UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2008

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: 0-22439

FISHER COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

WASHINGTON	91-0222175
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

100 Fourth Ave. N., Suite 510
Seattle, Washington 98109
(Address of Principal Executive Offices) (Zip Code)

(206) 404-7000
(Registrant’s Telephone Number, Including Area Code)

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

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

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

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $1.25 par value, outstanding as of November 1, 2008: 8,735,101

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

     The following Condensed Consolidated Financial Statements (unaudited) are presented for the Registrant, Fisher Communications, Inc., and its subsidiaries.

1. Condensed Consolidated Statements of Operations: Three and nine months ended September 30, 2008 and 2007	3
2. Condensed Consolidated Balance Sheets: September 30, 2008 and December 31, 2007	4
3. Condensed Consolidated Statements of Cash Flows: Nine months ended September 30, 2008 and 2007	5
4. Condensed Consolidated Statements of Comprehensive Income: Three and nine months ended September 30, 2008 and 2007	6
5. Unaudited Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	32
PART II	33
OTHER INFORMATION	33
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Submission of Matters to a Vote of Security Holders	33
Item 5. Other Information	33
Item 6. Exhibits	33
SIGNATURES	34
EXHIBIT INDEX	35
EX-31.1
EX-31.2
EX-32.1
EX-32.2

2

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Nine months ended						Three months ended
(in thousands, except per-share amounts)	September 30						September 30
(Unaudited)	2008			2007			2008			2007
Revenue	$	124,958		$	116,340		$	41,945		$	40,798
Costs and expenses
Direct operating costs (exclusive of depreciation and amortization of $7,728, $7,198, $2,568, and $2,312, respectively, and amortization of program rights of $16,818, $16,804, $7,357, and $7,370, respectively, reported separately below)		53,079			46,387			17,704			15,305
Selling, general and administrative expenses		49,675			38,818			14,794			13,617
Amortization of program rights		16,818			16,804			7,357			7,370
Depreciation and amortization		9,352			8,668			3,099			2,811
		128,924			110,677			42,954			39,103
Income (loss) from operations		(3,966	)		5,663			(1,009	)		1,695
Other income, net		155,800			3,683			50,044			1,387
Interest expense, net		(10,343	)		(10,222	)		(3,441	)		(3,318	)
Income (loss) from continuing operations before income taxes		141,491			(876	)		45,594			(236	)
Provision for federal and state income taxes		49,141			294			15,859			365
Income (loss) from continuing operations		92,350			(1,170	)		29,735			(601	)
Income from discontinued operations, net of income taxes		33			1,648			40			68
Net income (loss)	$	92,383		$	478		$	29,775		$	(533	)
Income (loss) per share:
From continuing operations	$	10.58		$	(0.14	)	$	3.41		$	(0.07	)
From discontinued operations		—			0.19			—			0.01
Net income (loss) per share	$	10.58		$	0.05		$	3.41		$	(0.06	)
Income (loss) per share assuming dilution:
From continuing operations	$	10.58		$	(0.14	)	$	3.41		$	(0.07	)
From discontinued operations		—			0.19			—			0.01
Net income (loss) per share assuming dilution	$	10.58		$	0.05		$	3.41		$	(0.06	)
Weighted average shares outstanding		8,731			8,722			8,733			8,724
Weighted average shares outstanding assuming dilution		8,735			8,722			8,741			8,724
Dividends declared per share	$	3.50		$	—		$	3.50		$	—

See accompanying notes to condensed consolidated financial statements.

3

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per-share amounts)	September 30			December 31
(Unaudited)	2008			2007
ASSETS
Current Assets
Cash and cash equivalents	$	19,167		$	6,510
Short-term investments		59,195
Receivables, net		29,719			30,498
Deferred income taxes		785			785
Prepaid expenses and other assets		2,828			3,855
Television and radio broadcast rights		8,387			5,934
Assets held for sale		43			37
Total current assets		120,124			47,619
Restricted cash					52,365
Marketable securities, at market value		899			129,223
Cash value of life insurance and retirement deposits		17,476			16,809
Television and radio broadcast rights		80			7
Goodwill		52,294			37,361
Intangible assets		78,820			42,782
Investment in equity investee		2,684			2,635
Deferred financing fees and other assets		4,803			9,072
Assets held for sale		2,052			2,053
Property, plant and equipment, net		148,235			146,008
Total Assets	$	427,467		$	485,934
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	3,757		$	3,737
Accrued payroll and related benefits		4,969			7,614
Interest payable		539			3,773
Television and radio broadcast rights payable		8,366			4,940
Income taxes payable		—			3,959
Current portion of accrued retirement benefits		1,230			1,230
Other current liabilities		7,376			4,218
Liabilities of businesses held for sale		59			100
Total current liabilities		26,296			29,571
Long-term debt		150,000			150,000
Accrued retirement benefits		18,568			18,552
Deferred income taxes		7,783			45,274
Other liabilities		11,852			9,140
Commitments and Contingencies
Stockholders’ Equity
Common stock, shares authorized 12,000,000, $1.25 par value; issued and outstanding 8,733,200 as of September 30, 2008 and 8,725,516 as of December 31, 2007		10,917			10,907
Capital in excess of par		10,907			10,220
Accumulated other comprehensive income (loss), net of income taxes:
Unrealized gain (loss) on marketable securities		(56	)		82,818
Accumulated loss		(1,933	)		(1,958	)
Prior service cost		(157	)		(181	)
Retained earnings		193,290			131,591
Total Stockholders’ Equity		212,968			233,397
Total Liabilities and Stockholders’ Equity	$	427,467		$	485,934

See accompanying notes to condensed consolidated financial statements.

4

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine months ended
(in thousands)	September 30
(Unaudited)	2008			2007
Cash flows from operating activities
Net income	$	92,383		$	478
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization		9,352			8,668
Deferred income taxes		7,134			(167	)
Dividends from equity investee		—			150
Amortization of deferred financing fees		474			474
Amortization of program rights		16,818			16,804
Payments for television and radio broadcast rights		(15,849	)		(15,740	)
Gain on sale of marketable securities		(152,610	)		—
Amortization of short-term investment discount		(286	)		—
Net non-cash contract termination fee		4,990			—
Amortization of non-cash contract termination fee		(898	)		(652	)
Gain on sale of radio station		—			(1,491	)
Equity in operations of equity investees		(50	)		42
Stock-based compensation		665			514
Other		366			40
Change in operating assets and liabilities
Receivables		779			(2,199	)
Prepaid expenses and other current assets		815			431
Cash value of life insurance and retirement deposits		(667	)		(607	)
Other assets		1,042			711
Trade accounts payable, accrued payroll and related benefits, interest payable, and other current liabilities		(3,370	)		(4,235	)
Income taxes receivable and payable		(3,959	)		(98	)
Accrued retirement benefits		16			(23	)
Other liabilities		(704	)		234
Net cash provided by (used in) operating activities		(43,559	)		3,334
Cash flows from investing activities
Purchases of marketable securities		(77	)		(182	)
Purchases of short-term investments		(58,909	)		—
Proceeds from sales of marketable securities		153,513			133
Deposits paid for purchase of television stations		—			(2,750	)
Proceeds from sale of radio station		—			2,869
Purchase of television stations		(52,365	)		(4,931	)
Decrease in restricted cash		52,365			8,473
Purchase of online news service		—			(1,482	)
Purchase of intangible assets		(285	)		—
Proceeds from sale of property, plant & equipment		—			1,250
Purchase of property, plant and equipment		(7,235	)		(6,740	)
Net cash provided by (used in) investing activities		87,007			(3,360	)
Cash flows from financing activities
Borrowings under borrowing agreements		21,000			6,000
Payments on borrowing agreements		(21,000	)		(6,000	)
Payment of capital lease obligation		(107	)		(11	)
Proceeds from exercise of stock options		—			39
Cash dividends paid		(30,684	)		—
Net cash provided by (used in) financing activities		(30,791	)		28
Net increase in cash and cash equivalents		12,657			2
Cash and cash equivalents, beginning of period		6,510			7,477
Cash and cash equivalents, end of period	$	19,167		$	7,479

See accompanying notes to condensed consolidated financial statements.

5

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Nine months ended						Three months ended
(in thousands)	September 30						September 30
(Unaudited)	2008			2007			2008			2007
Net income (loss)	$	92,383		$	478		$	29,775		$	(533	)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities		25,111			(3,961	)		(1,380	)		(3,121	)
Effect of income taxes		(8,789	)		1,386			483			1,092
Accumulated loss		40			32			13			11
Effect of income taxes		(14	)		(11	)		(5	)		(4	)
Prior service cost		36			36			12			12
Effect of income taxes		(13	)		(12	)		(5	)		(4	)
Reclassification adjustment for gains included in net income		(152,610	)		(22	)		(48,999	)		(14	)
Effect of income taxes		53,414			8			17,150			5
Other comprehensive loss		(82,825	)		(2,544	)		(32,731	)		(2,023	)
Comprehensive income (loss)	$	9,558		$	(2,066	)	$	(2,956	)	$	(2,556	)

See accompanying notes to condensed consolidated financial statements.

6

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

     The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments which are necessary to state fairly the consolidated financial position, results of operations, and cash flows of Fisher Communications, Inc. and its consolidated subsidiaries (the “Company”) as of and for the periods indicated. Any adjustments are of a normal recurring nature. Fisher Communications, Inc.’s principal wholly owned subsidiaries include Fisher Broadcasting Company and Fisher Media Services Company. The Company presumes that users of the interim financial information herein have read or have access to the Company’s audited consolidated financial statements and that the adequacy of additional disclosure needed for a fair statement, except in regard to material contingencies or recent subsequent events, may be determined in that context. Accordingly, footnote and other disclosures which would substantially duplicate the disclosures contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 filed by the Company on March 14, 2008 have been omitted. The financial information herein is not necessarily representative of a full year’s operations.

          Reclassifications

     Certain amounts in the 2007 condensed consolidated statement of operations have been reclassified to conform to the 2008 presentation. Certain employment-related expenses totaling $1.4 million and $4.5 million for the three and nine months ended September 30, 2007, respectively, which were previously reported within “Selling, general and administrative expenses”, are now reported within “Direct operating costs”. The reclassifications have no effect on income from operations, shareholders’ equity, cash flows from operating, or investing or financing activities.

2. Summary of Significant Accounting Policies

     The significant accounting policies used in preparation of the condensed consolidated financial statements are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. Additional significant accounting policies for 2008 are disclosed below.

          Fair Value Measurements

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. SFAS 157 does not expand or require any new fair value measures; however, the application of this statement may change current practice. The requirements of SFAS 157 are effective for the Company’s fiscal year beginning January 1, 2008; however, the FASB provides a one year deferral for the implementation of SFAS 157 for nonfinancial assets and liabilities. The adoption of SFAS 157 did not have any impact on the Company’s results of operations, financial position or cash flows.

     SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 also establishes a three-tier hierarchy, which prioritizes the inputs used to measure fair value as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

7

     Assets and liabilities measured at fair value on a recurring basis consist of marketable securities, for which the reported fair value of $899,000 at September 30, 2008 is measured using Level 1 inputs.

3. Recent Accounting Pronouncements

     In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). This standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles in the United States for non-governmental entities. SFAS 162 is effective 60 days following approval by the SEC of the PCAOB’s amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company does not expect SFAS 162 to have an impact on the preparation of its consolidated financial statements.

     In April 2008, the FASB issued Staff Position (“FSP”) No. 142-3, Determination of the Useful Life of Intangible Assets. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141(R), Business Combinations. The requirements of FSP 142-3 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 (for acquisitions closed on or after January 1, 2009 for the Company). The impact that FSP 142-3 will have on the Company’s consolidated financial statements when effective will depend upon the nature, terms and size of the acquisitions completed after the effective date.

     In February 2008, the FASB issued FSP No. FAS 157-2, Fair Value Measurements. This FSP delays the effective date of SFAS 157 until January 1, 2009 for all nonfinancial assets and liabilities, except those recognized or disclosed at fair value in the financial statements on a recurring basis. Nonfinancial assets and liabilities include, among other things: intangible assets acquired through business combinations; long-lived assets when assessing potential impairment; and liabilities associated with restructuring activities. The Company has not yet determined the impact, if any, that adoption of FAS 157 for nonfinancial assets and liabilities will have on its consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“FAS 141R”). FAS 141R retains the fundamental requirements in FAS 141 that the acquisition method of accounting (which FAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. FAS 141R also establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; (b) improves the completeness of the information reported about a business combination by changing the requirements for recognizing assets acquired and liabilities assumed arising from contingencies; (c) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (d) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 (for acquisitions closed on or after January 1, 2009 for the Company). Early application is not permitted. The impact that FAS 141R will have on the Company’s consolidated financial statements when effective will depend upon the nature, terms and size of the acquisitions completed after the effective date.

4. Sale of Safeco Corporation Common Stock

     In June 2008, the Company sold 1,548,956 shares of Safeco Corporation (“Safeco”) common stock, which represented 67.3% of the Company’s total Safeco holdings. The shares were sold at an average price of $67.27 per share, resulting in pre-tax net proceeds to the Company of $104.1 million. The book basis of the shares sold totalled $526,000, resulting in a pre-tax gain on sale of $103.6 million.

8

     In July 2008, the Company sold the remaining 753,720 shares of Safeco common stock. The shares were sold at an average price of $65.38 per share, resulting in pre-tax net proceeds to the Company of $49.3 million. The book basis of the shares sold totalled $256,000, resulting in a pre-tax gain on sale of $49.0 million.

     The pre-tax gain on 2008 sales of $49.0 million and $152.6 million for the three and nine-month periods ended September 30, 2008, respectively, is included in other income, net.

     The Company’s senior notes indenture contains provisions that limit its ability to distribute proceeds from asset sales, which includes the proceeds from the sale of the Company’s shares of Safeco Corporation common stock. In the event that the Company does not use the proceeds from asset sales for qualifying purposes (as specified in the indenture) within 360 days from the date of sale, the Company will be required to offer to repurchase its outstanding senior notes at par value to the extent of such unused proceeds. The credit agreement for the Company’s senior revolving credit facility also contains restrictions on the use of proceeds from asset sales for purposes that are not qualifying purposes, as specified in the credit agreement.

5. Short-Term Investments

     The Company’s short-term investments are comprised of commercial paper with original maturities of greater than 91 days but less than one year. The Company has classified its short-term investments as held-to-maturity as the Company has the intent and ability to hold these securities to maturity. The securities are carried at amortized cost using the specific identification method, and interest income is recorded using an effective interest rate with the associated discount amortized to interest income. The carrying value of $59.2 million approximates fair value at September 30, 2008. Fair values for these investments are estimated using best available evidence including broker quotes, prices for similar investments, interest rates and credit risk.

6. Acquisitions

     On August 3, 2007 the Company signed an agreement to purchase the assets of two television stations in the Bakersfield, California Designated Market Area pending FCC approval and other closing conditions. On January 1, 2008, the Company finalized the purchase of the stations for $55.3 million in cash. This acquisition serves to diversify the Company’s broadcast operations, and continues the Company’s strategy of creating duopolies in the markets it serves. The excess of the purchase price of the stations over the fair value of the tangible and identifiable intangible net assets was recorded as goodwill. The purchase price of the stations, including direct costs of the acquisition, has been allocated as follows (in thousands):

Intangible assets — FCC licenses (indefinite life, non-amortizing)	$	32,200
Intangible assets — Network affiliation agreement (useful life of 15 years)		3,900
Goodwill (non-amortizing, tax deductible)		14,933
Property, plant and equipment		4,281
	$	55,314

7. Termination of Agreement with National Advertising Representation Firm

     On April 28, 2008, the Company terminated its agreement with its national advertising representation firm. The successor firm will satisfy the Company’s contractual termination obligation to the predecessor firm with no cash payment made by the Company. In the second quarter of 2008, the Company recognized a non-cash termination charge of $7.3 million to selling, general and administrative expenses and will amortize the resulting liability as a non-cash benefit over the five year term of the new agreement. In addition, the Company recognized a non-cash benefit of $2.3 million to selling, general and administrative expenses in the second quarter of 2008, representing the remaining unamortized balance of the Company’s 2005 non-cash charge resulting from the termination of its national advertising representation agreement.

9

8. Forfeiture of Non-Refundable Option Payment

     In November 2006, the Company finalized the purchase of two Oregon television stations (KUNP and KUNP LP) for $19.3 million. A second amendment to that purchase agreement in September 2006 included an additional $1.0 million payment for an option to purchase one to three additional television stations in the Northwest. In June 2008, after finalizing its evaluation of various acquisition alternatives, the Company determined that it would not exercise its option to purchase additional stations. Accordingly, the Company recognized a $1.0 million charge to selling, general and administrative expenses in the second quarter of 2008 for the forfeiture of the non-refundable option payment.

9. Discontinued Operations

     On May 30, 2006, the Company entered into an agreement to sell its 24 small-market radio stations located in Montana and Eastern Washington. This agreement was amended in the third quarter of 2006 to reduce the number of stations being sold to 19, at a revised sales price of $29.1 million. On October 31, 2006, the Company completed the sale of 18 small-market radio stations for $26.1 million. The sale of one additional Montana station to the same buyer closed on June 1, 2007, for $3.0 million. At September 30, 2008, $1.0 million is held in escrow and is included in prepaid expenses and other assets, pending final resolution of claims made by the buyer against the escrow amount. The buyer filed a claim on May 7, 2008 asserting breach of representations and damages in excess of $1.0 million. The Company believes the claim is without merit and intends to vigorously pursue the release and collection of the escrow funds.

     The remaining five stations continue to be held for sale, and the Company anticipates completing the sale of these remaining stations by the end of the first quarter of 2009. In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company has reported the results of operations of these small-market stations as discontinued operations in the accompanying financial statements. These stations were included in the Company’s radio segment.

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

	Nine months ended						Three months ended
	September 30						September 30
	2008			2007			2008			2007
Revenue	$	1,225		$	1,477		$	412		$	500
Income from discontinued operations:
Discontinued operating activities	$	51		$	242		$	61		$	105
Gain on sale		—			2,294			—			—
		51			2,536			61			105
Income tax		(18	)		(888	)		(21	)		(37	)
	$	33		$	1,648		$	40		$	68

10

     The following table summarizes the classes of assets and liabilities held for sale (in thousands):

	September 30		December 31
	2008		2007
Goodwill, net	$	645	$	645
Property, plant and equipment, net		642		643
Intangible assets		765		765
Other assets		43		37
	$	2,095	$	2,090
Liabilities of businesses held for sale	$	59	$	100

10. Television and Radio Broadcast Rights and Other Broadcast Commitments

     The Company acquires television and radio broadcast rights. 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. It is possible that the cost of commitments for program rights may ultimately exceed direct revenue from the program. Estimates of future revenue can change significantly and, accordingly, are reviewed periodically to determine whether impairment is expected over the life of the contract.

     At September 30, 2008, the Company had commitments under license agreements amounting to $28.3 million for future rights to broadcast television programs through 2013. The broadcasting subsidiary acquired exclusive rights to sell available advertising time for a radio station in Seattle (the “Joint Sales Agreement”). Under the Joint Sales Agreement, the Company has commitments for monthly payments totaling $5.3 million through 2011.

11. Retirement Benefits

     The Company has a noncontributory supplemental retirement program for key management. No new participants have been admitted to this program since 2001. In June 2005, the program was amended to freeze accrual of all benefits to active participants provided under the program. 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 through the date of expected retirement. The cost of the program is accrued over the average expected future lifetime of the participants.

11

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

	Nine months ended				Three months ended
	September 30				September 30
	2008		2007		2008		2007
Interest cost	$	824	$	798	$	274	$	266
Amortization of loss		45		32		15		10
Net periodic pension cost	$	869	$	830	$	289	$	276

     The discount rate used to determine net periodic pension cost was 5.88% and 5.80% for 2008 and 2007, respectively.

12. Income (loss) per share

     Net income (loss) per share represents net income (loss) divided by the weighted average number of shares outstanding during the period. 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.

     Basic and diluted net income (loss) per share has been computed as follows (in thousands, except per-share amounts):

	Nine months					Three months
	ended September 30					ended September 30
	2008		2007			2008		2007
Income (loss) from continuing operations	$	92,350	$	(1,170	)	$	29,735	$	(601	)
Income from discontinued operations, net of income taxes		33		1,648			40		68
Net income (loss)	$	92,383	$	478		$	29,775	$	(533	)
Weighted average shares outstanding — basic		8,731		8,722			8,733		8,724
Weighted effect of dilutive options and rights		4		—			8		—
Weighted average shares outstanding assuming dilution		8,735		8,722			8,741		8,724
Income (loss) per share:
From continuing operations	$	10.58	$	(0.14	)	$	3.41	$	(0.07	)
From discontinued operations		—		0.19			—		0.01
Net income (loss) per share	$	10.58	$	0.05		$	3.41	$	(0.06	)
Income (loss) per share assuming dilution:
From continuing operations	$	10.58	$	(0.14	)	$	3.41	$	(0.07	)
From discontinued operations		—		0.19			—		0.01
Net income (loss) per share assuming dilution	$	10.58	$	0.05		$	3.41	$	(0.06	)

12

     The effect of options to purchase 265,126 shares are excluded from the calculation of weighted average shares outstanding for each of the nine and three-month periods ended September 30, 2008, because such options were anti-dilutive.

     The effect of 20,770 restricted stock rights and options to purchase 199,505 shares are excluded from the calculation of weighted average shares outstanding for the nine and three-month periods ended September 30, 2007, because such rights and options were anti-dilutive due to the loss from continuing operations for the periods; therefore, there is no difference in the calculation between basic and diluted per-share amounts.

13. Stock-Based Compensation

     Stock-based compensation expense related to stock-based awards under SFAS 123(R) totalled $665,000 and $514,000 for the nine months ended September 30, 2008 and 2007, respectively, and $239,000 and $186,000 for the three months ended September 30, 2008 and 2007, respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations.

14. Income Taxes

     As required by accounting rules for interim financial reporting, the Company records its income tax provision or benefit based upon its estimated annual effective tax rate, which is estimated as 35% and 19% for the nine months ended September 30, 2008 and 2007, respectively. The estimated effective tax rate in the 2008 period was higher than in the same period in 2007 due primarily to the relationship between the amount of estimated annual permanent differences and the Company’s estimated annual pre-tax income or loss.

     The U.S. federal statute of limitations remains open for the year 2006 and onward. The IRS is currently conducting a field examination of the Company’s 2006 and 2007 U.S. tax returns. The IRS completed a field examination of the Company’s 2003, 2004 and 2005 U.S. tax returns during March 2008, and the Company paid final notice of settlement in the amount of $68,000. The Company recognizes tax expense related to agreed-upon tax adjustments currently as part of its income tax provision and recognizes interest and penalties related to uncertain tax positions in interest expense. As of September 30, 2008, the Company had no accrued interest related to uncertain tax positions, while $218,000 was accrued as of December 31, 2007.

15. Dividends

     On July 30, 2008 the Company’s Board of Directors declared a special dividend of $3.50 per share on the Company’s common stock. This dividend totaling $30.7 million was paid on August 29, 2008 to shareholders of record on August 15, 2008.

16. Segment Information

     The Company reports financial data for three segments: television, radio, and Fisher Plaza. The television segment includes the operations of the Company’s 20 owned and operated network-affiliated television stations (including a 50%-owned television station) and internet business. The radio segment includes the operations of the Company’s three Seattle radio stations, while operations of the Company’s small-market radio stations are reported as discontinued operations. Corporate expenses of the broadcasting business unit are allocated to the television and radio segments based on actual expenditures incurred or based on a ratio that approximates historical revenue and operating expenses of the segments. The Fisher Plaza 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.

13

     Revenue for each segment is as follows (in thousands):

	Nine months						Three months
	ended September 30						ended September 30
	2008			2007			2008			2007
Television	$	86,288		$	77,110		$	27,403		$	25,532
Radio		28,926			30,844			11,261			12,493
Fisher Plaza		9,794			8,500			3,289			2,811
Corporate and eliminations		(50	)		(114	)		(8	)		(38	)
	$	124,958		$	116,340		$	41,945		$	40,798

     Inter-segment sales amounted to $50,000 and $114,000 for the nine months ended September 30, 2008 and 2007, respectively, and $8,000 and $38,000 for the three months ended September 30, 2008 and 2007, respectively, relating primarily to telecommunications fees charged from Fisher Plaza.

     Income (loss) from continuing operations before interest and income taxes for each segment is as follows (in thousands):

	Nine months						Three months
	ended September 30						ended September 30
	2008			2007			2008			2007
Television	$	3,894		$	9,822		$	1,939		$	3,405
Radio		(3,545	)		(514	)		(1,756	)		(472	)
Fisher Plaza		4,138			3,215			1,439			1,019
Corporate and eliminations		147,347			(3,177	)		47,413			(870	)
	$	151,834		$	9,346		$	49,035		$	3,082

     Corporate income from continuing operations for the nine and three-month periods ended September 30, 2008 includes the pre-tax gain of $152.6 million and $49.0 million, respectively, on sale of Safeco common stock (see Note 4).

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

	Nine months						Three months
	ended September 30						ended September 30
	2008			2007			2008			2007
Total segment income from continuing operations before interest and income taxes	$	151,834		$	9,346		$	49,035		$	3,082
Interest expense		(10,343	)		(10,222	)		(3,441	)		(3,318	)
Consolidated income (loss) from continuing operations before income taxes	$	141,491		$	(876	)	$	45,594		$	(236	)

14

     Identifiable assets for each segment are as follows (in thousands):

Total assets	September 30 2008		December 31 2007
Television	$	189,991	$	136,341
Radio		19,911		20,030
Fisher Plaza		113,730		117,688
Corporate and eliminations		101,740		209,785
		425,372		483,844
Assets held for sale		2,095		2,090
	$	427,467	$	485,934

     Identifiable assets by segment are those assets used in the operations of each segment. Corporate assets are principally cash, cash equivalents and investments.

17. Financial Information for Guarantors

     The Company has $150.0 million of 8.625% senior notes due 2014 outstanding. The notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future 100% owned subsidiaries of the Company.

     Presented below are condensed consolidated statements of operations for the nine and three months ended September 30, 2008 and 2007, and cash flows for the nine months ended September 30, 2008 and 2007. Also presented are the condensed consolidated balance sheets as of September 30, 2008 and December 31, 2007. The condensed consolidated information is presented for the Company (issuer) with its investments accounted for under the equity method, the 100%-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.

15

Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2008

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
(in thousands)	Inc.			Subsidiaries			Eliminations			Subsidiaries
Revenue	$			$	124,965		$	(7	)	$	124,958
Costs and expenses
Direct operating costs		240			52,693			146			53,079
Selling, general and administrative expenses		8,950			40,878			(153	)		49,675
Amortization of program rights					16,818						16,818
Depreciation and amortization		740			8,612						9,352
		9,930			119,001			(7	)		128,924
Income (loss) from operations		(9,930	)		5,964						(3,966	)
Other income, net		155,698			102						155,800
Equity in income of subsidiaries		3,674						(3,674	)		—
Interest expense, net		(10,276	)		(67	)					(10,343	)
Income from continuing operations before income taxes		139,166			5,999			(3,674	)		141,491
Provision for federal and state income taxes		46,783			2,358						49,141
Income from continuing operations		92,383			3,641			(3,674	)		92,350
Income from discontinued operations, net of income taxes					33						33
Net income	$	92,383		$	3,674		$	(3,674	)	$	92,383

16

Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2007

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
(in thousands)	Inc.			Subsidiaries			Eliminations			Subsidiaries
Revenue	$			$	116,454		$	(114	)	$	116,340
Costs and expenses
Direct operating costs					44,977			1,410			46,387
Selling, general and administrative expenses		6,399			33,943			(1,524	)		38,818
Amortization of program rights					16,804						16,804
Depreciation and amortization		217			8,451						8,668
		6,616			104,175			(114	)		110,677
Income (loss) from operations		(6,616	)		12,279			—			5,663
Other income, net		3,413			270						3,683
Equity in income of subsidiaries		9,578						(9,578	)		—
Interest expense, net		(10,214	)		(8	)					(10,222	)
Income (loss) from continuing operations before income taxes		(3,839	)		12,541			(9,578	)		(876	)
Provision (benefit) for federal and state income taxes		(4,317	)		4,611						294
Income from continuing operations		478			7,930			(9,578	)		(1,170	)
Income from discontinued operations, net of income taxes					1,648						1,648
Net income	$	478		$	9,578		$	(9,578	)	$	478

17

Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended September 30, 2008

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
(in thousands)	Inc.			Subsidiaries			Eliminations			Subsidiaries
Revenue	$			$	41,946		$	(1	)	$	41,945
Costs and expenses
Direct operating costs		93			17,562			49			17,704
Selling, general and administrative expenses		2,170			12,674			(50	)		14,794
Amortization of program rights					7,357						7,357
Depreciation and amortization		277			2,822						3,099
		2,540			40,415			(1	)		42,954
Income (loss) from operations		(2,540	)		1,531						(1,009	)
Other income, net		49,986			58						50,044
Equity in income of subsidiaries		961						(961	)		—
Interest expense, net		(3,419	)		(22	)					(3,441	)
Income from continuing operations before income taxes		44,988			1,567			(961	)		45,594
Provision for federal and state income taxes		15,213			646						15,859
Income from continuing operations		29,775			921			(961	)		29,735
Income from discontinued operations, net of income taxes					40						40
Net income	$	29,775		$	961		$	(961	)	$	29,775

18

Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended September 30, 2007

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
(in thousands)	Inc.			Subsidiaries			Eliminations			Subsidiaries
Revenue	$			$	40,836		$	(38	)	$	40,798
Costs and expenses
Direct operating costs					14,826			479			15,305
Selling, general and administrative costs		2,152			11,982			(517	)		13,617
Amortization of program rights					7,370						7,370
Depreciation and amortization		71			2,740						2,811
		2,223			36,918			(38	)		39,103
Income (loss) from operations		(2,223	)		3,918						1,695
Other income, net		1,344			43						1,387
Equity in income of subsidiaries		2,623						(2,623	)		—
Interest expense, net		(3,310	)		(8	)					(3,318	)
Income (loss) from continuing operations before income taxes		(1,566	)		3,953			(2,623	)		(236	)
Provision (benefit) for federal and state income taxes		(1,033	)		1,398						365
Income (loss) from continuing operations		(533	)		2,555			(2,623	)		(601	)
Income from discontinued operations, net of income taxes					68						68
Net income (loss)	$	(533	)	$	2,623		$	(2,623	)	$	(533	)

19

Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of September 30, 2008

				100%					Fisher
	Fisher			Owned					Communications,
	Communications,			Guarantor					Inc. and
(in thousands)	Inc.			Subsidiaries		Eliminations			Subsidiaries
ASSETS
Current Assets
Cash and cash equivalents	$	18,482		$	685	$			$	19,167
Short-term investments		59,195								59,195
Receivables, net					29,719					29,719
Due from affiliate		2,000					(2,000	)		—
Deferred income taxes		123			662					785
Prepaid expenses and other assets		445			2,383					2,828
Television and radio broadcast rights					8,387					8,387
Assets held for sale					43					43
Total current assets		80,245			41,879		(2,000	)		120,124
Marketable securities, at market value					899					899
Investment in consolidated subsidiaries		274,391					(274,391	)		—
Cash value of life insurance and retirement deposits		17,476								17,476
Television and radio broadcast rights					80					80
Goodwill					52,294					52,294
Intangible assets					78,820					78,820
Investment in equity investee					2,684					2,684
Deferred income taxes		8,877					(8,877	)		—
Deferred financing fees and other assets		3,430			1,373					4,803
Assets held for sale					2,052					2,052
Property, plant and equipment, net		1,843			146,392					148,235
Total Assets	$	386,262		$	326,473	$	(285,268	)	$	427,467
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	887		$	2,870	$			$	3,757
Due to affiliate					2,000		(2,000	)		—
Accrued payroll and related benefits		476			4,493					4,969
Interest payable		539								539
Television and radio broadcast rights payable					8,366					8,366
Current portion of accrued retirement benefits		1,230								1,230
Other current liabilities		1,594			5,782					7,376
Liabilities of businesses held for sale					59					59
Total current liabilities		4,726			23,570		(2,000	)		26,296
Long-term debt		150,000								150,000
Accrued retirement benefits		18,568								18,568
Deferred income taxes					16,660		(8,877	)		7,783
Other liabilities					11,852					11,852
Stockholders’ Equity
Common stock		10,917			1,131		(1,131	)		10,917
Capital in excess of par		10,907			164,234		(164,234	)		10,907
Accumulated other comprehensive income, net of income taxes:
Unrealized gain on marketable securities		(56	)							(56	)
Accumulated loss		(1,933	)							(1,933	)
Prior service cost		(157	)							(157	)
Retained earnings		193,290			109,026		(109,026	)		193,290
Total Stockholders’ Equity		212,968			274,391		(274,391	)		212,968
Total Liabilities and Stockholders’ Equity	$	386,262		$	326,473	$	(285,268	)	$	427,467

20

Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of December 31, 2007

				100%					Fisher
	Fisher			Owned					Communications,
	Communications,			Guarantor					Inc. and
(in thousands)	Inc.			Subsidiaries		Eliminations			Subsidiaries
ASSETS
Current Assets
Cash and cash equivalents	$	5,804		$	706	$			$	6,510
Receivables, net		582			29,916					30,498
Due from affiliate					40,567		(40,567	)
Deferred income taxes		123			662					785
Prepaid expenses and other assets		237			3,618					3,855
Television and radio broadcast rights					5,934					5,934
Assets held for sale					37					37
Total current assets		6,746			81,440		(40,567	)		47,619
Restricted cash		52,365								52,365
Marketable securities, at market value		128,201			1,022					129,223
Investment in consolidated subsidiaries		270,717					(270,717	)
Cash value of life insurance and retirement deposits		16,809								16,809
Television and radio broadcast rights					7					7
Goodwill					37,361					37,361
Intangible assets					42,782					42,782
Investments in equity investee					2,635					2,635
Deferred financing fees and other assets		3,913			5,159					9,072
Assets held for sale					2,053					2,053
Property, plant and equipment, net		1,030			144,978					146,008
Total Assets	$	479,781		$	317,437	$	(311,284	)	$	485,934
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	924		$	2,813	$			$	3,737
Due to affiliate		40,567					(40,567	)
Accrued payroll and related benefits		1,656			5,958					7,614
Interest payable		3,773								3,773
Television and radio broadcast rights payable					4,940					4,940
Income taxes payable					3,959					3,959
Current portion of accrued retirement benefits		1,230								1,230
Other current liabilities		1,033			3,185					4,218
Liabilities of businesses held for sale					100					100
Total current liabilities		49,183			20,955		(40,567	)		29,571
Long-term debt		150,000								150,000
Accrued retirement benefits		18,552								18,552
Deferred income taxes		28,590			16,684					45,274
Other liabilities		59			9,081					9,140
Stockholders’ Equity
Common stock		10,907			1,131		(1,131	)		10,907
Capital in excess of par		10,220			164,234		(164,234	)		10,220
Accumulated other comprehensive income — net of income taxes:
Unrealized gain on marketable securities		82,818								82,818
Accumulated loss		(1,958	)							(1,958	)
Prior service cost		(181	)							(181	)
Retained earnings		131,591			105,352		(105,352	)		131,591
Total Stockholders’ Equity		233,397			270,717		(270,717	)		233,397
Total Liabilities and Stockholders’ Equity	$	479,781		$	317,437	$	(311,284	)	$	485,934

21

Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 2008

				100%					Fisher
	Fisher			Owned					Communications,
	Communications,			Guarantor					Inc. and
(in thousands)	Inc.			Subsidiaries			Eliminations		Subsidiaries
Net cash provided by (used in) operating activities	$	(50,036	)	$	6,477		$		$	(43,559	)
Cash flows from investing activities
Purchase of marketable securities					(77	)				(77	)
Purchases of short-term investments		(58,909	)							(58,909	)
Proceeds from sale of marketable securities		153,403			110					153,513
Decrease in restricted cash		52,365								52,365
Purchase of television stations		(52,365	)							(52,365	)
Purchase of intangible assets					(285	)				(285	)
Purchase of property, plant and equipment		(1,096	)		(6,139	)				(7,235	)
Net cash provided by (used in) investing activities		93,398			(6,391	)		—		87,007
Cash flows from financing activities
Borrowings under borrowing agreements		21,000								21,000
Payments on borrowing agreements		(21,000	)							(21,000	)
Payment of capital lease obligation					(107	)				(107	)
Cash dividends paid		(30,684	)							(30,684	)
Net cash used in financing activities		(30,684	)		(107	)		—		(30,791	)
Net increase (decrease) in cash and cash equivalents		12,678			(21	)		—		12,657
Cash and cash equivalents, beginning of period		5,804			706			—		6,510
Cash and cash equivalents, end of period	$	18,482		$	685		$	—	$	19,167

22

Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 2007

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
(in thousands)	Inc.			Subsidiaries			Eliminations			Subsidiaries
Net cash provided by (used in) operating activities	$	(1,264	)	$	3,531		$	1,067		$	3,334
Cash flows from investing activities
Proceeds from sale of radio station					2,869						2,869
Deposit paid for purchase of television stations					(2,750	)					(2,750	)
Purchase of television stations					(4,931	)					(4,931	)
Decrease in restricted cash					8,473						8,473
Proceeds from sale of investments available-for-sale					133						133
Purchases of investments available-for-sale					(182	)					(182	)
Purchase of online news service					(1,482	)					(1,482	)
Proceeds from sale of property, plant and equipment					1,250						1,250
Purchase of property, plant and equipment		(277	)		(6,463	)					(6,740	)
Net cash used in investing activities		(277	)		(3,083	)		—			(3,360	)
Cash flows from financing activities
Borrowings under borrowing agreements		6,000									6,000
Payments on borrowing agreements		(6,000	)								(6,000	)
Payment of capital lease obligation					(11	)					(11	)
Proceeds from exercise of stock options		39									39
Net cash provided by (used in) financing activities		39			(11	)		—			28
Net increase (decrease) in cash and cash equivalents		(1,502	)		437			1,067			2
Cash and cash equivalents, beginning of period		8,544						(1,067	)		7,477
Cash and cash equivalents, end of period	$	7,042		$	437		$	—		$	7,479

23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q. Some of the statements in this quarterly report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as “aims”, “anticipates”, “believes”, “estimates”, “expects”, “hopes”, “intends”, “plans”, “predicts”, “projects” or “targets” or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. There are many risks and uncertainties that could cause actual results to differ materially from those predicted in our forward-looking statements, including, without limitation, those factors discussed under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which was filed with the Securities and Exchange Commission on March 14, 2008. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made in this report and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations. As used herein, unless the context requires otherwise, when we say “we”, “us”, “our”, or the “Company”, we are referring to Fisher Communications, Inc. and its consolidated subsidiaries.

     This discussion is intended to provide an analysis of significant trends and material changes in our financial condition and operating results during the three and nine-month periods ended September 30, 2008, compared with the corresponding periods in 2007.

Overview

     We are an integrated media company. We own and operate 13 full power (including a 50%-owned television station) and seven low power network-affiliated television stations and eight radio stations. Our television and radio stations are located in Washington, Oregon, Idaho, California and Montana. We also own and operate Fisher Plaza, a mixed-use 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 unaffiliated companies, including media and communications companies.

     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, which account for approximately 60% of our television broadcasting revenue, are affiliated with the ABC Television Network. Nine of our television stations are affiliated with the CBS Television Network (including a 50%-owned television station), one of our television stations is affiliated with the FOX Television Network, and the remainder of our television stations are affiliated with Univision or its sister network, Telefutura. 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 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. As of September 30, 2008, approximately 97% of Fisher Plaza was occupied or committed for occupancy (43% was

24

occupied by Fisher entities), compared to 97% occupied or committed for occupancy at December 31, 2007 and 96% occupied or committed for occupancy at September 30, 2007. 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. During the second quarter of 2008, we announced that we were exploring strategic options for our real estate assets, most notably Fisher Plaza. During the third quarter of 2008, we postponed these efforts in light of credit market conditions.

     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” below.

Significant Developments

     The following significant developments affect the comparability of our financial statements for the three and nine-month periods ended September 30, 2008 and 2007.

     Sale of Safeco Corporation Shares. In June 2008, we sold 1,548,956 shares of Safeco Corporation common stock, which represented 67.3% of our total Safeco Corporation holdings. The shares were sold at an average price of $67.27 per share, resulting in pre-tax net proceeds of $104.1 million. The book basis of the shares sold totalled $526,000, resulting in a pre-tax gain on sale of $103.6 million.

     In July 2008, we sold our remaining 753,720 shares of Safeco Corporation common stock. The shares were sold at an average price of $65.38 per share, resulting in pre-tax net proceeds of $49.3 million. The book basis of the shares sold totalled $256,000, resulting in a pre-tax gain on sale of $49.0 million.

     The pre-tax gain on 2008 sales of $49.0 million and $152.6 million for the three and nine-month periods ended September 30, 2008, respectively, is included in other income, net.

     Special Dividend. On July 30, 2008 our Board of Directors declared a special dividend of $3.50 per share on our common stock, which was paid on August 29, 2008 to shareholders of record on August 15, 2008. The total dividend paid of $30.7 million was funded from the proceeds of our sale of Safeco Corporation common stock.

     Termination of Seattle Mariners Radio Rights Agreement. 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 was greater during periods that included the broadcast of Mariners baseball games; therefore, the impact on the first and fourth quarters of each calendar year was less than for the second and third quarters of the calendar year. In July 2008, we announced that we would not renew the Rights Agreement with the Seattle Mariners; therefore, the 2008 season was the final year of our commitments under this agreement. As of September 30, 2008, all commitments under the Rights Agreement had been satisfied.

     Termination of National Advertising Representation Agreement. In April 2008, we terminated the agreement with our national advertising representation firm. The successor firm will satisfy our contractual termination obligation to the predecessor firm with no cash payment made by the Company. In the second quarter of 2008, we recognized a non-cash termination charge of $7.3 million to selling, general and administrative expenses and will amortize the resulting liability as a non-cash benefit over the five year term of the new agreement. In addition, we recognized a non-cash benefit of $2.3 million to selling, general and administrative expenses in the second quarter of 2008, representing the remaining unamortized balance of our 2005 non-cash charge resulting from the termination of our national advertising representation agreement.

     Purchase of Bakersfield, California Television Stations. On January 1, 2008 we completed the purchase of the assets of two television stations in the Bakersfield, California Designated Market Area for $55.3 million in cash.

     Option to Purchase Television Stations. In November 2006, we finalized the purchase of two Oregon television stations (KUNP and KUNP LP) for $19.3 million. A second amendment to that purchase agreement in September 2006 included an option to purchase one to three additional television stations in the Northwest. In June 2008, after finalizing our evaluation of various acquisition alternatives, we determined that we would not exercise the option to purchase additional stations. Accordingly, we recognized a $1.0 million charge to selling, general and administrative expenses in the second quarter of 2008 for the forfeiture of the non-refundable option payment.

25

     Sale of Radio Stations. In October 2006, we completed the sale of 18 of 24 small-market radio stations located in Montana and Eastern Washington for $26.1 million. The sale of one additional Montana station to the same buyer closed in June 2007, for $3.0 million. The remaining five stations continue to be actively marketed and held for sale, and we anticipate completing the sale of these remaining stations by the end of the first quarter of 2009. The small-market radio stations are treated as discontinued operations in the accompanying condensed consolidated financial statements.

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. Our critical accounting policies and estimates include the estimates used in determining the recoverability of goodwill and other indefinite-lived intangible assets, the recoverability of long-lived tangible assets, the value of television and radio broadcast rights, the cost of pension programs, the amount of tax accruals, the amount of the allowance for doubtful accounts, the existence of and accounting for variable interest entities and the amount of stock-based compensation. For a detailed discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2007. There have been no material changes in the application of our critical accounting policies and estimates subsequent to that report. We have discussed the development and selection of these critical accounting estimates with the Audit Committee of our board of directors.

     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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Consolidated Results of Operations

     We report financial data for three segments: television, radio and Fisher Plaza. The television segment includes the operations of the Company’s 20 owned and operated network-affiliated television stations (including a 50%-owned television station) and internet business. The radio segment includes the operations of the Company’s three Seattle radio stations, while operations of the Company’s small-market radio stations are reported as discontinued operations. Corporate expenses of the broadcasting business unit are allocated to the television and radio segments based on actual expenditures incurred or based on a ratio that approximates historical revenue and operating expenses of the segments. The Fisher Plaza segment consists of the operations of Fisher Plaza, a communications center located near downtown Seattle that serves as the home of the Company’s Seattle television and radio operations, the Company’s corporate offices, and third-party tenants. 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.

26

     The following table sets forth our results of operations for the three and nine-month periods ended September 30, 2008 and September 30, 2007, including the dollar and percentage variances between such periods. Percentage variances have been omitted within the following table where they are not considered meaningful.

	Nine months												Three months
(Dollars in thousands)	ended September 30						Variance						ended September 30						Variance
(Unaudited)	2008			2007			$			%			2008			2007			$			%
Revenue
Television	$	86,288		$	77,110		$	9,178			11.9	%	$	27,403		$	25,532		$	1,871			7.3	%
Radio		28,926			30,844			(1,918	)		-6.2	%		11,261			12,493			(1,232	)		-9.9	%
Fisher Plaza		9,794			8,500			1,294			15.2	%		3,289			2,811			478			17.0	%
Corporate and eliminations		(50	)		(114	)		64						(8	)		(38	)		30
Consolidated		124,958			116,340			8,618			7.4	%		41,945			40,798			1,147			2.8	%
Direct Operating Costs
Television		39,885			34,245			5,640			16.5	%		13,383			11,397			1,986			17.4	%
Radio		8,910			8,225			685			8.3	%		2,824			2,593			231			8.9	%
Fisher Plaza		2,758			2,507			251			10.0	%		984			836			148			17.7	%
Corporate and eliminations		1,526			1,410			116			8.2	%		513			479			34			7.1	%
Consolidated		53,079			46,387			6,692			14.4	%		17,704			15,305			2,399			15.7	%
Selling, general and administrative expenses
Television		30,503			21,685			8,818			40.7	%		8,043			7,094			949			13.4	%
Radio		12,173			11,946			227			1.9	%		4,735			4,784			(49	)		-1.0	%
Fisher Plaza		526			311			215			69.1	%		126			104			22			21.2	%
Corporate and eliminations		6,473			4,876			1,597			32.8	%		1,890			1,635			255			15.6	%
Consolidated		49,675			38,818			10,857			28.0	%		14,794			13,617			1,177			8.6	%
Amortization of program rights
Television		6,068			6,304			(236	)		-3.7	%		2,089			2,030			59			2.9	%
Radio		10,750			10,500			250			2.4	%		5,268			5,340			(72	)		-1.3	%
Consolidated		16,818			16,804			14			0.1	%		7,357			7,370			(13	)		-0.2	%
Depreciation and amortization
Television		6,055			5,257			798			15.2	%		2,039			1,635			404			24.7	%
Radio		642			726			(84	)		-11.6	%		193			253			(60	)		-23.7	%
Fisher Plaza		2,372			2,468			(96	)		-3.9	%		740			852			(112	)		-13.1	%
Corporate and eliminations		283			217			66			30.4	%		127			71			56			78.9	%
Consolidated		9,352			8,668			684			7.9	%		3,099			2,811			288			10.2	%
Income (loss) from operations
Television		3,777			9,619			(5,842	)					1,849			3,376			(1,527	)
Radio		(3,549	)		(553	)		(2,996	)					(1,759	)		(477	)		(1,282	)
Fisher Plaza		4,138			3,214			924						1,439			1,019			420
Corporate and eliminations		(8,332	)		(6,617	)		(1,715	)					(2,538	)		(2,223	)		(315	)
Consolidated		(3,966	)		5,663			(9,629	)					(1,009	)		1,695			(2,704	)
Other income, net		155,800			3,683			152,117						50,044			1,387			48,657
Interest expense, net		(10,343	)		(10,222	)		(121	)					(3,441	)		(3,318	)		(123	)
Income (loss) from continuing operations before income taxes		141,491			(876	)		142,367						45,594			(236	)		45,830
Provision for federal and state income taxes		49,141			294			48,847						15,859			365			15,494
Income (loss) from continuing operations		92,350			(1,170	)		93,520						29,735			(601	)		30,336
Income from discontinued operations, net of income taxes		33			1,648			(1,615	)					40			68			(28	)
Net income (loss)	$	92,383		$	478		$	91,905					$	29,775		$	(533	)	$	30,308

Reclassifications

Certain amounts in the 2007 condensed consolidated statements of operations have been reclassified to conform to the 2008 presentation. Certain employment-related expenses totaling approximately $4.5 million and $1.4 million for the nine and three-month periods ended September 30, 2007, respectively, which were previously reported within “Selling, general and administrative expenses,” are now reported within “Direct Operating Costs.”

27

Comparison of Nine and Three-Month Periods Ended September 30, 2008 and September 30, 2007

Revenue

     While the U.S. financial crisis and broader economic slowdown and the resulting sharp declines in advertising spending negatively impacted our television and radio revenue during 2008, our television revenue increased in the three and nine-month periods ended September 30, 2008 compared to the same periods in 2007. This increase was primarily due to our acquisition of the two Bakersfield, California television stations on January 1, 2008 as well as increased political advertising in certain markets. These new Bakersfield stations contributed $2.1 million and $7.4 million in additional television revenue in the three and nine-month periods ended September 30, 2008, respectively. Revenues from our ABC-affiliated stations decreased 6.1% and 0.2% in the three and nine-month periods ended September 30, 2008, respectively, as compared to the same periods in 2007, due primarily to reduced local and national revenue, partially offset by increased political revenue. Revenues from our CBS-affiliated stations, excluding the new Bakersfield, California CBS affiliate, increased 5.7% and 1.7% in the three and nine-month periods ended September 30, 2008, respectively, as compared to the same periods in 2007, due primarily to increased political revenue, partially offset by reduced local and national revenue. In addition, revenues from our Spanish-language television stations have increased 21.9% and 34.4% in the three and nine-month periods ended September 30, 2008, respectively, as compared to the same periods in 2007. 2007 was the first full year of our operation of these stations, and the increased revenue in 2008 reflects our continued development of the stations.

     Our radio revenue during 2008 has been negatively affected by the same economic factors discussed above, and it decreased in the three and nine-month periods ended September 30, 2008 compared to the same periods in 2007. The decrease was primarily attributable to a decrease in revenues associated with the broadcast of Seattle Mariners baseball games. Revenue and expenses from our small-market radio operations have been included in the discontinued operations category due to the held-for-sale status of those stations.

     The revenue increase at Fisher Plaza in the three and nine-month periods ended September 30, 2008, as compared to the same periods in 2007, was due primarily to increased rental and service fees, as well as increased electrical infrastructure fees and tenant reimbursements.

Direct operating costs

     Direct operating costs consist primarily of costs to 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 direct operating costs for the television segment in the three and nine-month periods ended September 30, 2008 compared to the same periods in 2007, is primarily the result of increased costs associated with operating our two new Bakersfield, California television stations, in addition to increasing expenses associated with our strategy to grow our Internet business.

     Direct operating costs increased at our radio segment in the three and nine-month periods ended September 30, 2008 as compared to the same periods in 2007. The increase was primarily attributable to increased compensation-related costs associated with news and programming.

     Direct operating costs increased at Fisher Plaza in the three and nine-month periods ended September 30, 2008 as compared to the same periods in 2007 due primarily to higher repair and maintenance expenses.

     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 selling, general and administrative, while Fisher Plaza records the reimbursement of these intercompany expenses as a reduction of direct operating costs.

28

Selling, general and administrative expenses

     The increase in selling, general and administrative expenses in the television segment in the three-month period ended September 30, 2008 compared to the same period in 2007, was due primarily to costs associated with operating our two new Bakersfield, California television stations and increasing expenses associated with our growing Internet business. The increase in selling, general and administrative expenses in the nine-month period ended September 30, 2008 compared to the same period in 2007, was due primarily to a net $5.0 million non-cash charge resulting from our April 2008 decision to change our national advertising representation firm as well as costs associated with operating our two new Bakersfield stations and increasing expenses associated with our Internet business.

     In April 2008, we terminated an agreement with our national advertising representation firm. The successor firm will satisfy our contractual termination obligation to the predecessor firm with no cash payment made by the Company. We recognized a non-cash termination charge of $7.3 million to television selling, general and administrative expenses and will amortize the resulting liability as a non-cash benefit over the five-year term of the new agreement. In addition, we recognized a non-cash benefit of $2.3 million to television selling, general and administrative expenses in the second quarter of 2008, representing the remaining unamortized balance of our 2005 non-cash charge resulting from the termination of our national advertising representation agreement.

     Selling, general and administrative expenses at our radio segment remained relatively unchanged in the three and nine-month periods ended September 30, 2008 as compared to the same periods in 2007.

     Selling, general and administrative expenses increased at Fisher Plaza in the three and nine-month periods ended September 30, 2008 as compared to the same periods in 2007 primarily due to expenses associated with our exploration of strategic alternatives for Fisher Plaza.

     Our corporate selling, general and administrative expenses increased in the three-month period ended September 30, 2008 compared to the same period in 2007 due primarily to increased legal and professional fees and payroll-related expenses. The increase in the nine-month period ended September 30, 2008 compared to the same period in 2007 is primarily due to a $1.0 million non-cash charge for the forfeiture of a non-refundable option payment related to our decision not to exercise an option to acquire additional television stations, as well as increased legal and professional fees and payroll-related expenses.

Amortization of program rights

     Amortization of program rights for the television segment increased in the three-month period ended September 30, 2008 compared to the same period in 2007, due primarily to programming costs incurred for the two new Bakersfield, California stations, which was partially offset by the renewal of several syndicated television programming contracts at reduced rates. Amortization of program rights decreased in the nine-month period ended September 30, 2008 compared to the same period in 2007, due primarily to renewal of several syndicated television programming contracts at reduced rates, which was partially offset by programming costs incurred for the new Bakersfield stations.

     Amortization of program rights for the radio segment are related to the Rights Agreement to broadcast Seattle Mariners baseball games and increased in the nine-month period ended September 30, 2008 compared to the same period in 2007 due to an increase in the annual fee amount for the 2008 baseball season. The slight decrease in the three-month period ended September 30, 2008 compared to the same period in 2007 is due to timing differences resulting from fewer baseball games during the third quarter of 2008 compared to the same quarter of 2007.

Depreciation and amortization

     Depreciation and amortization for the television segment increased in the three and nine-month periods ended September 30, 2008 compared to the same periods in 2007 due primarily to the acquisition of the two new Bakersfield, California stations.

     Depreciation and amortization for the radio and Fisher Plaza segments decreased in the three and nine-month periods ended September 30, 2008 compared to the same periods in 2007, as certain assets have become fully depreciated.

     Corporate depreciation and amortization increased for the three and nine-month periods ended September 30, 2008 compared to the same periods in 2007, due primarily to asset additions associated with information technology infrastructure upgrades.

29

Other income, net

     Other income, net, includes gain on sale of marketable securities, dividends received on marketable securities and, to a lesser extent, interest and miscellaneous income. The significant increase in the three and nine-months ended September 30, 2008 compared to the same periods in 2007 was the result of the sale of all of our Safeco Corporation common stock, resulting in pre-tax gains of $49.0 million and $152.6 million, respectively.

Interest expense, net

     Interest expense, net, consists primarily of interest on our $150 million senior notes and amortization of loan fees, and interest on borrowings under our $20 million senior revolving credit facility. Interest expense in the three-month period ended September 30, 2008 increased from the same period in 2007, as the prior year period included a net reduction in interest expense of $99,000 related to uncertain tax positions. Interest expense in the nine-month period ended September 30, 2008 increased from the same period in 2007 due primarily to increased borrowings on our revolving credit facility, which we subsequently repaid.

Provision for federal and state income taxes

     The provision for federal and state income taxes varies with pre-tax income or loss. Consequently, the changes in provision and benefit for federal and state income taxes were primarily due to fluctuating income and loss from continuing operations before income taxes. The effective tax rate varies from the statutory rate primarily due to a deduction for dividends received from our investment in Safeco Corporation common stock (70% exclusion rate), and changes in cash surrender value of life insurance policies held by the Company (for which proceeds are received tax-free if held to maturity). As required by accounting rules for interim financial reporting, we record our income tax provision or benefit based upon our estimated annual effective tax rate, which is estimated as 35% and 19% for the nine months ended September 30, 2008 and 2007, respectively. The estimated effective tax rate in the 2008 periods was higher than in the same periods in 2007 due primarily to the relationship between the amount of estimated annual permanent differences and our estimated annual pretax income or loss.

Income from discontinued operations, net of income taxes

     The income from discontinued operations is related to our small-market radio stations that have either been sold or are currently held for sale, and is presented net of income taxes. On June 1, 2007 we closed the sale of one of these stations and recognized a gain on sale of $1.5 million, net of tax. The remaining five stations remain classified as held for sale as of September 30, 2008. See Note 9 to our condensed consolidated financial statements for more information on our discontinued operations.

Liquidity and capital resources

     Our current assets as of September 30, 2008 included cash and cash equivalents totaling $19.2 million and short-term investments totaling $59.2 million, and we had working capital of $93.8 million. As of December 31, 2007, our current assets included cash and cash equivalents totaling $6.5 million, and we had working capital of $18.0 million. The significant increase in current assets and working capital is due to the sale of our investment in Safeco Corporation common stock.

     We are currently evaluating the redeployment of cash proceeds from the sale of our Safeco Corporation holdings. In light of our recent decision to postpone the marketing of Fisher Plaza due to current credit market conditions, we anticipate finalizing our evaluation and communicating our strategy for the use of the cash proceeds in the fourth quarter of 2008.

     Our senior notes indenture contains provisions that limit our ability to distribute proceeds from asset sales, which includes the proceeds from the sale of our shares of Safeco Corporation common stock. In the event that we do not use the proceeds from asset sales for qualifying purposes (as specified in the indenture) within 360 days from the date of sale, we will be required to offer to repurchase our outstanding senior notes at par value to the extent of such unused proceeds. The credit agreement for our senior revolving credit facility also contains restrictions on the use of proceeds from asset sales for purposes that are not qualifying purposes as specified in the credit agreement.

30

     We intend to finance working capital, debt service and capital expenditures primarily through operating activities and use of our senior revolving credit facility described below under “Description of Indebtedness”. Currently, no cash is restricted and $20.0 million is available for borrowings under the credit facility.

Summary of Cash Flows

     Net cash used in operating activities during the nine months ended September 30, 2008 was $43.6 million, compared to $3.3 million provided by operating activities in the comparable period in 2007. Net cash used in operating activities consists of our net income, adjusted by non-cash expenses such as depreciation and amortization, further adjusted by gain on the sale of marketable securities (for the 2008 period) and gain on the sale of radio stations (for the 2007 period), changes in current and deferred income tax and changes in operating assets and liabilities. Cash used in operating activities during the nine months ended September 30, 2008 includes $46.0 million in net cash paid for income taxes, resulting primarily from taxable gains realized on our sale of Safeco Corporation common stock.

     Net cash provided by investing activities during the nine-month period ended September 30, 2008 was $87.0 million, compared to $3.4 million used in investing activities in the comparable period in 2007. During the nine months ended September 30, 2008, we received proceeds from the sale of marketable securities of $153.5 million, used $58.9 million of cash to purchase short-term investments, used $52.4 million of restricted cash to complete the purchase of two television stations in Bakersfield, and used $7.2 million of cash to purchase property, plant and equipment. During the nine months ended September 30, 2007, cash flows related to investing activities consisted primarily of $6.7 million in purchases of property, plant and equipment, $4.9 million paid for the purchase of television stations, $2.75 million paid as a deposit on the purchase of television stations and $1.5 million paid for the purchase of an online news service, partially offset by proceeds of $2.9 million from the sale of a radio station, $1.25 million in proceeds from the sale of property, plant and equipment, and a decrease of $8.5 million in restricted cash. Broadcasting is a capital-intensive business; however, we had no material commitments for the purchase of capital items as of September 30, 2008.

     Net cash used in financing activities in the nine month period ended September 30, 2008 was $30.8 million, compared to $28,000 provided by financing activities in the comparable period in 2007. Net cash used in financing activities in the nine months ended September 30, 2008 consisted primarily of cash dividends paid of $30.7 million. Net cash provided by financing activities in the nine months ended September 30, 2007 consisted primarily of proceeds from the exercise of stock options.

Description of Indebtedness

     We have $150.0 million of 8.625% senior notes due 2014 outstanding. The notes are fully and 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. Additionally, we have a senior revolving credit facility, expiring 2010, with a financial institution for borrowings of up to $20.0 million. The credit facility is collateralized by substantially all of our assets (excluding certain real property). As of September 30, 2008, and December 31, 2007, no amounts were outstanding under this credit facility.

     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. The Company was in compliance with all debt covenant requirements at September 30, 2008.

Recent Accounting Pronouncements

     Refer to Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this report.

31

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk in our financial instruments represents the potential loss arising from adverse changes in financial rates. We are exposed to market risk primarily in the area of interest rates. This exposure is directly related to our normal funding and investing activities.

Interest Rate Exposure

As a result of our September 20, 2004 placement of $150.0 million of 8.625% senior notes due 2014, substantially all of our debt as of September 30, 2008 is at a fixed rate. As of September 30, 2008 and December 31, 2007, 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 September 30, 2008 was $150.0 million, which is equal to its carrying value, compared to $153.0 million at December 31, 2007. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10% change in interest rates and, as of September 30, 2008, amounted to $6.0 million. Fair market values are determined based on estimates made by investment bankers based on the fair value of our fixed rate long-term debt. For fixed rate debt, interest rate changes do not impact book value, operations or cash flows.

Our short-term investments are comprised of commercial paper with original maturities of greater than 91 days but less than one year, and we have classified our short-term investments as held-to-maturity. The securities are carried at amortized cost using the specific identification method, and interest income is recorded using an effective interest rate with the associated discount amortized to interest income. Commercial paper prices are susceptible to changes in market interest rates; however, the relatively short-term nature of these investments minimizes interest rate risk. Our short-term investments are classified as held-to-maturity and carried at amortized cost; therefore, fluctuations in market interest rates do not affect the carrying value or interest income recognized. Due to the short duration and nature of these instruments, we do not believe that we have a significant exposure to interest rate risk related to our short-term investments. As of September 30, 2008, our short-term investment carrying value of $59.2 million approximated fair value. Fair values for these instruments are estimated using best available evidence including broker quotes, prices for similar investments, interest rates and credit risk.

Marketable Securities Exposure

In the third quarter of 2008 we sold our remaining 754,000 shares of Safeco Corporation common stock. Our investment in Safeco Corporation, which has been liquidated over the past year, represented nearly all of our investments in marketable securities. Accordingly, our exposure to market risk in the area of securities prices was not significant as of September 30, 2008. As of December 31, 2007, the fair value of our investments in marketable securities, consisting primarily of 2.3 million shares of Safeco common stock, was $129.2 million.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, has 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”)) as of the end of the Company’s fiscal quarter ended September 30, 2008. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the Company’s fiscal quarter ended September 30, 2008, the Company’s disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We made no change in our internal control over financial reporting during the fiscal quarter ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We intend to continue to refine our internal control over financial reporting on an ongoing basis, as we deem appropriate with a view towards continuous improvement.

32

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to various claims, legal actions and complaints in the ordinary course of their businesses. In the Company’s 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 the consolidated financial position, results of operations or cash flows of the Company.

ITEM 1A. RISK FACTORS

There have not been any material changes to the risk factors set forth in Part 1, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on March 14, 2008.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

10.1*+	Form of Option Agreement under the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to Fisher Communications, Inc.’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-22439)).
10.2*+	Form of Restricted Stock Unit under the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to Fisher Communications, Inc.’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-22439)).
10.3*+	Terms of the Equity Grant Program for Nonemployee Directors under the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Fisher Communications, Inc.’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-22439)).
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 Chief Executive Officer 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 Chief Financial Officer 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 compensatory plan or arrangement.

33

SIGNATURES

Pursuant to the requirements 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.

	FISHER COMMUNICATIONS, INC.
Date: November 10, 2008	/s/ Joseph L. Lovejoy
	Joseph L. Lovejoy
	Senior Vice President and Chief Financial Officer (Signing on behalf of the registrant and as Principal Financial Officer)

34

EXHIBIT INDEX

Exhibit No.	Description
10.1*+	Form of Option Agreement under the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to Fisher Communications, Inc.’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-22439)).
10.2*+	Form of Restricted Stock Unit under the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to Fisher Communications, Inc.’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-22439)).
10.3*+	Terms of the Equity Grant Program for Nonemployee Directors under the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Fisher Communications, Inc.’s Quarterly Report on Form 10-Q filed on August 8, 2008 (File No. 000-22439)).
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 Chief Executive Officer 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 Chief Financial Officer 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 compensatory plan or arrangement.

35