall execute and deliver, or cause to be executed and delivered, to the Equity Entities, at the Equity Entities’ expense, such other undertakings and assumptions as the Equity Entities may reasonably request or as may be otherwise necessary to more effectively evidence Buyer’s assumption of and obligation to pay, perform and discharge such Assumed Liabilities.

          Section 2.10 Allocation. The Purchase Price shall be allocated among the Purchased Assets as provided in this Section 2.10 (the “Asset Allocation”). The Equity Entities and Buyer shall use good faith efforts to agree upon, prior to Closing, an allocation of the Purchase Price among the Purchased Assets which, if agreed upon within sixty (60) days after the date hereof, will be incorporated in a schedule to be executed by the parties prior to or at Closing. Buyer shall deliver its proposed Asset Allocation to the Equity Entities within thirty (30) days after the date hereof. If the Equity Entities and Buyer are unable to so agree, the Equity Entities and Buyer shall then promptly select and retain an appraisal firm reasonably acceptable to the Equity Entities and Buyer (the “Appraisal Firm”) to appraise the classes of the Purchased Assets. The Appraisal Firm shall be instructed to perform an appraisal of the classes of Purchased Assets and to deliver a report to the Equity Entities and Buyer as soon as reasonably practicable. Buyer and the Equity Entities shall bear equally the fees, costs and expenses of the Appraisal Firm. Each party shall prepare IRS Form 8594 allocating the Purchase Price in accordance with Section 1060 of the Code, except as may otherwise be required under Treasury Regs. Section 1.1031(d)-1T, and in accordance with the Asset Allocation. Buyer and each of the Equity Entities shall file with their respective Federal income tax return for the tax year in which the Closing occurs, IRS Form 8594 containing the information agreed upon by the parties pursuant to the immediately preceding sentence. Buyer agrees to report the purchase of the Purchased Assets, and the Equity Entities agree to report the sale of the Purchased Assets on their respective Tax Returns in a manner consistent with the information agreed upon by the parties pursuant to this Section 2.10 and contained in their respective IRS Forms 8594. Notwithstanding anything to the contrary in this Agreement, the provisions of this Section 2.10 shall survive the Closing for the full period of any applicable statute of limitations plus sixty (60) days.

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          Section 2.11 Prorations and Adjustments. All income and normal operating expenses arising from the conduct of the Business and operation of the Stations, including, without limitation, assumed liabilities and prepaid expenses, Taxes, and assessments (but excluding Taxes arising by reason of the sale of the Purchased Assets hereunder, which shall be paid as set forth in Section 6.1(e)), power and utilities charges, FCC regulatory fees, and rents and similar prepaid and deferred items shall be prorated between the Equity Entities and Buyer in accordance with generally accepted accounting principles to reflect the principle that the Equity Entities shall be entitled to all income and be responsible for all expenses arising from the conduct of the Business and operation of the Stations through 12:01 a.m. on the Closing Date (the “Adjustment Time”) and Buyer shall be entitled to all income and be responsible for all expenses arising from the conduct of the Business and operation of the Stations after the Adjustment Time. All special assessments and similar charges or liens imposed against the Purchased Assets in respect of any period of time through the Adjustment Time, whether payable in installments or otherwise, shall be the responsibility of the Equity Entities, and amounts with respect to such special assessments, charges or liens in respect of any period of time after the Adjustment Time shall be the responsibility of Buyer, and such charges shall be adjusted as required hereunder. The prorations and adjustments to be made pursuant to this Section 2.11 are referred to as the “Closing Date Adjustments.” Three (3) days prior to the Closing Date, the Equity Entities shall estimate all Closing Date Adjustments pursuant to this Section 2.11 and shall deliver a statement of their estimates to Buyer (which statement shall set forth in reasonable detail the basis for those estimates). At the Closing, the net amount due to the Buyer or the Equity Entities as a result of the estimated Closing Date Adjustments (excluding any item that is in good faith dispute) shall be applied as an adjustment to the Purchase Price as appropriate. Within sixty (60) days after the Closing, Buyer shall deliver to the Equity Entities a statement reflecting Buyer’s adjustments to the estimate of the Closing Date Adjustments, and no later than the close of business on the 20th day after the delivery to the Equity Entities of Buyer’s statement (the “Payment Date”), Buyer shall pay to the Equity Entities, or the Equity Entities shall pay to Buyer, as the case may be, any amount due as a result of the adjustment (or, if there is any good faith dispute, the undisputed amount). Except with respect to items that the Equity Entities notify Buyer that they object to prior to the close of business on the Payment Date, the adjustments set forth in Buyer’s statement shall be final and binding on the parties effective at the close of business on the Payment Date. If the Equity Entities dispute Buyer’s determinations, the parties shall confer with regard to the matter and an appropriate adjustment and payment shall be made as agreed upon by the parties within thirty (30) business days after such agreement (or, if they are unable to resolve the matter, they shall select a recognized firm of independent certified public accountants agreed to by Buyer and the Equity Entities (“Accounting Firm”) to resolve the matter, whose decision on the matter shall be binding and whose fees and expenses shall be borne equally by the parties, and an appropriate adjustment and payment shall be made based on the resolution by the Accounting Firm within thirty (30) business days after such resolution). If the amount of Taxes that are to be prorated pursuant to this Section 2.11 is not known by sixty (60) days after the Closing Date, then the amount of such Taxes will be estimated as of such date, and once the amount of such Taxes is known, Buyer shall pay to the Equity Entities, or the Equity Entities shall pay to Buyer, as the case may be, the net amount due as a result of the actual apportionment of such Taxes. If there is a Bifurcated Closing, then the Closing Date Adjustments shall be made as of each Closing Date with respect only to those Purchased Assets that are the subject of such Closing.

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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF
THE EQUITY ENTITIES

          As an inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Equity Entities jointly and severally make the following representations and warranties to Buyer, all of which shall be true, correct, and complete as of the date hereof and as of the Closing, except as otherwise specifically provided:

          Section 3.1 Organization. Each of Equity, La Grande and EBC Boise is a corporation duly organized, validly existing and in good standing under the laws of the State of Arkansas. EBC Pocatello is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. La Grande is duly qualified as a foreign corporation to do business in, and is in good standing under, the laws of the State of Oregon. EBC Boise and EBC Pocatello are duly qualified as a foreign corporations to do business in, and are in good standing under, the laws of the State of Idaho. The Equity Entities have the requisite corporate power and authority to own or lease and to operate the Stations, to use the Purchased Assets in the operation of the Stations, and to carry on the Business as conducted by them.

          Section 3.2 Authority of the Equity Entities.

          (a) Each Equity Entity has the requisite corporate power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by such Equity Entity pursuant hereto (collectively, the “Equity Ancillary Agreements”), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof.

          (b) The execution, delivery and performance of this Agreement and the Equity Ancillary Agreements by each Equity Entity have been duly authorized and approved by all necessary action of the Equity Entities and do not require any further authorization or consent of the Equity Entities or any of their stockholders or Affiliates. This Agreement is, and the Equity Ancillary Agreements when executed and delivered by the Equity Entities will be, a legal, valid and binding agreement of the Equity Entities enforceable in accordance with their respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

          (c) Except as set forth in Schedule 3.2(c), none of the execution, delivery and performance by any of the Equity Entities of this Agreement or the Equity Ancillary Agreements, or the consummation by any of the Equity Entities of any of the transactions contemplated hereby or thereby or compliance by any of the Equity Entities with or fulfillment by any of the Equity Entities of the terms, conditions and provisions hereof or thereof will:

          (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance upon any of the Purchased Assets under, the organizational documents of any Equity Entity, any Station Agreement, any Governmental Permit or

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any judgment, order, award or decree to which any Equity Entity is a party or any of the Purchased Assets, the Stations or the Business is subject or by which any Equity Entity is bound, or any statute, other law or regulatory provision affecting any Equity Entity or the Purchased Assets, the Stations or the Business; or

          (ii) require the approval, consent, authorization or act of, or the making by any of the Equity Entities of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except for such of the foregoing as are necessary pursuant to the Communications Act and the rules and regulations of the FCC.

          Section 3.3 Financial Statements.

          (a) Schedule 3.3 contains true and correct copies of the unaudited balance sheets (the “Balance Sheets”) of the Stations as of September 30, 2005 (the “Balance Sheet Date”) and the related monthly statements of income for the twelve (12) months then ended.

          (b) Such balance sheets and statements of income (i) have been prepared from and are in accordance in all material respects with the books and records regularly maintained by the Equity Entities, and (ii) have been prepared in accordance with generally accepted accounting principles consistently applied and present fairly and accurately, in all material respects, the financial position and results of operations of the Stations and the Business as of their respective dates and for the respective periods covered thereby (except for the omission of footnotes and changes resulting from normal year-end adjustments).

          (c) Except as reflected in such balance sheets and statements of income, no event has occurred since the Balance Sheet Date that would make such balance sheets or such statements of income misleading in any material respect for the respective periods covered thereby.

          (d) The books of account and other records of the Equity Entities from which such balance sheets and statements of income were prepared accurately and fairly reflect, in all material respects, in reasonable detail, the activities of the Equity Entities for the respective periods covered thereby and have been made available to Buyer for its inspection.

          Section 3.4 Operations Since Balance Sheet Date.

          (a) Except as set forth in Schedule 3.4(a), during the period from the Balance Sheet Date to the date hereof, inclusive, there has been:

          (i) no fact, event, change or effect having, or which may reasonably be expected to have, a Material Adverse Effect;

          (ii) no material change in the Stations’ usage or patterns of usage of Program Rights, any material change in the broadcast hours or in the percentage of types of programming broadcast by the Stations or any other material change in the programming policies of the Stations;

          (iii) no damage, destruction, loss or claim (whether or not covered by insurance) or condemnation or other taking that materially adversely affects the Purchased Assets, the Stations or the Business; and

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          (iv) no adverse change in relations with employees, directors or officers that has had or would reasonably be expected to have a Material Adverse Effect.

          (b) Except as set forth in Schedule 3.4(b), since the Balance Sheet Date, the operations of the Stations and the Business have been conducted only in the ordinary course consistent with past practice. Without limiting the generality of the foregoing, since the Balance Sheet Date, except as set forth in such Schedule 3.4(b) the Equity Entities have not, in respect of the Purchased Assets, the Stations or the Business:

          (i) sold, leased, transferred or otherwise disposed of (including any transfers to any Affiliate of the Equity Entities), or mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance (other than Permitted Encumbrances) on, any of the Purchased Assets, other than personal property having a value, in the aggregate, of less than $5,000 sold or otherwise disposed of for fair value or consumed in the ordinary course of the Business consistent with past practice;

          (ii) canceled without fair consideration therefor any debts owed to or claims held by the Equity Entities relating to the Stations (including the settlement of any claims or litigation) or waived any right of significant value to the Equity Entities relating to the Purchased Assets, the Stations or the Business, other than in the ordinary course of the Business consistent with past practice;

          (iii) created, incurred, guaranteed or assumed, or agreed to create, incur, guarantee or assume, any indebtedness for borrowed money except in the ordinary course of the Business and except for borrowings under existing credit arrangements either that do not affect the Purchased Assets or the Business or that will be repaid prior to or as of the Closing;

          (iv) entered into any capitalized leases;

          (v) delayed payment of any account payable or other liability of the Business beyond its due date or the date when such liability would have been paid in the ordinary course of the Business consistent with past practice;

          (vi) failed to maintain all Employee Plans in accordance with applicable law and regulations;

          (vii) made any loan to, or entered into any transaction with any of their directors, officers and employees that would materially affect the ability of the Equity Entities to consummate the transactions contemplated by, or otherwise comply with their respective obligations under, this Agreement;

          (viii) changed the accounting methods, principles, or practices materially affecting the Purchased Assets, the Stations or the Business, except insofar as may have been required by law or by a change in generally accepted accounting principles; or

          (ix) entered into any agreement or made any commitment to take any action described in subparagraphs (i) through (viii) above.

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          Section 3.5 No Undisclosed Liabilities. Except as set forth in Schedule 3.5 and in the Balance Sheets, the Equity Entities are not subject, with respect to the Purchased Assets, the Stations or the Business, to any liability, whether absolute, contingent, accrued or otherwise, that is required by generally accepted accounting principles to be reflected or reserved against in such Balance Sheets that are not fully reflected or reserved against in such Balance Sheets.

          Section 3.6 Taxes. Except as set forth on Schedule 3.6:

          (a) The Equity Entities have (i) duly filed all Tax Returns required to be filed in respect of the Stations, (ii) paid in full or discharged all Taxes owed by the Equity Entities relating to the Purchased Assets (whether or not such Taxes are shown as due on any Tax Return), excepting such Taxes as will not be due until after the Closing Date and that are to be prorated between Buyer and the Equity Entities pursuant to Section 2.11 of this Agreement and (iii) paid in full or discharged all Taxes, the non-payment of which could result in an Encumbrance on the Purchased Assets in the hands of the Buyer, excepting such Taxes as will not be due until after the Closing Date and which are to be prorated pursuant to Section 2.11 of this Agreement.

          (b) None of the Purchased Assets (i) are required to be treated as being owned by any other person pursuant to the so-called safe harbor lease provisions of former section 168(f)(8) of the Code, (ii) secure any debt the interest on which is tax-exempt under section 103(a) of the Code, (iii) are tax-exempt use property within the meaning of section 168(h) of the Code or (iv) are subject to a 467 rental agreement as defined in section 467 of the Code.

          Section 3.7 Sufficiency of Assets. Except as set forth in Schedule 3.7, the Purchased Assets constitute all of the assets necessary for and used in the conduct of the Business and the operation of the Stations as currently conducted.

          Section 3.8 Governmental Permits. The Equity Entities own, hold or possess all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from a Governmental Body (other than the FCC Licenses) that are necessary to entitle the Equity Entities to own or lease, operate and use their assets and to carry on and conduct the Business substantially as conducted immediately prior to the date of this Agreement, including, but not limited to, any that may be required pursuant to Environmental Laws, and except for such Governmental Permits as to which the failure to so own, hold or possess would not have a Material Adverse Effect (herein collectively called “Governmental Permits”). Schedule 3.8 sets forth a list and brief description of each such Governmental Permit held by the Equity Entities as of the date of this Agreement. Except as set forth in Schedule 3.8, the Equity Entities have fulfilled and performed in all material respects their obligations under and are in compliance with each of the Governmental Permits, and no event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a material breach or material default under or noncompliance with any such Governmental Permit. No notice of cancellation, of default, of violation, or of any dispute concerning any such Governmental Permit, or of any event, condition or state of facts described in the preceding sentence, has been received by the Equity Entities. Except as set forth in Schedule 3.8, each such Governmental Permit is valid, subsisting and in full force and effect (subject to expiration or termination in accordance with its terms), and may be assigned and transferred to the Buyer in accordance with this Agreement and at the time of assignment or transfer of control to the Buyer will be in full force and effect, in each case without (i) the occurrence of any breach, default or forfeiture of rights thereunder or (ii) the consent, approval or act of, or the making of any filing with, any Governmental Body or other party.

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          Section 3.9 FCC Licenses; Construction Permits.

          (a) Set forth on Schedule 3.9(a) is a list of the Station Licenses issued by the FCC for the operation of the Stations and all applications for modification, extension or renewal thereof, and any applications for any modified licenses, permits, permissions or authorizations pending on the date hereof (the “FCC Licenses”).

          (b) The FCC Licenses are all of the licenses, permits, and other authorizations issued by the FCC used or necessary to lawfully operate the Stations in the manner and to the full extent as they are now operated, and the FCC Licenses are validly issued. The Equity Entities have delivered to Buyer true and complete copies of the FCC Licenses, including any and all amendments and other modifications thereto. Except as set forth on Schedule 3.9(b), the FCC Licenses are in full force and effect, are valid for the balance of the current license term applicable generally to broadcast television stations licensed to communities in the states where the Stations are located, are unimpaired by any acts or omissions of any Equity Entity or any of their Affiliates, or the employees, agents, officers, directors or shareholders of any Equity Entity, and are free and clear of any restrictions that might limit the full operation of the Stations in the manner and to the full extent that they are now operated (other than restrictions under the terms of the FCC Licenses themselves or generally applicable under the rules and regulations of the FCC). Except as set forth on Schedule 3.9(b), the Equity Entities have not received any notice of any violations of the FCC Licenses, the Communications Act or the rules and regulations thereunder that remain pending and unresolved. Except as set forth on Schedule 3.9(b), there is no action by or before the FCC currently pending or, to the Knowledge of the Equity Entities, threatened, to revoke, cancel, rescind, modify or refuse to renew in the ordinary course any of the FCC Licenses. Except as set forth on Schedule 3.9(b), there are no applications, petitions, complaints or proceedings pending at the FCC or, to the Knowledge of the Equity Entities, threatened, to which the Equity Entities are a party or that are directed at the Equity Entities, the Business or the Stations, that may have a material adverse effect on the Business, the Purchased Assets or the operation of the Stations (other than those generally applicable to the broadcast television industry). The Equity Entities do not have Knowledge of any facts or circumstances reasonably likely to result in those of the FCC Licenses subject to expiration not being renewed in the ordinary course for a full term without material qualifications or of any reason reasonably likely to result in any of the FCC Licenses being revoked. No renewal of any FCC License would constitute a major environmental action under the rules and regulations of the FCC in existence as of the date of this Agreement. To the Knowledge of the Equity Entities, there are no facts pertaining to the Stations, any Equity Entity, their Affiliates or any other persons or entities affiliated therewith, which, under the Communications Act or the existing rules and regulations of the FCC, would (i) disqualify the Equity Entities from assigning the FCC Licenses (excluding any applications that by their terms cannot be assigned) to Buyer or from consummating the transactions contemplated herein, or (ii) materially delay the obtaining of the approvals required for the transactions contemplated herein. The Equity Entities maintain an appropriate public inspection file at the studio of KPOU in accordance with FCC rules and regulations, and all required documents in such files have been filed on a timely basis. All material reports and filings required to be filed with the FCC with respect to the operation of the Stations have been timely filed, and all such reports and filings are accurate and complete in all material respects. Except as set forth in Schedule 3.9(b), each Station is currently, and at the Closing Date will be, operating at its full authorized effective radiated power.

          (c) All information contained in any applications for modification, extension or renewal of the FCC Licenses, and any pending applications for any modified licenses, permits, permissions or authorizations relating to the Stations pending on the Closing Date, including, but not limited to, those listed on Schedule 3.9(a), was true, complete and accurate in all material respects when

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filed and was updated to the extent required by the Communications Act and the rules and regulations of the FCC as circumstances may have changed during the pendency thereof.

          (d) To the Knowledge of the Equity Entities, all antenna support structures used in connection with the Stations have been registered with the FCC, if registration is required, and comply with all other requirements of the FCC and the FAA.

          (e) EBC Boise is the sole holder of the Construction Permits, and at Closing, the Construction Permits will be in full force and effect and will not have been revoked, suspended, canceled, rescinded, terminated, modified or expired. There are no applications pending before the FCC for modification of the Construction Permits except for applications which have been disclosed to Buyer. There is not pending, or to the Equity Entities’ Knowledge, threatened, any action before the FCC to revoke, suspend, cancel, rescind or modify any of the Construction Permits (other than proceedings to amend FCC rules of general applicability). There is not now issued, pending, outstanding, or to the Equity Entities’ Knowledge, threatened, by or before the FCC, any order to show cause, notice of violation, notice of apparent liability, or notice of forfeiture or complaint with respect to the Construction Permits. The Equity Entities are aware of no facts and have received no notice or other communication from the FCC indicating that any Seller is not in compliance in all material respects with all applicable requirements of the FCC with respect to the Construction Permits

          Section 3.10 Real Property; Real Property Leases.

          (a) Schedule 3.10(a) contains a description of all real property leased by the Equity Entities in connection with the operation of the Stations as of the date of this Agreement, as they are now operated and each option held by the Equity Entities to acquire any real property (the “Real Property”). None of the Equity Entities owns any real property in connection with the operation of the Stations as of the date of this Agreement.

          (b) No real property other than that listed on Schedule 3.10(a) is used in, held for use in connection with, or necessary for the conduct of the Business or operation of the Stations as they are now operated (other than easements, rights of access, and the like included in the Purchased Assets).

          (c) Except as disclosed in Schedule 3.10(c), and to the Knowledge of the Equity Entities: No utility lines serving the Real Property necessary for the operation of the Stations as currently conducted pass over the lands of others except where appropriate easements have been obtained. To the Knowledge of the Equity Entities, no guy wires supporting any leased tower, pass over the lands of others except where appropriate easements have been obtained. To the Knowledge of the Equity Entities, neither the whole nor any part of any Real Property leased by the Equity Entities, is subject to any pending or threatened suit for condemnation or other taking by any public authority. There exists no writ, injunction, decree, order or judgment, nor any litigation, pending, or, to the Knowledge of the Equity Entities, threatened, relating to the Equity Entities’ use, lease, occupancy or operation of any of the Real Property. The Equity Entities’ use and occupancy of the Real Property comply with all regulations, codes, ordinances, and statutes of all applicable governmental authorities, including without limitation all Environmental Laws, occupational safety and health regulations, and electrical codes. To the Knowledge of the Equity Entities, each of the towers used in connection with the Stations can structurally support all of the permitted equipment in accordance with law, governmental approvals, and sound engineering practices as the Stations are currently operating.

          (d) Schedule 3.10(d) sets forth a list of each lease or similar agreement under which either Equity Entity is lessee of, or holds or operates, any Real Property owned by any third Person as of

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the date of this Agreement, which are the sole and complete agreements concerning the Equity Entities’ rights and obligations with respect to the leased premises (the “Real Property Leases”). Each Real Property Lease is legal, valid, binding, enforceable and in full force and effect (subject to expiration or termination in accordance with their terms). No Equity Entity nor, to the Knowledge of the Equity Entities, any other party is in default, violation or breach in any material respect under any Real Property Lease to which an Equity Entity is a party, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would (i) constitute a default, violation or breach by the Equity Entities in any material respect thereunder, or (ii) to the Knowledge of the Equity Entities, constitute a default, violation or breach by any other party in any material respect thereunder. No amount payable under any Real Property Lease is past due (other than amounts being contested in good faith through appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles consistently applied on the balance sheets and statements of income of the Equity Entities). The Equity Entities have not received any notice of a default, offset or counterclaim under any Real Property Lease or any other communication asserting any material non-compliance with any Real Property Lease. Subject to matters that constitute Permitted Encumbrances, and to the Knowledge of the Equity Entities, the Equity Entities have the exclusive right to use and occupy that portion of the premises leased under each Real Property Lease. The Equity Entities enjoy peaceful and undisturbed possession of that portion of the premises leased by the Equity Entities under the Real Property Leases. Except as set forth on Schedule 3.10(d), the Equity Entities’ interests under the Real Property Leases are free and clear of all Encumbrances other than Permitted Encumbrances. The Equity Entities have delivered to Buyer, true and complete copies of the Real Property Leases, together, in the case of any subleases or similar occupancy agreements, with copies of all other leases. Except as disclosed in Schedule 3.2(c) or Schedule 3.10(d), the Equity Entities have full legal power and authority to assign their rights under the Real Property Leases to Buyer in accordance with this Agreement on terms and conditions no less favorable in any material respect (with respect to the Real Property Leases individually or in the aggregate) than those contained in the Real Property Leases on the date hereof (as the Leases may be modified prior to the Closing in accordance with the provisions of this Agreement), and such assignment will not affect the validity, enforceability and continuity of any such lease.

          (e) All utilities that are required for the use of the Real Property for the purposes for which such properties are presently being used by the Equity Entities, including, without limitation, electric, water, sewer, telephone and similar services, if any, have been connected and are in satisfactory working order (subject to normal wear and tear). By the Closing Date, the Equity Entities will have ensured that all charges for such utilities, including, without limitation, any “tie-in” charges or connection fees due as of the Closing Date and imposed on the Equity Entities as the lessees (specifically excluding any charges that are the responsibility of the landlord) will have been paid, except for those charges that will not become due until after the Closing Date and that are to be prorated between the Equity Entities and Buyer pursuant to Section 2.11.

          Section 3.11 Personal Property.

          (a) Schedule 3.11(a) contains a list of all machinery, equipment, vehicles, furniture and other personal property owned or leased by an Equity Entity having an original cost of $2,500 or more, relating to the Business, or used or held for use in, or necessary for, the operation of the Stations that is to be assigned to Buyer (the “Personal Property”).

          (b) Except as set forth on Schedule 3.11(a), the Personal Property required to be listed on Schedule 3.11(a) is in good operating condition and repair (reasonable wear and tear excepted), is in conformity with FCC regulations, is maintained in accordance with good engineering practice, is performing satisfactorily, is not in need of repair, has been properly maintained in accordance with

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industry practices, is available for immediate use, is otherwise sufficient to permit the Stations to operate in accordance with the FCC Licenses and the rules and regulations of the FCC in all material respects and does not contain any PCBs, and its presence and use is in compliance with Environmental Laws. All Personal Property is type-approved or type-accepted where such type-approval or type-acceptance is required by the FCC.

     Section 3.12 Personal Property Leases. Schedule 3.12 contains a list of each lease or other agreement or right under which any Equity Entity is lessee of, or holds or operates, any Personal Property owned by a third party and relating to the Business, or used or held for use in, or necessary for, the operation of the Stations as of the date of this Agreement, except those which are terminable by the Equity Entities without penalty on 30 days’ notice or less or which provide for annual rentals less than $5,000 (the “Personal Property Leases”).

     Section 3.13 Intellectual Property

     (a) Schedule 3.13(a) contains a list of (i) all call signs, United States and foreign patents, pending patent applications, trademark registrations, pending trademark applications, trade names, service marks, copyrights, logos, domain names, and other similar intangible property rights (including licensee rights in third party software), issued to, licensed to, assigned to, filed by, or used to promote or identify the Stations, or otherwise used in connection with the Business by the Equity Entities, and (ii) all agreements, contracts and understandings therefor (the “Intellectual Property”).

     (b) Except as disclosed in Schedule 3.13(b), the Equity Entities either: (i) own the entire right, title and interest in and to the Intellectual Property listed in Schedule 3.13(a), free and clear of Encumbrances except for Permitted Encumbrances; or (ii) have the valid right and license to use the Intellectual Property in the conduct of the Business and the operation of the Stations.

     (c) Except as disclosed in Schedule 3.13(c), (i) all patents and registrations identified in Schedule 3.13(a) are in force, and all applications identified in Schedule 3.13(a) are pending without challenge (other than office actions that may be pending before the Patent and Trademark Office or its foreign equivalents); (ii) the Intellectual Property owned or licensed by the Equity Entities and material to the conduct of the Business is valid and enforceable; and (iii) the Equity Entities have the right to bring actions for infringement or unauthorized use of the Intellectual Property owned or licensed by the Equity Entities and material to the conduct of the Business.

     (d) Except as disclosed in Schedule 3.13(d), (i) no claim has been made or asserted that alleges the Intellectual Property owned or licensed by the Equity Entities and material to the conduct of the Business infringes the intellectual property of another Person; (ii) no litigation, arbitration or other proceeding is currently pending with respect to the Intellectual Property owned or licensed by the Equity Entities; and (iii) no claim has been made or asserted that challenges the validity or ownership of any Intellectual Property owned or licensed by the Equity Entities and material to the conduct of the Business.

     (e) The operation of the Stations does not infringe any copyright, patent, trademark, trade name, service mark, or other similar right of any third party. The Equity Entities have not sold, licensed or otherwise disposed of any of the Intellectual Property to any person or entity and the Equity Entities have not agreed to indemnify any person or entity for any patent, trademark or copyright infringement.

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     Section 3.14 Title to Purchased Assets. Except as disclosed on Schedule 3.14, the Equity Entities have good and marketable title to all of the Purchased Assets (or a valid leasehold or license interest, in the case of any leased or licensed assets, as applicable), free and clear of all Encumbrances, except for Permitted Encumbrances. At Closing, the Equity Entities shall convey to Buyer good and marketable title to the Purchased Assets (or a valid leasehold or license interest, in the case of any leased or licensed assets, as applicable), free and clear of all Encumbrances, except for Permitted Encumbrances.

     Section 3.15 Employees. To the Knowledge of the Equity Entities, no executive, key employee or group of employees employed by the Equity Entities solely in connection with the operation of the Stations has any plans to terminate employment with the Stations prior to Closing.

     Section 3.16 Employee Relations

     (a) Except as set forth on Schedule 3.16, the Equity Entities are not a party to any (i) labor collective bargaining union or similar agreement or (ii) any employment, loan, loan guaranty, consulting, non-compete, severance, retention, compensation, deferred compensation, stock or cash based incentive or other similar agreement, arrangement, commitment or understanding (whether written or oral) with salaried or non-salaried employees in each case in connection with the Business or any of the Stations, and except as set forth on Schedule 3.16, no such agreement, arrangement, commitment or understanding will be binding upon Buyer without Buyer’s express written assumption thereof.

     (b) Except as set forth in Schedule 3.16, and except as provided by law, the employment of all persons presently employed or retained by the Equity Entities or the Stations in connection with the Business is terminable at will.

     (c) Except as set forth on Schedule 3.16, (i) no union or similar organization represents employees of any of the Business or the Stations, no union has been certified to represent the Equity Entities or the Stations, and, to the Knowledge of the Equity Entities, no such organization is attempting to organize such employees; (ii) except as set forth in Schedule 3.16, none of the Equity Entities nor any of the Stations have engaged in any unfair labor practice and there are no complaints against the Equity Entities or any of the Stations pending before the National Relations Board or any similar state or local labor agency by or on behalf of any employee of the Equity Entities or any of the Stations; (iii) there is no pending or threatened strike, slowdown, picket, work stoppage, or arbitration proceedings involving labor matters or other labor disputes affecting the Business or the Stations; and (iv) none of the Equity Entities nor any of their subsidiaries have experienced any attempt by organized labor to cause the Equity Entities or the Stations to comply with or conform to demands of organized labor, strike, work stoppage or other significant labor difficulties of any nature at the Stations in the past two (2) years.

     (d) Except as set forth in Schedule 3.16, the Equity Entities are and have been in compliance in all material respects with all state, local and federal laws, ordinances, rules, regulations and requirements relating to labor and employment laws, immigration laws, any employment tax or withholding obligations, any obligations arising under a collective bargaining agreement or any obligations arising under employee benefit plans in each case with respect to the Business or any of the Stations. Except as set forth in Schedule 3.16, there are no pending, threatened or anticipated claims or litigation by employees or former employees, or applicants for employment, or contractors providing services of a nature similar to employment services, arising out of their employment, termination of their employment or application for employment with the Stations.

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     (e) The Equity Entities have paid in full to all employees of the Stations all amounts currently due and payable for wages, salaries, commissions, bonuses, benefits and other compensation. Except as set forth in Schedule 3.16, there are no vacation, bonus, wage or other compensation obligations in relation to employees or independent contractors of the Stations.

     Section 3.17 Contracts

     (a) Set forth in Schedule 3.17(a) is a list of each contract, agreement, lease or other agreement relating to the Business, the operation of the Stations or the Purchased Assets to which any Equity Entity is a party as of the date of this Agreement, except for Trade Agreements, Barter Agreements, contracts that relate solely to Excluded Assets, contracts that are designated as Excluded Assets in Section 2.2 or Schedule 2.2, and contracts that could impose an obligation or liability on Buyer of less than $5,000 individually and less than $10,000 in the aggregate. Schedule 3.17(a) also indicates whether each contract, agreement or other instrument listed therein is to be deemed an “Assumed Contract,” a “Contract Not Assumed,” and/or a Material Station Agreement for purposes of this Agreement. There are no contracts or agreements relating to programming payments for the Stations, and the Stations do not have any (i) material feature film inventory, (ii) material cash programming assets or liabilities, or (iii) material barter programming assets.

     (b) Except as set forth on Schedule 3.17(a), except for contracts that are designated as Excluded Assets in Section 2.2 or Schedule 2.2 and except for contracts entered into after the date of this Agreement consistent with the provisions of this Agreement, as of the date of this Agreement, no Equity Entity is a party to or bound by:

     (i) Any contract in respect of the Business or any of the Stations for the future lease, purchase or sale of real property;

     (ii) Any contract in respect of the Business or any of the Stations for the purchase, rental or use of any broadcast television programming or programming services that is not terminable by the Equity Entities without penalty on thirty (30) days’ notice or less or that provides for performance over a period of more than ninety (90) days or that involves the payment after the date hereof of more than $5,000;

     (iii) Any contract in respect of the Business or any of the Stations for the purchase of merchandise, supplies or personal property or for the receipt of services (other than services referred to in clause (ii) above) that is not terminable by the Equity Entities on thirty (30) days’ notice or less or that provides for performance over a period of more than ninety (90) days or that involves the payment after the date hereof of more than $5,000;

     (iv) Any contract for the sale of broadcast time for advertising or other purposes for cash that was not made in the ordinary course of business consistent with past practices;

     (v) Any guarantee of the obligations of any of the Stations’ customers, suppliers, or employees;

     (vi) Any sales agency, advertising representative or advertising or public relations contract in respect of the Business or any of the Stations which is not terminable by the Equity Entities without penalty on thirty (30) days’ notice or less or which

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provides for payments over a period of more than ninety (90) days or which involves the payment after the date hereof of more than $5,000;

     (vii) Any agreement or arrangement, written or oral, with salaried or non-salaried employees, except as set forth in Schedule 3.16, with respect to the Business or any of the Stations;

     (viii) Any contract in respect of the Business or any of the Stations other than those listed in subsections (ii), (iii) and (vi) which the Equity Entities reasonably anticipate will involve the payment of more than $10,000;

     (ix) Any partnership, joint venture or other similar agreement or arrangement relating to the Stations;

     (x) Any agreement or instrument which provides for, or relates to, the incurrence by the Equity Entities of debt for borrowed money (except for such agreements or instruments which shall not apply to Buyer or its Affiliates upon Closing); or

     (xi) Any agreement outside of the ordinary course of the Business containing any covenant or provision prohibiting the Equity Entities from engaging in any line or type of business (except for such agreements which shall not apply to Buyer or its Affiliates upon Closing).

     Section 3.18 Status of Contracts

     (a) Each of the leases, contracts and other agreements listed in Schedules 3.10(a), 3.12 and 3.17(a), but excluding contracts and other agreements that are designated as Excluded Assets in Section 2.2 or Schedule 2.2, (the “Station Agreements”), constitutes a valid and binding obligation of the Equity Entities party thereto and, to the Knowledge of the Equity Entities, the other parties thereto (subject to bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors’ rights generally), is in full force and effect (subject to expiration or termination in accordance with its terms), and (except as set forth in Schedule 3.2(c) and except for those Station Agreements which by their terms will expire prior to the Closing Date or will be otherwise terminated prior to the Closing Date in accordance with the provisions hereof or at the direction of Buyer) may be transferred to the Buyer pursuant to this Agreement on terms and conditions no less favorable in any material respect than those contained in the relevant Station Agreement on the date hereof (as the Station Agreement may be modified prior to the Closing in accordance with the provisions of this Agreement), and which will not, by reason of assignment to Buyer, increase the obligations or liabilities of Buyer under such agreement in any material respect, and will be in full force and effect at the time of such transfer (subject to expiration or termination in accordance with its terms), in each case without breaching the terms thereof or resulting in the forfeiture or impairment of any rights thereunder and without the consent, approval or act of, or the making of any filing with, any other party.

     (b) Each Equity Entity has fulfilled and performed in all material respects its obligations under each of the Station Agreements to which it is a party, and no Equity Entity is in, or alleged to be in, breach or default under any of the Station Agreements in any material respect and, to the Knowledge of the Equity Entities, no other party to any of the Station Agreements has committed a breach or default thereunder in any material respect that remains uncured, and no event has occurred and no condition or state of facts exists which, with the passage of time or the giving of notice or both, would

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constitute such a default or breach in any material respect by any Equity Entity or, to the Knowledge of the Equity Entities, by any such other party. The Equity Entities have delivered or made available to the Buyer complete and correct copies of each of the written Station Agreements, together with all amendments thereto, or true and complete memoranda describing the material terms of all oral Station Agreements, and all liabilities and obligations under such Station Agreements can be ascertained from such copies or memoranda. There are no oral contracts material to the operation of the Business, or the Stations. Except as otherwise disclosed on Schedule 2.2 and Schedule 3.26, the Station Agreements as amended through the date of this Agreement will not be modified or renewed without Buyer’s written consent, which consent shall not be unreasonably withheld or delayed, except the Equity Entities shall be permitted to renew any Station Agreement that pursuant to its terms renews automatically on a month-to-month basis or any agreements that if not renewed would materially alter the operation of the Stations.

     Section 3.19 No Violation, Litigation or Regulatory Action. Except as set forth in Schedule 3.19 and for such matters as have been remedied or cured, the Equity Entities have complied in all material respects with all, and are not in material violation of any, laws, regulations, rules, writs, injunctions, ordinances, franchises, decrees or orders of any court or of any foreign, federal, state, municipal or other Governmental Body which affect or are applicable to the Purchased Assets, the Stations or the Business, and, without limiting the generality of the foregoing:

     (a) There are no unsatisfied judgments outstanding against the Equity Entities, the Purchased Assets, the Stations or the Business that might adversely affect the continued operation of the Stations or impair the value of the Purchased Assets or that might adversely affect the Equity Entities’ ability to perform in accordance with this Agreement;

     (b) There are no lawsuits, suits or proceedings pending or, to the Knowledge of the Equity Entities, threatened against the Equity Entities in respect of the Purchased Assets, the Stations or the Business that could adversely affect the continued operation of the Stations or impair the value of the Purchased Assets or that could adversely affect the Equity Entities’ ability to perform in accordance with this Agreement (other than any of the foregoing generally affecting similarly-situated companies and that are not specific to the Equity Entities);

     (c) There are no claims or investigations pending or, to the Knowledge of the Equity Entities, threatened against the Equity Entities in respect of the Purchased Assets, the Stations or the Business that could adversely affect the continued operation of the Stations or impair the value of the Purchased Assets or that could adversely affect the Equity Entities’ ability to perform in accordance with this Agreement (other than any of the foregoing generally affecting similarly-situated companies and that are not specific to the Equity Entities);

     (d) As of the date of this Agreement there is no action, suit or proceeding pending or, to the Knowledge of the Equity Entities, threatened, that questions the legality or propriety of the transactions contemplated by this Agreement (other than any of the foregoing generally affecting similarly-situated companies and that are not specific to the Equity Entities or this Agreement);

     (e) All of the Stations’ transmitting and studio equipment is operating in all material respects in accordance with the terms and conditions of the FCC Licenses and all underlying construction permits, and the rules, regulations and policies of the FCC, including, without limitation, all regulations concerning equipment authorization, and is in compliance with all Environmental Laws. To the Knowledge of the Equity Entities, none of the Stations is causing interference in violation of FCC rules to the transmission of any other broadcast station or communications facility. The Equity Entities have not received any written complaints with respect thereto, and, to the Knowledge of the Equity Entities, no

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other broadcast station or communications facility is causing interference in violation of FCC rules to the Stations’ transmissions or the public’s reception of such transmissions. The Equity Entities have no reason to believe that the Stations are receiving or in the future may receive any objectionable interference based on the manner in which the Stations and other full power, low power and Class A televisions in the Stations’ markets are authorized to operate as of the date of this Agreement. KPOU is not short-spaced, on a grandfathered basis or otherwise, to any existing station, outstanding construction permit, or pending application therefor, domestic or international, or to any existing or proposed broadcast channel allotment, domestic or international;

     (f) The Equity Entities have, in the conduct of the Business and the operation of the Stations, complied in all material respects with all applicable laws, rules and regulations relating to the employment of labor;

     (g) Except as set forth on Schedule 3.19, the Equity Entities have not received any notification from the FCC that the Equity Entities’ employment practices fail to comply with FCC rules and policies that remains pending and unresolved;

     (h) All material ownership reports, employment reports, tax returns and other material documents required to be filed by the Equity Entities with the FCC or other Governmental Body with respect to the Stations or the Business have been filed. The public inspection file for KPOU is complete in all material respects. At the time of filing, all information provided by the Equity Entities, and to the Knowledge of the Equity Entities, all information provided by unaffiliated third parties, contained in the foregoing documents was true, complete and accurate in all material respects and was updated to the extent required by the Communications Act and the rules and regulations of the FCC as circumstances may have changed during the pendency thereof; and

     (i) To the Knowledge of the Equity Entities, all towers and other structures on the Real Property are painted and lighted in accordance with the requirements of the FCC Licenses, the FCC, FAA and all applicable requirements of federal, state and local law in all material respects. Except as set forth on Schedule 3.9(b), appropriate notification to the FAA has been filed for such towers where required by the FCC’s rules and regulations.

     Section 3.20 Insurance. Set forth on Schedule 3.20 is an accurate and complete list of the policies of fire and extended coverage and casualty, liability and other forms of insurance that the Equity Entities maintain as of the date of this Agreement in respect of the Purchased Assets, the Stations or the Business, in such amounts and against such risks and losses as will provide adequate insurance coverage for the replacement cost of the Purchased Assets, the Stations or the Business with respect to all risks normally insured against by a Person or entity carrying on the same business as the Equity Entities. All insurance policies listed on Schedule 3.20 are in full force and effect, and there are no outstanding claims under any insurance policy or default with respect to provisions in any such policy which claim or default individually or in the aggregate would reasonably be expected to have a Material Adverse Effect on the Purchased Assets, the Stations or the Business.

     Section 3.21 Employee Plans; ERISA.

     (a) Schedule 3.21 lists all compensation and benefit plans, programs, arrangements, contracts, agreements, understandings, commitments and policies sponsored, administered, maintained, or contributed to, by or on behalf of the Equity Entities, any of their subsidiaries, any ERISA Affiliate or any of its subsidiaries as of the date hereof (including “employee benefit plans” within the meaning of Section 3(3) of ERISA, all pension, profit sharing, savings and thrift, bonus, stock or cash based incentive,

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deferred compensation, stock option, stock purchase, stock ownership, restricted stock, stock appreciation, phantom stock, fringe benefits, vacation, retention, change in control, workers’ compensation, unemployment compensation, post-retirement, severance pay, retention pay, and medical, disability, accident and life insurance plans) relating to the Business or any of the Stations for the benefit of any former or current employees of the Equity Entities or their respective dependents (collectively, the “Employee Plans”).

     (b) None of the Equity Entities nor any ERISA Affiliates (i) has ever sponsored, administered, maintained, contributed to, been obligated to contribute to, participated in or agreed to participate in, any Employee Plan that is subject to Title IV of ERISA, or a multi-employer plan (as defined in Section 3(37) of ERISA) relating to the Business or any of the Stations or (ii) except as set forth on Schedule 3.21, has ever provided health care or any other non-pension benefits to any employees after their employment is terminated (other than as required by part 6 of subtitle B of title I of ERISA) or has ever promised to provide such post-termination benefits in connection with the Business or any of the Stations. None of the Equity Entities nor any ERISA Affiliate has withdrawn from a multi-employer plan within the meaning of Section 414(f) of the Code, which withdrawal could impose liability on the Buyer. No Employee Plan of the Equity Entities is a multiple employer plan within the meaning of Section 413(c) of the Code. No Employee Plan of the Equity Entities is a multiple employer welfare arrangement as defined in Section 3(40) of ERISA.

     (c) Each Employee Plan that is intended to be qualified under Code Section 401(a) is so qualified and has been so qualified during the period from its adoption to date and is the subject of a favorable determination letter. Each such plan has been administered in accordance with its terms and in substantial compliance with applicable law, except where the failure to so administer such plan has been corrected in accordance with the IRS’s Employee Plans Compliance Resolution System. Except as set forth in Schedule 3.21, (i) none of the Equity Entities nor any ERISA Affiliate has or had any liability for unpaid contributions with respect to any Employee Plan that is an “employee pension benefit plan” as defined in Section 3(2) of ERISA; (ii) the Equity Entities and any ERISA Affiliates have made all required contributions under such plan for all periods; and (iii) proper accruals have been made and are reflected on the appropriate balance sheet, books and records.

     (d) No plan that is an employee benefit plan under Section 3(3) of ERISA listed in Schedule 3.21 has engaged in a transaction that is a prohibited transaction, as defined in Section 406 of ERISA and Section 4975 of the Code, for which there is no exemption and with respect to which the Equity Entities have on the date hereof incurred any Liability that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect upon the Purchased Assets, the Stations or the Business (taken as a whole).

     Section 3.22 Environmental Protection. In respect of the Business, the Real Property, and the Purchased Assets, except as set forth in Schedule 3.22:

     (a) The operation of the Business and the use of the Real Property by the Equity Entities and, to the Knowledge of the Equity Entities, by all of their predecessors, is and at all times has been in material compliance with all applicable Environmental Laws, the Equity Entities hold all Permits required under Environmental Laws for the operation of the Business, and no modification or change to the operations of the Business will be required upon the renewal of any such Permits other than modifications or changes required due to changes in law occurring after the date hereof.

     (b) (i) No claims arising under Environmental Laws are pending or, to the Knowledge of the Equity Entities, threatened, (ii) there are no writs, injunctions, decrees, orders or

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judgments outstanding or, to the Knowledge of the Equity Entities, threatened relating to compliance with or liability under any Environmental Laws, and (iii) the Equity Entities do not have any material liability under any Environmental Law.

     (c) To the Knowledge of the Equity Entities, there have been no Releases of Hazardous Materials in, on or under the Real Property that could result in any material investigation or material remedial action by any Governmental Body or third party pursuant to any Environmental Law.

     (d) No facility or Real Property of the Equity Entities nor, to the Knowledge of the Equity Entities, any facility or property to which the Equity Entities transported, recycled, or disposed, or arranged for the transportation, recycling, or disposal of any Hazardous Materials, is listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA), or on any other similar federal, tribal, state, or local list of sites requiring remediation.

     (e) (i) There are no structures, improvements, equipment, fixtures, facilities, or Personal Property on any Real Property that are constructed with, use or otherwise contain radioactive materials, lead or urea formaldehyde unless the same are in good condition, ordinary wear and tear excepted, and in compliance with Environmental Laws, and (ii) there are no asbestos-containing materials, polychlorinated biphenyls, or underground storage tanks (whether active or abandoned), or underground piping associated with such tanks on the Real Property.

     (f) There are no liens, restrictive covenants or other land use restrictions under Environmental Laws on any of the Real Property, and no actions by a Government Body or third person have been taken, or, to the Knowledge of the Equity Entities, are in process and could subject any of such properties to such liens, restrictive covenants or other land use restrictions.

     (g) The Equity Entities have not released any person nor waived any rights or defenses with respect to any Environmental Conditions or any claim arising under any Environmental Law.

     (h) There is no Environmental Report in the possession or control of the Equity Entities or any of their Affiliates relating to the Business, the Stations, the Real Property, or the Purchased Assets, that has not been delivered or made available to Buyer.

     (i) The operation of no Station by itself exceeds permissible levels of exposure to RF radiation specified in either the FCC’s rules, regulations and policies concerning RF radiation or any other applicable Environmental Laws, and the Equity Entities have no Knowledge that any other users of the towers from which the Stations transmit cause such towers to exceed such levels.

     Section 3.23 Insolvency Proceedings. Neither the Equity Entities nor the Purchased Assets are the subject of any pending or threatened insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary. None of the Equity Entities has made an assignment for the benefit of creditors or taken any action in contemplation of or that would constitute a valid basis for the institution of any such insolvency proceedings. Immediately after giving effect to this transaction, each of the Equity Entities (i) will have sufficient capital to carry on its business and transactions, (ii) will be able to pay its debts as they mature or become due, and (iii) will own assets the fair value of which will be greater than the sum of all liabilities (including contingent liabilities) not specifically assumed by Buyer pursuant to the terms of this Agreement. None of the Equity Entities is insolvent nor will it become insolvent as a result of entering into or consummating this transaction.

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     Section 3.24 Citizenship. None of the Equity Entities is a “foreign person” as defined in Section 1445(f)(3) of the Code. On the Closing Date, the Equity Entities will deliver to Buyer an affidavit to that effect, verified as true and sworn to under penalty of perjury by a duly-authorized officer of each Equity Entity. The affidavit shall also set forth the name, address, taxpayer identification number, and such additional information as may be required to exempt the transaction from the withholding provisions of Section 1445 of the Code. Buyer shall have the right to furnish copies of the affidavit to the Internal Revenue Service.

     Section 3.25 No Misleading Statements. No representation or warranty or other statement made by, nor any information provided to Buyer by, the Equity Entities in this Agreement or in any document, instrument, or certificate provided to Buyer in writing pursuant to this Agreement, contains any untrue statement of a material fact or omits a material fact necessary in order to make such statements or information not misleading in any material respect.

     Section 3.26 Transactions with Affiliates. Except as set forth on Schedule 3.26, no Affiliate of the Equity Entities provides any goods or services or owns or leases property or is a party to any contract affecting the operation of the Purchased Assets, the Stations or the Business.

     Section 3.27 No Finder None of the Equity Entities, nor any party acting on behalf of the Equity Entities, has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement, except for the 5% commission fee due Arkansas Media, LLC, which shall be paid out of the proceeds of this transaction by Seller. Should this Agreement be terminated and the Deposit is delivered to the Sellers pursuant to Section 2.5(c), Arkansas Media, LLC, shall receive half of the Deposit and Equity Entities shall receive the balance.

     Section 3.28 Cable and Satellite Matters. Schedule 3.28 lists all MVPDs currently carrying any of the Stations’ signal and all elections or agreements relating to such carriage. True and complete copies of any and all retransmission consent agreements relating to the Stations have been supplied to the Buyer. The Sellers promptly will supply Buyer with any and all additional retransmission agreements, amendments, follow-on or replacement agreements entered into by any of Sellers with any MVPD prior to the Closing Date. The Equity Entities know of no reason such carriage will not continue after the Closing Date, in the same manner and form it is currently carried, and will notify Buyer immediately upon the termination or discontinuance of any current MVPD carriage or carriage arrangement.

ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
OF BUYER

     As an inducement to the Equity Entities to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer makes the following representations and warranties to the Equity Entities, all of which shall be true, correct, and complete as of the date hereof and as of the Closing, except as otherwise specifically provided:

     Section 4.1 Organization. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Washington. Buyer has the requisite corporate power and authority to own or lease and to operate the properties and assets used in connection with its business as currently being conducted or to be acquired pursuant hereto, and as of Closing will have authority to do business in the States of Oregon and Idaho.

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     Section 4.2 Authority of Buyer

     (a) Buyer has the requisite corporate power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Buyer pursuant hereto (collectively, the “Buyer Ancillary Agreements”), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof.

     (b) The execution, delivery and performance of this Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized and approved by all necessary action of Buyer and do not require any further authorization or consent of Buyer or its shareholder. This Agreement is, and each other Buyer Ancillary Agreement when executed and delivered by Buyer and the other parties thereto will be, a legal, valid and binding agreement of Buyer enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

     (c) Except as set forth in Schedule 4.2, none of the execution and delivery by Buyer of this Agreement and the other Buyer Ancillary Agreements, the consummation by Buyer of any of the transactions contemplated hereby or thereby or compliance by Buyer with or fulfillment by Buyer of the terms, conditions and provisions hereof or thereof will:

     (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance upon any assets of Buyer under, the organizational documents of Buyer, any indenture, note, mortgage, lease, guaranty or material agreement, or any judgment, order, award or decree, to which Buyer is a party or any of the assets of Buyer is subject or by which Buyer is bound, or any statute, other law or regulatory provision affecting Buyer or its assets; or

     (ii) require the approval, consent, authorization or act of, or the making by Buyer of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except for such of the foregoing as are necessary pursuant to the Communications Act.

     Section 4.3 Litigation. Buyer is not a party to any action, suit or proceeding pending or, to the knowledge of Buyer, threatened which, if adversely determined, would reasonably be expected to materially restrict the ability of Buyer to consummate the transactions contemplated by this Agreement. There is no order to which Buyer is subject that would reasonably be expected to restrict the ability of Buyer to consummate the transactions contemplated by this Agreement.

     Section 4.4 No Finder. Neither Buyer nor any party acting on its behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.

     Section 4.5 Qualifications as FCC Licensee. To Buyer’s knowledge, there is no fact or circumstance relating to the Stations, Buyer or any of its Affiliates that would cause the FCC not to grant the applications in the ordinary course. Buyer is eligible to hold the FCC licenses and/or

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authorizations for all of the Stations without any waiver of any FCC ownership or other rule or regulation currently in effect.

ARTICLE 5.
ACTION PRIOR TO THE CLOSING DATE

     The respective parties hereto covenant and agree to take the following actions between the date hereof and the Closing Date:

     Section 5.1 Investigation of the Business. Upon the request of Buyer, the Equity Entities shall afford to the officers, employees and authorized representatives of Buyer (including, without limitation, independent public accountants, attorneys and consultants) reasonable access during normal business hours, and upon not less than 24-hours prior notice, to the offices, properties, employees and business and financial records (including computer files, retrieval programs and similar documentation) of the Business to the extent Buyer shall reasonably deem necessary or desirable and shall furnish to Buyer or its authorized representatives such additional information concerning the Business as shall be reasonably requested; provided, however, that any such investigation shall be conducted in such a manner as not to interfere unreasonably with the operations of the Equity Entities. It is expressly understood that, pursuant to this Section 5.1, Buyer, at its sole expense, shall be entitled to make such engineering inspections of the Stations, such inspections of the Stations for the purpose of appraising the Purchased Assets and such audits of the Stations’ financial records as Buyer may desire, so long as the same do not unreasonably interfere with the operation of the Stations; provided, that neither the furnishing of such information to Buyer or its representatives nor any investigation made heretofore or hereafter by Buyer shall affect Buyer’s right to rely upon any representation or warranty made by the Equity Entities in this Agreement, each of which shall survive any furnishing of information to Buyer or its agents, or any investigation by Buyer or its agents, subject to Section 11.1 hereof. In the event Buyer discovers any discrepancy or any information during such investigation that Buyer reasonably believes to be a violation of the terms and conditions of this Agreement, Buyer agrees to immediately disclose such discrepancy or information to the Sellers and to either (i) give the Sellers the opportunity to correct such discrepancy or problem subject to the cure provisions set forth herein, or in the alternative, to (ii) notify the Sellers that Buyer is waiving such finding as a condition to Closing.

     Section 5.2 Preserve Accuracy of Representations and Warranties. The Equity Entities shall refrain from taking any action that would render any representation or warranty contained in Article 3 hereof inaccurate, and Buyer shall refrain from taking any action that would render any representation or warranty contained in Article 4 hereof inaccurate. Each party shall promptly notify the other of any action, suit or proceeding that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of any transaction contemplated by this Agreement. The Equity Entities shall promptly notify Buyer, and Buyer shall promptly notify the Equity Entities, of any lawsuit, claim, proceeding or investigation that may be threatened, brought, asserted or commenced against the other which would have been listed in Schedule 3.19 or would be an exception to Section 4.3 if such lawsuit, claim, proceeding or investigation had arisen prior to the date hereof.

     Section 5.3 FCC Consent; Other Consents and Approvals.

     (a) As promptly as practicable after the date of this Agreement, but in any event no later than five (5) business days thereafter, the Equity Entities and Buyer shall file with the FCC an application requesting its consent to the assignment of the FCC Licenses (and any extensions or renewals thereof) to Buyer from the Equity Entities (the “Transfer Application”). The Equity Entities and Buyer will cooperate in the preparation of such Transfer Applications and will diligently take and will cooperate

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in the taking of all reasonable steps necessary to prosecute expeditiously the Transfer Applications and will use their reasonable best efforts to obtain promptly the FCC’s consent and approval of the Transfer Applications. Any fees assessed by the FCC incident to the filing or grant of such applications shall be borne equally by Buyer and the Equity Entities, with each party responsible for one half of any such fees assessed; provided, however, that Buyer will reimburse the Equity Entities for Buyer’s share of such fees paid by the Equity Entities, and the Equity Entities will reimburse the Buyer for Equity Entities’ share of such fees paid by the Buyer. The Equity Entities and Buyer shall make available to each other, promptly after the filing thereof, copies of all reports filed by it or their Affiliates on or prior to the Closing Date with the FCC in respect of the Stations.

     (b) The Equity Entities and the Buyer shall each use reasonable best efforts to obtain any consents, amendments or permits from Governmental Bodies which are required by the terms thereof or this Agreement for the consummation of the transactions contemplated by this Agreement, and shall jointly, diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such requests for approval or waiver and all proceedings necessary to secure such approvals and waivers.

     Section 5.4 Operations of the Stations Prior to the Closing Date.

     (a) Prior to the Closing Date, the Equity Entities shall, consistent with past practice, use their reasonable best efforts to (subject to, and except as modified by, compliance with the other covenants contained in this Agreement):

     (i) continue to promote and conduct advertising on behalf of the Stations and the Business at levels substantially consistent with past practice;

     (ii) maintain the business organization of the Stations intact;

     (iii) preserve the goodwill of the suppliers, contractors, licensors, employees, customers, distributors and others having business relations with the Business or the Stations;

     (iv) maintain the employment of each current employee who is necessary for the continued operation of the Business or the Stations as currently operated (any voluntary departure of any employee or discharge of any employee for cause between the date hereof and the Closing excepted);

     (v) take reasonable measures consistent with past practice to preserve the Stations’ present customers and business relations;

     (vi) perform all Station Agreements without material default and pay all trade accounts payable in a timely manner; provided, however, that the Equity Entities may dispute, in good faith, any of their alleged obligations; and

     (vii) to the extent possible, run off all outstanding advertising due under trade and barter agreements.

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     (b) Prior to the Closing Date, except as approved by Buyer pursuant to Section 5.4(c) or as expressly required or permitted by this Agreement, the Equity Entities shall:

     (i) operate and carry on the operations of the Stations and conduct the Business only in the ordinary course consistent with past practices (subject to, and except as modified by, compliance with the other covenants contained in this Agreement and FCC rules and regulations);

     (ii) subject to Section 11.12, maintain the Purchased Assets in their present condition (reasonable wear and tear in normal use excepted);

     (iii) subject to Section 11.12, continue making capital expenditures at budgeted levels;

     (iv) maintain their respective books and records in the usual and ordinary manner, on a basis consistent with prior periods;

     (v) comply in all material respects with all laws, rules, ordinances and regulations applicable to it, to the Purchased Assets, the Business and the operation of the Stations;

     (vi) retain the Stations’ libraries of recordings and other programming;

     (vii) maintain the present character and entertainment format of the Stations and the quality of their programs;

     (viii) maintain all inventories of supplies and spare parts at levels consistent with the Stations’ prior practices; and

     (ix) prepare and file all Tax Returns that pertain to the Purchased Assets.

     (c) Notwithstanding Section 5.4(a) and (b), and subject to the Communications Act and the rules and regulations of the FCC, except as expressly contemplated by this Agreement, without the express prior written approval of the Buyer, the Equity Entities in respect of the Stations shall not:

     (i) make any material change in the Business or the operations of the Stations;

     (ii) make any capital expenditure, or enter into any contract or commitment therefor, in excess of $25,000 in the aggregate (provided that Buyer’s consent shall not be required for capital expenditures made as required by Section 5.4(b)(iii) and for repairs reasonably necessary to keep the Stations’ transmission facilities operating after any loss, damage, or equipment failure, subject to the terms and conditions set forth herein);

     (iii) enter into any contract for the purchase of real property or exercise any option to extend a lease listed in Schedules 3.10(d) unless necessary to continue the operations of the Stations;

     (iv) sell, lease (as lessor), transfer or otherwise dispose of (including any transfers to any Affiliates of the Equity Entities), or mortgage or pledge, or impose or

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suffer to be imposed any Encumbrance on, any of the Purchased Assets, other than Excluded Assets and other than inventory and personal property sold or otherwise disposed of or consumed in the ordinary course of the Business and other than Permitted Encumbrances;

     (v) create, incur or assume, or agree to create, incur or assume, any indebtedness for borrowed money (other than money borrowed or advances from the other of Equity Entities or any Affiliate of the Equity Entities in the ordinary course of the Business);

     (vi) institute any material increase in any profit-sharing, bonus, incentive, deferred compensation, insurance, pension, retirement, medical, hospital, disability, welfare or other employee benefit plan with respect to their employees, other than in the ordinary course of the Business or as required by any such plan or Requirements of Law;

     (vii) make any material change in the compensation of their employees, other than changes made in accordance with normal salary adjustments and consistent with past compensation practices or as required by contracts set forth on Schedule 3.17(a);

     (viii) acquiesce in any infringement, unauthorized use or impairment of the Intellectual Property or change the Stations’ call signs;

     (ix) make a Tax election, settle any material controversy with any taxing authority or change accounting methods or procedures if the election, settlement or change pertains to the Purchased Assets;

     (x) except as required by law, recognize any labor organization as the collective bargaining representative of any group of employees of the Stations; or

     (xi) enter into any contract or agreement of the nature of such contracts and agreements as are described in Section 3.17(b)(i) through (xi).

     Section 5.5 Third Party Consents. The Equity Entities shall use their commercially reasonable efforts to obtain the consents of the other contracting parties to the transactions contemplated hereby to the extent required by the Station Agreements requiring such consent. The delivery of such consents with respect to the Station Agreements that are identified on Schedule 3.17(a) to be material to the operation of the Stations (“Material Station Agreements”) shall, pursuant to Section 8.6, be a condition to Buyer’s obligation to close. To the extent that transfer or assignment hereunder by the Equity Entities to Buyer of any Station Agreement or license is not permitted or is not permitted without the consent of another Person, this Agreement shall not be deemed to constitute an undertaking to assign the same if such consent is not given or if such an undertaking otherwise would constitute a breach thereof or cause a loss of benefits thereunder. If, other than with respect to the Material Station Agreements, any such third party consent, approval or waiver is not obtained before the Closing, for a period continuing until the earlier of the first anniversary of the Closing Date or such consent, approval or waiver is obtained, the parties shall use their commercially reasonable efforts in good faith to cooperate, and to cause each of their respective Affiliates to cooperate, in effecting any lawful arrangement to provide to Buyer the economic benefits of the Station Agreements for which third party consents, approvals, and waivers are being sought after Closing, and Buyer shall, to the extent Buyer is provided with the benefits thereunder, assume and discharge the obligations under the Station Agreements after the Closing Date.

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     Section 5.6 FCC Matters. The Equity Entities shall diligently prosecute all FCC applications relating to the Construction Permits. The Equity Entities shall, upon Buyer’s reasonable request and to the extent the Equity Entities determine is commercially reasonable, duly execute and authorize the filing with the FCC of such applications, pleadings, or other papers as Buyer may from time to time prepare in connection with plans, if any, that Buyer may develop to change the call sign or modify the facilities (including channel, class, equipment, antenna location and/or community of license) of the Stations (the “Additional Filings”). Buyer and the Equity Entities agree that the grant by the FCC of any Additional Filings shall not be made a condition precedent to Closing. The parties further agree that if Buyer requests any modification to be made to the facilities for KPOU-LP, Salem, Oregon, including but not limited to a relocation of the transmission facilities to the KATU tower site in Portland, Oregon, then Buyer shall be required to enter into a commercially reasonable lease with the Equity Entities for a term of ten years and a monthly lease payment not to exceed Five Hundred Dollars ($500) per month, which lease shall be in effect regardless of the ability of the parties to close under this Agreement. The Equity Entities shall cooperate with Buyer on such Additional Filings and shall interpose no objections to any Additional Filings, including any amendments thereto and appeals thereof. Buyer shall bear all costs and expenses of preparation, filing and prosecution of any Additional Filings and all costs and expenses relating to the construction, development and modification of such facilities in connection with such Additional Filings. The Equity Entities shall not make any filings with the FCC without the prior written approval of Buyer, other than filings to renew existing licenses and FCC regulatory fee filings and other filings required by the FCC. The Equity Entities will deliver to Buyer, promptly after filing, copies of any reports, applications or responses to the FCC or any communications from the FCC or any other party directed to the FCC related to the Stations which are filed or received between the date of this Agreement and the Closing Date. The Equity Entities shall not, directly or indirectly, engage in or willingly permit any activity that could adversely affect any of the Stations’ service areas or MVPD carriage or any of the FCC Licenses or Construction Permits, or that could result in a Material Adverse Effect. The Equity Entities shall use best efforts to cure promptly all operating problems, if any, that may permit, after notice from the FCC or any other governmental body, the revocation, termination, suspension, or adverse modification of any of the FCC Licenses or the imposition of any restriction or limitation upon the operation of any of the Stations. The Equity Entities shall vigorously oppose all applications, proposals, or proceedings, if any, that could adversely affect the service area or MVPD carriage of any of the Stations. The Equity Entities shall take all steps necessary to preserve each Station’s television allotments, authorizations, and operations, as applicable, including compliance with all FCC deadlines pertaining to such allotments, authorizations, or operations.

     Section 5.7 Public Announcement. None of the Equity Entities, Buyer or any of their Affiliates shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such party shall be so obligated by law (including any filing to be made with the FCC) or by the rules, regulations or policies of any national securities exchange or association, in which case the other party shall be advised and the parties shall use reasonable efforts to cause a mutually agreeable release or announcement to be issued.

     Section 5.8 Administrative Violations. If the Equity Entities receive any finding, order, complaint, citation or notice prior to the Closing Date which states that any aspect of the Stations’ operations violates any rule or regulation of the FCC or of any other Governmental Body (an “Administrative Violation”), the Equity Entities shall promptly notify Buyer of the Administrative Violation, shall remove or correct the Administrative Violation (provided, however, that the Equity Entities may dispute, in good faith, the findings of any Administrative Violation), and be responsible for the payment of all costs associated therewith, including any fines or back pay that may be assessed;

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provided, however, that nothing in this Section shall relieve the Equity Entities of their obligations with respect to the representations and warranties contained herein.

     Section 5.9 Adverse Developments. The Equity Entities shall promptly notify Buyer of any materially adverse developments that occur prior to Closing with respect to the Purchased Assets, or the operation of the Stations or the Business, or with respect to the Transfer Application, including, without limitation, any material interruption in the normal and usual operations of any of the Stations or any actual or threatened material reduction in MVPD carriage of any of the Stations; provided, however, that compliance with the disclosure requirements of this Section 5.9 shall not relieve the Equity Entities of any obligation with respect to any representation, warranty or covenant of the Equity Entities in this Agreement or waive any condition to Buyer’s obligations under this Agreement.

     Section 5.10 Additional Covenant. The Equity Entities and Buyer shall use all commercially reasonable efforts to cause the consummation of the transactions contemplated by this Agreement. The Equity Entities and Buyer shall not take any action that is inconsistent with their obligations under this Agreement in any material respect or that could reasonably be expected to materially hinder or materially delay the consummation of the transactions contemplated by this Agreement. Buyer shall not acquire any assets that would result in ownership interests that would become attributable to Buyer and would require Buyer to obtain a waiver of the FCC rules to be granted prior to Closing.

     Section 5.11 No Solicitation Covenant. The Equity Entities shall not, and each shall use its best efforts to cause its Affiliates, representatives and agents (including, without limitation, investment bankers, attorneys and accountants) not to, directly or indirectly, through any officer, director, member, partner, agent or otherwise, enter into, solicit, initiate, conduct or continue any discussions or negotiations with, or encourage or respond to any inquiries or proposals or offers by, or provide any information to, or otherwise cooperate in any other way with, any corporation, partnership, person or other entity or group, other than the Buyer and its representatives and agents, concerning (i) any sale of all or any portion of the Purchased Assets including without limitation the Business and the Stations, (ii) any merger, acquisition, consolidation, recapitalization, liquidation, dissolution or similar transaction involving the Purchased Assets, the Business or the Stations to a party other than Buyer, or (iii) any transaction that would have an effect similar to the transactions described in (i) or (ii) (each such transaction being referred to herein as a “Proposed Acquisition Transaction”); provided that communication solely of the negative covenant in this Section 5.11 shall not be a violation hereof. The Equity Entities hereby represent that they are not engaged in discussions or negotiations with any party other than Buyer with respect to any Proposed Acquisition Transaction. Notwithstanding the foregoing, the Equity Entities’ discharge of their obligations under existing agreements with Univision Network Limited Partnership and Belo Broadcasting Company, complete copies of which have been provided to Buyer, shall not be a violation hereof.

     Section 5.12 Estoppel Certificates. The Equity Entities shall use commercially reasonable efforts to obtain executed versions of estoppel certificates from the landlords under the Real Property Leases in a form reasonably acceptable to Buyer.

     Section 5.13 Trade Agreements. From the date of the Agreement through the Closing, the Equity Entities shall not modify or amend any existing Trade Agreements or enter into any new Trade Agreements (other than in the ordinary course of the Business or Trade Agreements that provide for termination upon thirty (30) days notice without financial penalty) without the prior written consent of the Buyer which shall not be unreasonably withheld or delayed.

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ARTICLE 6.
ADDITIONAL AGREEMENTS

     Section 6.1 Taxes; Sales, Use and Transfer Taxes.

     (a) The Equity Entities shall pay after the Closing when due all Taxes for taxable periods ending on or prior to the Closing Date and for Pre-Closing Straddle Periods that have given rise to, or will give rise to an Encumbrance on the Purchased Assets in the hands of Buyer after the Closing Date. Notwithstanding the foregoing, no payments shall be required to be made for Taxes pursuant to the preceding sentence to the extent such Taxes are to be prorated pursuant to Section 2.11 of this Agreement. For purposes of this Agreement, in the case of Taxes that are payable with respect to a Straddle Period, the portion of such Tax allocable to the Pre-Closing Straddle Period shall (a) in the case of any Taxes based on the value of property, such as property or ad valorem Tax, be deemed to be the amount of such Tax for the entire period multiplied by a fraction, the numerator of which is the number of days in the Pre-Closing Straddle Period and the denominator of which is the number of days in the Straddle Period and (b) in the case of any other Tax, such as income, sales or gross receipts, be deemed to equal the amount that would be payable if the taxable year ended as of the end of the Closing Date.

     (b) Subject to the other provisions of this Section 6.1, Buyer shall notify the Equity Entities of any Tax obligation to be paid pursuant to Section 6.1(a) within a reasonable time prior to the date such payment is due and the Equity Entities shall wire transfer funds to Buyer for value no later than two (2) days before such payments are due.

     (c) To the extent that the amount of any adjustment made to the Purchase Price in favor of Buyer pursuant to Section 2.11 in respect of any Tax exceeds the amount actually payable with respect to the period covered by such calculation, Buyer shall promptly reimburse the Equity Entities for the full amount of such excess.

     (d) Buyer and the Equity Entities shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of any Tax Return related to the Stations or the Purchased Assets and any audit, litigation or other proceeding with respect to Taxes that relates to the Stations or the Purchased Assets. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to the preparation of any Tax Return, audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

     (e) Any sales, use or other transfer Taxes payable by reason of transfer and conveyance of the Business, the Stations or the Purchased Assets hereunder and any documentary stamp or transfer Taxes payable by reason of the real estate or interests therein included in the Purchased Assets shall be paid by the Equity Entities. Except as otherwise provided in Section 5.3, all fees relating to any filing with any Governmental Body required for transfer and conveyance of the Business, the Stations or the Purchased Assets hereunder shall be paid by the Equity Entities.

     Section 6.2 Employees; Employee Benefit Plans.

     (a) Buyer shall have no obligation to hire any of Seller’s employees and shall have no liabilities of any kind in connection with any such employees arising from their employment by the Equity Entities.

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     (b) Buyer shall not be obligated to provide, nor shall assume any obligation or liability relating to COBRA Coverage for an employee of the Equity Entities or the Stations or any beneficiary who incurs a qualifying event in connection with the transactions contemplated by this Agreement.

     (c) The Equity Entities shall be solely responsible for the Employee Plans or workers compensation arrangements and all obligations and liabilities thereunder and any claims arising from employment, termination of employment or application of employment, with the Equity Entities. Buyer shall not assume any such obligations, liabilities or claims. The Equity Entities shall be solely responsible for all obligations and liabilities associated with any employees of the Equity Entities. The Equity Entities shall be responsible for, shall indemnify Buyer for and shall hold harmless Buyer from and against any adverse consequences that Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by, any actions taken by the Equity Entities or the Stations or any ERISA Affiliate with respect to an Employee Plan.

     (d) The Equity Entities shall be responsible for all liabilities or obligations under the Worker Adjustment and Retraining Notification Act and any state or local law similar to such Act, and any similar obligations arising by contract or regulation resulting from their actions contemplated by this Agreement.

     (e) The Equity Entities will remain responsible for (i) all benefits payable to their employees who, as of the close of business on the day immediately preceding the Closing Date, were determined to be disabled in accordance with the applicable provisions of the health, accident, sickness, salary continuation, or short-term or long-term disability benefit plans or programs of the Equity Entities, and (ii) all benefits payable to their employees, who as of the close of business on the business day immediately preceding the Closing Date, were receiving short-term disability benefits in accordance with the applicable provisions of the short term disability benefit plans or programs of the Equity Entities; and (iii) all benefits payable to employees of the Equity Entities who, as of the close of business on the business day immediately preceding the Closing Date, were on any type of leave other than vacation leave. For purposes of this Agreement: (i) a claim for health benefits (including, without limitation, claims for medical, prescription drug and dental expenses) will be deemed to have been incurred on the date on which the related medical service or material was rendered to or received by the employee claiming such benefit, (ii) a claim for sickness or disability benefits based on an injury or illness occurring on or prior to the Closing Date will be deemed to have been incurred prior to the Closing Date, and (iii) in the case of any claim for benefits other than health benefits and sickness and disability benefits (e.g., life insurance benefits), a claim will be deemed to have been incurred upon the occurrence of the event giving rise to such claims. Notwithstanding the foregoing, such benefit responsibility shall only extend to the date when the disability condition in effect as of the Closing Date terminates. Nothing in this paragraph shall be construed to impose upon Buyer any liabilities that are Excluded Liabilities.

     (f) The Equity Entities shall be responsible for, and shall indemnify and hold Buyer harmless for, all claims, whether known or unknown, asserted or filed by employees, former employees or retired employees of the Equity Entities or the Stations with respect to events occurring or circumstances arising prior to Closing.

     Section 6.3 Control of Operations Prior to Closing Date. Notwithstanding anything contained herein to the contrary, no Closing shall be consummated prior to the grant by the FCC of the FCC Consent applicable to such Closing. The Equity Entities and Buyer acknowledge and agree that at all times commencing on the date hereof and ending on the Closing Date, neither Buyer nor any of its employees, agents or representatives, directly or indirectly, shall, or have any right to, control, direct or otherwise supervise, or attempt to control, direct or

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otherwise supervise any of the management or operations of the Stations, it being understood that the operation, management, control and supervision of all programs, equipment, operations and other activities of the Stations shall be the sole responsibility, and at all times prior to the Closing Date remain within the complete control and discretion, of the Equity Entities, subject to the terms of Section 5.4 of this Agreement.

     Section 6.4 Covenant Not to Compete.

     (a) For two years after the Closing Date, each Equity Entity and its Affiliates (each a “Covenantor”) shall not directly or indirectly (i) engage in any business or activity (whether by ownership, control, management, operation or financing of such business or activity) in a Station’s Nielson designated market area that would, directly or indirectly, compete with such Station, or (ii) for itself or on behalf of any other Person, hire or solicit any employee of Buyer or any of its Affiliates to leave the employment of Buyer or any of its Affiliates; provided, however, that this Section 6.4 shall not prohibit any Covenantor from making a general, public solicitation or a general industry-specific solicitation for employment; provided further, that the Equity Entities may build out permits that have been applied for (by either Equity Entities or Equity) and are pending as of the date of this Agreement, that are not yet granted by the FCC (“Build-out Permits”) and are located in the Stations’ Nielsen designated market area so long as such Build-out Permits do not relate to any Spanish-language programming or programming from the ABC, CBS, NBC, Fox, UPN, or WB networks. During the two year period defined in this paragraph, and upon receiving an offer for any of the Build-out Permits from a third party that the Equity Entities are willing to accept, Equity Entities will give Buyer a right of first refusal to purchase any of the Build-out Permits. If Buyer declines to exercise such right of first refusal, then the Equity Entities may transfer such Build-out Permits to such third party only if such third party agrees in writing to be bound by this Section 6.4 to the same extent as any Covenantor.

     (b) From and after the Closing, no Covenantor will disclose to any Person that is in competition in any respect, directly or indirectly, with the Stations, any proprietary information of the Stations (including information with respect to advertisers or financial affairs of the Stations) or any other confidential matter, obtained or developed by any of them prior to the Closing with respect to any aspect of the Stations’ business; provided, however, that any information related to the centralcasting technology is proprietary to Equity and may be used or disseminated however Equity wishes.

     (c) Each Covenantor acknowledges and agrees that if such Covenantor breaches any provision of this Section 6.4, any remedy at law would be inadequate and that Buyer, in addition to seeking monetary damages in connection with any such breach, shall be entitled to specific performance, and injunctive and other equitable relief, to prevent or restrain a breach of this Section 6.4 or to enforce the provisions hereof. The parties to this Agreement intend that the provisions of this Section 6.4 be enforced to the fullest extent permissible under the laws applied in each jurisdiction in which enforcement is sought. If any provision of this Section 6.4, or any part hereof, shall be held by a court of competent jurisdiction to be invalid or unenforceable, this Section 6.4 shall be amended to revise the scope of such provision to make it enforceable to the fullest extent permissible or, if necessary, to delete such provision or such part, such revision or deletion to apply only with respect to the operation of such provision in the jurisdiction of such court.

     (d) The parties acknowledge and agree that the restrictions contained in Section 6.4 are a reasonable and necessary protection of the immediate interests of Buyer, and any violation of these restrictions would cause substantial injury to Buyer, and Buyer would not have entered into this Agreement without receiving the additional consideration offered by each Covenantor binding itself to these restrictions.

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     Section 6.5 Termination of Certain Arrangements. Except as otherwise may be agreed by the parties in this Agreement or otherwise (including the post-closing arrangements contemplated by Schedule 3.26), Buyer and the Equity Entities acknowledge and agree that any and all services provided by the Equity Entities or any of their Affiliates to the Stations and any other arrangements between the Equity Entities or their Affiliates and the Stations shall automatically be terminated effective as of the Closing without any additional actions by the parties, and that the Equity Entities and their Affiliates, on the one hand, and the Stations, on the other, shall have no further obligations or liabilities to each other from and after the Closing.

     Section 6.6 Public Filings. The Equity Entities acknowledge that Buyer may be obligated to use the pre-Closing financial statements of the Equity Entities and other information in connection with filings under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Public Filings”), to be issued or filed by Buyer. For a period of three (3) years from the Closing Date, the Equity Entities shall cooperate in a commercially reasonable manner with Buyer so that Buyer can obtain information sufficient for Buyer to prepare such Public Filings, in each case the out-of-pocket costs for which shall be borne solely by Buyer. The foregoing cooperation of the Equity Entities shall include (i) with respect to the period of time that the Station, the Purchased Assets and the Business was owned or controlled by an Equity Entity, compiling the requisite financial information, and (ii) granting Buyer and its accountants full and complete access to the books and records of the Equity Entities and to any personnel knowledgeable about such books and records (including the accountants of the Equity Entities), in each case, to the extent reasonably requested by Buyer and as pertaining to Stations. With respect to matters described in clause (i), for periods prior to the time the Station was owned or controlled by the Equity Entities, the Equity Entities agree to provide all relevant financial information in their possession with respect to such periods, to contact the former owners of the Station on behalf of Buyer and to assist Buyer in arranging access to financial information of such former owners.

     Section 6.7 Bulk Sales Act. The Equity Entities agree to jointly and severally indemnify, defend, and hold Buyer harmless against any claims, liabilities, costs, or expenses, including reasonable attorneys’ fees, that Buyer may incur as a result of the failure to comply with the bulk sales provisions of the Uniform Commercial Code or similar laws with respect to the transactions contemplated hereby.

     Section 6.8 Section 1031 Exchange. Buyer may elect to qualify the transactions contemplated by this Agreement under Section 1031 of the Code (the “1031 Exchange”). In such event, the Equity Entities will cooperate with Buyer, in a commercially reasonable manner, to the extent necessary to qualify for the 1031 Exchange. To that end, Buyer may, without the consent of any Equity Entity and in furtherance of the 1031 Exchange, assign this Agreement and convey the Purchased Assets to a Qualified Intermediary under Section 1031 of the Code and Treasury Regulations thereunder or an Exchange Accommodation Titleholder under Revenue Procedure 2000-37, at or prior to Closing, and the Equity Entities shall execute all documents, agreements or instruments reasonably requested by Buyer to complete such exchange. The Equity Entities shall not bear any cost, expense or liability in connection with the 1031 Exchange, and Buyer shall indemnify and hold the Equity Entities harmless from any such cost, expense, or liability. No assignment to a Qualified Intermediary or an Exchange Accommodation Titleholder shall deprive an Equity Entity of its rights or benefits, or relieve Buyer of any obligations or liabilities, under this Agreement, and nothing in this Agreement shall be construed as a representation or warranty of any party to any other party as to the tax characterization of any transaction. Nothing in this Section 6.8 shall be construed to permit Closing to be delayed for more than two (2) business days to accommodate documentation and implementation of the 1031 Transaction.

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ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF
THE EQUITY ENTITIES

     The obligations of the Equity Entities under this Agreement to consummate the Closing shall, at the option of the Equity Entities, be subject to the satisfaction, on or prior to the Closing Date, of the following conditions:

     Section 7.1 No Misrepresentation or Breach of Covenants and Warranties

     (a) There shall have been no material breach by Buyer in the performance of any of its respective covenants and agreements contained herein to be performed prior to the Closing that remains uncured as of the Closing.

     (b) Each of the representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects (without regard to any materiality limitation contained in any representation or warranty) on the Closing Date as though made on the Closing Date (except to the extent that they expressly speak as of a specific date or time other than the Closing Date, in which case they need only have been true and correct in all material respects as of such specified date or time).

     (c) Buyer shall have delivered to the Equity Entities certificates, dated as of the Closing Date and signed on behalf of Buyer by its President or any Vice President, certifying that the conditions described in subsections (a) and (b) above have been satisfied.

     Section 7.2 No Restraint or Litigation

     (a) There shall not be in effect any preliminary or permanent injunction or other order, decree or ruling by a court of competent jurisdiction or by a Governmental Body, and no statute, rule, regulation or executive order shall have been promulgated or enacted by a Governmental Body, and there shall not be in effect any temporary restraining order of a court of competent jurisdiction, which, in any case, restrains or prohibits the transactions contemplated hereby.

     (b) There shall not be in existence any suit, action, proceeding or investigation instigated by a Governmental Body before any court or governmental agency or body to prohibit the transactions contemplated by this Agreement; provided, however, that this condition may not be invoked by the Equity Entities if any such action, suit, or proceeding was solicited or encouraged by, or instituted as a result of any act or omission of, the Equity Entities in breach of this Agreement.

     Section 7.3 FCC Consent. The FCC Consent shall have been granted without any condition or qualification that is materially adverse to the Equity Entities, except those that are customary in the assignment of television broadcast licenses or construction permits; provided, however, that in a Bifurcated Closing, this condition shall be satisfied for purposes of the Oregon Closing if such FCC Consent has been granted with respect to the Oregon Stations, regardless of whether such consent has been granted with respect to the Idaho Stations.

     Section 7.4 Payment. Buyer shall have delivered the applicable Purchase Price to the Equity Entities in accordance with Section 2.7.

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     Section 7.5 Closing Documents. Buyer shall have delivered to the Equity Entities all of the closing documents specified in Section 2.8(b), all of which documents shall be dated as of the Closing Date, duly executed, and in a form customary in transactions of this type and reasonably acceptable to the Equity Entities.

     Section 7.6 Affiliation. Sellers and their affiliates shall have been fully released from their obligations under the Stations’ Univision or Telefutura Affiliation Agreements on and after the Closing Date, by virtue of an assumption of those agreements by Buyer or the granting of a written release by Univision.

     Notwithstanding the failure of any one or more of the foregoing conditions, to the extent permitted by law, the Equity Entities may proceed with the Closing without satisfaction, in whole or in part, of any one or more of such conditions and without written waiver; provided, that Closing shall be deemed a waiver of only such conditions; and provided, further, that the Equity Entities shall not be required to close on the Idaho Stations unless the Oregon Closing occurs.

ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

     The obligations of Buyer under this Agreement to consummate the Closing shall, at the option of Buyer, be subject to the satisfaction on or prior to the Closing Date, of the following conditions:

     Section 8.1 No Misrepresentation or Breach of Covenants and Warranties.

     (a) There shall have been no breach by the Equity Entities in the performance of any of their covenants and agreements contained herein to be performed prior to the Closing that remains uncured as of the Closing except to the extent any such breach does not, individually or in the aggregate, have a Material Adverse Effect.

     (b) Each of the representations and warranties of the Equity Entities contained in this Agreement shall be true and correct in all respects (without regard to any materiality limitation contained in any representation or warranty) on the Closing Date as though made on the Closing Date (except to the extent that they expressly speak as of a specific date or time other than the Closing Date, in which case they need only have been true and correct in all respects as of such specified date or time) except to the extent any failure of such representation or warranty to be true and correct does not, individually or in the aggregate, have a Material Adverse Effect.

     (c) The Equity Entities shall have delivered to Buyer certificates, dated as of the Closing Date and signed on behalf of the Equity Entities by their President or any Vice President, certifying that the conditions described in subsections (a) and (b) above have been satisfied.

     Section 8.2 No Restraint or Litigation

     (a) There shall not be in effect any preliminary or permanent injunction or other order, decree or ruling by a court of competent jurisdiction or by a Governmental Body, and no statute, rule, regulation or executive order shall have been promulgated or enacted by a Governmental Body, and there shall not be in effect any temporary restraining order of a court of competent jurisdiction, which, in any case, restrains or prohibits the transactions contemplated hereby.

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     (b) There shall not be in existence any suit, action, proceeding or investigation instigated by a Governmental Body before any court or governmental agency or body to prohibit the transactions contemplated by this Agreement; provided, however, that this condition may not be invoked by Buyer if any such action, suit, or proceeding was solicited or encouraged by, or instituted as a result of any act or omission of, Buyer in breach of this Agreement.

     Section 8.3 FCC Consent. The FCC Consent shall have become a Final Order without any condition or qualification that is materially adverse to any of Buyer, Buyer’s permitted assignees, or the Stations; provided, however, that in a Bifurcated Closing, this condition shall be satisfied for purposes of the Oregon Closing if the FCC Consent with respect to the Oregon Stations has become such a Final Order, regardless of whether such a Final Order has been granted with respect to the Idaho Stations.

     Section 8.4 Affiliate Agreement. Buyer shall have assumed the Univision Network Limited Partnership and Telefutura affiliation agreements that are currently in effect with Sellers or entered into new affiliation agreements with Univision and/or Telefutura.

     Section 8.5 Closing Documents. The Equity Entities shall have delivered to Buyer all of the closing documents specified in Section 2.8(a), all of which documents shall be dated as of the Closing Date, duly executed, and in a form customary in transactions of this type and reasonably acceptable to Buyer.

     Section 8.6 Third Party Consents. The Equity Entities shall have obtained all consents required under the Material Station Agreements in connection with the consummation of the Transaction (a “Required Consent”), such that after the Closing the Buyer will continue to enjoy all of their rights and privileges under the Material Station Agreements, subject only to the same obligations as are binding thereunder, on terms and conditions that are no less favorable in any material respect than those contained in such Material Station Agreements on the date of this Agreement (as it may be modified prior to the Closing in accordance with the provisions of this Agreement).

     Section 8.7 Broadcast Transmissions and MVPD Carriage. None of the broadcast transmissions of any of the Stations shall have been materially impaired for more than one hundred twenty (120) hours in the aggregate since the date hereof, and no actual or threatened material reduction in MVPD carriage of any of the Station shall have occurred since the date hereof.

     Notwithstanding the failure of any one or more of the foregoing conditions, to the extent permitted by law, Buyer may proceed with the Closing without satisfaction, in whole or in part, of any one or more of such conditions and without written waiver; provided, that Closing shall be deemed a waiver of any such conditions; and provided, further, that the Equity Entities shall not be required to close on the Idaho Stations unless the Oregon Closing occurs.

ARTICLE 9.
INDEMNIFICATION

     Section 9.1 Indemnification by Equity Entities.

     (a) The Equity Entities agree jointly and severally to indemnify and hold harmless Buyer from and against any and all Losses and Expenses incurred by Buyer in connection with or arising from:

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     (i) any breach by the Equity Entities of, or any other failure of the Equity Entities to perform, any of their covenants, agreements or obligations in this Agreement or in any Equity Ancillary Agreement;

     (ii) any breach of any warranty or the inaccuracy of any representation of the Equity Entities contained in this Agreement or any certificate delivered by or on behalf of the Equity Entities pursuant hereto;

     (iii) any Encumbrances on the Purchased Assets except for Permitted Encumbrances;

     (iv) any Administrative Violation or alleged Administrative Violation of the Equity Entities occurring prior to the Closing Date;

     (v) the litigation described on Schedule 3.19;

     (vi) the Excluded Liabilities; and

     (vii) any and all obligations of the Equity Entities to, or claims for payment of fees or commissions by, any of its employees, independent contractors, agents or Affiliates that arise in connection with the transactions contemplated by this Agreement.

     (b) Equity, by its execution of this Agreement, hereby absolutely and unconditionally guarantees the full performance by the Equity Entities of their respective obligations under Section 9.1(a).

     Section 9.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless the Equity Entities from and against any and all Losses or Expenses incurred by the Equity Entities in connection with or arising from:

     (i) any breach by Buyer, or any other failure of Buyer to perform, any of its covenants, agreements or obligations in this Agreement or in any Buyer Ancillary Agreement;

     (ii) any breach of any warranty or the inaccuracy of any representation of Buyer contained in this Agreement or any certificate delivered by or on behalf of Buyer pursuant hereto; and

     (iii) the failure of Buyer to perform any of the Assumed Liabilities, Buyer’s (or any successor’s or assignee’s) operation of the Stations and conduct of the Business and/or the ownership and/or use of the Purchased Assets after the Closing.

     Section 9.3 Additional Indemnification Matters; Notice of Claims

     (a) The aggregate amount that (i) the Equity Entities shall be required to indemnify and hold harmless Buyer pursuant to Section 9.1(ii) and (ii) Buyer shall be required to indemnify and hold harmless the Equity Entities pursuant to Section 9.2(ii) shall not exceed the Purchase Price. The Equity Entities shall have no obligation to indemnify Buyer with respect to Section 9.1(ii) and Buyer shall have no obligation to indemnify the Equity Entities with respect to Section 9.2(ii) unless and until, in either case, the aggregate amount of Losses and Expenses arising in conjunction therewith exceeds

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$10,000, in which event the indemnifying party (the “Indemnitor”) shall be required to indemnify the other party (the “Indemnified Party”) for the full amount of any Losses and Expenses incurred by the Indemnified Party. In determining whether a party shall be obligated to indemnify the other party under this Article 9, each representation and warranty and each covenant contained in this Agreement with respect to which indemnity may be sought hereunder shall be read solely for purposes of determining whether a breach of such representation, warranty or covenant has occurred without regard to materiality qualifications (including Material Adverse Effect) that may be contained therein. The indemnity set forth herein is intended by the parties to cover all acts, suits, proceedings, claims, demands, assessments, adjustments, costs, and expenses with respect to any and all of the specific matters in this indemnity set forth.

     (b) An Indemnified Party seeking indemnification hereunder shall give promptly to the Indemnitor a written notice (a “Claim Notice”) describing in reasonable detail the facts giving rise to the claim for indemnification hereunder and shall include in such Claim Notice (if then known or estimable) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based. The failure of any Indemnified Party to give the Claim Notice promptly as required by this Section 9.3 shall not affect such Indemnified Party’s rights under this Article 9 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

     (c) After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Article 9 shall be determined: (i) by the written agreement between the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any court of competent jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor shall agree in writing. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. The Indemnified Party shall have the burden of proof in establishing the amount of Losses and Expenses suffered by it.

     Section 9.4 Third Person Claims

     (a) In order for a party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any third Person against the Indemnified Party, such Indemnified Party must notify the Indemnitor in writing, and in reasonable detail, of the third Person claim promptly after receipt by such Indemnified Party of written notice of the third Person claim. Thereafter, the Indemnified Party shall promptly deliver to the Indemnitor copies of all notices and documents (including court papers) received by the Indemnified Party relating to the third Person claim. Notwithstanding the foregoing, should a party be physically served with a complaint with regard to a third Person claim, the Indemnified Party must notify the Indemnitor with a copy of the complaint promptly after receipt thereof and shall deliver to the Indemnitor promptly after the receipt of such complaint copies of notices and documents (including court papers) physically served upon the Indemnified Party relating to the third Person claim. The failure of any Indemnified Party to give the Claim Notice promptly or to deliver copies of notices and documents as required by this Section 9.4 shall not affect such Indemnified Party’s rights under this Article 9 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

     (b) In the event of the initiation of any legal proceeding against the Indemnified Party by a third Person, the Indemnitor shall have the sole and absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice and to control, defend against,

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negotiate, settle or otherwise deal with any proceeding, claim, or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that, the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense, and that if the interests of the Indemnified Party and Indemnitor are sufficiently divergent that representation by common counsel is inappropriate, the cost of the Indemnified Party’s separate counsel shall be included in the Indemnified Party’s claim for Losses and Expenses. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnified Party defends against or otherwise deals with any such proceeding, claim or demand, the Indemnified Party may retain counsel, reasonably acceptable to the Indemnitor, at the expense of the Indemnitor, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnified Party may settle any such proceeding which settlement does not include a release in favor of the Indemnified Party or which obligates the other party to pay money, to perform obligations or to admit liability without the consent of the other party, such consent not to be unreasonably withheld. After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall arrive at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor shall pay all of the sums so owing to the Indemnified Party by wire transfer, certified or bank cashier’s check within thirty (30) days after the date of such notice.

     Section 9.5 Treatment of Indemnity Payments. All payments under this Article 9 shall be treated for income tax purposes as adjustments to the Purchase Price.

     Section 9.6 Indemnity Escrow Agreement. In order to secure the Equity Entities’ indemnification obligations under this Article 9, the Indemnity Deposit will, in accordance with Section 2.7(a), be deposited to the Indemnity Escrow Account which shall be held and released in accordance with the Indemnity Escrow Agreement attached to this Agreement as Exhibit A. The initial amount of the Indemnity Deposit is Seven Hundred Fifty Thousand Dollars ($750,000). On the first business day eight months after the Closing Date, Buyer and the Equity Entities shall instruct the Indemnity Escrow Agent to release to the Equity Entities the balance of the Indemnity Deposit that exceeds the sum of (i) $500,000, and (ii) any amounts of any pending indemnification claim by Buyer. On the first Business Day twelve months after the Closing Date, Buyer and the Equity Entities shall instruct the Indemnity Escrow Agent to release to the Equity Entities the balance of the Indemnity Deposit that exceeds the amount of any pending indemnification claim by Buyer, plus an amount reasonably estimated to cover expenses, not to exceed ten percent (10%) of the amount of such pending claims.

ARTICLE 10.
TERMINATION AND REMEDIES

     Section 10.1 Termination

     (a) Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Closing:

     (i) by the mutual written consent of the Equity Entities and Buyer;

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     (ii) provided that the Equity Entities are not then in material breach of this Agreement, by written notice from the Equity Entities in the event of a material breach by Buyer of any of its covenants, agreements, representations or warranties contained in this Agreement or if any of the representations or warranties of Buyer contained in this Agreement shall have been inaccurate in any material respect when made, and the failure of Buyer to cure such breach within thirty (30) days after receipt of written notice from the Equity Entities requesting such breach to be cured, and provided that the failure to cure such breach would result in the conditions contained in Section 7.1 not being satisfied;

     (iii) provided that Buyer is not then in material breach of this Agreement, by written notice from Buyer in the event of a material breach by the Equity Entities of any of their respective covenants, agreements, representations or warranties contained in this Agreement or if any of the representations or warranties of the Equity Entities contained in this Agreement shall have been inaccurate in any material respect when made, and the failure of the Equity Entities, as the case may be, to cure such breach within thirty (30) days after receipt of written notice from Buyer requesting such breach to be cured, and provided that the failure to cure such breach would result in the conditions contained in Section 8.1 not being satisfied;

     (iv) by written notice from the Equity Entities or Buyer if any court of competent jurisdiction in the United States or other United States Governmental Body shall have issued a final and non-appealable order, decree or ruling permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

     (v) by written notice from Buyer, pursuant to the provisions of Section 11.12(a) hereof;

     (vi) by written notice from Buyer, pursuant to the provisions of Section 11.12(b) hereof;

     (vii) by written notice from Buyer if, for any reason, the Transfer Application is designated for hearing by the FCC;

     (viii) by written notice from the Equity Entities or Buyer, (A) with respect to all the Stations, if the Closing on the Oregon Stations shall not have occurred by September 30, 2006, and (B) with respect to the Idaho Stations, if the Idaho Closing shall not have occurred on or before December 15, 2006 (or such later date or dates as may be mutually agreed to by the Equity Entities and Buyer); provided, however, that the right to terminate this Agreement under this Section 10.1(a)(viii) shall not be available (A) to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or resulted in, the failure of the Closing to occur prior to such date, or (B) to the Equity Entities in the event that Buyer has exercised its rights to delay the Closing pursuant to Section 11.12.

     (b) In the event that this Agreement is terminated pursuant to this Article 10, all further obligations of the parties under this Agreement (other than the provisions of Sections 2.5 (Earnest Money), this Article 10, and Sections 11.2 (Confidential Nature of Information) and 11.9 (Expenses)) shall be terminated without further liability of any party to the other, except that notwithstanding the

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foregoing each party shall remain liable to the other party hereto for any breach of its obligations under this Agreement prior to such termination.

     Section 10.2 Equity Entities’ Remedies. If this Agreement is terminated by the Equity Entities and Section 2.5(c) applies, then Buyer shall pay to the Equity Entities One Million Dollars ($1,000,000) (the “Liquidated Damages Amount”), which shall be liquidated damages and not a penalty and shall constitute full payment and the exclusive remedy for any damages suffered by the Equity Entities for Buyer’s breach under this Agreement. The Equity Entities shall be entitled to collect the Liquidated Damages Amount by receiving a disbursement of the Deposit held by the Deposit Escrow Agent pursuant to the Deposit Escrow Agreement. The Equity Entities and Buyer agree in advance that actual damages would be difficult to ascertain and that the Liquidated Damages Amount is a fair and equitable amount to reimburse the Equity Entities for damages sustained due to Buyer’s breach of this Agreement and is not a penalty.

     Section 10.3 Buyer’s Remedies. The parties recognize that if, prior to Closing, the Equity Entities breach this Agreement and refuse to perform under the provisions of this Agreement, monetary damages alone would not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled, in addition to any other remedies that may be available, to obtain specific performance of the terms of this Agreement prior to Closing. If any action is brought by Buyer to enforce this Agreement, whether prior to or following the Closing, the Equity Entities shall waive the defense in any such action that there is an adequate remedy at law and interpose no opposition, legal or otherwise, as to the propriety of specific performance as a remedy hereunder, and the Equity Entities agree that Buyer shall have the right to seek specific performance without being required to prove actual damages, post bond, furnish other security, or make an election of remedies. Following the Closing, Buyer shall be entitled, in addition to any other remedies that may be available, to seek specific performance of the terms of this Agreement to be performed after the Closing. In the event Buyer elects to terminate this Agreement as a result of Equity Entities’ default hereunder instead of seeking specific performance, Buyer shall be entitled to recover Buyer’s damages.

ARTICLE 11.
GENERAL PROVISIONS

     Section 11.1 Survival of Representations, Warranties and Obligations. All representations, warranties, covenants and obligations contained in this Agreement shall survive the consummation of the transactions contemplated by this Agreement; provided, however, that, except as otherwise provided in Article 9 (Indemnification), the representations and warranties contained in Articles 3 and 4 of this Agreement shall terminate two (2) years after the Closing Date. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, (a) the representations and warranties contained in Sections 3.6 (Taxes), 3.21 (Employee Plans; ERISA), and 3.22 (Environmental Protection) shall survive for the full period of any applicable statute of limitations plus sixty (60) days, and (b) the representations and warranties contained in Sections 3.2 (Authority of the Equity Entities), 3.14 (Title to Purchased Assets) and 4.2 (Authority of Buyer) shall survive without limitation. Except as otherwise provided herein, no claim shall be made for the breach of any representation or warranty contained in Article 3 or 4 after the date on which such representations and warranties terminate as set forth in this Section 11.1.

     Section 11.2 Confidential Nature of Information. Each party agrees that it will treat in confidence all documents, materials and other information which it shall have obtained regarding the other party during the course of the negotiations leading to the consummation of the transactions contemplated hereby (whether obtained before or after the date of this Agreement), and the preparation of

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this Agreement and other related documents, and, in the event the transactions contemplated hereby are not consummated, each party will return to the other party all copies of nonpublic documents and materials that have been furnished in connection therewith and will not, thereafter, use any confidential material contained therein. Without limiting the right of any party to pursue all other legal and equitable rights available to it for violation of this Section 11.2 by any other party, it is agreed that other remedies cannot fully compensate the aggrieved party for such a violation of this Section 11.2 and that the aggrieved party shall be entitled to injunctive relief to prevent a violation or continuing violation hereof. Notwithstanding anything to the contrary set forth herein or in any other written or oral understanding or agreement to which the parties hereto are parties or by which they are bound, the parties acknowledge and agree that (i) any obligations of confidentiality contained herein and therein do not apply and have not applied from the commencement of discussions between the parties to the tax treatment and tax structure of the transactions contemplated hereby (and any related transactions or arrangements) (the “Transactions”), and (ii) each party (and each of its employees, representatives, or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, all within the meaning of Treasury Regulations Section 1.6011-4; provided, however, that each party recognizes that the privilege each has to maintain, in its sole discretion, the confidentiality of a communication relating to the Transactions, including a confidential communication with its attorney or a confidential communication with a federally authorized tax practitioner under Section 7525 of the Code, is not intended to be affected by the foregoing.

     Section 11.3 Governing Law. This Agreement and the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Oregon without reference to its choice of law rules.

     Section 11.4 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered when delivered personally or by messenger or 72 hours after having been sent by registered or certified mail or when delivered by private courier addressed as follows:

If to Equity or the Equity Entities, to:

Equity Broadcasting Corporation
1 Shackleford Drive
Suite 400
Little Rock, Arkansas 72211
Attention: Larry E. Morton and Lori Withrow

with a copy to:

Irwin, Campbell & Tannenwald, PC
1730 Rhode Island Avenue, NW
Suite 200
Washington, DC 20036
Attention: Peter Tannenwald

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If to Buyer, to:

Fisher Radio Regional Group, Inc.
100 Fourth Avenue North
Suite 510
Seattle, Washington
Attention: Robert C. Bateman

with a copy to:

Graham & Dunn, PC
Pier 70
2801 Alaskan Way, Suite 300
Seattle, Washington
Attn: Jack G. Strother

or to such other address as such party may indicate by a notice delivered to the other parties hereto.

     Section 11.5 Assignment; Successors and Assigns

     (a) The rights and obligations of any party under this Agreement shall not be assignable or delegable by such party hereto without the written consent of the other parties hereto. Notwithstanding the foregoing, Buyer may, without the consent of the Equity Entities, (i) assign its rights under this Agreement, in whole or in part, to any Affiliate of Buyer and (ii) make a collateral assignment of its rights under this Agreement for the benefit of its lenders; provided, however, that no assignment shall relieve Buyer of its obligations hereunder, and Buyer shall guarantee the performance of all such obligations by its assignee.

     (b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors, heirs and permitted assigns. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the parties and successors, heirs and permitted assigns by this Section 11.5 any right, remedy or claim under or by reason of this Agreement.

     Section 11.6 Entire Agreement; Amendments. This Agreement, the Exhibits and Schedules referred to herein and the other documents delivered pursuant hereto contain the entire understanding of the parties hereto with regard to the subject matter contained herein or therein, and supersede all prior agreements, understandings or intents between or among any of the parties hereto. The parties hereto, by mutual agreement in writing, may amend, modify and supplement this Agreement.

     Section 11.7 Interpretation. Article titles and headings to sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. As used in this Agreement, the word “including” is not limiting, and the word “or” is not exclusive.

     Section 11.8 Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed

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to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

     Section 11.9 Expenses. Except as otherwise expressly provided herein, the Equity Entities and Buyer will each pay all of its own respective costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel and accountants.

     Section 11.10 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein unless the deletion of such provision or provisions would result in a Material Adverse Effect so as to cause completion of the transactions contemplated hereby to be unreasonable or would reduce the Purchase Price.

     Section 11.11 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the parties and delivered to each of the parties.

     Section 11.12 Risk of Loss; Damage to Facilities.

     (a) The risk of loss or damage to the Purchased Assets shall be on the Equity Entities prior to the Closing and thereafter shall be on Buyer. If any material portion of the Purchased Assets is destroyed or damaged on or prior to the Closing (the “Damaged Assets”), the Equity Entities shall give written notice to Buyer as soon as practicable thereafter, but in any event within five (5) calendar days of discovery of such damage or destruction. Such written notice shall include a specification of the amount of insurance, if any, covering such Damaged Assets and the amount, if any, which the Equity Entities are otherwise entitled to receive as a consequence of such damage or destruction. Prior to the Closing, Buyer shall have the option, which shall be exercised by written notice to the Equity Entities within twenty (20) calendar days after receipt of the Equity Entities’ notice (or if there are not twenty (20) calendar days prior to the Closing Date, as soon as practicable prior to the Closing Date) of (a) accepting the Damaged Assets in their destroyed or damaged condition, in which event Buyer shall be entitled to the proceeds of any insurance or other proceeds payable with respect to the Damaged Assets, or the cash equivalent thereof, and to indemnification for any uninsured portion of such loss pursuant to Section 9.1, and the full Purchase Price shall be paid for the Purchased Assets including the Damaged Assets, (b) excluding the Damaged Assets from this Agreement, in which event the Purchase Price shall be reduced by the amount allocated the Damaged Assets as mutually agreed between the parties, (c) terminating this Agreement, or (d) requiring the Equity Entities to use their insurance proceeds to repair or replace the Damaged Assets; provided, however, that if such repair or replacement cannot be completed prior to the scheduled Closing Date, the Buyer may elect to postpone the Closing Date for such time as is necessary for the completion of such repair or replacement without regard to the date specified in Section 10.1(a)(viii). In the event that the Closing Date is postponed pursuant to this Section 11.12 beyond the date specified in Section 10.1(a)(viii), the parties shall amend the Transfer Application to request an extension of the date of Closing.

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     (b) The Equity Entities shall give prompt written notice to Buyer if a Specified Event occurs. If a Specified Event occurs, Buyer may, at its option, terminate this Agreement by providing written notice thereof to the Equity Entities not more than ten (10) days after receipt of the Equity Entities’ notice. If Buyer elects not to terminate this Agreement or fails to give written notice within such ten (10) day period, Buyer shall have no further right to terminate this Agreement in respect of such Specified Event, and the remaining provisions of this Agreement shall govern. A “Specified Event” means, (i) with respect to KPOU, the interruption of its broadcast transmission in the normal and usual manner for a period of (a) thirty six (36) or more consecutive hours if such interruption results in a loss of cable carriage of more than ten percent (10%), or (b) seventy two (72) or more consecutive hours, (ii) with respect to each of KPOU LP, KUNS LP and KUNP LP, the interruption of such Station’s broadcast transmission in the normal and usual manner for a period of one hundred sixty eight (168) or more consecutive hours, and (iii) for any of the Stations, broadcasting at a reduced power level, which reduction is reasonably likely to materially and adversely affect the operations and business of such Station.

     Section 11.13 No Third Party Beneficiaries. The Equity Entities and Buyer do not intend by the execution, delivery or performance of this Agreement to confer a benefit upon any Person not a party to this Agreement.

     Section 11.14 Attorneys’ Fees. If either party initiates any litigation against the other party involving this Agreement, the prevailing party in such action shall be entitled to receive reimbursement from the other party for all reasonable attorneys’ fees and other costs and expenses incurred by the prevailing party in respect of that litigation, including any appeal, and such reimbursement may be included in the judgment or final order issued in that proceeding.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have caused this ASSET PURCHASE AGREEMENT to be executed as of the day and year first above written.

FISHER RADIO REGIONAL GROUP, INC.
By:	/s/ Robert C. Bateman
	Name: Robert C. Bateman
	Title: Vice President, Finance
LA GRANDE BROADCASTING, INC.
By:	/s/ Lori Withrow
	Name: Lori Withrow Title: Secretary
EBC BOISE, INC.
By:	/s/ Lori Withrow
	Name: Lori Withrow Title: Secretary
EBC POCATELLO, INC.
By:	/s/ Lori Withrow
	Name: Lori Withrow Title: Secretary
For the limited purpose of its obligations under
Section 9.1(b):
EQUITY BROADCASTING CORPORATION
By:	/s/ Lori Withrow
	Name: Lori Withrow Title: Secretary

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EX-10.1

EXHIBIT 10.1

AMENDED AND RESTATED
FISHER COMMUNICATIONS, INC.
SUPPLEMENTAL PENSION PLAN

     THIS Plan is amended and restated as of the 31^st day of December, 2005, by FISHER COMMUNICATIONS, INC., a Washington corporation (the “Company”), for the benefit of a select group of management employees (the “Participants”) of the Company.

A. This Plan is an amended plan, in restated form, the original Plan being established as of the 29^th day of February, 1996, and restated on December 5, 2001, and again on February 12, 2003, and subsequently amended on December 1, 2004, and again on June 30, 2005.

B. The Participants in this Plan shall be as determined from time to time by the Board of Directors of the Company.

C. The ability and experience of the Participants are of such value to the Company that the Company wishes to more adequately compensate the Participants for their past and future services by providing special retirement and survivorship income benefits to them.

D. The funds accumulated in Company-sponsored qualified retirement plans may be inadequate in amount to provide the Participants with a retirement benefit commensurate with the anticipated value of their past and future services to the Company.

E. This Plan is intended to supersede any and all Supplementary Pension Agreements and all amendments thereto previously entered into between the Company and the Participants who were employed by the Company as of the effective date hereof.

F. Effective July 1, 2005, no further benefits shall accrue to Participants in the Plan. Benefits that become payable to Participants who are active employees of the Company on June 30, 2005, shall only take into account compensation earned prior to July 1, 2005, and all benefit calculations shall be based on information available and reasonable assumptions made as of June 30, 2005.

     NOW, THEREFORE, the Company hereby agrees as follows:

1. Plan Mergers.

     Effective December 31, 2005 (the “Merger Date”), the Fisher Broadcasting Company Supplemental Pension Plan, as amended (the “Broadcasting Plan”), the Fisher Properties, Inc. Supplemental Pension Plan, as amended (the “Properties Plan”), and the Fisher Mills, Inc. Supplemental Pension Plan, as amended (the “Mills Plan,” and together with the Broadcasting Plan and the Properties Plan, the “Affiliate Plans”), are merged with and into this Plan, and the liabilities of the sponsors of the Affiliate Plans for the payment of accrued benefits thereunder shall henceforth become liabilities of the Company and of this Plan. On and after the Merger Date, participants in the Affiliate Plans shall become Participants in this Plan.

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2. Retirement Benefits.

     (a) Entitlement/Payment. If a Participant is in the employ of the Company when the Participant attains sixty-five (65) years of age, then the Company shall thereafter pay to the Participant monthly retirement income as determined pursuant to paragraph (b) immediately below, commencing with a payment on the first day of the month coincident with or next following the Participant’s attainment of sixty-five (65) years of age (hereinafter referred to as the “Retirement Date”) and continuing with a like payment on the first day of each month thereafter throughout the Participant’s lifetime. If, while receiving said monthly retirement income, the Participant dies prior to the expiration of a period of one hundred twenty (120) months from and after his Retirement Date, then the Company shall thereafter pay said amount to the beneficiary designated in Paragraph 7 below, continuing until the expiration of said one hundred twenty (120) month period; provided, however, that if (i) the primary beneficiary designated in Paragraph 7 below is the Participant’s surviving spouse; (ii) the Participant was married to said spouse on the Participant’s Retirement Date, and (iii) said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall thereafter continue until the death of said surviving spouse.

     (b) Amount. A Participant’s monthly retirement income under this subparagraph (b) shall be equal to the Applicable Percentage of the Participant’s Average Compensation less the following amounts:

     (i) One-half of the Participant’s monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant’s Retirement Date. Notwithstanding any Plan term to the contrary, for a Participant who is an active employee on June 30, 2005, one-half of the monthly Primary Social Security amount shall be determined as of June 30, 2005, based on a reasonable projection of the Primary Social Security amount payable at the Retirement Date, and shall not change thereafter;

     (ii) The monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company. Such amount shall be determined as of the Participant’s Retirement Date, as if the Participant remained in the employ of the Company until that date; provided that in the case of a terminated plan, such amount shall be finally determined with regard to, and as of the date of, the final distribution to the Participant from the terminated plan. The amount of the reduction under this subparagraph (b)(ii) shall not include any benefit attributable to Participant contributions (including rollover contributions and direct transfers) and earnings thereon. Notwithstanding any Plan term to the contrary, for a Participant who is an active employee on June 30, 2005, the monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company, shall be determined as of June 30, 2005, based on a reasonable projection of the amount payable at the Participant’s Retirement Date, and shall not change thereafter; and

2

     (iii) The monthly amount payable to the Participant in the form of a single life annuity pursuant to any qualified profit sharing (including 401(k)) plan maintained by the Company. Such amount shall be determined as of the Participant’s Retirement Date, as if the Participant remained in the employ of the Company until that date. Further, the monthly amount payable as a single life annuity shall be determined by converting the Participant’s account balance to a single life annuity as of the Participant’s Retirement Date using the interest rate and mortality assumptions set forth in Paragraph 8(e) hereof. The amount of the reduction under this subparagraph (b)(iii) shall not consider any portion of the Participant’s account balance attributable to Participant contributions (including rollover contributions and direct transfers) and earnings thereon. In determining the amount of the reduction attributable to employer contributions and earnings thereon, the following assumptions shall be used:

(A)	Employer contributions shall equal actual employer contributions;
(B)	Historical earnings shall equal actual earnings on employer contributions; and
(C)	Hypothetical future earnings shall be projected at the average of the dividend (interest) rates of the Plan’s money market option determined as of December 31 of each of the prior three (3) years.

Notwithstanding any Plan term to the contrary, for a Participant who is an active employee on June 30, 2005, the monthly amount payable to the Participant in the form of a single life annuity pursuant to any qualified profit sharing (including 401(k)) plan maintained by the Company, shall be determined as of June 30, 2005, based on a reasonable projection of the amount payable at the Participant’s Retirement Date, and shall not change thereafter.

     (c) Average Compensation. A Participant’s Average Compensation shall be the average of the Participant’s Plan Compensation for the Averaging Period in the Participant’s Compensation History, which results in the highest Average Compensation. A Participant’s Compensation History is the Participant’s entire period of employment with the employer. The Averaging Period is 3 consecutive compensation periods (or the entire period of employment, if shorter). A compensation period is the 12-month period ending on the last day of the Plan Year. A Participant’s Compensation History does not include the 12-month compensation period in which the Participant terminates employment. Average Compensation shall not include long-term and short-term incentive compensation, bonuses, commissions and taxable and non-taxable fringe benefits. Plan Compensation shall not include any compensation for Plan Years that commence after June 30, 2005.

     (i) Total Compensation. All wages for federal income tax withholding purposes, as defined under Code § 3401(a) (for purposes of income tax withholding at the source), disregarding any rules limiting the remuneration included as wages based on the nature or location of the employment or the services performed. Total Compensation also includes all other payments to an employee in the course of the employer’s trade or

3

business, for which the employer must furnish the employee a written statement under Code §§ 604l, 6051 and 6052. As long as the instructions to the “wages, tips, other compensation” box of Form W-2 (or a corresponding box on a later released Form W-2), are consistent with the instructions for the 1991 Form W-2 (Box 10), the employer may treat the amount reported in the “wages, tips, other compensation” as satisfying this definition. Total Compensation does not include elective contributions.

     (ii) Plan Compensation. Plan Compensation means Total Compensation described in subparagraph (c)(i), but excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, bonuses, long-term and short-term incentive compensation, deferred compensation and welfare benefits, and including elective contributions. Plan Compensation applies to determine a Participant’s benefit formula and accrued benefit hereunder.

     (iii) Elective Contributions. Elective contributions are amounts excludable from the employee’s gross income under Code §§ 125 or 402 (e)(3), and contributed by the employer, at the employee’s election, to a Code § 401(k) arrangement or cafeteria plan.

     (iv) Plan Year. Plan year means the fiscal year of the Plan, a twelve (12) consecutive month period ending every June 30.

A Participant’s Plan Compensation for each of the three Plan Years ending prior to July 1, 1996, shall be equal to the Participant’s Plan Compensation for the Plan Year ended June 30, 1996.

     (d) Late Retirement. In the event that Participant continues in the employ of the company beyond the Participant’s Retirement Date such continued employment shall not be taken into account under this Plan inasmuch as the Participant’s monthly retirement income commences as of his Retirement Date.

     (e) Applicable Percentage. For purposes of Paragraph 2(b), the term “Applicable Percentage” shall mean seventy percent (70%), except as provided below:

     (i) Former Properties Plan Participants. For Participants who, immediately prior to the Merger Date, participated in the Properties Plan, the Applicable Percentage shall be sixty percent (60%).

     (ii) Former Mills Plan Participants. For Participants who, immediately prior to the Merger Date, participated in the Mills Plan, the Applicable Percentage shall be fifty percent (50%).

3. Termination Benefit.

     If a Participant’s employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, such Participant’s accrued benefit shall be determined as follows:

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Total actual years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65)   Total possible years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65) x


Projected Monthly Retirement Benefit as contemplated by Paragraph 2 of this Plan =


Participant’s Accrued Benefit (payable monthly commencing at age sixty-five (65)

     For purposes of determining a Participant’s accrued benefit, the term “years of service” shall include all calendar years in which the Participant completes at least 1,000 hours of service and the term “hours of service” shall have the same meaning as it does under the qualified pension plan of the Company. Furthermore, “total possible years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65)” shall be determined by computing the maximum number of years of service that the Participant could possibly complete with the Company between the date the Participant first becomes a Participant in the Plan and the date on which the Participant attains age sixty-five (65). The Participant’s accrued benefit under this Paragraph 3 shall never exceed the Participant’s retirement benefit as contemplated by Paragraph 2 of this Plan. Notwithstanding the foregoing, if the employment of a Participant who is an active employee on June 30, 2005, is subsequently terminated, other than voluntarily, prior to attaining age 65, such Participant’s accrued benefit shall be determined taking into account in the numerator of the service fraction only “actual years of service” with the Company prior to July 1, 2005; however, “total possible years of service” shall not be so limited in the denominator.

     If a Participant’s employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, the Participant’s accrued benefit shall normally be paid in the form of a monthly annuity commencing at age sixty-five (65), but may, in the sole discretion of the Company, be paid to the Participant as a reduced annuity commencing prior to age sixty-five (65) or as a lump sum. Any annuity shall be payable under the same terms and conditions as contemplated by Paragraph 2 of this Plan; provided, however, that payments shall only continue until the death of the Participant’s surviving spouse if: (i) the beneficiary designated in Paragraph 7 below is the Participant’s surviving spouse, and (ii) the Participant was married to said spouse on the Participant’s termination date. Any present value calculations required in connection with the payment of a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83), adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest determined pursuant to Code § 417(e)(3)(A)(ii)(II) for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater.

     If the Participant dies prior to receiving the entirety of the benefits contemplated by this

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Paragraph 3, such benefits shall thereafter be paid to the beneficiary designated in Paragraph 7 below.

4. Death Benefit.

     (a) If a Participant dies prior to his Retirement Date while in the employ of the Company, then the Company shall thereafter pay to the beneficiary designated in Paragraph 7 below a monthly death benefit amount as determined pursuant to subparagraph (b) below, commencing with a payment on the first day of the month next following the Participant’s death and continuing with a like payment on the first day of each month thereafter for a total of one hundred twenty (120) months; provided, however, that if the primary beneficiary designated in Paragraph 7 below is the Participant’s surviving spouse, and said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall continue until the death of said surviving spouse.

     (b) A Participant’s monthly death benefit amount under this paragraph (b) shall be equal to the greater of:

          (i) The Participant’s Accrued Benefit under Paragraph 3 of this Plan determined as if the Participant’s employment had been involuntarily terminated on the day preceding the Participant’s death, or

          (ii) Thirty-five percent (35%) of the Participant’s Average Compensation less the following amounts:

(A) One-half of the Participant’s monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant’s Retirement Date annuitized over the payment period set forth in Paragraph 4(a);

(B) The greater of the present value of the monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company or the present value of the death benefit under any such plan, annuitized over the payment period set forth in Paragraph 4(a). Such amount shall be determined as of the Participant’s date of death; provided that in the case of a terminated plan, such amount shall be finally determined with regard to, and as of the date of, the final distribution to the Participant from the terminated plan. The amount of the reduction under this subparagraph (b)(ii)(B) shall not include any benefit attributable to Participant contributions (including rollover contributions and direct transfers) and earnings thereon;

(C) The Participant’s account balance in any qualified profit sharing (including 401(k)) plan maintained by the Company annuitized over the payment period set forth in Paragraph 4(a). Such amount shall be determined as of the Participant’s date of death. The amount of the

6

reduction under this subparagraph (b)(iii)(C) shall not consider any portion of the Participant’s account balance attributable to Participant contributions (including rollover contributions and direct transfers) and earnings thereon; and

(D) The proceeds from any life insurance policy on the life of the Participant under any Company sponsored Group Life Insurance Plan, annuitized over the payment period set forth in Paragraph 4(a)

     (c) Notwithstanding the foregoing, if a Participant dies while employed by the Company and after June 30, 2005, and is entitled to death benefits under subparagraph (a) of this Paragraph 4, the monthly death benefit payable shall be the amount payable as if the Participant had died on June 30, 2005.

5. Disability Benefit.

     (a) If the Participant becomes totally and permanently disabled prior to his retirement date and while in the employ of the Company and such disability continues for a period of six (6) months, then the Company shall thereafter pay the Participant a monthly disability payment in the amount as determined pursuant to subparagraph (b) below commencing with a payment on the first day of the month next following the expiration of the six (6) month period (hereinafter referred to as the “Disability Date”) and continuing with a like payment on the first day of each month thereafter until the Participant attains sixty-five (65) years of age or ceases to be disabled, whichever occurs first. If the Participant continues to be disabled until he is sixty-five (65) years of age, then the monthly payments to the Participant thereafter shall be equal to the monthly amount of retirement income specified in Paragraph 2, and shall be paid pursuant to the terms and conditions of Paragraph 2. If, while receiving disability payments under this paragraph the Participant dies prior to attaining the age of sixty-five (65) years, such disability payments shall cease, and the Company shall thereafter pay to the beneficiary designated in Paragraph 7 the amount of the death benefit specified in Paragraph 4, in the manner and for the period of time provided in said paragraph.

     (b) A Participant’s monthly disability benefit amount under this subparagraph (b) shall be equal to sixty percent (60%) of the Participant’s Average Compensation less the following amounts:

          (i) The monthly amount payable to the Participant pursuant to the Company sponsored Group Long-Term Disability Plan, determined prior to any reduction for the Participant’s monthly disability Social Security amount, if any; and

          (ii) One-half of the Participant’s monthly disability Social Security amount, determined as of the Participant’s Disability Date.

     (c) Notwithstanding the foregoing, if a Participant becomes totally and permanently disabled after June 30, 2005, and is entitled to disability benefits under subparagraph (a) of this Paragraph 5, the monthly disability benefit payable shall be the amount payable as if the

7

Participant’s Disability Date was June 30, 2005.

6. Voluntary Termination.

     If a the Participant voluntarily terminates employment with the Company prior to attaining age sixty-five (65) for any reason other than total and permanent disability, the Participant shall be entitled to no benefit under this Plan.

7. Beneficiary.

     For purposes of Paragraphs 2, 3, 4, and 5, the Participant’s beneficiary shall be as follows:

     (a) The spouse of the Participant shall be the primary beneficiary.

     (b) If said spouse fails to survive the Participant, then any remaining payments under this Plan shall be made in accordance with the Participant’s beneficiary designation form then on file with the Company, or if none to the Participant’s estate.

     (c) If said spouse survives the Participant and thereafter dies before receiving all payments hereunder, such remaining payments shall be made to such persons in such amounts as said spouse designates in a validly executed beneficiary designation form on file with the Company. If said spouse fails to exercise this power of appointment, such remaining payments shall be made to such persons in such amounts as provided in subparagraph (b) immediately above.

     Notwithstanding the foregoing, the Company shall give effect to any beneficiary designation in effect immediately prior to the Merger Date made by a Participant with respect to his accrued benefit under an Affiliate Plan.

8. Conditions and Other Provisions.

     (a) The benefits under Paragraphs 2, 3, 4, and 5 are conditioned upon the Participant having been continuously in the employ of the Company from the date of becoming a Participant in this Plan (or, with respect to Participants who, immediately prior to the Merger Date, were participants in an Affiliate Plan, from the date of becoming a participant in such Affiliate Plan) until the happening of the event that would qualify the Participant (or his beneficiary) for such benefits; provided, however, that the employment of the Participant shall not be deemed to have ceased because of or during (i) any period of involuntary military service of the Participant or (ii) a leave of absence granted the Participant by the Company which does not exceed a period of one (1) year.

     (b) If monthly benefits become payable to a Participant or beneficiary by virtue of the provisions of Paragraphs 2, 3, 4, or 5, the Company may then, or at any time thereafter, at its sole option and discretion and without the consent of any Participant or beneficiary, elect to pay the Participant or current beneficiary, in one lump sum, the present value of the monthly payments

8

remaining unpaid at the time of such election. Any present value calculations required in connection with the payment of such a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83), adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest determined pursuant to Code § 417(e)(3)(A)(ii)(II) for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater.

     (c) Except as specifically provided herein, benefits under this Plan shall not be payable to the Participant or any beneficiary under more than one of Paragraphs 2, 3, 4, or 5 of this Plan.

     (d) For the purpose of determining any and all benefits payable under this Plan, it shall be assumed that the Participant’s spouse is no more than fifteen (15) years younger than the Participant. In the event that a Participant’s spouse is more than fifteen years younger than the Participant, the monthly amount payable to the spouse hereunder shall be a reduced amount, actuarially determined. Such reduced amount shall be calculated by first determining the present value of the benefits payable to the surviving spouse over his or her life expectancy as if he or she were exactly fifteen (15) years younger than the Participant, and then determining the monthly benefit that could be paid over the surviving spouse’s actual life expectancy, using the present value amount so determined.

     (e) Except as otherwise specifically provided herein, for purposes of determining present values and/or alternative forms of benefits hereunder, the 1983 Group Annuity Mortality Table (GAM 83), adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and 6% interest per annum shall be used.

9. Termination of Participation/Benefits.

     Participation in this Plan may be terminated by the Company, and all accrued benefits hereunder may at any time be forfeited, either before or after benefits become payable hereunder, notwithstanding any provision in this Plan to the contrary, if the Board of Directors of the Company, acting in its sole and absolute discretion, shall find that at any time before or after the Participant’s termination, retirement or disability and before the Participant’s death:

     (a) The Participant induces or attempts to induce a client or customer of the Company to curtail or cancel any business dealing with the Company,

     (b) The Participant induces or attempts to induce any other employee of the Company to terminate employment with the Company,

     (c) The Participant fails to cooperate in the procurement or maintenance of any policies of insurance as contemplated by Paragraph 10 below, or

     (d) The Participant commits a violation of the Statement on Ethics of Fisher Communications, Inc., and such violation results in the termination of the Participant’s employment with the Company.

9

10. Insurance.

     (a) It is further a condition of participation in this Plan that, if the Company at its sole option shall at any time wish to own, sponsor and/or maintain any policy of life or disability insurance on the Participant the proceeds of which are payable to either the Participant or the Company:

          (i) The Participant shall fully cooperate with the Company in its application for such insurance, including, without limiting the generality of the foregoing, submitting to physical examinations and answering truthfully and completely, without mental reservation or concealment, any questions or requests for information in connection therewith; and

          (ii) The Participant shall not, by act or omission, give cause for any insurance company to restrict or cancel any policy of insurance on the Participant owned by the Company or give cause for such insurance company’s refusal to pay the full proceeds to the Company, including refusal to pay the full proceeds because of the suicide of the Participant.

     (b) An individual shall not become a Participant in this Plan unless and until:

          (i) the Company has procured a policy of life insurance and a policy of disability insurance on that individual adequate in amount to fund the life and disability benefits contemplated by this Plan assuming no further increases in the individual’s Average Compensation;

          (ii) the Company has specifically waived such requirement in writing; or

          (iii) the Company has, by separate agreement entered into between the Company and the individual, limited the benefits payable to that individual under this Plan. It is contemplated that such an agreement may be entered into if an individual is uninsurable, uninsurable against certain risks or uninsurable at standard rates. Any such agreement shall be deemed to be part of this Plan with respect to the Participant to whom it applies.

     (c) All determinations made by the insurance company with regard to the question of death, disability, waiver of premium and/or pre-existing conditions shall be accepted as conclusive by the Company, the Participant and any beneficiary.

11. ERISA.

     Participation in this Plan may be terminated by the Company if the Department of Labor issues regulations under ERISA which indicate that the Participant is no longer eligible for continued participation in the Plan. This determination shall be made by the Board of Directors of the Company acting in its sole and absolute discretion. In the event of a termination of this

10

Plan pursuant to this Paragraph 11, the Participant shall be entitled to receive a termination benefit pursuant to the terms and conditions of Paragraph 3.

12. No Current Benefit.

     The benefits to be paid pursuant to the terms of this Plan are granted by the Company as additional benefits to the Participants and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Participants have no option to receive any current payment or bonus in lieu of these additional benefits.

13. No Trust Agreement.

     (a) Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company, or any employee or agent thereof, and the Participants or any other person.

     (b) The rights of the Participants or beneficiaries under this Plan are purely contractual and shall not be funded or secured in any way. Payments to the Participants or their beneficiaries hereunder shall be made only from the general assets of the Company, and no person, other than the Company, shall have, by virtue of this Plan, any interest in such assets. Such assets are available to satisfy the claims of the Company’s general creditors and, to the extent any person acquires a right to receive payments from the Company under the terms of this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company.

     (c) The Company, at its discretion, may acquire an annuity or insurance policy insuring the life of the Participants from which it can satisfy its obligation to make benefit payments pursuant to this Plan. However, it is expressly understood that such contract (or contracts), if acquired, does not create any account or fund separate from the ordinary assets of the Company, and neither the Participants nor their beneficiaries may look to any such contract as the fund from which benefits under this Plan are to be paid. Any such contract so acquired for the convenience of the Company shall be the sole and exclusive property of the Company, with the Company named as applicant, owner, and beneficiary of any life insurance contract payments; provided, further, that any such contract shall not be held in trust or collateral security for the benefit of the Participants or beneficiaries, nor is any representation made herein that such contract, if acquired, will be used to provide benefits under this Plan. Neither the Participants nor their beneficiaries shall have any beneficial ownership interest in, or preferred or other claim against, the life insurance contract, if acquired by the Company.

14. No Assignment.

     No right of a Participant or any other person to the payment of deferred compensation or other benefits under this Plan shall be assigned, transferred, pledged, hypothecated, or encumbered. No right of a Participant under this Plan shall be subject to garnishment, attachment, or other legal process, whether by the Participant or any beneficiary named herein,

11

any heir or creditor of the Participant, or any other person. Any attempted assignment of any right hereunder by a Participant or a beneficiary shall, at the Company’s option, cause all rights of the Participant hereunder to terminate.

15. Incapacity of Beneficiary.

     If the Company shall determine that a Participant is unable to care for his or her affairs because of illness, accident, or other incapacity, any payment due may be paid to the Participant’s spouse or to any other person considered by the Company to have incurred expense for the Participant or to be otherwise responsible for the Participant or his or her affairs, in such manner and proportions as the Company may determine (unless a prior claim therefor shall have been made by a duly appointed guardian, committee, or other legal representative). Any such payment made in good faith by the Company shall be a complete discharge of the liabilities of the Company under this Plan.

16. Company’s Powers and Liabilities.

     The Company shall have the full power and authority to interpret, construe, and administer this Plan, and the Company’s interpretation and construction hereof and action hereunder shall be binding and conclusive on all persons for all purposes. Neither the Company, its officers, directors, employees, or agents shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. Any notice, consent, or demand required or permitted to be given under the terms of this Plan shall be in writing and shall be signed by the party giving or making the same. The date of such notice, consent, or demand shall be the date of receipt by the addressee.

17. Binding Effect.

     This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participant, his heirs, executors, administrators and legal representatives.

18. Continued Employment.

     Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company as an executive or in any other capacity. The Participant or the Company may terminate the Participant’s employment at will, with or without cause. Upon termination of the Participant’s employment with the Company, all rights of the Participant hereunder shall terminate, except as otherwise provided herein.

19. Governing Law.

     This Plan shall be construed and governed in accordance with the laws of the State of Washington.

12

20. Qualified Plan.

     Any deferred compensation payable under this Plan shall not be deemed salary or other compensation to the Participants for purposes of computing benefits to which they may be entitled under any pension plan or other arrangement of the Company for the benefit of its employees.

21. Amendment; Entire Agreement; Plan Termination.

     No modification of this Plan shall be effective unless communicated in writing to the Participant. With respect to the subject matter hereof, this Plan constitutes the entire agreement and understanding of the Company and the Participant and shall supersede any prior agreement or understanding including any and all Supplemental Pension Plan Agreements and amendments thereto previously entered into between the Company and the Participant. Further, the Company may, from time to time, furnish the Participant with information containing estimates of the projected benefits available under this Plan. This information will be provided simply as a tool to assist the Participant in planning for his or her retirement, and not as a definitive statement of the benefits that will be available to the Participant upon retirement or in the event of death or disability. This is because the estimates of projected benefits are affected by a number of variables that are constantly changing which include, but are not limited to salary levels, interest rates, qualified plan benefits, group life and disability benefits and Social Security benefits. In certain circumstances the benefits payable to a Participant under this Plan may be adjusted based upon that Participant’s individual circumstances. Adjustments resulting in a reduction of benefits will generally be prospective in application, whereas adjustments resulting in an increase in benefits may be retroactive. The Company has the right to terminate this Plan at any time. Any termination of this Plan shall be by action of the Board of Directors of the Company, and in such case, the accrued benefit of a Participant who is employed by the Company on the date of the Plan termination shall be determined pursuant to Paragraph 3, as if the Participant’s employment with the Company terminated on such date, other than voluntarily.

     Notwithstanding any Plan provision to the contrary, the Company reserves the right to amend the Plan retroactively, in any manner the Company determines is appropriate, to comply with the requirements imposed on nonqualified deferred compensation plans by the American Jobs Creation Act of 2004, as codified in Code § 409A, and regulations to be promulgated thereunder.

22. Severability.

     If any provision of this Plan is rendered invalid or unenforceable, the remaining provisions of this Plan shall continue to be fully effective.

23. Participation in Other Participant Benefit Plans.

     Nothing herein shall, in any manner, modify, impair, or affect the existing or future rights or interests of the Participants (i) to receive any employee benefits to which he would otherwise be entitled; or (ii) as participants in the present or any future incentive or bonus plan, stock

13

option plan, pension plan, or profit sharing plan of the Company, applicable generally to salaried employees. The rights and interests of the Participants to any employee benefits or as a participant or beneficiary in or under any or all such plans shall continue in full force and effect unimpaired, and this Plan shall not act to deny the Participant the right at any time hereafter to become a participant or beneficiary under or pursuant to any and all such plans.

24. Legal and Tax Consequences to Participants.

     The Company does not represent or guarantee that any particular income or other tax consequences will occur under the Plan. The Participant acknowledges that he has been advised to consult with professional tax and other advisors regarding all benefits, burdens, risks, and consequences arising in connection with this Plan.

25. FICA/Medicare/Federal Income Tax Withholding.

     Any benefits payable to a Participant and/or a beneficiary hereunder shall be subject to FICA, Medicare, and Federal and State Income Tax withholding to the extent required by law.

26. Claims Procedure.

     Any person claiming a benefit under this Plan (a “Claimant”) shall present the claim, in writing, to the Company, and the Company shall respond in writing. If the claim is denied, the written notice of denial shall state, in a manner calculated to be understood by the Claimant:

     (a) The specific reason or reasons for the denial, with specific references to the Plan provisions on which the denial is based;

     (b) A description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation of why such material or information is necessary; and

     (c) An explanation of the Plan’s claims review procedure.

     The written notice denying or granting the Claimant’s claim shall be provided to the Claimant within ninety (90) days after the Company’s receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension shall be furnished by the Company to the Claimant within the initial ninety (90) day period and in no event shall such an extension exceed a ninety (90) day period. Any extension notice shall indicate the special circumstances requiring the extension and the date on which the Company expects to render a decision on the claim. Any claim not granted or denied within the period noticed above shall be deemed to have been denied.

     Any Claimant whose claim is denied or deemed to have been denied under the preceding sentence (or such Claimant’s authorized representative) may, within sixty (60) days after the Claimant’s receipt of notice of the denial or after the date of the deemed denial, request a review

14

of the denial by notice given, in writing, to the Company. Upon such a request for review, the claim shall be reviewed by the Company (or its designated representative), which may, but shall not be required to, grant the Claimant a hearing. In connection with the review, the Claimant may have representation, may examine pertinent documents, and may submit issues and comments in writing.

     The decision on review normally shall be made within sixty (60) days of the Company’s receipt of the request for review. If an extension of time is required due to special circumstances, the Claimant shall be notified, in writing, by the Company, and the time limit for the decision on review shall be extended to one hundred twenty (120) days. The decision on review shall be in writing and shall state, in a manner calculated to be understood by the Claimant, the specific reasons for the decision and shall include references to the relevant Plan provisions on which the decision is based. The written decision on review shall be given to the Claimant within the sixty (60) days (or, if applicable, the one hundred twenty (120) day) time limit discussed above. If the decision on review is not communicated to the Claimant within the sixty (60) day (or, if applicable, the one hundred twenty (120) day) period discussed above, the claim shall be deemed to have been denied upon review. All decisions on review shall be final and binding with respect to all concerned parties.

     IN WITNESS WHEREOF, the undersigned has executed this amended and restated Plan on December 29, 2005.

FISHER COMMUNICATIONS, INC.

/s/ Robert C. Bateman

Robert C. Bateman
Senior Vice President and Chief Financial Officer

15

EX-10.13

EXHIBIT 10.13

CBS TELEVISION
51 WEST 52 STREET
NEW YORK, NEW YORK 10019-6188

(212) 975-4191
FAX: (212) 975-4229
rtroutman@cbs.com

RHONDA TROUTMAN
SENIOR VICE PRESIDENT,
CBS AFFILIATE RELATIONS

January 6, 2006

Via Overnight Delivery

Ms. Colleen B. Brown
President & Chief Executive Officer
Fisher Communications, Inc.
100 Fourth Avenue, North
Suite 510
Seattle, Washington 98109

Dear Colleen:

Reference is made to the Affiliation Agreement (“the Agreement”) between Fisher Broadcasting, as assignee and successor to Fisher Broadcasting — Oregon TV, LLC, a wholly-owned subsidiary of Fisher Broadcasting Company; Retlaw Broadcasting of Boise LLC and Retlaw Enterprises, Inc.; and Northwest Television Inc. (“Broadcaster”) and CBS, dated February 13, 1996, as amended, regarding the affiliation of television station KVAL (“Station”), in Eugene, Oregon (including satellite stations KPIC Roseburg and KCBY Coos Bay), with the CBS Television Network.

You and we mutually agree in this Letter Agreement to the following amendments and additional terms and conditions of the Agreement:

1. In order to clarify that Broadcaster’s “first call” rights to Network Programs extend to such programs in digital format, you and we agree that the initial words of Paragraph 1 of the Agreement prior to the start of Subparagraph 1 (a) shall be deleted and replaced by the following language:

“1. Offer, Acceptance and Delivery of Network Programs

Broadcaster shall have a “first call”, as set forth below, on the program offerings of the CBS Television Network (“Network Programs”). Such “first call” rights shall apply to Network Programs in both analog and digital format, it being understood that, with respect to digital broadcasting, “Network Programs” shall refer to the “Primary Network Feed”, which during the digital transition shall mean the digital version of those programs transmitted to CBS Affiliates for the purpose of analog broadcasting, and not to any additional program streams that may be transmitted by the Network (i.e., “multi-plexed” programming).”

Ms. Colleen B. Brown
January 6, 2006
Page 2 of 8

2.	In order to clarify that Broadcaster’s network non-duplication protection rights apply to digital as well as analog broadcasting of Network Programs, you and we agree that the words “in analog and digital formats” shall be inserted into the second line of Subparagraph 9(b) of the Agreement after the words “network programming”, so that the beginning of this subparagraph will read as follows:
	“Broadcaster shall be entitled to exercise, within Affiliated Station’s Network Exclusivity Zone, the protection against duplication of network programming in analog and digital formats,”
	Also, due to modification of the FCC’s regulations, you and we agree that the reference in the same Subparagraph 9(b) to “Section 76.92 through 76.97 of the FCC rules” shall be amended to read “Sections 76.92 through 76.95 of the FCC rules.”

3. In addition, you and we agree to the following additional terms and conditions which shall be made part of the Agreement:

Station will, to the same extent as the Agreement provides for carriage of Network programs on its analog channel, transmit on such DTV channel the digital feed of such Network Programs in the technical format, consistent with the ATSC standards, provided by CBS, which shall be deemed to include the transmission by Station of all program related material, as defined below, provided by CBS which can be accommodated within a six MHz channel carrying a data stream of up to 19.4 megabits per second; provided, however, that nothing in the foregoing shall be deemed to prohibit Broadcaster from using digital compression technology in connection with the transmission by Station of all Network Programs and program-related material if, in the reasonable judgment of CBS engineers, such use does not materially degrade the audio or video quality of the Primary Network Feed. It is expressly understood that this Agreement applies only to the Primary Network Feed in digital format of the program provided by the Network to its affiliated stations, together with any associated program related material, and that Broadcaster will in no event be required to carry additional Network digital programming (i.e., “multiplexed” programming). Consistent with and subject to the foregoing, the Station shall have the right to use any available portion of its digital signal for the purpose of transmitting local programs or any other material; provided, however, that in the event that CBS proposes that the Station carry Network multiplexed programming or ancillary data which is not “program related material”, Broadcaster agrees to negotiate in good faith with CBS regarding the terms pursuant to which such multiplexed programming or ancillary data may be carried. As used in this paragraph,

Ms. Colleen B. Brown
January 6, 2006
Page 3 of 8

“program-related material” shall mean (i) information and material of a commercial or non-commercial nature which is directly related to the subject matter or identification of, or persons appearing in, the Network Programs, or to specific Network commercial advertisements or promotional announcements contained in the Network Programs, if such information or material is transmitted concurrently or substantially concurrently with the associated Network Program, commercial advertisement or promotional announcement (such information and material shall not require more than 3 megabits per second of digital bandwidth), (ii) closed-captioning information, (iii) program identification codes, (iv) program ratings information, (v) alternative language feeds related to the programming, (vi) video description information, and (vii) such other material as may be essential to or necessary for the delivery or distribution of the Network Programs in digital format.

4.	Subject to the FCC’s Right to Reject under Section 73.658(e) of the FCC’s Rules, and superseding previous understandings regarding clearance of network programming, Station will provide and maintain full, in-pattern clearance of all programs (or, any program’s replacement) on the CBS Television Network program schedule in all day-parts (including, but not limited to, Weekend Sports programming), in accordance with the foregoing and the attached Schedule A. Station agrees to broadcast such Network Program in its entirety (including but not limited to commercial announcements, billboards, credits, public service announcements, promotional announcements and network identification), without interruption, alteration, deletion or addition of any kind, from the beginning of the Network Program to the final system cue at the conclusion of the Network Program and not to downgrade, delay or change time periods of any Network Program without the written consent of CBS.
	Further, Station agrees (i) to continue to provide live clearance of the “full network” format THE EARLY SHOW (or its replacement), 7:00-9:00am local time, Monday-Friday; (ii) to provide live clearance of Face the Nation (or its replacement), using one of the live feeds provided by CBS to Pacific Time Zone stations; and (iii) to continue to provide clearance of at least two (2) hours per weekday of the overnight service UP TO THE MINUTE (or its replacement).
	Broadcaster agrees to limit one-time-only primetime preemptions to no more than 12 hours per calendar year allocated proportionally in partial years (“the Primetime Preemption Cap”). For any Primetime preemption beyond 12 hours and up to 17 hours annually, the Station agrees to pay CBS [*] per hour

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 4 of 8

	with an increase effective on each anniversary of the Agreement of [*] (the “Primetime Preemption Fee”). Any Primetime preemption beyond 17 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules. Station acknowledges that any primetime preemptions of Network Programming in primetime for paid religion are done strictly for financial reasons and in consideration of the terms hereof agrees not to preempt Network Programming in primetime for paid religion during the Term.
	Similarly, Broadcaster agrees to limit one-time-only preemptions of Weekend Sports programming to no more than 5 hours per calendar year allocated proportionately in partial years(“the Weekend Sports Cap”). For any Weekend Sports preemption beyond 5 hours and up to 10 hours annually, the Station agrees to pay CBS [*] per hour with an increase effective on each anniversary of the Agreement of [*] (the “Weekend Preemption Fee”). Any Weekend Sports preemption beyond 10 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules.
	Station will promptly notify CBS of any preemption and payment of any Preemption Fee will be made within sixty (60) days of the written notification from CBS of the amount due.
	It is understood that Station’s obligations pursuant the above provisions shall be subject to Station’s rights under Section 73.658 (e) of the FCC’s rules and Paragraph 5 (a) of the Agreement, and that Station’s exercise of such rights shall in no event be deemed a breach of the obligations set forth in the above paragraph and shall not count against the Primetime Preemption Cap or the Weekend Sports Cap as set forth above; provided, however, that nothing in the foregoing will be construed to permit Station to preempt a program, regardless of the reason for the preemption, in its live or agreed time period, and then broadcast such program in a different time period, without the express written consent of CBS. Station will use its best efforts to provide makegoods in a mutually agreed upon time period for all primetime preemptions made for reasons other than the Right to Reject Rule as defined in Section 73.658(e) of the FCC rules.
5.	This Letter Agreement and the terms herein shall become effective March 1, 2006 and Paragraph 3 (a) of the Agreement shall be deleted and replaced by the following new Paragraph 3(a):

“3. Term and Termination.

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 5 of 8

(a) Term.

The term of this Agreement shall be the period commencing on March 1, 2006 and expiring on February 29, 2016. Notwithstanding any provision of any offer or acceptance under Paragraph 1 hereof, upon the expiration or any termination of the term of this Agreement, Broadcaster shall have no right whatsoever to broadcast over Affiliated Station any Network Program.”

6.	Station agrees to participate in CBS’ Coop and Promo Swap Programs provided the elements of such Programs remain as currently defined.
7.	Station agrees to abide by the standard CBS Service Mark requirements specifying acceptable ways Station may utilize the CBS Eye Service Mark in on-air and print advertising.
8.	The Affiliated Station’s Annual Net Compensation as specified in Paragraphs 2(a) through 2(c) of the Agreement will be revised to the amount shown below on the indicated Effective Date:

Effective	Annual Net
Date	Compensation
March 1, 2006 — February 28, 2007	[*]
March 1, 2007 — February 28, 2008	[*]
March 1,2008 — February 29,2016	[*]

The foregoing represents CBS’s total financial contribution to Station during this Term and supersedes all previous agreements with respect thereto, including, but not limited to, all compensation, promotion and capital contributions. Payments of Annual Net Compensation shall be paid in twelve (12) equal installments and shall be due and payable monthly, in arrears, within 20 days from the end of each calendar month during the applicable period for which Annual Net Compensation is due. All references in the Agreement to Network Rate shall be deleted.

9. Paragraph 4 of the Agreement is hereby amended by changing the existing subparagraph (c) to subparagraph (d) and inserting the following new subparagraph (c):

[*]Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 6 of 8

(c) Notwithstanding the foregoing, CBS consents to Station granting direct broadcast satellite service carriers the right to retransmit its signal, including CBS programming outside of Station’s television market where Station is significantly viewed and according to the provisions of the Satellite Home Viewer Extension and Reauthorization Act of 2004, signed into law by the President on December 8, 2004; provided, that the local CBS affiliate is carried on the service in the county. CBS consent herein is limited to Station’s initial agreement with carrier and Station must obtain consent before entering into any renewal, extension or new agreement which includes CBS programming.

10.

In order to reflect that television markets now generally are defined with reference to Nielsen DMAs rather than with reference to Arbitron ADIs, you and we agree that in Subparagraph 9(a) of the Agreement the language “the Area of Dominant Influence (ADI), as determined by Arbitron and published in the then-current edition of its Television ADI Market Guide,” shall be stricken and replaced with the following: “the Designated Market Area (DMA), as most recently determined by the A.C. Nielsen Company,”.

11.

In order to permit notices pursuant to the Agreement to be made by facsimile delivery, you and we agree that the word “facsimile” shall be inserted between “personal delivery,” and “mail” in the first sentence of Subparagraph 11(d) of the Agreement, so that the beginning of the Subparagraph will read as follows:

“11(d) Unless specified otherwise, all notices given hereunder shall be given in writing by personal delivery, facsimile, mail,”

12. The terms of this Letter and Affiliation Agreement, and discussions related thereto, will not be disclosed to anyone who is not either employed by the Station or the corporate ownership of the Station and such disclosure shall be subject to the employees agreement to this Confidentiality provision; it being understood, however, that adherence to FCC filing requirements and disclosures will not constitute a violation of this point; provided, that all terms not required to be disclosed by the FCC are redacted. Any press release regarding the terms of this negotiation or Agreement, shall be made jointly by the parties.

Further, it is hereby ratified and reaffirmed that throughout this Term the: (i) terms of the September 23, 1998 and October 22, 2001 Letter Agreements between you and us which established, among other things, Station’s NFL Contribution and placed

Ms. Colleen B. Brown
January 6, 2006
Page 7 of 8

various program exclusivity requirements on the Network, plus any increase or renewals agreed to by Station and CBS, shall remain in full force and effect per the terms of that Letter Agreement; (ii) Station’s participation in the NCAA Exchange Value Program will continue as set forth in the December 2, 2003 Letter Agreement; and (iii) Station’s participation in CBS Newspath shall continue throughout the Term at the current rate of [*] plus a [*] annual increase effective on October 1, 2006, and, thereafter, by such annual increases agreed to by the CBS Affiliate Board. There will be no charge for NNS. CBS agrees that Station may repurpose and telecast its local news containing Newspath footage on its multicast digital channel; provided that, such telecast is merely a repeat of the initial telecast on KVAL.

As herein amended, all terms and conditions of the Agreement are ratified and confirmed. All individual reference herein to Station or Broadcaster shall apply to both collectively.

Four originals of this Letter Agreement are enclosed. Please indicate your approval by signing each original in the space provided below and return all originals to me for counter-execution. We will return two fully executed originals to you.

Accepted and agreed:

Fisher Broadcasting — Oregon TV LLC	CBS AFFILIATE RELATIONS
	A Unit of CBS Broadcasting, Inc.

By:	/s/ Colleen B. Brown	By:	/s/ Peter K. Schruth
	Colleen B. Brown		Peter K. Schruth
	President & Chief Executive Officer		President

Best regards,

cc: P. Schruth, P. Farr, K. Freedman, J. Mitchell

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Schedule A KVAL Eugene

Current Clearance of CBS Programming on KVAL (all times local):

Monday-Friday
CBS Morning News	5:30-6:00am
The Early Show	7:00-9:00am (full-network format)
Price Is Right	10:00-11:00am
Young & Restless	11:00am-12:00pm
Bold & Beautiful	12:30-1:00pm
As The World Turns	1:00-2:00pm
Guiding Light	2:00-3:00pm
CBS Evening News	5:30-6:00pm
Prime Time	8:00-11:00pm
Late Show	11:35pm-12:37am
Late Late Show	12:37am-1:37am
Up To The Minute	Minimum two hour clearance
Saturday
Saturday Early Show	5:00-7:00am
Kids Programming	7:00-10:00am
Sat. Evening News	6:30-7:00pm
Prime Time	8:00-11:00pm
Sunday
CBS Sun. Morning	7:00-8:30am
Face The Nation	Live Pacific Time Zone Feed (see para. 4)
Sun. Evening News	6:00-6:30pm
Prime Time	7:00-11:00pm

EX-10.14

EXHIBIT 10.14

CBS TELEVISION
51 WEST 52 STREET
NEW YORK, NEW YORK 10019-6188

(212) 975-4191
FAX: (212) 975-4229
rtroutman@cbs.com

RHONDA TROUTMAN
SENIOR VICE PRESIDENT,
CBS AFFILIATE RELATIONS

January 6, 2006

Via Overnight Delivery

Ms. Colleen B. Brown
President & Chief Executive Officer
Fisher Communications, Inc.
100 Fourth Avenue, North
Suite 510
Seattle, Washington 98109

Dear Colleen:

Reference is made to the Affiliation Agreement (“the Agreement”) between Fisher Broadcasting, as assignee and successor to Fisher Broadcasting — Washington TV, LLC, a wholly-owned subsidiary of Fisher Broadcasting Company; and Retlaw Broadcasting of Boise LLC and Retlaw Enterprises, Inc. (“Broadcaster”) and CBS, dated February 13, 1996, as amended, regarding the affiliation of television station KIMA (“Station”), in Yakima, Washington (including satellite stations KEPR in Pasco, Washington and KLEW in Lewiston, Idaho), with the CBS Television Network.

You and we mutually agree in this Letter Agreement to the following amendments and additional terms and conditions of the Agreement:

1. In order to clarify that Broadcaster’s “first call” rights to Network Programs extend to such programs in digital format, you and we agree that the initial words of Paragraph 1 of the Agreement prior to the start of Subparagraph 1 (a) shall be deleted and replaced by the following language:

“1. Offer, Acceptance and Delivery of Network Programs

Broadcaster shall have a “first call”, as set forth below, on the program offerings of the CBS Television Network (“Network Programs”). Such “first call” rights shall apply to Network Programs in both analog and digital format, it being understood that, with respect to digital broadcasting, “Network Programs” shall refer to the “Primary Network Feed”, which during the digital transition shall mean the digital version of those programs transmitted to CBS Affiliates for the purpose of analog broadcasting, and not to any additional program streams that may be transmitted by the Network (i.e., “multi-plexed” programming).”

Ms. Colleen B. Brown
January 6, 2006
Page 2 of 8

2.	In order to clarify that Broadcaster’s network non-duplication protection rights apply to digital as well as analog broadcasting of Network Programs, you and we agree that the words “in analog and digital formats” shall be inserted into the second line of Subparagraph 9(b) of the Agreement after the words “network programming”, so that the beginning of this subparagraph will read as follows:
	“Broadcaster shall be entitled to exercise, within Affiliated Station’s Network Exclusivity Zone, the protection against duplication of network programming in analog and digital formats,”
	Also, due to modification of the FCC’s regulations, you and we agree that the reference in the same Subparagraph 9(b) to “Section 76.92 through 76.97 of the FCC rules” shall be amended to read “Sections 76.92 through 76.95 of the FCC rules.”

3. In addition, you and we agree to the following additional terms and conditions which shall be made part of the Agreement:

Station will, to the same extent as the Agreement provides for carriage of Network programs on its analog channel, transmit on such DTV channel the digital feed of such Network Programs in the technical format, consistent with the ATSC standards, provided by CBS, which shall be deemed to include the transmission by Station of all program related material, as defined below, provided by CBS which can be accommodated within a six MHz channel carrying a data stream of up to 19.4 megabits per second; provided, however, that nothing in the foregoing shall be deemed to prohibit Broadcaster from using digital compression technology in connection with the transmission by Station of all Network Programs and program-related material if, in the reasonable judgment of CBS engineers, such use does not materially degrade the audio or video quality of the Primary Network Feed. It is expressly understood that this Agreement applies only to the Primary Network Feed in digital format of the program provided by the Network to its affiliated stations, together with any associated program related material, and that Broadcaster will in no event be required to carry additional Network digital programming (i.e., “multiplexed” programming). Consistent with and subject to the foregoing, the Station shall have the right to use any available portion of its digital signal for the purpose of transmitting local programs or any other material; provided, however, that in the event that CBS proposes that the Station carry Network multiplexed programming or ancillary data which is not “program related material”, Broadcaster agrees to negotiate in good faith with CBS regarding the terms pursuant to which such multiplexed programming or ancillary data may be carried. As used in this paragraph,

Ms. Colleen B. Brown
January 6, 2006
Page 3 of 8

“program-related material” shall mean (i) information and material of a commercial or non-commercial nature which is directly related to the subject matter or identification of, or persons appearing in, the Network Programs, or to specific Network commercial advertisements or promotional announcements contained in the Network Programs, if such information or material is transmitted concurrently or substantially concurrently with the associated Network Program, commercial advertisement or promotional announcement (such information and material shall not require more than 3 megabits per second of digital bandwidth), (ii) closed-captioning information, (iii) program identification codes, (iv) program ratings information, (v) alternative language feeds related to the programming, (vi) video description information, and (vii) such other material as may be essential to or necessary for the delivery or distribution of the Network Programs in digital format.

4.	Subject to the FCC’s Right to Reject under Section 73.658(e) of the FCC’s Rules, and superseding previous understandings regarding clearance of network programming, Station will provide and maintain full, in-pattern clearance of all programs (or, any program’s replacement) on the CBS Television Network program schedule in all day-parts (including, but not limited to, Weekend Sports programming), in accordance with the foregoing and the attached Schedule A. Station agrees to broadcast such Network Program in its entirety (including but not limited to commercial announcements, billboards, credits, public service announcements, promotional announcements and network identification), without interruption, alteration, deletion or addition of any kind, from the beginning of the Network Program to the final system cue at the conclusion of the Network Program and not to downgrade, delay or change time periods of any Network Program without the written consent of CBS.
	Further, Station agrees (i) to continue to provide live clearance of the “full network” format of THE EARLY SHOW (or its replacement), 7:00-9:00am local time, Monday-Friday; (ii) to provide live clearance of Face the Nation (or its replacement), immediately following CBS Sunday Morning (or its replacement) using one of the live feeds available to Pacific Time Zone stations; (iii) to continue to provide clearance of at least two (2) hours per weekday of the overnight service UP TO THE MINUTE (or its replacement).
	Broadcaster agrees to limit one-time-only primetime preemptions to no more than 12 hours per calendar year allocated proportionally in partial years (“the Primetime Preemption Cap”). For any Primetime preemption beyond 12 hours and up to 17 hours annually, the Station agrees to pay CBS [*] per hour

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 4 of 8

	with an increase effective on each anniversary of the Agreement of [*] (the “Primetime Preemption Fee”). Any Primetime preemption beyond 17 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules. Station acknowledges that any primetime preemptions of Network Programming in primetime for paid religion are done strictly for financial reasons and in consideration of the terms hereof agrees not to preempt Network Programming in primetime for paid religion during the Term.
	Similarly, Broadcaster agrees to limit one-time-only preemptions of Weekend Sports programming to no more than 5 hours per calendar year allocated proportionately in partial years(“the Weekend Sports Cap”). For any Weekend Sports preemption beyond 5 hours and up to 10 hours annually, the Station agrees to pay CBS [*] per hour with an increase effective on each anniversary of the Agreement of [*] (the “Weekend Preemption Fee”). Any Weekend Sports preemption beyond 10 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules.
	Station will promptly notify CBS of any preemption and payment of any Preemption Fee will be made within sixty (60) days of the written notification from CBS of the amount due.
	It is understood that Station’s obligations pursuant the above provisions shall be subject to Station’s rights under Section 73.658 (e) of the FCC’s rules and Paragraph 5 (a) of the Agreement, and that Station’s exercise of such rights shall in no event be deemed a breach of the obligations set forth in the above paragraph and shall not count against the Primetime Preemption Cap or the Weekend Sports Cap as set forth above; provided, however, that nothing in the foregoing will be construed to permit Station to preempt a program, regardless of the reason for the preemption, in its live or agreed time period, and then broadcast such program in a different time period, without the express written consent of CBS. Station will use its best efforts to provide makegoods in a mutually agreed upon time period for all primetime preemptions made for reasons other than the Right to Reject Rule as defined in Section 73.658(e) of the FCC rules.
5.	This Letter Agreement and the terms herein shall become effective March 1, 2006 and Paragraph 3 (a) of the Agreement shall be deleted and replaced by the following new Paragraph 3(a):

“3. Term and Termination.

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 5 of 8

(a) Term.

The term of this Agreement shall be the period commencing on March 1, 2006 and expiring on February 29, 2016. Notwithstanding any provision of any offer or acceptance under Paragraph 1 hereof, upon the expiration or any termination of the term of this Agreement, Broadcaster shall have no right whatsoever to broadcast over Affiliated Station any Network Program.”

6.	Station agrees to participate in CBS’ Coop and Promo Swap Programs provided the elements of such Programs remain as currently defined.
7.	Station agrees to abide by the standard CBS Service Mark requirements specifying acceptable ways Station may utilize the CBS Eye Service Mark in on-air and print advertising.
8.	The Affiliated Station’s Annual Net Compensation as specified in Paragraphs 2(a) through 2(c) of the Agreement will be revised to the amount shown below on the indicated Effective Date:

Effective	Annual Net
Date	Compensation
March 1, 2006 — February 28, 2007	[*]
March 1, 2007 — February 28, 2008	[*]
March 1,2008 — February 29,2016	[*]

The foregoing represents CBS’s total financial contribution to Station during this Term and supersedes all previous agreements with respect thereto, including, but not limited to, all compensation, promotion and capital contributions. Payments of Annual Net Compensation shall be paid in twelve (12) equal installments and shall be due and payable monthly, in arrears, within 20 days from the end of each calendar month during the applicable period for which Annual Net Compensation is due. All references in the Agreement to Network Rate shall be deleted.

9. Paragraph 4 of the Agreement is hereby amended by changing the existing subparagraph (c) to subparagraph (d) and inserting the following new subparagraph (c):

[*]Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 6 of 8

(c) Notwithstanding the foregoing, CBS consents to Station granting direct broadcast satellite service carriers the right to retransmit its signal, including CBS programming outside of Station’s television market where Station is significantly viewed and according to the provisions of the Satellite Home Viewer Extension and Reauthorization Act of 2004, signed into law by the President on December 8, 2004; provided, that the local CBS affiliate is carried on the service in the county. CBS consent herein is limited to Station’s initial agreement with carrier and Station must obtain consent before entering into any renewal, extension or new agreement which includes CBS programming.

10.

In order to reflect that television markets now generally are defined with reference to Nielsen DMAs rather than with reference to Arbitron ADIs, you and we agree that in Subparagraph 9(a) of the Agreement the language “the Area of Dominant Influence (ADI), as determined by Arbitron and published in the then-current edition of its Television ADI Market Guide,” shall be stricken and replaced with the following: “the Designated Market Area (DMA), as most recently determined by the A.C. Nielsen Company,”.

11.

In order to permit notices pursuant to the Agreement to be made by facsimile delivery, you and we agree that the word “facsimile” shall be inserted between “personal delivery,” and “mail” in the first sentence of Subparagraph 11(d) of the Agreement, so that the beginning of the Subparagraph will read as follows:

“11(d) Unless specified otherwise, all notices given hereunder shall be given in writing by personal delivery, facsimile, mail,”

12. The terms of this Letter and Affiliation Agreement, and discussions related thereto, will not be disclosed to anyone who is not either employed by the Station or the corporate ownership of the Station and such disclosure shall be subject to the employees agreement to this Confidentiality provision; it being understood, however, that adherence to FCC filing requirements and disclosures will not constitute a violation of this point; provided, that all terms not required to be disclosed by the FCC are redacted. Any press release regarding the terms of this negotiation or Agreement, shall be made jointly by the parties.

Further, it is hereby ratified and reaffirmed that throughout this Term the: (i) terms of the September 23, 1998 and October 22, 2001 Letter Agreements between you and us which established, among other things, Station’s NFL Contribution and placed

Ms. Colleen B. Brown
January 6, 2006
Page 7 of 8

various program exclusivity requirements on the Network, plus any increase or renewals agreed to by Station and CBS, shall remain in full force and effect per the terms of that Letter Agreement; (ii) Station’s participation in the NCAA Exchange Value Program will continue as set forth in the December 2, 2003 Letter Agreement; and (iii) Station’s participation in CBS Newspath shall continue throughout the Term at the current rate of [*] plus a [*] annual increase effective on October 1, 2006, and, thereafter, by such annual increases agreed to by the CBS Affiliate Board. There will be no charge for NNS. CBS agrees that Station may repurpose and telecast its local news containing Newspath footage on its multicast digital channel; provided that, such telecast is merely a repeat of the initial telecast on KIMA.

As herein amended, all terms and conditions of the Agreement are ratified and confirmed. All individual reference herein to Station or Broadcaster shall apply to both collectively.

Four originals of this Letter Agreement are enclosed. Please indicate your approval by signing each original in the space provided below and return all originals to me for counter-execution. We will return two fully executed originals to you.

Accepted and agreed:

Fisher Broadcasting — Washington TV LLC	CBS AFFILIATE RELATIONS
	A Unit of CBS Broadcasting, Inc.

By:	/s/ Colleen B. Brown	By:	/s/ Peter K. Schruth
	Colleen B. Brown		Peter K. Schruth
	President & Chief Executive Officer		President

Best regards,

cc: P. Schruth, P. Farr, K. Freedman, J. Mitchell

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Schedule A KIMA Yakima

Current Clearance of CBS Programming on KIMA (all times local):

Monday-Friday
CBS Morning News	5:30-6:00am
The Early Show	7:00-9:00am (full network format)
Price Is Right	10:00-11:00am
Young & Restless	11:00am-12:00pm
Bold & Beautiful	12:30-1:00pm
As The World Turns	1:00-2:00pm
Guiding Light	2:00-3:00pm
CBS Evening News	5:30-6:00pm
Prime Time	8:00-11:00pm
Late Show	11:35pm-12:37am
Late Late Show	12:37am-1:37am
Up To The Minute	Minimum two hour clearance
Saturday
Saturday Early Show	5:00-7:00am
Kids Programming	7:00-10:00am
Sat. Evening News	6:00-6:30pm
Prime Time	8:00-11:00pm
Sunday
CBS Sun. Morning	Live Pacific Time Zone feed (see para. 4)
Face The Nation	Live Pacific Time Zone feed (see para. 4)
Sun. Evening News	6:00-6:30pm
Prime Time	7:00-11:00pm

EX-10.15

EXHIBIT 10.15

CBS TELEVISION
51 WEST 52 STREET
NEW YORK, NEW YORK 10019-6188

(212) 975-4191
FAX: (212) 975-4229
rtroutman@cbs.com

RHONDA TROUTMAN
SENIOR VICE PRESIDENT,
CBS AFFILIATE RELATIONS

January 6, 2006

Via Overnight Delivery

Ms. Colleen B. Brown
President & Chief Executive Officer
Fisher Communications, Inc.
100 Fourth Avenue, North
Suite 510
Seattle, Washington 98109

Dear Colleen:

Reference is made to the Affiliation Agreement (“the Agreement”) between Fisher Broadcasting, as assignee and successor to Fisher Broadcasting — Idaho TV, LLC, a wholly-owned subsidiary of Fisher Broadcasting Company; Retlaw Broadcasting of Boise LLC and Retlaw Enterprises, Inc.; and Northwest Television Inc. (“Broadcaster”) and CBS, dated February 13, 1996, as amended, regarding the affiliation of television station KBCI (“Station”), in Boise, Idaho, with the CBS Television Network.

You and we mutually agree in this Letter Agreement to the following amendments and additional terms and conditions of the Agreement:

1. In order to clarify that Broadcaster’s “first call” rights to Network Programs extend to such programs in digital format, you and we agree that the initial words of Paragraph 1 of the Agreement prior to the start of Subparagraph 1 (a) shall be deleted and replaced by the following language:

“1. Offer, Acceptance and Delivery of Network Programs

Broadcaster shall have a “first call”, as set forth below, on the program offerings of the CBS Television Network (“Network Programs”). Such “first call” rights shall apply to Network Programs in both analog and digital format, it being understood that, with respect to digital broadcasting, “Network Programs” shall refer to the “Primary Network Feed”, which during the digital transition shall mean the digital version of those programs transmitted to CBS Affiliates for the purpose of analog broadcasting, and not to any additional program streams that may be transmitted by the Network (i.e., “multi-plexed” programming).”

Ms. Colleen B. Brown
January 6, 2006
Page 2 of 8

2.	In order to clarify that Broadcaster’s network non-duplication protection rights apply to digital as well as analog broadcasting of Network Programs, you and we agree that the words “in analog and digital formats” shall be inserted into the second line of Subparagraph 9(b) of the Agreement after the words “network programming”, so that the beginning of this subparagraph will read as follows:
	“Broadcaster shall be entitled to exercise, within Affiliated Station’s Network Exclusivity Zone, the protection against duplication of network programming in analog and digital formats,”
	Also, due to modification of the FCC’s regulations, you and we agree that the reference in the same Subparagraph 9(b) to “Section 76.92 through 76.97 of the FCC rules” shall be amended to read “Sections 76.92 through 76.95 of the FCC rules.”

3. In addition, you and we agree to the following additional terms and conditions which shall be made part of the Agreement:

Station will, to the same extent as the Agreement provides for carriage of Network programs on its analog channel, transmit on such DTV channel the digital feed of such Network Programs in the technical format, consistent with the ATSC standards, provided by CBS, which shall be deemed to include the transmission by Station of all program related material, as defined below, provided by CBS which can be accommodated within a six MHz channel carrying a data stream of up to 19.4 megabits per second; provided, however, that nothing in the foregoing shall be deemed to prohibit Broadcaster from using digital compression technology in connection with the transmission by Station of all Network Programs and program-related material if, in the reasonable judgment of CBS engineers, such use does not materially degrade the audio or video quality of the Primary Network Feed. It is expressly understood that this Agreement applies only to the Primary Network Feed in digital format of the program provided by the Network to its affiliated stations, together with any associated program related material, and that Broadcaster will in no event be required to carry additional Network digital programming (i.e., “multiplexed” programming). Consistent with and subject to the foregoing, the Station shall have the right to use any available portion of its digital signal for the purpose of transmitting local programs or any other material; provided, however, that in the event that CBS proposes that the Station carry Network multiplexed programming or ancillary data which is not “program related material”, Broadcaster agrees to negotiate in good faith with CBS regarding the terms pursuant to which such multiplexed programming or ancillary data may be carried. As used in this paragraph,

Ms. Colleen B. Brown
January 6, 2006
Page 3 of 8

“program-related material” shall mean (i) information and material of a commercial or non-commercial nature which is directly related to the subject matter or identification of, or persons appearing in, the Network Programs, or to specific Network commercial advertisements or promotional announcements contained in the Network Programs, if such information or material is transmitted concurrently or substantially concurrently with the associated Network Program, commercial advertisement or promotional announcement (such information and material shall not require more than 3 megabits per second of digital bandwidth), (ii) closed-captioning information, (iii) program identification codes, (iv) program ratings information, (v) alternative language feeds related to the programming, (vi) video description information, and (vii) such other material as may be essential to or necessary for the delivery or distribution of the Network Programs in digital format.

4.	Subject to the FCC’s Right to Reject under Section 73.658(e) of the FCC’s Rules, and superseding previous understandings regarding clearance of network programming, Station will provide and maintain full, in-pattern clearance of all programs (or, any program’s replacement) on the CBS Television Network program schedule in all day-parts (including, but not limited to, Weekend Sports programming), in accordance with the foregoing and the attached Schedule A. Station agrees to broadcast such Network Program in its entirety (including but not limited to commercial announcements, billboards, credits, public service announcements, promotional announcements and network identification), without interruption, alteration, deletion or addition of any kind, from the beginning of the Network Program to the final system cue at the conclusion of the Network Program and not to downgrade, delay or change time periods of any Network Program without the written consent of CBS.
	Further, Station agrees (i) to continue to provide live clearance of THE EARLY SHOW (or its replacement), 7:00-9:00am local time, Monday-Friday, however, upon CBS’ discontinuance of the “co-op format,” to provide live clearance of the “full-network format” (or its replacement), 7:00-9:00am local time, Monday-Friday; and (ii) to provide year-round live clearance of CBS Sunday Evening News (or its replacement), 5:00-5:30pm local time on Sunday; and (iii) to continue to provide clearance of at least two (2) hours per weekday of the overnight service UP TO THE MINUTE (or its replacement).
	Broadcaster agrees to limit one-time-only primetime preemptions to no more than 15 hours per calendar year allocated proportionally in partial years (“the Primetime Preemption Cap”). For any Primetime preemption beyond 15 hours and up to 20 hours annually, the Station agrees to pay CBS [*] per hour

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 4 of 8

	with an increase effective on each anniversary of the Agreement of [*] (the “Primetime Preemption Fee”). Any Primetime preemption beyond 20 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules. Station acknowledges that any primetime preemptions of Network Programming in primetime for paid religion are done strictly for financial reasons and in consideration of the terms hereof agrees not to preempt Network Programming in primetime for paid religion during the Term.
	Similarly, Broadcaster agrees to limit one-time-only preemptions of Weekend Sports programming to no more than 11 hours per calendar year allocated proportionately in partial years(“the Weekend Sports Cap”). For any Weekend Sports preemption beyond 11 hours and up to 16 hours annually, the Station agrees to pay CBS [*] per hour with an increase effective on each anniversary of the Agreement of [*] (the “Weekend Preemption Fee”). Any Weekend Sports preemption beyond 16 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules.
	Station will promptly notify CBS of any preemption and payment of any Preemption Fee will be made within sixty (60) days of the written notification from CBS of the amount due.
	It is understood that Station’s obligations pursuant the above provisions shall be subject to Station’s rights under Section 73.658 (e) of the FCC’s rules and Paragraph 5 (a) of the Agreement, and that Station’s exercise of such rights shall in no event be deemed a breach of the obligations set forth in the above paragraph and shall not count against the Primetime Preemption Cap or the Weekend Sports Cap as set forth above; provided, however, that nothing in the foregoing will be construed to permit Station to preempt a program, regardless of the reason for the preemption, in its live or agreed time period, and then broadcast such program in a different time period, without the express written consent of CBS. Station will use its best efforts to provide makegoods in a mutually agreed upon time period for all primetime preemptions made for reasons other than the Right to Reject Rule as defined in Section 73.658(e) of the FCC rules.
5.	This Letter Agreement and the terms herein shall become effective March 1, 2006 and Paragraph 3 (a) of the Agreement shall be deleted and replaced by the following new Paragraph 3(a):

“3. Term and Termination.

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 5 of 8

(a) Term.

The term of this Agreement shall be the period commencing on March 1, 2006 and expiring on February 29, 2016. Notwithstanding any provision of any offer or acceptance under Paragraph 1 hereof, upon the expiration or any termination of the term of this Agreement, Broadcaster shall have no right whatsoever to broadcast over Affiliated Station any Network Program.”

6.	Station agrees to participate in CBS’ Coop and Promo Swap Programs provided the elements of such Programs remain as currently defined.
7.	Station agrees to abide by the standard CBS Service Mark requirements specifying acceptable ways Station may utilize the CBS Eye Service Mark in on-air and print advertising.
8.	The Affiliated Station’s Annual Net Compensation as specified in Paragraphs 2(a) through 2(c) of the Agreement will be revised to the amount shown below on the indicated Effective Date:

Effective	Annual Net
Date	Compensation
March 1, 2006 — February 28, 2007	[*]
March 1, 2007 — February 28, 2008	[*]
March 1,2008 — February 29,2016	[*]

The foregoing represents CBS’s total financial contribution to Station during this Term and supersedes all previous agreements with respect thereto, including, but not limited to, all compensation, promotion and capital contributions. Payments of Annual Net Compensation shall be paid in twelve (12) equal installments and shall be due and payable monthly, in arrears, within 20 days from the end of each calendar month during the applicable period for which Annual Net Compensation is due. All references in the Agreement to Network Rate shall be deleted.

9. Paragraph 4 of the Agreement is hereby amended by changing the existing subparagraph (c) to subparagraph (d) and inserting the following new subparagraph (c):

[*]Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 6 of 8

(c) Notwithstanding the foregoing, CBS consents to Station granting direct broadcast satellite service carriers the right to retransmit its signal, including CBS programming outside of Station’s television market where Station is significantly viewed and according to the provisions of the Satellite Home Viewer Extension and Reauthorization Act of 2004, signed into law by the President on December 8, 2004; provided, that the local CBS affiliate is carried on the service in the county. CBS consent herein is limited to Station’s initial agreement with carrier and Station must obtain consent before entering into any renewal, extension or new agreement which includes CBS programming.

10.

In order to reflect that television markets now generally are defined with reference to Nielsen DMAs rather than with reference to Arbitron ADIs, you and we agree that in Subparagraph 9(a) of the Agreement the language “the Area of Dominant Influence (ADI), as determined by Arbitron and published in the then-current edition of its Television ADI Market Guide,” shall be stricken and replaced with the following: “the Designated Market Area (DMA), as most recently determined by the A.C. Nielsen Company,”.

11.

In order to permit notices pursuant to the Agreement to be made by facsimile delivery, you and we agree that the word “facsimile” shall be inserted between “personal delivery,” and “mail” in the first sentence of Subparagraph 11(d) of the Agreement, so that the beginning of the Subparagraph will read as follows:

“11(d) Unless specified otherwise, all notices given hereunder shall be given in writing by personal delivery, facsimile, mail,”

12. The terms of this Letter and Affiliation Agreement, and discussions related thereto, will not be disclosed to anyone who is not either employed by the Station or the corporate ownership of the Station and such disclosure shall be subject to the employees agreement to this Confidentiality provision; it being understood, however, that adherence to FCC filing requirements and disclosures will not constitute a violation of this point; provided, that all terms not required to be disclosed by the FCC are redacted. Any press release regarding the terms of this negotiation or Agreement, shall be made jointly by the parties.

Further, it is hereby ratified and reaffirmed that throughout this Term the: (i) terms of the September 23, 1998 and October 22, 2001 Letter Agreements between you and us which established, among other things, Station’s NFL Contribution and placed

Ms. Colleen B. Brown
January 6, 2006
Page 7 of 8

various program exclusivity requirements on the Network, plus any increase or renewals agreed to by Station and CBS, shall remain in full force and effect per the terms of that Letter Agreement; (ii) Station’s participation in the NCAA Exchange Value Program will continue as set forth in the December 2, 2003 Letter Agreement; and (iii) Station’s participation in CBS Newspath shall continue throughout the Term at the current rate of [*] plus a [*] annual increase effective on October 1, 2006, and, thereafter, by such annual increases agreed to by the CBS Affiliate Board. There will be no charge for NNS. CBS agrees that Station may repurpose and telecast its local news containing Newspath footage on its multicast digital channel; provided that, such telecast is merely a repeat of the initial telecast on KBCI.

As herein amended, all terms and conditions of the Agreement are ratified and confirmed. All individual reference herein to Station or Broadcaster shall apply to both collectively.

Four originals of this Letter Agreement are enclosed. Please indicate your approval by signing each original in the space provided below and return all originals to me for counter-execution. We will return two fully executed originals to you.

Accepted and agreed:

Fisher Broadcasting — Idaho TV LLC	CBS AFFILIATE RELATIONS
	A Unit of CBS Broadcasting, Inc.

By:	/s/ Colleen B. Brown	By:	/s/ Peter K. Schruth
	Colleen B. Brown		Peter K. Schruth
	President & Chief Executive Officer		President

Best regards,

cc: P. Schruth, P. Farr, K. Freedman, J. Mitchell

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Schedule A KBCI Boise

Current Clearance of CBS Programming on KBCI (all times local):

Monday-Friday
CBS Morning News	5:30-6:00am
The Early Show	7:00-9:00am (Co-op format)
Price Is Right	9:00-10:00am
Young & Restless	10:00-11:00am
Bold & Beautiful	12:30-1:00pm
As The World Turns	1:00-2:00pm
Guiding Light	2:00-3:00pm
CBS Evening News	5:00-5:30pm
Prime Time	7:00-10:00pm
Late Show	10:35-11:37pm
Late Late Show	11:37pm-12:37am
Up To The Minute	Minimum two hour clearance
Saturday
Saturday Early Show	5:00-7:00am
Kids Programming	7:00-10:00am
Sat. Evening News	5:00-5:30pm
Prime Time	7:00-10:00pm
Sunday
CBS Sun. Morning	8:00-9:30am
Face The Nation	9:30-10:00am
Sun. Evening News	5:00-5:30pm*
Prime Time	6:00-10:00pm

EX-10.16

EXHIBIT 10.16

CBS TELEVISION
51 WEST 52 STREET
NEW YORK, NEW YORK 10019-6188

(212) 975-4191
FAX: (212) 975-4229
rtroutman@cbs.com

RHONDA TROUTMAN
SENIOR VICE PRESIDENT,
CBS AFFILIATE RELATIONS

January 6, 2006

Via Overnight Delivery

Ms. Colleen B. Brown
President & Chief Executive Officer
Fisher Communications, Inc.
100 Fourth Avenue, North
Suite 510
Seattle, Washington 98109

Dear Colleen:

Reference is made to the Affiliation Agreement (“the Agreement”) between Fisher Broadcasting, as assignee and successor to Fisher Broadcasting — Idaho TV, LLC, a wholly-owned subsidiary of Fisher Broadcasting Company; Retlaw Broadcasting of Boise LLC and Retlaw Enterprises, Inc. (“Broadcaster”) and CBS, dated February 13, 1996, as amended, regarding the affiliation of television station KIDK (“Station”), in Idaho Falls, Idaho, with the CBS Television Network.

You and we mutually agree in this Letter Agreement to the following amendments and additional terms and conditions of the Agreement:

1. In order to clarify that Broadcaster’s “first call” rights to Network Programs extend to such programs in digital format, you and we agree that the initial words of Paragraph 1 of the Agreement prior to the start of Subparagraph 1 (a) shall be deleted and replaced by the following language:

“1. Offer, Acceptance and Delivery of Network Programs

Broadcaster shall have a “first call”, as set forth below, on the program offerings of the CBS Television Network (“Network Programs”). Such “first call” rights shall apply to Network Programs in both analog and digital format, it being understood that, with respect to digital broadcasting, “Network Programs” shall refer to the “Primary Network Feed”, which during the digital transition shall mean the digital version of those programs transmitted to CBS Affiliates for the purpose of analog broadcasting, and not to any additional program streams that may be transmitted by the Network (i.e., “multi-plexed” programming).”

Ms. Colleen B. Brown
January 6, 2006
Page 2 of 8

2.	In order to clarify that Broadcaster’s network non-duplication protection rights apply to digital as well as analog broadcasting of Network Programs, you and we agree that the words “in analog and digital formats” shall be inserted into the second line of Subparagraph 9(b) of the Agreement after the words “network programming”, so that the beginning of this subparagraph will read as follows:
	“Broadcaster shall be entitled to exercise, within Affiliated Station’s Network Exclusivity Zone, the protection against duplication of network programming in analog and digital formats,”
	Also, due to modification of the FCC’s regulations, you and we agree that the reference in the same Subparagraph 9(b) to “Section 76.92 through 76.97 of the FCC rules” shall be amended to read “Sections 76.92 through 76.95 of the FCC rules.”

3. In addition, you and we agree to the following additional terms and conditions which shall be made part of the Agreement:

Station will, to the same extent as the Agreement provides for carriage of Network programs on its analog channel, transmit on such DTV channel the digital feed of such Network Programs in the technical format, consistent with the ATSC standards, provided by CBS, which shall be deemed to include the transmission by Station of all program related material, as defined below, provided by CBS which can be accommodated within a six MHz channel carrying a data stream of up to 19.4 megabits per second; provided, however, that nothing in the foregoing shall be deemed to prohibit Broadcaster from using digital compression technology in connection with the transmission by Station of all Network Programs and program-related material if, in the reasonable judgment of CBS engineers, such use does not materially degrade the audio or video quality of the Primary Network Feed. It is expressly understood that this Agreement applies only to the Primary Network Feed in digital format of the program provided by the Network to its affiliated stations, together with any associated program related material, and that Broadcaster will in no event be required to carry additional Network digital programming (i.e., “multiplexed” programming). Consistent with and subject to the foregoing, the Station shall have the right to use any available portion of its digital signal for the purpose of transmitting local programs or any other material; provided, however, that in the event that CBS proposes that the Station carry Network multiplexed programming or ancillary data which is not “program related material”, Broadcaster agrees to negotiate in good faith with CBS regarding the terms pursuant to which such multiplexed programming or ancillary data may be carried. As used in this paragraph,

Ms. Colleen B. Brown
January 6, 2006
Page 3 of 8

“program-related material” shall mean (i) information and material of a commercial or non-commercial nature which is directly related to the subject matter or identification of, or persons appearing in, the Network Programs, or to specific Network commercial advertisements or promotional announcements contained in the Network Programs, if such information or material is transmitted concurrently or substantially concurrently with the associated Network Program, commercial advertisement or promotional announcement (such information and material shall not require more than 3 megabits per second of digital bandwidth), (ii) closed-captioning information, (iii) program identification codes, (iv) program ratings information, (v) alternative language feeds related to the programming, (vi) video description information, and (vii) such other material as may be essential to or necessary for the delivery or distribution of the Network Programs in digital format.

4.	Subject to the FCC’s Right to Reject under Section 73.658(e) of the FCC’s Rules, and superseding previous understandings regarding clearance of network programming, Station will provide and maintain full, in-pattern clearance of all programs (or, any program’s replacement) on the CBS Television Network program schedule in all day-parts (including, but not limited to, Weekend Sports programming), in accordance with the foregoing and the attached Schedule A. Station agrees to broadcast such Network Program in its entirety (including but not limited to commercial announcements, billboards, credits, public service announcements, promotional announcements and network identification), without interruption, alteration, deletion or addition of any kind, from the beginning of the Network Program to the final system cue at the conclusion of the Network Program and not to downgrade, delay or change time periods of any Network Program without the written consent of CBS.
	Further, Station agrees (i) to continue to provide live clearance of THE EARLY SHOW (or its replacement), 7:00-9:00am local time, Monday-Friday, however, upon CBS’ discontinuance of the “co-op format,” to provide live clearance of the “full-network format” (or its replacement), 7:00-9:00am local time, Monday-Friday; and (ii) to continue to provide clearance of at least two (2) hours per weekday of the overnight service UP TO THE MINUTE (or its replacement).
	Broadcaster agrees to limit one-time-only primetime preemptions to no more than 12 hours per calendar year allocated proportionally in partial years (“the Primetime Preemption Cap”). For any Primetime preemption beyond 12 hours and up to 17 hours annually, the Station agrees to pay CBS [*] per hour

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 4 of 8

	with an increase effective on each anniversary of the Agreement of [*] (the “Primetime Preemption Fee”). Any Primetime preemption beyond 17 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules. Station acknowledges that any primetime preemptions of Network Programming in primetime for paid religion are done strictly for financial reasons and in consideration of the terms hereof agrees not to preempt Network Programming in primetime for paid religion during the Term.
	Similarly, Broadcaster agrees to limit one-time-only preemptions of Weekend Sports programming to no more than 13 hours per calendar year allocated proportionately in partial years(“the Weekend Sports Cap”). For any Weekend Sports preemption beyond 13 hours and up to 18 hours annually, the Station agrees to pay CBS [*] per hour with an increase effective on each anniversary of the Agreement of [*] (the “Weekend Preemption Fee”). Any Weekend Sports preemption beyond 18 hours annually shall be considered a breach of the Affiliation Agreement unless such preemptions are made pursuant to Section 73.658(e) of the FCC’s rules.
	Station will promptly notify CBS of any preemption and payment of any Preemption Fee will be made within sixty (60) days of the written notification from CBS of the amount due.
	It is understood that Station’s obligations pursuant the above provisions shall be subject to Station’s rights under Section 73.658 (e) of the FCC’s rules and Paragraph 5 (a) of the Agreement, and that Station’s exercise of such rights shall in no event be deemed a breach of the obligations set forth in the above paragraph and shall not count against the Primetime Preemption Cap or the Weekend Sports Cap as set forth above; provided, however, that nothing in the foregoing will be construed to permit Station to preempt a program, regardless of the reason for the preemption, in its live or agreed time period, and then broadcast such program in a different time period, without the express written consent of CBS. Station will use its best efforts to provide makegoods in a mutually agreed upon time period for all primetime preemptions made for reasons other than the Right to Reject Rule as defined in Section 73.658(e) of the FCC rules.
5.	This Letter Agreement and the terms herein shall become effective March 1, 2006 and Paragraph 3 (a) of the Agreement shall be deleted and replaced by the following new Paragraph 3(a):

“3. Term and Termination.

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 5 of 8

(a) Term.

The term of this Agreement shall be the period commencing on March 1, 2006 and expiring on February 29, 2016. Notwithstanding any provision of any offer or acceptance under Paragraph 1 hereof, upon the expiration or any termination of the term of this Agreement, Broadcaster shall have no right whatsoever to broadcast over Affiliated Station any Network Program.”

6.	Station agrees to participate in CBS’ Coop and Promo Swap Programs provided the elements of such Programs remain as currently defined.
7.	Station agrees to abide by the standard CBS Service Mark requirements specifying acceptable ways Station may utilize the CBS Eye Service Mark in on-air and print advertising.
8.	The Affiliated Station’s Annual Net Compensation as specified in Paragraphs 2(a) through 2(c) of the Agreement will be revised to the amount shown below on the indicated Effective Date:

Effective	Annual Net
Date	Compensation
March 1, 2006 — February 28, 2007	[*]
March 1, 2007 — February 28, 2008	[*]
March 1,2008 — February 29,2016	[*]

The foregoing represents CBS’s total financial contribution to Station during this Term and supersedes all previous agreements with respect thereto, including, but not limited to, all compensation, promotion and capital contributions. Payments of Annual Net Compensation shall be paid in twelve (12) equal installments and shall be due and payable monthly, in arrears, within 20 days from the end of each calendar month during the applicable period for which Annual Net Compensation is due. All references in the Agreement to Network Rate shall be deleted.

9. Paragraph 4 of the Agreement is hereby amended by changing the existing subparagraph (c) to subparagraph (d) and inserting the following new subparagraph (c):

[*]Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Ms. Colleen B. Brown
January 6, 2006
Page 6 of 8

(c) Notwithstanding the foregoing, CBS consents to Station granting direct broadcast satellite service carriers the right to retransmit its signal, including CBS programming outside of Station’s television market where Station is significantly viewed and according to the provisions of the Satellite Home Viewer Extension and Reauthorization Act of 2004, signed into law by the President on December 8, 2004; provided, that the local CBS affiliate is carried on the service in the county. CBS consent herein is limited to Station’s initial agreement with carrier and Station must obtain consent before entering into any renewal, extension or new agreement which includes CBS programming.

10.

In order to reflect that television markets now generally are defined with reference to Nielsen DMAs rather than with reference to Arbitron ADIs, you and we agree that in Subparagraph 9(a) of the Agreement the language “the Area of Dominant Influence (ADI), as determined by Arbitron and published in the then-current edition of its Television ADI Market Guide,” shall be stricken and replaced with the following: “the Designated Market Area (DMA), as most recently determined by the A.C. Nielsen Company,”.

11.

In order to permit notices pursuant to the Agreement to be made by facsimile delivery, you and we agree that the word “facsimile” shall be inserted between “personal delivery,” and “mail” in the first sentence of Subparagraph 11(d) of the Agreement, so that the beginning of the Subparagraph will read as follows:

“11(d) Unless specified otherwise, all notices given hereunder shall be given in writing by personal delivery, facsimile, mail,”

12. The terms of this Letter and Affiliation Agreement, and discussions related thereto, will not be disclosed to anyone who is not either employed by the Station or the corporate ownership of the Station and such disclosure shall be subject to the employees agreement to this Confidentiality provision; it being understood, however, that adherence to FCC filing requirements and disclosures will not constitute a violation of this point; provided, that all terms not required to be disclosed by the FCC are redacted. Any press release regarding the terms of this negotiation or Agreement, shall be made jointly by the parties.

Further, it is hereby ratified and reaffirmed that throughout this Term the: (i) terms of the September 23, 1998 and October 22, 2001 Letter Agreements between you and us which established, among other things, Station’s NFL Contribution and placed

Ms. Colleen B. Brown
January 6, 2006
Page 7 of 8

various program exclusivity requirements on the Network, plus any increase or renewals agreed to by Station and CBS, shall remain in full force and effect per the terms of that Letter Agreement; (ii) Station’s participation in the NCAA Exchange Value Program will continue as set forth in the December 2, 2003 Letter Agreement; and (iii) Station’s participation in CBS Newspath shall continue throughout the Term at the current rate of [*] plus a [*] annual increase effective on October 1, 2006, and, thereafter, by such annual increases agreed to by the CBS Affiliate Board. There will be no charge for NNS. CBS agrees that Station may repurpose and telecast its local news containing Newspath footage on its multicast digital channel; provided that, such telecast is merely a repeat of the initial telecast on KIDK.

As herein amended, all terms and conditions of the Agreement are ratified and confirmed. All individual reference herein to Station or Broadcaster shall apply to both collectively.

Four originals of this Letter Agreement are enclosed. Please indicate your approval by signing each original in the space provided below and return all originals to me for counter-execution. We will return two fully executed originals to you.

Accepted and agreed:

Fisher Broadcasting — Idaho TV LLC	CBS AFFILIATE RELATIONS
	A Unit of CBS Broadcasting, Inc.

By:	/s/ Colleen B. Brown	By:	/s/ Peter K. Schruth
	Colleen B. Brown		Peter K. Schruth
	President & Chief Executive Officer		President

Best regards,

cc: P. Schruth, P. Farr, K. Freedman, J. Mitchell

[*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Schedule A KIDK Idaho Falls

Current Clearance of CBS Programming on KIDK (all times local):

Monday-Friday
CBS Morning News	5:30-6:00am
The Early Show	7:00-9:00am (Co-op format)
Price Is Right	9:00-10:00am
Young & Restless	10:00-11:00am
Bold & Beautiful	12:30-1:00pm
Guiding Light	1:00-2:00pm
As The World Turns	2:00-3:00pm
CBS Evening News	5:30-6:00pm
Prime Time	7:00-10:00pm
Late Show	10:35-11:37pm
Late Late Show	11:37pm-12:37am
Up To The Minute	Minimum two hour clearance
Saturday
Saturday Early Show	5:00-7:00am
Kids Programming	7:00-10:00am
Sat. Evening News	4:30-5:00pm
Prime Time	7:00-10:00pm
Sunday
CBS Sun. Morning	7:00-8:30am
Face The Nation	8:30-9:00am
Sun. Evening News	5:00-5:30pm
Prime Time	6:00-10:00pm

EX-21.1

Exhibit No. 21.1

Fisher Communications, Inc.
Subsidiaries

	Jurisdiction in which
Subsidiary	Organized
Fisher Broadcasting Company	Washington
Fisher Mills Inc.	Washington
Fisher Properties Inc.	Washington
Fisher Media Services Company	Washington
Fisher Radio Regional Group Inc. /(1)/	Washington
Fisher Broadcasting — Seattle TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Seattle Radio, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Portland TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Oregon TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Washington TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Idaho TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — S.E. Idaho TV, L.L.C. /(1)/	Delaware

(1) Wholly owned by Fisher Broadcasting Company

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-32103) of our report dated March 14, 2006, relating to the consolidated financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, of Fisher Communications, Inc., which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Seattle, Washington
March 14, 2006

EX-31.1

Exhibit 31.1

Section 302 Certification
Annual Report on Form 10-K

I, Colleen B. Brown, certify that:

1.	I have reviewed this annual report on Form 10-K of Fisher Communications, Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d)	disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 14, 2006

/s/ COLLEEN B. BROWN

Colleen B. Brown

President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

Section 302 Certification
Annual Report on Form 10-K

I, Robert C. Bateman, certify that:

1.	I have reviewed this annual report on Form 10-K of Fisher Communications, Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d)	disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 14, 2006

/s/ Robert C. Bateman

Robert C. Bateman,

Senior Vice President,

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Fisher Communications, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, Colleen B. Brown, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 14, 2006

/s/ COLLEEN B. BROWN  

Colleen B. Brown
President and Chief Executive Officer 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Fisher Communications, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, Robert C. Bateman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 14, 2006

/s/ ROBERT C. BATEMAN  

Robert C. Bateman 

Senior Vice President
Chief Financial Officer