10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

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	(I.R.S. Employer
Incorporation or Organization)	Identification Number)

1525 One Union Square

600 University Street

Seattle, Washington 98101-3185

(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 Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   x  No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  x  No  ¨

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 March 31, 2003: 8,594,060

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 Statement of Operations: Three months ended March 31, 2003 and 2002.	3
2.	Condensed Consolidated Balance Sheet: March 31, 2003 and December 31, 2002.	4
3.	Condensed Consolidated Statement of Cash Flows: Three months ended March 31, 2003 and 2002.	5
4.	Condensed Consolidated Statement of Comprehensive Income: Three months ended March 31, 2003 and 2002.	6
5.	Notes to Condensed Consolidated Financial Statements.	7

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ITEM 1 – FINANCIAL STATEMENTS

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

	Three months ended March 31
	2003			2002
(in thousands, except per share amounts)
(Unaudited)
Revenue
Broadcasting	$	28,804		$	27,979
Media services		4,084			1,632
Real estate		1,906			2,244
		34,794			31,855
Costs and expenses
Cost of products and services sold		17,494			16,394
Selling expenses		6,366			4,143
General and administrative expenses		10,159			10,335
Depreciation and amortization		4,799			4,480
		38,818			35,352
Loss from operations		(4,024	)		(3,497	)
Net loss on derivative instruments		(242	)		(725	)
Loss from extinguishment of long-term debt					(3,264	)
Other income, net		4,801			587
Equity in operations of equity investees		4			(1	)
Interest expense		(5,536	)		(4,566	)
Loss from continuing operations before income taxes		(4,997	)		(11,466	)
Provision for federal and state income taxes (benefit)		(1,919	)		(3,432	)
Loss from continuing operations		(3,078	)		(8,034	)
Income (loss) from discontinued operations, net of income tax:
Real estate operations sold					12
Georgia television stations		(18,297	)		264
Net loss	$	(21,375	)	$	(7,758	)
Income (loss) per share:
From continuing operations	$	(0.36	)	$	(0.94	)
From discontinued operations		(2.13	)		0.04
Net loss per share	$	(2.49	)	$	(0.90	)
Income (loss) per share assuming dilution:
From continuing operations	$	(0.36	)	$	(0.94	)
From discontinued operations		(2.13	)		0.04
Net loss per share assuming dilution	$	(2.49	)	$	(0.90	)
Weighted average shares outstanding		8,594			8,592
Weighted average shares outstanding assuming dilution		8,594			8,592

See accompanying notes to condensed consolidated financial statements.

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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

	March 31 2003			December 31 2002
(in thousands, except share and per share amounts)
(Unaudited)
ASSETS
Current Assets
Cash and short-term cash investments	$	14,063		$	23,515
Restricted cash					12,778
Receivables		23,580			33,057
Prepaid income taxes		4,905			4,425
Prepaid expenses		8,189			6,247
Television and radio broadcast rights		5,802			7,884
Current assets held for sale		3,693
Total current assets		60,232			87,906
Marketable Securities, at market value		104,993			107,352
Other Assets
Cash value of life insurance and retirement deposits		13,942			13,876
Television and radio broadcast rights		5,175			5,954
Goodwill, net		134,926			189,133
Investments in equity investees		2,926			2,922
Other		12,318			17,971
Noncurrent assets held for sale		29,920
		199,207			229,856
Property, Plant and Equipment, net		209,941			214,912
	$	574,373		$	640,026
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Notes payable	$	7,681		$	6,448
Trade accounts payable		4,084			5,335
Accrued payroll and related benefits		7,517			6,505
Television and radio broadcast rights payable		3,658			6,756
Other current liabilities		2,036			2,041
Current liabilities held for sale		2,569
Total current liabilities		27,545			27,085
Long-term Debt, net of current maturities		258,424			286,159
Other Liabilities
Accrued retirement benefits		17,024			18,412
Deferred income taxes		49,899			63,167
Television and radio broadcast rights payable, long-term portion		168			851
Other liabilities		5,884			6,563
Other liabilities held for sale		450
		73,425			88,993
Commitments and Contingencies
Stockholders’ Equity
Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,594,060		10,743			10,743
Capital in excess of par		3,488			3,488
Deferred compensation		(9	)		(11	)
Accumulated other comprehensive income—net of income taxes:
Unrealized gain on marketable securities		67,583			69,020
Minimum pension liability		(2,183	)		(2,183	)
Retained earnings		135,357			156,732
		214,979			237,789
	$	574,373		$	640,026

See accompanying notes to condensed consolidated financial statements.

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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Three months ended March 31
	2003			2002
(in thousands)
(Unaudited)
Cash flows from operating activities
Net loss	$	(21,375	)	$	(7,758	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		4,956			4,984
Noncurrent deferred income taxes		(12,495	)		8,773
Equity in operations of equity investees		(4	)		1
Amortization of deferred loan costs		286
Increase in fair value of derivative instruments					(2,040	)
Loss from extinguishment of debt					3,264
Net loss from discontinued operations		28,613
Amortization of television and radio broadcast rights		2,991			4,179
Payments for television and radio broadcast rights		(4,014	)		(2,992	)
Other		869			67
Change in operating assets and liabilities
Receivables		7,608			6,836
Prepaid income taxes		730			(11,115	)
Prepaid expenses		(1,977	)		(1,694	)
Cash value of life insurance and retirement deposits		(65	)		(227	)
Other assets		2,681			(338	)
Trade accounts payable, accrued payroll and related benefits and other current liabilities		413			(619	)
Accrued retirement benefits		(1,387	)		(8	)
Other liabilities		1,217			2,057
Net cash provided by operating activities		9,047			3,370
Cash flows from investing activities
Proceeds from sale of real estate and property, plant and equipment		111
Restricted cash		12,778
Purchase of property, plant and equipment		(3,013	)		(11,535	)
Net cash provided by (used in) investing activities		9,876			(11,535	)
Cash flows from financing activities
Net payments under notes payable		(122	)		(8,259	)
Borrowings under borrowing agreements and mortgage loans					245,403
Payments on borrowing agreements and mortgage loans		(28,178	)		(220,073	)
Payment of deferred loan costs		(75	)		(4,770	)
Cash dividends paid					(2,234	)
Net cash provided by (used in) financing activities		(28,375	)		10,067
Net increase (decrease) in cash and short-term cash investments		(9,452	)		1,902
Cash and short-term cash investments, beginning of period		23,515			3,568
Cash and short-term cash investments, end of period	$	14,063		$	5,470

See accompanying notes to condensed consolidated financial statements.

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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Three months ended March 31
	2003			2002
(in thousands)
(Unaudited)
Net loss	$	(21,375	)	$	(7,758	)
Other comprehensive income:
Unrealized gain on marketable securities		904			3,254
Effect of income taxes		(317	)		(1,139	)
Net gain on interest rate swap					835
Effect of income taxes					(292	)
Loss on settlement of interest rate swap reclassified to operations, net of income tax benefit of $923					1,713
Unrealized gain on marketable securities reclassified to operations, net of income tax benefit of $1,090		(2,024	)
Comprehensive loss	$	(22,812	)	$	(3,387	)

See accompanying notes to condensed consolidated financial statements.

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FISHER COMMUNICATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. 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 subsidiaries (the “Company”) as of and for the periods indicated. Fisher Communications, Inc.’s principal wholly-owned subsidiaries include Fisher Broadcasting Company, Fisher Media Services Company, and Fisher Properties Inc. 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 presentation, 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 Form 10-K for the year ended December 31, 2002 filed on March 25, 2003 by the Company have been omitted. The financial information herein is not necessarily representative of a full year’s operations.

2. Accounting change

In May 2002, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 145 “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (FAS 145). FAS 145, which updates, clarifies, and simplifies existing accounting pronouncements became effective for the Company’s 2003 financial statements. Accordingly, a loss from extinguishment of long-term debt reported by the Company as an extraordinary item in the 2002 financial statements has been reclassified to continuing operations.

On January 1, 2003, the Company adopted FASB Statement No. 143, “Accounting for Asset Retirement Obligations” (FAS 143). This statement requires entities to record the fair value of future liabilities for asset retirement obligations as an increase in the carrying amount of the related long-lived asset if a reasonable estimate of fair value can be made. Over time, the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. The Company has certain legal obligations, principally related to leases on locations used for broadcast system assets, which fall within the scope of FAS 143. These legal obligations include a responsibility to remediate the leased sites on which these assets are located. In conjunction with the adoption of FAS 143, the Company did not record asset retirement obligations subject to the provisions of this statement as the fair value of these obligations could not reasonably be estimated.

In February 2003, the Company adopted FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. Adoption of this portion of the interpretation did not have a material impact on the Company’s financial statements. The consolidation requirements apply to existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The impact of adoption of this portion of the interpretation is not expected to have a material impact on the company’s financial statements.

3. Discontinued operations

In October 2002, the Company’s real estate subsidiary concluded the sale of one industrial property. In December 2002, the real estate subsidiary concluded the sale of three industrial properties. The properties that were sold meet the criteria of a “component of an entity” as defined in FASB Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (FAS 144). In accordance with the provisions of FAS 144, the results of operations of the properties sold through the date of sale, as well as the gain recognized on sales, are reported as discontinued operations in the accompanying financial statements. The prior year results of operations of the properties sold have been reclassified to conform to the 2003 presentation.

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The loss from discontinued operations of the real estate sold for the three months ended March 31, 2002 is summarized as follows (in thousands):

	(Unaudited)
Income from operations:
Before income taxes	$	19
Income tax effect		(7	)
	$	12

Revenue of the real estate sold amounted to $958,000 in the three months ended March 31, 2002.

On January 29, 2003, the broadcasting subsidiary signed an asset purchase agreement for the sale of its two Georgia television stations, WFXG-TV, Augusta and WXTX-TV, Columbus, for a purchase price of $40 million plus working capital. Completion of the sale is subject to FCC approval, receipt of consents to assignment of certain material agreements, and satisfaction of other customary closing conditions. The sale is expected to be completed in the third quarter of 2003. The stations to be sold meet the criteria of a “component of an entity” as defined in FAS 144. In accordance with the provisions of FAS 144, the results of operations of the stations through the date of completion of the sale, as well as the estimated loss to be recognized on the sale, are reported as discontinued operations in the accompanying financial statements. The prior year results of operations of the stations to be sold have been reclassified to conform to the 2003 presentation.

The loss from discontinued operations of the television stations to be sold is summarized as follows (in thousands):

	Three months ended March 31
	2003			2002
	(Unaudited)
Income from operations:
Before income taxes	$	464		$	423
Income tax effect		(163	)		(159	)
		301			264
Estimated loss from disposal of Georgia television stations:
Before income taxes		(28,613	)
Income tax benefit		10,015
		(18,598	)
	$	(18,297	)	$	264

Revenue of the stations to be sold amounted to $2,060,000 and $1,868,000 in the three months ended March 31, 2003 and 2002, respectively.

4. Derivative instruments

The Company is a party to a variable forward sales transaction (“Forward Transaction”) with a financial institution. The Company’s obligations under the Forward Transaction are collateralized by 3,000,000 shares of SAFECO Corporation common stock owned by the Company. A portion of the Forward Transaction is considered a derivative and, as such, the Company periodically measures its fair value and recognizes the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. The Company may in the future designate the Forward Transaction as a hedge and, accordingly, the change in fair value will be recorded in the income statement or in other comprehensive income depending on its effectiveness. The Company may borrow up to $70,000,000 under the Forward Transaction. The Forward Transaction will mature in five separate six-month intervals beginning March 15, 2005 through March 15, 2007. The amount due at each maturity date will be determined based on the market value of SAFECO common stock on such maturity date. Although the Company will have the option of settling the amount due in cash, or by delivery of shares of SAFECO common stock, the Company currently intends to settle in cash rather than by delivery of shares. The Company may prepay amounts due in connection with the Forward Transaction. During

8

the term of the Forward Transaction, the Company will continue to receive dividends paid by SAFECO; however, any increase in the dividend amount above the present rate must be paid to the financial institution that is a party to the Forward Transaction. At March 31, 2003 the derivative portion of the Forward Transaction had a fair market value of $4,335,000. At March 31, 2003, $50,913,000 was outstanding under the Forward Transaction including accrued interest amounting to $4,461,000. Subsequent to March 31, 2003, the Company made a payment of $5,000,000 on the Forward Transaction.

In March 2002, the broadcasting subsidiary entered into an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under the broadcast facility. The notional amount of the swap is $65,000,000, which reduces as payments are made on principal outstanding under the broadcast facility, until termination of the contract in March 2004. At March 31, 2003 the fair market value of the swap agreement was a liability of $3,644,000.

Changes in the fair market value of the Forward Transaction and the interest rate swap agreement are included in Net loss on derivative instruments in the accompanying Condensed Consolidated Financial Statements.

5. Television and radio broadcast rights and other commitments:

The broadcasting subsidiary acquires television and radio broadcast rights, and at March 31, 2003 has commitments under license agreements amounting to $72,367,000 for future rights to broadcast television and radio programs through 2008, and $11,574,000 in related fees. As these programs will not be available for broadcast until after March 31, 2003, they have been excluded from the financial statements. In addition, the broadcasting subsidiary has commitments under a Joint Sales Agreement totaling $13,029,000 through 2007.

6. Income (loss) per share:

Net income (loss) per share represents net income (loss) divided by the weighted average number of shares outstanding during the year. Net income (loss) per share assuming dilution represents net income (loss) divided by the weighted average number of shares outstanding, including the potentially dilutive impact of the 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.

The weighted average number of shares outstanding as of March 31, 2003 was 8,594,060. The dilutive effect of 1,504 restricted stock rights and options to purchase 422,798 shares are excluded for the three months ended March 31, 2003 because such rights and options were anti-dilutive.

The weighted average number of shares outstanding as of March 31, 2002 was 8,591,658. The dilutive effect of 3,612 restricted stock rights and options to purchase 441,161 shares are excluded for the three months ended March 31, 2002 because such rights and options were anti-dilutive.

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7. Stock-based compensation:

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

	Three months ended March 31
	2003			2002
	(Unaudited)
Net loss, as reported	$	(21,375	)	$	(7,758	)
Deduct total stock-based employee compensation expense determined under the fair value based method for all awards, net of related income tax effect		(148	)		(169	)
Adjusted net loss	$	(21,523	)	$	(7,927	)
Loss per share:
As reported	$	(2.49	)	$	(0.90	)
Adjusted	$	(2.51	)	$	(0.92	)
Loss per share assuming dilution:
As reported	$	(2.51	)	$	(0.90	)
Adjusted	$	(2.51	)	$	(0.92	)

8. Segment information:

The Company operates its continuing operations as three principal business segments: broadcasting, media services, and real estate. Income (loss) from operations by business segment consists of revenue less operating expenses. In computing income from operations by business segment, other income, net, and equity in operations of equity investees have not been included, and net loss on derivative instruments, loss from extinguishment of long-term debt, interest expense, and income taxes have not been deducted. Identifiable assets by business segment are those assets used in the operations of each segment. Corporate assets are principally marketable securities.

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

	March 31 2003		December 31 2002
	(Unaudited)
Broadcasting	$	276,701	$	285,402
Media services		84,343		97,800
Real estate		48,702		50,742
Corporate, eliminations and other		131,014		143,006
Continuing operations		540,760		576,950
Discontinued operations		33,613		63,076
	$	574,373	$	640,026

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Income (loss) from continuing operations for each segment are as follows (in thousands):

	Three months ended March 31
	2003			2002
	(Unaudited)
Broadcasting	$	(3,115	)	$	(1,186	)
Media services		833			(630	)
Real estate		440			434
Corporate, eliminations and other		(2,182	)		(2,115	)
Continuing operations	$	(4,024	)	$	(3,497	)

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF  OPERATIONS

The following discussion and analysis should be read in conjunction with the 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 “Additional Factors That May Affect Our Business, Financial Condition And Future Results”, and those discussed in our annual report on Form 10-K for the year ended December 31, 2002. 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 position and operating results during the three month period ended March 31, 2003 compared with the similar period in 2002.

In October 2002, our real estate subsidiary concluded the sale of the subsidiary’s Fisher Commerce Center industrial property. Net proceeds from the sale were $8,993,000. In December 2002 the subsidiary concluded the sale of three industrial properties. Net proceeds from the sale were $37,510,000. The results of operations of the properties sold in October and December 2002 are reported as discontinued operations for the three months ended March 31, 2002 in the accompanying condensed consolidated financial statements.

On January 29, 2003, the broadcasting subsidiary signed an asset purchase agreement for the sale of its two Georgia television stations, WFXG-TV, Augusta and WXTX-TV, Columbus, for a purchase price of $40 million plus working capital. Completion of the sale is subject to FCC approval, receipt of consents to assignment of certain material agreements, and satisfaction of other customary closing conditions. The sale is expected to be completed in the third quarter of 2003. The stations to be sold meet the criteria of a “component of an entity” as defined in FASB Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (FAS 144). In accordance with the provisions of FAS 144, the results of operations of the stations through the date of completion of the sale, as well as the estimated loss to be recognized on the sale, are reported as discontinued operations in the accompanying condensed consolidated financial statements. The prior year results of operations of the stations to be sold have been reclassified to conform to the 2003 presentation.

In connection with our ongoing corporate restructuring, we expect to discontinue operations at Fisher Properties and Fisher Media Services during 2003. In particular, we expect to sell the remaining two commercial properties at Fisher Properties, West Lake Union Center and Fisher Business Center, plus the property management operation. In addition, we expect that the media services businesses of Fisher Entertainment, Fisher Pathways, and Civia will either be sold, absorbed into our broadcasting operations, or shut down. We expect that such actions will reduce the revenue, operating expenses, depreciation, and income or loss attributable to our media services and real estate business segments.

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

CRITICAL ACCOUNTING POLICIES

The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies below. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results. For a detailed discussion on the application of these and other accounting policies, see

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Note 1 to the Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2002.

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

Allowance for doubtful accounts. We evaluate the collectibility of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected. For all other customers, we recognize reserves for bad debts based on historical experience of bad debts as a percent of accounts receivable for each business unit, adjusted for relative improvements or deteriorations in the aging and changes in current economic conditions.

Television and radio broadcast rights. Television and radio broadcast rights are recorded as assets when the license period begins and the programs are available for broadcasting, at the gross amount of the related obligations. Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast after one year are considered noncurrent. The costs are charged to operations over their estimated broadcast periods using the straight-line method. Program obligations are classified as current or noncurrent in accordance with the payment terms of the license agreement. Costs of programs which are not available for broadcast are not recorded as assets and are disclosed as commitments.

Accounting for derivative instruments. We utilize an interest rate swap in the management of our variable rate exposure. The interest rate swap is held at fair value with the change in fair value being recorded in the statement of income.

We entered into a variable forward sales transaction with a financial institution. Our obligations under the Forward Transaction are collateralized by 3,000,000 shares of SAFECO Corporation common stock owned by us. A portion of the Forward Transaction will be considered a derivative and, as such, we will periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. We may in the future designate the Forward Transaction as a hedge and, accordingly, the change in fair value will be recorded in the income statement or in other comprehensive income depending on its effectiveness.

Goodwill and long-lived intangible assets. Goodwill represents the excess of purchase price of certain broadcast properties over the fair value of tangible net assets acquired and is accounted for under the provision of Statement of Financial Accounting Standards No. 142.

On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (FAS 142). Upon adoption we ceased amortizing goodwill. Goodwill is now tested for impairment annually or whenever events or circumstances occur indicating that goodwill might be impaired. We have determined that indefinite-lived intangible assets resulting from past business combinations are to be accounted for as goodwill. In the second quarter of 2002 we completed the first step of the transitional impairment test for goodwill and found no indication of impairment. The determination of fair value is a critical and complex consideration when assessing impairment under FAS 142 that involves significant assumptions and estimates. These assumptions and estimates were based on our best judgments. We completed our annual test for impairment of goodwill during the fourth quarter of 2002 and found no indication of impairment. Our judgments regarding the existence of impairment indicators include: an assessment of the impacts of legal factors and market and economic conditions; the results of our operational performance and strategic plans; competition and market share; any potential for the sale or disposal of a significant portion of our business; and availability of sources of funding to conduct our principal operations. In the future, it is possible that such assessments could cause us to conclude that impairment indicators exist and that certain assets are impaired. The carrying value of goodwill is $135 million as of March 31, 2003.

Whenever changes in circumstances indicate that the carrying amount may not be recoverable we assess the recoverability of intangible and long-lived assets by reviewing the performance of the underlying operations, in particular, the operating cash flows (earnings before interest, income taxes, depreciation and amortization) of the operation.

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CONSOLIDATED RESULTS OF OPERATIONS

Operating results for the three months ended March 31, 2003 showed a consolidated loss of $21,375,000 including loss from discontinued operations amounting to $18,297,000. Net loss for the three months ended March 31, 2002 was $7,758,000 including income from discontinued operations amounting to $276,000.

Revenue

Three months ended March 31	2003		% Change		2002
Broadcasting	$	28,804,000	2.9	%	$	27,979,000
Media services		4,084,000	150.3	%		1,632,000
Real estate		1,906,000	-15.1	%		2,244,000
Consolidated	$	34,794,000	9.2	%	$	31,855,000

First quarter 2003 broadcasting revenue increased $825,000, compared with the same period of last year. Television revenues, net of sales commissions, increased 4%. Net revenue from overall radio operations was essentially unchanged compared with first-quarter 2002.

Our Seattle and Portland television stations experienced revenue increases of 1% and 6%, respectively. Based on information published by Miller, Kaplan, Arase & Co. (Miller Kaplan), revenue for the overall Seattle television market increased 4% during first quarter of 2003, and revenue for the overall Portland television market decreased 3%. Our smaller market television operations experienced increased revenues ranging from 1% to 28%, except for KBCI in Boise, Idaho, which experienced a decline of 1%.

First quarter revenue at our small market radio stations in Eastern Washington and Montana increased 12%. Revenue at Seattle and Portland radio operations declined 3% and 6%, respectively. Miller Kaplan reported that, for the first quarter of 2003, radio revenues for the Seattle market increased 5%, and revenues for the Portland radio market increased 6%.

The increase in revenue for the media services segment in 2003 is due to increased revenue from program production and development at Fisher Entertainment and from increased revenue at Fisher Plaza, where a tenant paid a significant penalty for early termination of premises agreements.

The comparison of real estate revenue is impacted by rents from the Lake Union properties which are included in results for the first quarter of 2002, but are not included in 2003 as the property was sold in September 2002.

Cost of services sold

Three months ended March 31	2003			% Change		2002
Broadcasting	$	15,241,000		-.1	%	$	15,255,000
Media services		1,912,000		171.0	%		705,000
Real estate		341,000		-21.5	%		434,000
Consolidated	$	17,494,000		6.7	%	$	16,394,000
Percentage of revenue		50.3	%				51.5	%

The cost of services sold consists primarily of costs to acquire, produce, and promote broadcast programming, operating costs of the businesses in the media services segment, and costs to operate the properties held by the real estate segment. These costs are relatively fixed in nature, and do not necessarily vary on a proportional basis with revenue.

Overall operating expenses at the broadcasting segment for first quarter of 2003 declined modestly compared with the first quarter of 2002. Increases in a number of expense categories at our television stations were more than offset by a reduction in the cost of syndicated programming. Our Seattle radio operations reported increased operating expenses as a result of the 24 hour news format adopted by KOMO AM in the fall of 2002 and additional costs associated with the broadcast of Seattle Mariners baseball.

The increase in operating expenses in the media services segment is principally due to program production and development at Fisher Entertainment and to increases in insurance, utilities, and other operating costs at Fisher Plaza.

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The decline in real estate operating expenses relates primarily to costs of operating the Lake Union properties during the first quarter of 2002. Those properties were sold in the fall of 2002 and, therefore, are excluded from 2003 results.

Selling expenses

Three months ended March 31	2003			% Change		2002
Broadcasting	$	6,199,000		54.0	%	$	4,025,000
Media services		167,000		41.1	%		118,000
Consolidated	$	6,366,000		53.6	%	$	4,143,000
Percentage of revenue		18.3	%				13.0	%

The increase in selling expenses at our broadcasting segment in 2003 is principally due to costs incurred at Seattle Radio operations in connection with a joint sales agreement that became effective in March 2002, and additional sales personnel and other costs related to the rights agreement to broadcast Seattle Mariners baseball games on KOMO AM.

The increase in selling expenses at the media services segment is primarily due to marketing efforts for Fisher Plaza.

General and administrative expenses

Three months ended March 31	2003			% Change		2002
Broadcasting	$	7,121,000		7.3	%	$	6,636,000
Media services		398,000		-60.2	%		1,001,000
Real estate		506,000		-21.1	%		642,000
Corporate, eliminations and other		2,134,000		3.8	%		2,056,000
Consolidated	$	10,159,000		-1.7	%	$	10,335,000
Percentage of revenue		29.2	%				32.4	%

The increase in broadcasting general and administrative expenses is principally due to higher medical benefits. Other employee-related costs increased at our Seattle radio operations as a result of additional personnel required for the all-news format and broadcast of Seattle Mariners baseball.

The decrease in general and administrative expenses at the media services segment is primarily attributable to expenses incurred by Civia, Inc. during the first quarter of 2002 in connection with development of the Civia Media Terminal. No development took place in 2003.

The decrease in general and administrative expenses in the real estate segment is primarily attributable to a decrease in salaries and related costs as a result of staff reductions as the Company continues to reduce its real estate portfolio.

The increase in general and administrative expenses at the corporate segment is principally related to legal and consulting fees incurred in connection with a review of strategic alternatives that concluded in February 2003.

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Depreciation and amortization

Three months ended March 31	2003			% Change		2002
Broadcasting	$	3,357,000		3.3	%	$	3,250,000
Media services		775,000		77.2	%		437,000
Real estate		619,000		-15.8	%		734,000
Corporate, eliminations and other		48,000		-18.9	%		59,000
Consolidated	$	4,799,000		7.1	%	$	4,480,000
Percentage of revenue		13.8	%				14.1	%

The increase in depreciation and amortization at the broadcasting segment is largely attributable to capital expenditures made in connection with the relocation of Seattle radio operations to Fisher Plaza in fall of 2002.

The increase in depreciation in the media services segment is attributable to operations of Fisher Plaza.

The decrease in depreciation and amortization at our real estate segment relates primarily to depreciation of the Lake Union properties during the first quarter of 2002. Those properties were sold in the fall of 2002 and, therefore, are excluded from 2003 results.

Income (Loss) from operations

Three months ended March 31	2003			% Change		2002
Broadcasting	$	(3,115,000	)	162.7	%	$	(1,186,000	)
Media services		833,000		-232.1	%		(630,000	)
Real estate		440,000		1.6	%		434,000
Corporate, eliminations and other		(2,182,000	)	3.2	%		(2,115,000	)
Consolidated	$	(4,024,000	)			$	(3,497,000	)

Income (loss) from operations by business segment consists of revenue less operating expenses. In computing income from operations by business segment, other income, net, and equity in operations of equity investees have not been included, and net loss on derivative instruments, loss from extinguishment of long-term debt, interest expense, and income taxes have not been deducted. Identifiable assets by business segment are those assets used in the operations of each segment.

Net loss on derivative instruments

Three months ended March 31	2003			2002
	$	(242,000	)	$	(725,000	)

During the first quarter of 2003, net loss on derivative instruments includes unrealized loss resulting from a decrease in fair value of a variable forward sales transaction amounting to $892,000, partially offset by unrealized gain from an increase in the fair value of an interest rate swap agreement amounting to $650,000.

The amount for 2002 includes an unrealized gain resulting from an increase in fair value of the variable forward sales transaction amounting to $2,040,000, offset by an unrealized loss in an interest rate swap agreement amounting to $129,000, and a realized loss of $2,636,000 on termination of an interest rate swap agreement.

Loss from extinguishment of long-term debt

Three months ended March 31	2003		2002
	$	-0-	$	(3,264,000	)

We repaid certain loans in March 2002 and, as a result, expensed deferred loan costs amounting to $3,264,000. This expense was previously reported in the 2002 financial statements as an extraordinary item in the amount of $2,058,000, net of income tax benefit.

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Other income, net

Three months ended March 31	2003		2002
	$	4,801,000	$	587,000

Other income, net includes dividends received on marketable securities and, to a lesser extent, interest and miscellaneous income. The amount for 2003 also includes gains on sale of marketable securities amounting to $3,657,000 and income from prepayment of an installment note receivable.

Interest expense

Three months ended March 31	2003		% Change		2002
	$	5,536,000	21.3	%	$	4,566,000

Interest expense includes interest on borrowed funds, loan fees, and net payments under a swap agreement. The increase in interest expense results from several factors, including: higher interest rates on some borrowings; an interest rate swap agreement that has a higher fixed interest rate than was in effect during the first quarter of 2002; we paid a premium in February 2003 in connection with prepayment of certain long-term debt. Interest capitalized in connection with the Fisher Plaza project amounted to $669,000 and $399,000 during the three months ended March 31, 2003 and 2002, respectively.

Provision for federal and state income taxes (benefit)

Three months ended March 31	2003			% Change		2002
	$	(1,919,000	)	-42.9	%	$	(3,432,000	)
Effective tax rate		38.4	%				29.9	%

The provision for federal and state income taxes varies directly with pre-tax income. The tax benefits reflect our ability to utilize net operating losses. The effective tax rate varies from the statutory rate primarily by due to a deduction for dividends received, offset by the impact of state income taxes.

Other comprehensive income (loss)

Three months ended March 31	2003			2002
	$	(1,437,000	)	$	4,371,000

Other comprehensive income (loss) includes unrealized gain or loss on our marketable securities and, during a portion of 2002, the effective portion of the change in fair value of an interest rate swap agreement, and is net of income taxes.

During the three months ended March 31, 2003 the value of our marketable securities increased $587,000, net of tax. Also during the period, we realized gain amounting to $2,024,000, net of tax, from sale of our investment in Weyerhaeuser Company common stock, which was reclassified to operations.

At March 31, 2003, our marketable securities consisted of 3,002,376 shares of SAFECO Corporation. The per share market price of SAFECO Corporation common stock was $34.67 at December 31, 2002, $34.97 at March 31, 2003, $31.15 at December 31, 2001, and $32.04 at March 31, 2002.

During the period from January 1, 2002 through March 21, 2002 we used an interest rate swap, designated as a cash flow hedge, to manage exposure to interest rate risks. During this period the fair value of the swap increased $543,000, net of tax, which is recorded in other comprehensive income. In connection with the refinancing of our long-term debt, the swap agreement was terminated and the remaining negative fair market value of $2,636,000 ($1,713,000 net of tax benefit) was reclassified to operations.

Unrealized gains and losses are reported as accumulated other comprehensive income, a separate component of stockholders’ equity.

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Liquidity and Capital Resources

As of March 31, 2003 we had working capital of $32,687,000 and cash and short-term cash investments totaling $14,063,000. We intend to finance working capital, debt service, and capital expenditures primarily through operating activities. However, we will consider using available credit facilities to fund significant development activities. As of March 31, 2003, approximately $40,000,000 is available under existing credit facilities.

Net cash provided by operating activities during the three months ended March 31, 2003 was $9,047,000. Net cash provided by operating activities consists of our net income, increased by non-cash expenses such as depreciation and amortization, and adjusted by changes in operating assets and liabilities. Net cash provided by investing activities during the period was $9,876,000, including restricted cash of $12,778,000 that became available for general corporate purposes during the first quarter, reduced by $3,013,000 invested for purchase of property, plant and equipment (including the Fisher Plaza project). Net cash used in financing activities was $28,375,000, primarily for payments on borrowing agreements and mortgage loans.

As of March 31, 2003, future maturities of notes payable and long-term debt, and television and radio broadcast rights are as follows (in thousands):

	Notes Payable and Long-Term Debt		Broadcast Rights
2003	$	5,886
2004		8,776	$	68
2005		86,467		79
2006		44,822		21
2007		22,367
Thereafter		97,787
	$	266,105	$	168

ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND FUTURE RESULTS

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

A continuing economic downturn in the Seattle, Washington or Portland, Oregon areas or in the national economy could adversely affect our operations, revenue, cash flow and earnings.

Our operations are concentrated primarily in the Pacific Northwest. The Seattle, Washington and Portland, Oregon markets are particularly important for our financial well being. Operating results during 2002 and 2003 were adversely impacted by a soft economy, and a continuing economic downturn in these markets could have a material adverse effect on our operations and financial condition. Because our costs of services are relatively fixed, we may be unable to significantly reduce costs if our revenues continue to decline. If our revenues do not increase or if they continue to decline, we could continue to suffer net losses or such net losses could increase. In addition, a continued downturn in the national economy has resulted and may continue to result in decreased national advertising sales. This could have an adverse affect on our results of operations because national advertising sales represent approximately one-third of our television advertising net revenue.

Our restructuring may cause disruption of operations and distraction of management, and may not achieve the desired results.

We continue to implement a restructuring of our corporate enterprise. This restructuring may disrupt operations and distract management, which could have a material adverse effect on our operating results. We cannot predict whether this restructuring will achieve the desired benefits, or whether our Company will be able to fully integrate our broadcast communications and other operations. Because we do not control all aspects of the proposed sales or

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shut down activities we cannot assure you that all such activities will occur. We cannot assure you that the restructuring will be completed in a timely manner or that any benefits of the restructuring will justify its costs. We may incur costs in connection with the restructuring in a number of areas, including professional fees, marketing expenses, employment expenses, and administrative expenses. In addition, we may incur additional costs, which we are unable to predict at this time. Our proposed restructuring involves the upstream merger of Fisher Broadcasting Company into Fisher Communications. We may determine that there are regulatory or contractual restrictions which may cause us to choose not to consummate this merger.

Our proposed sale of the Georgia television stations and the commercial property assets and property management operations of Fisher Properties may not take place.

In 2003, we announced that we executed agreements to sell our Georgia television stations to a third party. We may be unable to close the sale of the Georgia stations, or the sale may not take place on the same terms that were previously announced, if we do not obtain FCC approval or other necessary consents. We have recently received notice that an informal objection to the application seeking consent to the assignment of licenses for the Georgia stations was filed with the FCC, which may delay or prevent us from closing the sale of the stations. We may also be unable to sell the remaining commercial real estate assets and property management operations of Fisher Properties on terms that are acceptable to us due to the market for commercial rental property in Seattle.

Our debt service consumes a substantial portion of the cash we generate, but our ability to generate cash depends on many factors beyond our control.

We currently use a significant portion of our operating cash flow to service our debt. Our leverage makes us vulnerable to an increase in interest rates or a downturn in the operating performance of our businesses or a decline in general economic conditions. It further limits our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or other purposes, and may limit our ability to pay dividends in the future. Finally, it inhibits our ability to compete with competitors who are less leveraged than we are, and it constrains our ability to react to changing market conditions, changes in our industry and economic downturns.

Prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to satisfy our debt obligations and our goals to reduce our debt. If in the future we cannot generate sufficient cash flow from operations to meet our obligations, we may need to refinance our debt, obtain additional financing, forego capital expenditures, or sell assets. Any of these actions could adversely affect the value of our common stock. We cannot assure you that we will generate sufficient cash flow or be able to obtain sufficient funding or take other actions to satisfy our debt service requirements.

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

Our broadcasting operations experienced a loss of advertising revenue and incurred additional operating expenses during the recent war with Iraq. In the future, we may experience a loss of advertising revenue and incur additional broadcasting expenses in the event the United States engages in foreign hostilities or in the event there is a terrorist attack against the United States. A significant news event like a war or terrorist attack will likely result in the preemption of regularly scheduled programming by network news coverage of the event. As a result, advertising may not be aired and the revenue for such advertising may be lost unless the broadcasting station is able to run the advertising at agreed-upon times in the future. There can be no assurance that advertisers will agree to run such advertising in future time periods or that space will be available for such advertising. We cannot predict the duration of such preemption of local programming if it occurs. In addition, our broadcasting stations may incur additional expenses as a result of expanded local news coverage of the local impact of a war or terrorist attack. The loss of revenue and increased expenses could negatively affect our results of operations.

The performance of the television networks could harm our operating results.

The operating results of our broadcasting operations are primarily dependent on advertising revenues. Our Seattle and Portland television stations are affiliated with the ABC Television Network. Popularity of programming on ABC lagged behind other networks during 2002 and 2003, and contributed to a decline in audience ratings, which negatively impacted revenues for our Seattle and Portland television stations. Continued weak performance by ABC, a decline in performance by CBS or FOX, or an adverse change in performance by other networks or network program suppliers, could harm our business and results of operations.

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

We cannot assure you that any of our stations will maintain or increase its current audience ratings or advertising revenues. Fisher Broadcasting’s television and radio stations face intense competition from local network affiliates and independent stations, as well as from cable and alternative methods of broadcasting brought about by technological advances and innovations. The stations compete for audiences on the basis of programming popularity, which has a direct effect on advertising rates. Additional significant factors affecting a station’s competitive position include assigned frequency and signal strength. The possible rise in popularity of competing entertainment and communications media could also have a materially adverse effect on Fisher Broadcasting’s audience share and advertising revenues. In addition, our principal marketing representative for the sale of national advertising for our Seattle and Portland television and radio stations is owned by a competitor, and the success of their efforts in selling national advertising is beyond our control. We cannot predict either the extent to which such competition will materialize or, if such competition materializes, the extent of its effect on our business.

The syndicator for several of our most popular talk radio programs recently acquired radio stations in the Seattle market, and competes with our Seattle radio stations. We can give no assurance that we will continue to be able to acquire rights to such programs once our current contracts for these programs expire.

The FCC is currently considering whether to modify its national and local television ownership limitations, its prohibition on common ownership of newspapers and broadcast stations in the same market, as well as its local radio ownership limitations. We cannot predict what action the FCC will take. If the FCC adopts proposals to allow large broadcast groups to expand further their ownership on a national basis, to permit a single entity to own more than one station in markets with fewer independently owned stations, to allow consolidated newspaper and broadcast ownership and operation, or to allow radio operators to increase their level of ownership in local markets, our existing operations could face increased competition from entities with significantly greater resources, and greater economies of scale, than Fisher Broadcasting.

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

We make significant commitments to acquire rights to television and radio programs under multi-year agreements. The success of such programs is dependent partly upon unpredictable and volatile factors beyond our control such as audience preferences, competing programming, and the availability of other entertainment activities. Audience preferences could cause our programming not to gain popularity or decline in popularity, which could cause our advertising revenues to decline. In some instances, we may have to replace programs before their costs have been fully-amortized, resulting in write-offs that increase operating costs.

In April 2002 we acquired the radio broadcast rights for the Seattle Mariners baseball team for a term of six years. The success of this programming is dependent on some factors beyond our control, such as the continued competitiveness of the Seattle Mariners and the successful marketing of the team by the team’s owners. If the Seattle Mariners fail to maintain their current fan base, the number of listeners to our radio broadcasts will likely decrease, which would harm our ability to generate anticipated advertising dollars.

We converted one of our Seattle radio stations, KOMO AM, to an “all news” format which has higher costs than the previous format. If we are unable to successfully increase the number of listeners, our margins could be adversely affected. We also recently entered into a joint sales agreement with KING FM, which is owned and operated by a third-party. Our success in selling advertising under this agreement is closely tied to the station’s programming performance, which is not under our control. If the station’s ratings performance does not improve consistently, it will harm our ability to recoup our costs and generate a profit from this agreement.

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

The broadcasting industry is subject to extensive regulation by the FCC under the Communications Act of 1934, as amended. Compliance with and the effects of existing and future regulations could have a material adverse impact on us. Issuance, renewal or transfer of broadcast station operating licenses requires FCC approval, and we cannot operate our stations without FCC licenses. Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly egregious violations, the denial of a license renewal application or revocation of a license. While the majority of such licenses are renewed by the FCC, there can be no assurance that Fisher

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Broadcasting’s licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If the FCC decides to include conditions or qualifications in any of our licenses, we may be limited in the manner in which we may operate the affected stations.

The Communications Act and FCC rules impose specific limits on the number of stations and other media outlets an entity can own in a single market. The FCC attributes interests held by, among others, an entity’s officers, directors, certain stockholders, and in some circumstances, lenders, to that entity for purposes of applying these ownership limitations. The existing ownership rules or proposed new rules may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in a swap transaction if the swap would cause the other company to violate these rules.

The FCC is currently considering whether to modify its national and local television ownership limitations, its prohibition on common ownership of newspapers and broadcast stations in the same market, as well as its local radio ownership limitations. We cannot predict what action the FCC will take. If the FCC adopts proposals to allow large broadcast groups to expand further their ownership on a national basis, to permit a single entity to own more than one station in markets with fewer independently owned stations, to allow consolidated newspaper and broadcast ownership and operation, or to allow radio operators to increase their level of ownership in local markets, our existing operations could face increased competition from entities with significantly greater resources, and greater economies of scale, than Fisher Broadcasting.

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

Many viewers of our television stations receive their signals via retransmissions by cable television systems. All television stations are generally entitled to be carried on cable television systems in their local markets without compensation from the cable system (“must-carry”). Alternatively, commercial television stations may choose to require cable television systems to obtain their permission (“retransmission consent”) to carry the signal of their station. In such cases, the terms of carriage, including compensation, are subject to negotiation between the station and the cable system. The decision as to whether a television station’s relationship with each local cable system will be governed by must-carry or by retransmission consent arrangements is binding for a three-year period.

On October 1, 2002, each of Fisher Broadcasting’s television stations sent notices to cable systems in their market electing must-carry or retransmission consent status for the period from January 1, 2003 through December 31, 2005. We elected retransmission consent status with respect to a number of key cable systems. We have granted temporary permission for such cable systems to continue to retransmit the signal of the station involved while a retransmission consent agreement is under negotiation. There is no assurance, however, that retransmission consent agreements can be negotiated successfully with any cable system. If we cannot reach agreement regarding the terms under which a station will be retransmitted by a cable system, the cable system will be prohibited by law from continuing to carry the signal of that station. This could have an adverse effect on the ability of the public to receive the signal of affected station, ultimately resulting in reduced audience share and advertising revenue.

A write-down of goodwill to comply with new accounting standards would harm our operating results.

Approximately $135 million, or 24% of our total assets as of March 31, 2003, consists of unamortized goodwill. On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (FAS 142). FAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Goodwill was tested for impairment upon adoption of FAS 142, and will be tested annually or whenever events or circumstances occur indicating that goodwill might be impaired. We have determined that indefinite-lived intangible assets resulting from past business combinations are to be accounted for as goodwill. The determination of fair value is a critical and complex consideration when assessing impairment under FAS 142 that involves significant assumptions and estimates. These assumptions and estimates were based on our best judgments. We completed our annual test for impairment of goodwill during the fourth quarter of 2002 and found no indication if impairment. Our judgments regarding the existence of impairment indicators include: our assessment of the impacts of legal factors and market and economic conditions; the results of our operational performance and strategic plans; competition and market share; any potential for the sale or disposal of a significant portion of our business; and availability of sources of funding to conduct our principal operations. In the future, it is possible that such assessments could cause us to conclude that impairment indicators exist and that certain assets are impaired, which would harm our operating results.

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Dependence on key personnel may expose us to additional risks.

Our business is dependent on the performance of certain key employees, including our chief executive officer and other executive officers. We also employ several on-air personalities who have significant loyal audiences in their respective markets. We can give no assurance that all such key personnel will remain with us. The loss of any key personnel could harm our operations and financial results.

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

Our television stations’ affiliation with one of the four major television networks (ABC, CBS, NBC and FOX) has a significant impact on the composition of the stations’ programming, revenues, expenses and operations. We cannot give any assurance that we will be able to renew our affiliation agreements with the networks at all, or on satisfactory terms. In recent years, the networks have been attempting to change affiliation arrangements in manners that would disadvantage affiliates. The non-renewal or modification of any of the network affiliation agreements could harm our operating results.

A network might acquire a television station in one of our markets, which could harm our business and operating results.

If a network acquires a television station in a market in which we own a station affiliated with that network, the network will likely decline to renew the affiliation agreement for our station in that market, which could harm our business and results of operations.

Our operations may be adversely affected by power outages, severe weather, increased energy costs or earthquakes in the Pacific Northwest.

Our corporate headquarters and a significant portion of our operations are located in the Pacific Northwest. The Pacific Northwest has from time-to-time experienced earthquakes and experienced a significant earthquake on February 28, 2001. We do not know the ultimate impact on our operations of being located near major earthquake faults, but an earthquake could harm our operating results. Severe weather, such as high winds, can also damage our television and radio transmission towers, which could result in loss of transmission, and a corresponding loss of advertising revenue, for a significant period of time. In addition, the Pacific Northwest may experience power shortages or outages and increased energy costs. Power shortages or outages could cause disruptions to our operations, which in turn may result in a material decrease in our revenues and earnings and have a material adverse effect on our operating results. Power shortages or increased energy costs in the Northwest could harm the region’s economy, which could reduce our advertising revenues. Our insurance coverage may not be adequate to cover the losses and interruptions caused by earthquakes, severe weather and power outages.

Health concerns relating to Severe Acute Respiratory Syndrome (SARS) could disrupt or depress economic activity, which could harm our results of operations.

Health concerns related to the spread of SARS could disrupt or depress economic activity, harm trade and result in a decrease in national and local advertising sales. Any decrease in television or radio advertising may harm our results of operations.

Our computer systems are vulnerable to viruses and unauthorized tampering.

Despite our implementation of network security measures, our servers and computer systems are vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. Any of these events could cause system interruption, delays and loss of critical data. Our recovery planning may not be sufficient for all eventualities.

Our efforts to develop new business opportunities are subject to technological risk and may not be successful, or results may take longer than expected to realize.

We are developing new opportunities for creating, aggregating and distributing content through non-broadcast media channels, such as the Internet, cell phones, and web-enabled personal digital assistants. The success of our efforts is subject to technological innovations and risks beyond our control, so that the anticipated benefits may take longer than expected to realize. In addition, we have limited experience in non-broadcast media, which may result in errors

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in the conception, design or implementation of a strategy to take advantage of the opportunities available in that area. We therefore cannot give any assurance that our efforts will result in successful products or services.

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

Revenue and operating income from our properties and the value of our properties may be adversely affected by the general economic climate, the local economic climate and local real estate conditions, including prospective tenants’ perceptions of attractiveness of the properties and the availability of space in other competing properties. We have developed the second building at Fisher Plaza, which entailed a significant investment. The softened economy in the Seattle area could adversely affect our ability to lease the space of our properties on attractive terms or at all, which could harm our operating results. In addition, a continuing of the severe downturn in the telecom and high-tech sectors may significantly affect our ability to attract tenants to Fisher Plaza, since space at Fisher Plaza is marketed in significant part to organizations from these sectors. Other risks relating to our real estate operations include the potential inability to provide adequate management, maintenance and insurance, and the potential inability to collect rent due to bankruptcy or insolvency of tenants or otherwise. One of our properties is leased to a tenant that occupies a substantial portion of the property and the departure of this tenant or its inability to pay their rents or other fees could have a significant adverse effect on our real estate revenues. Real estate income and values may also be adversely affected by such factors as applicable laws and regulations, including tax and environmental laws, interest rate levels and the availability of financing. We carry comprehensive liability, fire, extended coverage and rent loss insurance with respect to our properties. There are, however, certain losses that may be either uninsurable, not economically insurable or in excess of our current insurance coverage limits. If an uninsured loss occurs with respect to a property, it could harm our operating results.

A reduction on the periodic dividend on the common stock of SAFECO may adversely affect our revenue, cash flow and earnings.

We are a 2.2% stockholder of the common stock of SAFECO Corporation. If SAFECO reduces its periodic dividends, it will negatively affect our cash flow and earnings. In February 2001, SAFECO reduced its quarterly dividend from $0.37 to $0.185 per share.

Antitrust law and other regulatory considerations could prevent or delay our business activity or adversely affect our revenues.

The completion of any future transactions we may consider may be subject to the notification filing requirements, applicable waiting periods and possible review by the Department of Justice or the Federal Trade Commission under the Hart-Scott-Rodino Act. Any television or radio station acquisitions or dispositions will be subject to the license transfer approval process of the FCC. Review by the Department of Justice or the Federal Trade Commission may cause delays in completing transactions and, in some cases, result in attempts by these agencies to prevent completion of transactions or to negotiate modifications to the proposed terms. Review by the FCC, particularly review of concentration of market revenue share, may also cause delays in completing transactions. Any delay, prohibition or modification could adversely affect the terms of a proposed transaction or could require us to abandon a transaction opportunity. In addition, campaign finance reform laws or regulations could result in a reduction in funds being spent on advertising in certain political races, which would adversely affect our revenues and results of operations in election years.

We may be required to make additional unanticipated investments in HDTV technology, which could harm our ability to fund other operations or lower our outstanding debt.

Although our Seattle, Portland, Eugene and Boise television stations currently comply with FCC rules requiring stations to broadcast in high definition television (HDTV), our stations in smaller markets do not because they are operating pursuant to Special Temporary Authority to utilize low power digital facilities. These Special Temporary Authorizations must be renewed every six months, and there is no assurance that the FCC will continue to extend those authorizations. If the FCC does not extend the authorizations for Fisher’s smaller stations, then we may be required to make substantial additional investments in digital broadcasting to maintain the licenses of our smaller market stations. This could result in less cash being available to fund other aspects of our business or decrease our debt load.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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

Interest Rate Exposure

Our strategy in managing exposure to interest rate changes is to maintain a balance of fixed- and variable-rate instruments. We will also consider entering into interest rate swap agreements at such times as it deems appropriate. At March 31, 2003, the fair value of our fixed-rate debt is estimated to be approximately $1,200,000 greater than the carrying amount. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10 percent change in interest rates and, at March 31, 2003, amounted to $1,715,000 on our fixed rate debt, which totaled $89,676,000.

We also had $176,230,000 in variable-rate debt outstanding at March 31, 2003. A hypothetical 10 percent change in interest rates underlying these borrowings would result in a $992,000 annual change in our pre-tax earnings and cash flows.

We are a party to an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of our floating rate debt outstanding under an eight-year credit facility (“Broadcast Facility”). The notional amount of the swap reduces as payments are made on principal outstanding under the broadcast facility until termination of the contract on March 22, 2004. At March 31, 2003, the notional amount of the swap was $65,000,000 and the fair value of the swap agreement was a liability of $3,644,000. A hypothetical 10 percent change in interest rates would change the fair value of our swap agreement by approximately $50,000 at March 31, 2003. We have not designated the swap as a cash flow hedge; accordingly changes in the fair value of the swap are included in Net loss on derivative instruments in the accompanying Condensed Consolidated Financial Statements.

Marketable Securities Exposure

The fair value of our investments in marketable securities at March 31, 2003 was $104,993,000. Marketable securities consist of 3,002,376 shares of SAFECO Corporation, which is reported on the NASDAQ securities market. As of March 31, 2003, these shares represented 2.2% of the outstanding common stock of SAFECO Corporation. While we currently do not intend to dispose of our investments in marketable securities, we have classified the investments as available-for-sale under applicable accounting standards. Mr. William W. Krippaehne, Jr., President, CEO, and a Director of the Company, is a Director of SAFECO Corporation. A hypothetical 10 percent change in market prices underlying these securities would result in a $10,499,000 change in the fair value of the marketable securities portfolio. Although changes in securities prices would affect the fair value of the marketable securities portfolio and cause unrealized gains or losses, such gains or losses would not be realized unless the investments are sold.

As of March 31, 2003, 3,000,000 shares of SAFECO Corporation stock owned by the Company were pledged as collateral under a variable forward sales transaction with a financial institution. A portion of the Forward Transaction is considered a derivative and, as such, we periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. As of March 31, 2003 the derivative portion of the Forward Transaction had a fair market value of $4,335,000, which is included in Net loss on derivative instruments in the accompanying Condensed Consolidated Financial Statements. A hypothetical 10 percent change in the market price of SAFECO Corporation stock would change the market value of the Forward Transaction by approximately $7,700,000. A hypothetical 10 percent change in volatility would change the market value of the Forward Transaction by approximately $350,000. A hypothetical 10 percent change in interest rates would change the market value of the Forward Transaction by approximately $550,000.

ITEM 4 – CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of its disclosure controls and procedures within 90 days prior to the filing date of this quarterly report, and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

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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 or results of operations of the Company.

Item 2. Changes in Securities and Use of Proceeds

On April 24, 2003, the board of directors passed a resolution to amend the Company’s Bylaws to add new Section 6 (Planning Committee) to Article IV.

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 and Reports on Form 8-K

(a) Exhibits:

2.1	Asset Purchase Agreement dated as of January 29, 2003 between Fisher Broadcasting – Georgia, LLC, and Southeastern Media Holdings, Inc
3.1	Bylaws of Fisher Communications, Inc., as amended on April 24, 2003.
10.1	Letter agreement dated July 23, 2002 between Fox Broadcasting Company and Fisher Broadcasting – Georgia, L.L.C., regarding WFXG TV, extending the term of the Station Affiliation Agreement dated April 20, 2001 to June 30, 2007.
10.2	Letter agreement dated July 23, 2002 between Fox Broadcasting Company and Fisher Broadcasting – Georgia, L.L.C., regarding WXTX TV, extending the term of the Station Affiliation Agreement dated April 20, 2001 to June 30, 2007.
99.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:

A report on Form 8-K dated January 29, 2003 was filed with the Commission announcing the signing of an asset purchase agreement for the sale of the broadcasting subsidiary’s two Georgia television stations.

A report on Form 8-K dated February 12, 2003 was filed with the Commission announcing fourth quarter and year-end 2002 financial results, the completion of a review of strategic alternatives by the Company’s Board of Directors, and the retirement of director John Mangels. The report also included a letter to shareholders from the Chairman of the Board and the Company’s President and Chief Executive Officer, and a letter to employees from the Company’s President and Chief Executive Officer.

A report on Form 8-K dated March 14, 2003 was filed with the Commission announcing the appointment of Jerry St. Dennis as a director.

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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. (Registrant)
Dated	May 14, 2003	/s/    DAVID D. HILLARD
			David D. Hillard Senior Vice President and Chief Financial Officer

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Section 302 Certification

Quarterly Report on Form 10-Q

I, William W. Krippaehne, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fisher Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

May 14, 2003

/s/    WILLIAM W. KRIPPAEHNE, JR.        

William W. Krippaehne, Jr.

President, Chief Executive Officer

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Section 302 Certification

Quarterly Report on Form 10-Q

I, David D. Hillard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fisher Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

May 14, 2003

/s/    DAVID D. HILLARD        

David D. Hillard

Senior Vice President, Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
2.1	Asset Purchase Agreement dated as of January 29, 2003 between Fisher Broadcasting – Georgia, LLC, and Southeastern Media Holdings, Inc.
3.1	Bylaws of Fisher Communications, Inc., as amended on April 24, 2003.
10.1	Letter agreement dated July 23, 2002 between Fox Broadcasting Company and Fisher Broadcasting – Georgia, L.L.C., regarding WFXG TV, extending the term of the Station Affiliation Agreement dated April 20, 2001 to June 30, 2007.
10.2	Letter agreement dated July 23, 2002 between Fox Broadcasting Company and Fisher Broadcasting – Georgia, L.L.C., regarding WXTX TV, extending the term of the Station Affiliation Agreement dated April 20, 2001 to June 30, 2007.
99.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

29

EX-2.1

Exhibit 2.1

ASSET PURCHASE AGREEMENT

dated as of January 29^th, 2003

between

FISHER BROADCASTING-GEORGIA, LLC,

and

SOUTHEASTERN MEDIA HOLDINGS, INC.

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of January 29, 2003 between Southeastern Media Holdings, Inc., a Delaware corporation (“Buyer”), Fisher Broadcasting-Georgia, LLC, a Delaware limited liability company (“Seller”), and, for the limited purpose set forth in Section 12.03(c), Fisher Broadcasting Company, a Washington corporation (“Parent”).

Background Statement

Seller is solely engaged in the business of television broadcasting and operates and owns all of the assets and licenses used in the operation of a commercial television broadcast station WXTX-TV, Channel 54 (“DTV Channel 49”), in Columbus, Georgia (the “Columbus Station”), and a commercial television broadcast station WFXG-TV, Channel 54 (“DTV Channel 51”), in Augusta, Georgia (the “Augusta Station” and together with the Columbus Station, the “Stations”), under licenses issued by the Federal Communications Commission (the “FCC”). Buyer desires to purchase from Seller substantially all of the assets and assume certain specified liabilities, and Seller desires to sell to Buyer substantially all of the assets and transfer certain specified liabilities, related to the conduct of the Stations on the terms and subject to the conditions hereinafter set forth;

NOW, THEREFORE, Buyer and Seller hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 Definitions.

As used in this Agreement, the following terms shall have the following meanings:

(a) “Accounting Firm” means (A) an independent certified public accounting firm in the United States of national recognition (other than a firm that then serves as the independent auditor for either Buyer or Seller or any of their respective Affiliates) mutually acceptable to Seller and Buyer or (B) if Seller and Buyer are unable to agree upon such a firm, then the regular independent auditors for Seller and Buyer shall mutually agree upon a third independent certified public accounting firm, in which event, “Accounting Firm” shall mean such third firm.

(b) “Accounts Receivable” means all accounts receivable (other than Intercompany Receivables and accounts receivable relating to Tradeout Agreements or film and program barter agreements), and all rights to receive payments under any notes, bonds and other evidences of indebtedness and all other rights to receive payments, in each case arising out of sales occurring in the conduct of the Business prior to the Closing Date for services performed or delivered by the Business prior to the Closing Date.

(c) “Action” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

(d) “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such other Person.

2

(e) “Ancillary Agreement” means, as to any Person, all of the documents and instruments required to be executed pursuant to this Agreement by such Person.

(f) “Balance Sheet Date” means November 30, 2002.

(g) “Business” means the conduct and operation of the Stations in the ordinary course.

(h) “Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the city of Charlotte, North Carolina.

(i) “Capital Lease Obligation” means any liability or obligation of Seller as lessee under leases relating to the Business that have been or should have been recorded as capital leases in accordance with GAAP.

(j) “CERCLA” means The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S)(S) 9601 et seq.

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

(l) “Communications Act” means the Communications Act of 1934, as amended, the Telecommunications Act of 1996, the Children’s Television Act and the rules and regulations promulgated thereunder, in each case, as in effect from time to time.

(m) “Confidentiality Agreement” means the confidentiality agreement dated as of October 13, 2002 by and between Seller and Buyer.

(n) “Control” means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The terms “Controlled” and “Controlling” shall have a correlative meaning.

(o) “Copyrights” means all copyrights, copyright applications, registrations and similar rights used by the Stations (other than those included in the Excluded Assets), including those registered copyrights and copyright applications identified on Schedule 3.06(e).

(p) “Employee Plan” means any (i) employee benefit plan, arrangement or policy subject to ERISA, including without limitation, any retirement, pension, deferred compensation, severance, profit sharing, savings, group health, dental, life insurance, disability or cafeteria plan, policy or arrangement, (ii) any stock option, stock purchase or equity-based compensation plan, (iii) any bonus or incentive arrangement and (iv) any severance or termination agreements, policies or arrangements that are not covered by ERISA, in each case maintained or contributed to by Seller or any of its Affiliates for the benefit of any current or former Station Employee.

(q) “Environmental Laws” means any applicable statute, ordinance, rule, regulation, decision, judgment, decree, permit or license, in each case, in effect on the date of this Agreement or the Closing Date, as applicable, whether local, state, or federal relating to: (A) Releases or threatened Releases of Hazardous Materials into the indoor or outdoor environment; (B) the use, treatment, storage, disposal, handling, discharging or shipment of Hazardous Material; (C) the regulation of storage tanks; or (d) otherwise relating to pollution or protection of human health, occupational safety and the indoor or outdoor environment.

3

(r) “Environmental Liabilities” means any and all liabilities arising in connection with or in any way relating to Seller (or any predecessor of Seller or any prior owner of all or part of Seller’s business and assets), the Business, the Real Property or any property now or previously owned, leased or operated by the Business or Seller in connection with the Stations (as currently or previously conducted), the assets of the Business or any activities or operations occurring or conducted at the Real Property (including offsite disposal), whether accrued, contingent, absolute, determined, determinable or otherwise, which (i) arise under or relate to any Environmental Law and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date (including any matter disclosed or required to be disclosed in Schedule 3.19(a)).

(s) “Environmental Permits” means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental Authorities relating to or required by Environmental Laws and affecting, or relating in any way to, the Stations, the Business or the business of Seller as currently conducted.

(t) “Equipment” means all machinery, equipment, computers, Motor Vehicles, furniture, fixtures, furnishings, toolings, parts, and other items of tangible personal property (other than those included in the Excluded Assets) owned or leased by Seller and used in the Business, including those items listed on Schedule 1.01(t) attached hereto.

(u) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

(v) “ERISA Affiliate” means, as to any Person any other Person that, together with such Person, would be treated as a single employer under Section 414 of the Code.

(w) “FCC Consent” means the FCC’s grant of its consent to the assignment of each of the FCC Licenses from Seller to Buyer or its permitted assignee pursuant to Section 13.06.

(x) “FCC Licenses” means the FCC licenses, permits and other authorizations identified on Schedule 3.15(a)(1), and any other license, permit or other authorization, including any temporary waiver or special temporary authorization, issued by the FCC for use in the operation of the Stations, and any renewals thereof or any pending application therefor.

(y) “Final Order” means an action by the FCC (i) that has not been vacated, reversed, stayed, enjoined, set aside, annulled or suspended, (ii) with respect to which no request for stay, petition for rehearing, reconsideration or review or appeal or sua sponte review by the FCC is pending, and (iii) as to which the time for filing any such request, petition or appeal or for review by the FCC on its own motion has expired.

(z) “GAAP” means United States generally accepted accounting principles as in effect on the Balance Sheet Date, consistently applied.

(aa) “Governmental Authority” means any federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

4

(bb) “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

(cc) “Hazardous Material” means hazardous or toxic wastes, chemicals, substances, constituents, pollutants or related material, whether solids, liquids, or gases, defined or regulated under (S) 101(14) of CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. (S)(S)6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. (S)(S)2601 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S)300f et seq.; the Clean Air Act, as amended, 42 U.S.C. (S)(S)7401 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. (S)(S)1251 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S)11001 et seq.; the Occupational Safety and Health Act of 1970, 29 U.S.C. (S)(S)651 et seq. or any similar federal, state or local Environmental Laws, including polychlorinated biphenyls (PCBs), asbestos, radioactive materials and wastes, and petroleum products (including crude oil and any fraction thereof).

(dd) “Intangible Property” means: (A) the Copyrights; (B) the Patents; (C) the Trademarks, including all of the rights of the Seller in and to the call letters “WXTX” and “WFXG”; (D) the Trade Secrets; (E) the domain names listed on Schedule 1.01(dd); (F) all computer software; and (G) all goodwill, if any, associated therewith, excluding, in all cases, the names “Fisher”, “Fisher Broadcasting”, “Fisher Communications”, and all similar names.

(ee) “Intercompany Receivables” means all accounts receivable, and all rights to receive payments under any notes, bonds and other evidences of indebtedness and all other rights to receive payments, in each case between Seller and any Affiliate of Seller occurring prior to the Closing Date.

(ff) “IRS” means the Internal Revenue Service.

(gg) “Knowledge of Seller” or “Knowledge” means that an individual will be deemed to have Knowledge of a particular fact or other matter if that individual is actually aware of that fact or matter. With respect to Seller, Knowledge is limited to the following individuals: (i) Benjamin Tucker; (ii) Warren Spector; (iii) Morris Pollock; and (iv) Shelia Lovely.

(hh) “Law” means any United States (federal, state, local) or foreign statute, law, ordinance, regulation, rule, code, order, judgment, injunction or decree.

(ii) “Leases” means those leases or license agreements (including any and all assignments, amendments and other modifications of such leases and license agreements) pertaining to Real Property, as listed on Schedule 3.05(a).

(jj) “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, in respect of such property or asset.

(kk) “Material Adverse Effect” means a material adverse effect on (A) the condition (financial or otherwise), business, assets, or results of operations of the Business; or (B) the ability of Seller to perform its obligations under this Agreement or any Ancillary Agreement.

(ll) “Material Consents” means the consents to the assignment of each of the agreements set forth on Schedule 10.03(d).

5

(mm) “Motor Vehicles” means all motor vehicles owned by Seller and used in the Business, including those listed in Schedule 1.01(mm).

(nn) “Multiemployer Plan” means each Employee Plan that is a multiemployer plan, as defined in Section 3(37) of ERISA.

(oo) “Other Parties” means those entities listed on Exhibit A attached hereto.

(pp) “Patents” means all patents, patent applications, registrations and similar rights used by the Stations, including those patents, patent registrations and patent applications identified in Schedule 1.01(pp).

(qq) “PBGC” means the Pension Benefit Guaranty Corporation.

(rr) “Permitted Liens” means, as to any property or asset, (A) liens for Taxes, assessments and governmental charges not yet due and payable, (B) zoning laws and ordinances and similar Laws that are not violated by any existing improvement or that do not prohibit the use of the Real Property as currently used in the Business; (C) any right reserved to any Governmental Authority to regulate the affected property (including restrictions stated in the Permits); (D) in the case of any leased asset, (i) the rights of any lessor under the applicable lease agreement or any Lien granted by any lessor and (ii) any statutory Lien for amounts that are not yet due and payable or are being contested in good faith; (E) inchoate materialmens’, mechanics’, workmen’s, repairmen’s or other like Liens arising in the ordinary course of business; and (F) in the case of Real Property, minor defects of title, easements, rights-of-way, restrictions and other similar charges or encumbrances not materially detracting from the value of the Real Property as currently used or interfering in any material respect with use of the Real Property as currently used in the Business, (G) any other Lien, other than a Lien securing a monetary obligation, that does not, individually or in the aggregate, detract from or interfere with any use of or impair the value of any such property or asset as currently used, (H) such title matters as are set forth on Schedule 3.07(a), and (I) any Lien that shall be extinguished prior to the execution of this Agreement.

(ss) “Person” means any natural person, general or limited partnership, corporation, limited liability company, firm, association, trust or other legal entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

(tt) “Program Rights” means all rights of Seller or Other Parties presently existing or obtained after the date of this Agreement and prior to the Closing Date in accordance with the terms of this Agreement, to broadcast television programs or shows as part of the Stations’ programming, including all film and program barter agreements, sports rights agreements, news rights or service agreements and syndication agreements.

(uu) “Real Property” means the real property owned, leased, subleased or licensed by Seller used or held for use in the conduct of the Business, as listed in Schedule 1.01(uu), and all buildings, towers, improvements and fixtures owned, leased, subleased or licensed thereon, together with all strips and gores, rights of way, easements, privileges and appurtenances pertaining thereto, including any right, title and interest of Seller in and to any street adjoining any portion of the Real Property.

6

(vv) “Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.

(ww) “Seller Environmental Liabilities” means any Environmental Liabilities which result from and action, omission or release which occurred at any time between the date the Seller acquired the Stations on             , 1999 and the Closing Date.

(xx) “Software” means all computer software and subsequent versions thereof, including object, executable or binary code, objects, comments, screens, user interfaces, report formats, templates, menus, buttons and icons and all files, data, materials, manuals, design notes and other items and documentation related thereto or associated therewith.

(yy) “Station Employees” means the full-time, part-time and per-diem employees employed by Seller in the Business.

(zz) “Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (A) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (B) the interest in the capital or profits of such partnership, joint venture or limited liability company or (C) the beneficial interest in such trust or estate, in each case, is at the time directly or indirectly owned or Controlled by such Person.

(aaa) “Tax” or “Taxes” means all income, excise, gross receipts, ad valorem, sales, use, employment, franchise, profits, gains, property, transfer, use, payroll, intangibles or other taxes, fees, stamp taxes, duties, charges, levies or assessments of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, additions to tax or additional amounts imposed by any Tax authority with respect thereto.

(bbb) “Tax Returns” means all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes.

(ccc) “Title Company” means Chicago Title Insurance Company or such other title insurance company retained by Buyer.

(ddd) “Title IV Plan” means an Employee Plan subject to Title IV of ERISA other than any Multiemployer Plan.

(eee) “Trademarks” means all of those trade names, trademarks, service marks, jingles, slogans, logos, trademark and service mark registrations and trademark and service mark applications (other than those included in Excluded Assets) owned, used, held for use, licensed by or leased by Seller relating to the Stations as set forth on Schedule 3.06(e) and the goodwill appurtenant thereto.

(fff) “Tradeout Agreement” means any contract, agreement or commitment, oral or written, other than film and program barter agreements, pursuant to which Seller has agreed to sell or trade commercial air

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time or commercial production services of the Station in consideration for any property or service in lieu of or in addition to cash;

(ggg) “Trade Secrets” means all proprietary information of Seller necessary to the operation of the Business (other than as included in the Excluded Assets) that is not generally known and is used or useful in the Business, as to which reasonable efforts have been made to prevent unauthorized disclosure, and which provides a competitive advantage to those who know or use it.

(hhh) “Transfer Taxes” means all excise, sales, use, value added, registration stamp, recording, documentary, conveyancing, franchise, property, transfer, gains and similar Taxes, levies, charges and fees.

(iii) “WARN Act” means the Workers Adjustment and Retraining Notification Act, as amended.

SECTION 1.02 Other Defined Terms.

The following terms have the meanings defined for such terms in the Sections set forth below:

Term	Section
Active Employees	8.01(a)
Agreement	Preamble
Antitrust Laws	7.01(c)
Appraisal Report	2.06(b)
Assumed Liabilities	2.03
Augusta DMA	3.16
Augusta Market Cable Systems	3.16
Augusta Station	Recitals
Base Purchase Price	2.06(a)
Buyer	Preamble
Buyer Indemnified Parties	12.03(a)
Buyer Warranty Breach	12.02(a)(i)
Closing	2.08
Closing Balance Sheets	2.07(b)
Closing Date	2.08
Closing Working Capital	2.07(b)
Columbus DMA	3.16
Columbus Market Cable Systems	3.16
Columbus Station	Recitals
Contracts	2.01(d)
Default Payment	11.02(b)
DOJ	7.01(c)
DTV Channel 49	Recitals
DTV Channel 51	Recitals
DTV Modification Applications	7.01(d)
Employment Commencement Date	8.03
Escrow Agent	2.06(c)
Escrow Amount	2.06(c)

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Estimated Working Capital	2.07(a)
Excluded Assets	2.02
Excluded Liabilities	2.04
FCC	Recitals
FCC Applications	7.01(b)
FTC	7.01(c)
Indemnified Party	12.04(a)
Indemnifying Party	12.04(a)
Losses	12.02(a)
Market Cable Systems	3.16(a)
Parent	Recitals
Permits	2.01(h)
Purchased Assets	2.01
Purchase Price	2.06(a)
Reference Balance Sheets	3.11(a)
Reference Financial Statements	3.11(a)
Seller	Preamble
Seller Indemnified Parties	12.02(a)
Specified Deposits	2.01(m)
Stations	Recitals
Termination Date	11.01(b)(i)
Title Commitments	5.03(a)
Title Policy	5.03(a)
Transferred Employees	8.01(a)
Seller	Preamble
Seller Warranty Breach	12.03(a)(i)
Unaudited Balance Sheets	5.04(b)
Unaudited Financial Statements	5.04(b)
Valuation Balance Sheets	2.07(a)
Working Capital	2.07(a)

SECTION 1.03 Terms Generally.

(a) Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires,

(b) The terms “hereof”, “herein”, and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including the Schedules and Exhibits hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified,

(c) The word “including” and words of similar import when used in this Agreement means “including, without limitation,” unless otherwise specified, and

(d) The word “or” shall not be exclusive.

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ARTICLE II

PURCHASE AND SALE

SECTION 2.01 Purchase and Sale.

Except as otherwise provided below, upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell, convey, transfer, assign and deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to Buyer at the Closing, free and clear of all Liens, other than Permitted Liens, all of Seller’s right, title and interest in, to and under the assets, contracts, properties and business, of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, held or used in the conduct of the Business by Seller as the same shall exist on the date of this Agreement, including all assets shown on the Reference Balance Sheets and not disposed of in accordance with Section 5.01(d), and all assets of the Business thereafter acquired by Seller, but excluding the Excluded Assets (the “Purchased Assets”), and including all right, title and interest of Seller in, to and under:

(a) all Real Property;

(b) all Equipment;

(c) all Accounts Receivable;

(d) all rights under all contracts, agreements, leases, licenses, commitments, sales and purchase orders and other instruments, whether oral or written, relating to the Business, including the items listed on Schedule 3.05(a) and the Leases (collectively, the “Contracts”);

(e) all prepaid expenses and deposits, including ad valorem taxes, leases and rentals;

(f) all of Seller’s rights, claims, credits, causes of action or rights of set-off against third parties relating to the Purchased Assets, including unliquidated rights under manufacturers’ and vendors’ warranties, in each case only to the extent Buyer incurs Losses relating thereto;

(g) all Intangible Property owned by the Seller;

(h) all internet web sites and related agreements, content and databases and domain name registrations, as and to the extent relating to the Business, as those are set forth on Schedule 2.01(h);

(i) the FCC Licenses, all transferable municipal, state and federal franchises, licenses, permits or other governmental authorization affecting, or relating in any way to, the Business, the items listed on Schedule 2.01(i) (the “Permits”);

(j) all prepayments made by Seller under advertising sales contracts for advertising that has not been run prior to the Closing Date;

(k) all books, records, files and papers, whether in hard copy or computer format, used in the Business, including, without limitation, engineering information, sales and promotional literature, manuals and

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data, sales and purchase correspondence, lists of present and former suppliers, lists of present and former customers, personnel and employment records for Transferred Employees (to the extent permitted by Law), and any information relating to any Tax imposed on the Purchased Assets;

(l) all management and other systems (including computers and peripheral equipment), databases, computer software, computer disks and similar assets, related to the Business and all licenses and rights in relation thereto;

(m) all goodwill associated with the Stations, the Business or the Purchased Assets;

(n) the security deposits Seller has deposited with landlords, if any (the “Specified Deposits”);

(o) any insurance proceeds payable in accordance with Section 5.07

SECTION 2.02 Excluded Assets.

Buyer expressly understands and agrees that the following assets and properties of Seller shall be excluded from the Purchased Assets (the “Excluded Assets”):

(a) all of Seller’s cash and cash equivalents on hand and in banks;

(b) insurance policies relating to the Business and all claims (except as otherwise provided in Section 5.07), credits, causes of action or rights thereunder;

(c) all rights to insurance proceeds relating to the Excluded Assets;

(d) any assets of any Employee Plan sponsored by Seller or its Affiliates including any amounts due to such Employee Plan from Seller or any of its Affiliates;

(e) all books, records, files and papers, whether in hard copy or computer format, prepared in connection with this Agreement or the transactions contemplated hereby and all minute books and corporate records of Seller and its Affiliates, including accounting, financial and legal records and related correspondence;

(f) all accounting and human resources software (PeopleSoft) used or licensed by Seller prior to the Closing Date;

(g) all rights of Seller arising under this Agreement or the transactions contemplated hereby;

(h) any rights or interest in the name “Fisher”, “Fisher Broadcasting”, “Fisher Communication” and similar names;

(i) any Purchased Asset sold or otherwise disposed of in accordance with Section 5.01(d); and

(j) the property and assets described on Schedule 2.02(j).

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SECTION 2.03 Assumed Liabilities.

Upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective at the Closing Date, to assume the following liabilities (the “Assumed Liabilities”):

(a) the liabilities and obligations of Seller under the Contracts and Permits with respect to the operation of the Stations, except those Contracts and Permits, if any, included in the Excluded Assets;

(b) any Contract liabilities for Program Rights; and

(c) any liability or obligation to the extent taken into account to compute Working Capital under Section 2.07(a) at Closing.

SECTION 2.04 Excluded Liabilities.

Notwithstanding any provision in this Agreement or any other writing to the contrary, Buyer is assuming only the Assumed Liabilities and is not assuming any other liability or obligation of Seller (or any predecessor of Seller) of whatever nature, whether presently in existence or arising hereafter. All such other liabilities and obligations shall be retained by and remain obligations and liabilities of Seller (all such liabilities and obligations not being assumed being herein referred to as the “Excluded Liabilities”), and, notwithstanding anything to the contrary in Section 2.03, none of the following shall be Assumed Liabilities for the purposes of this Agreement:

(a) any liability or obligation under or with respect to any Contract or Permit required by the terms thereof to be discharged on or prior to the Closing Date;

(b) any liability or obligation for borrowed money including interest and fees;

(c) any liability or obligation relating to or arising out of any of the Excluded Assets;

(d) any Environmental Liabilities;

(e) except as set forth in Section 8.04 herein, any liability or obligation relating to vacation, bonuses and other employee-related benefits including any Seller stay bonuses pursuant to Section 8.07 earned prior to the Closing Date;

(f) any Tax liability or obligation (except as expressly provided in Section 9.02); and

(g) any liability or obligation relating to or arising out of any Employee Plan.

SECTION 2.05 Assignment of Contracts and Rights.

Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom if such assignment, without the consent of a third party thereto, would constitute a breach or other contravention of such Purchased Asset or in any way adversely affect the rights of Buyer or the Seller

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thereunder. Seller will use its commercially reasonable best efforts to obtain the consent of the other parties to any such Purchased Asset or any claim or right or any benefit arising thereunder for the assignment thereof to Buyer as Buyer may request. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of Seller thereunder so that Buyer would not in fact receive all such rights, Seller and Buyer will cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including sub-contracting, sub-licensing, or sub-leasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming the Seller’s obligations, any and all rights of Seller against a third party thereto. Seller will promptly pay to Buyer when received all monies received by Seller under any Purchased Asset or any claim or right or any benefit arising thereunder after the Closing.

SECTION 2.06 Purchase Price; Allocation of Purchase Price; Escrow.

(a) The purchase price for the purchase of the Purchased Assets shall be $40,000,000 (the “Base Purchase Price”), plus or minus, respectively, the Working Capital Adjustment set forth in section 2.08 (the “Purchase Price”).

(b) The allocation of the Purchase Price shall be determined pursuant to an appraisal report in form and substance satisfactory to Seller and Buyer, drafts of which, including the final draft, are to be delivered simultaneously to Buyer and Seller (the “Appraisal Report”). The parties shall designate an Appraiser by mutual agreement. The cost of the Appraisal Report shall be paid one-half by Buyer and one-half by Seller. Buyer and Seller hereby covenant and agree that the values assigned to the Purchased Assets in the final Appraisal Report shall be conclusive and final for all Tax purposes subject to adjustment for any indemnification payments made pursuant to this Agreement. Buyer and Seller further covenant and agree not to take any position on any Tax Return or before any Governmental Authority charged with the collection of any Taxes or in any judicial proceeding that is in any way inconsistent with the allocation determined by the Appraisal Report, except to the extent required by any Governmental Authority. Buyer and Seller shall file with their respective federal income tax returns for the tax year in which the Closing occurs an IRS Form 8824 (and an IRS Form 8594) in a manner consistent with the Appraisal Report.

(c) Simultaneously with the execution of this Agreement, Buyer shall deliver or cause to be delivered to a mutually acceptable escrow agent (the “Escrow Agent”), the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) (the “Escrow Amount”). The Escrow Agent shall disburse the Escrow Amount, plus all accrued interest, to Seller or Buyer as provided in Section 11.02 of this Agreement.

SECTION 2.07 Working Capital Adjustment.

(a) No later than five (5) days prior to the Closing, Seller shall prepare and deliver to Buyer unaudited balance sheets for the Stations (the “Valuation Balance Sheets”) prepared as of the last day of the penultimate month prior to the Closing Date. The Valuation Balance Sheets shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States (“GAAP”). At the Closing, in the event that the Working Capital on the Valuation Balance Sheets (the “Estimated Working Capital”) is negative, the Base Purchase Price shall be reduced by

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such negative amount. Conversely, in the event that the Estimated Working Capital is positive, the Base Purchase Price shall be increased by such positive amount.

“Working Capital” shall mean the sum of (i) Accounts Receivable (less an adequate allowance for doubtful accounts), (ii) inventory (including programming), (iii) prepaid expenses and (iv) all other current assets, less all current liabilities and Capital Lease Obligations, in each case attributable to the Business and determined in accordance with GAAP.

(b) Within sixty (60) days after the Closing, Buyer shall prepare balance sheets as of the Closing Date (the “Closing Balance Sheets”) in a manner consistent with the Valuation Balance Sheets, and submit such balance sheets, along with a calculation of Working Capital on the Closing Date (the “Closing Working Capital”) to Seller for review and approval.

(c) Within fifteen (15) days after receipt of the Closing Balance Sheets, Seller shall notify Buyer of any objections Seller may have to the Closing Balance Sheets or the calculation of Closing Working Capital. In the absence of any such objections, Seller shall be deemed to have approved the Closing Balance Sheets for purposes of the adjustment to be made pursuant to this section 2.07. If Seller notifies Buyer of any such objections, Buyer and Seller shall attempt to resolve such objections in good faith for a period of fifteen (15) days from the date of such notice of objections. If any objections of Seller cannot be resolved by Seller and Buyer within such fifteen (15) day period, such dispute shall immediately be referred to the Accounting Firm. The determination of the Accounting Firm with respect to such dispute, which shall occur on or prior to ninety (90) days after Seller’s receipt of the Closing Balance Sheets, shall be conclusive and binding on Seller and Buyer. Seller and Buyer shall each pay one-half of the fees of the Accounting Firm.

(d) If, based on the Closing Balance Sheets and the calculation of Closing Working Capital as finally approved, it is determined that the Closing Working Capital exceeds Estimated Working Capital, then within three (3) days of the final approval of the Closing Balance Sheets, Buyer shall remit to Seller, by wire transfer of immediately available funds, an amount equal to such excess. Conversely, if the Estimated Working Capital exceeds the Closing Working Capital, then within three (3) days of the final approval of the Closing Balance Sheets, Seller shall remit to Buyer, by wire transfer of immediately available funds, an amount equal to such excess. The parties hereby agree that such recovery shall not be subject to the limitations set forth in section 12.03(b).

SECTION 2.08 Closing.

The closing (the “Closing”) of the sale and purchase of the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall take place at 1:00 P.M. (Charlotte, North Carolina time) on the first day of the subsequent month following the satisfaction or waiver of the conditions to the obligations of the parties set forth in Article X, at the offices of Buyer’s attorney, 6100 Fairview Road, Suite 650, Charlotte, North Carolina 28210, or at such other time or place as Seller and Buyer may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”). At the Closing:

(a) Buyer shall deliver to Seller the Purchase Price in immediately available funds by wire transfer to one or more accounts designated by Seller, by notice to Buyer, which notice shall be received no later than three (3) Business Days prior to the Closing Date.

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(b) Seller and Buyer shall enter into and deliver such deeds, bills of sale, instruments of assumption, endorsements, consents, assignments, releases of Liens other than Permitted Liens and other good and sufficient instruments of conveyance and assignment as the parties and their respective counsel shall deem reasonably necessary to vest in Buyer all right, title and interest in, to and under the Purchased Assets as provided under this Agreement. Buyer shall have the right to designate an Affiliate of Buyer or any other person described in Section 13.06 to accept title to any Purchased Asset.

ARTICLE III

SELLER’S REPRESENTATIONS AND WARRANTIES

Subject to the attached Schedules, as of the date hereof and as of the Closing, Seller represents and warrants to Buyer in each case as set forth below. Each disclosure made in the attached Schedules shall be deemed disclosed with respect to all applicable representations and warranties herein, and not merely with respect to the representation or warranty identified in the particular Schedule.

SECTION 3.01 Corporate Existence and Power.

Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the state of its formation and has all powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. Seller is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Seller has heretofore delivered to Buyer true and complete copies of the Articles of Organization and Operating Agreements of Seller as currently in effect.

SECTION 3.02 Authorization.

(a) The execution and delivery of this Agreement by Seller and each Ancillary Agreement to which Seller will be a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby are within Seller’s powers and have been duly authorized by all requisite action on the part of Seller.

(b) This Agreement has been, and at the Closing each Ancillary Agreement will be, duly executed and delivered by Seller. This Agreement (assuming due authorization, execution and delivery by Buyer) constitutes, and each Ancillary Agreement to which Seller will be a party will constitute when executed and delivered by Seller, the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

SECTION 3.03 Governmental Authorization.

The execution, delivery and performance by Seller of this Agreement and each Ancillary Agreement to which Seller will be a party and the consummation of the transactions contemplated hereby and thereby require no action by or in respect of, or filing with or notification to, any Governmental Authority other than (a) as described in Schedule 3.03, (b) the FCC, and (c) any such action by or in respect of or filing with any

15

Governmental Authority as to which the failure to take, make or obtain could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.04 Noncontravention.

Except as set forth in Schedule 3.04, the execution, delivery and performance of this Agreement by Seller and each Ancillary Agreement to which Seller will be a party and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with the Articles of Organization or Operating Agreement of Seller, (b) assuming compliance with the matters referred to in Section 3.03, conflict with or violate any Law or Governmental Order applicable to Seller, (c) require any consent or other action by or notification to any Person under, constitute a default under, or give to any Person any rights of termination, amendment, acceleration or cancellation of any right or obligation of Seller or to a loss of any benefit relating to the Business to which Seller is entitled under any provision of any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other agreement or instrument to which Seller is a party or by which any of its assets is or may be bound or (d) result in the creation or imposition of any Lien on any asset of Seller, except for Permitted Liens, except, in the cases of clauses (b), (c) and (d), for any such violations, consents, actions, defaults, rights or losses as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.05 Contracts.

(a) As of the date of this Agreement, the Contracts listed on Schedule 3.05(a) constitute all of the Contracts with third parties relating to the Business:

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

(ii) with a term of more than six (6) months from the date of this Agreement and that involve payments or receipts over the remaining term of such Contract of more than $10,000 or (B) that involve payments or receipts over the remaining term of such Contract of more than $25,000 with respect to any single agreement or group of related agreements;

(iii) involving the purchase or sale of any Real Property;

(iv) relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise);

(v) involving construction, architecture, engineering or other agreements relating to uncompleted construction projects, in each case that involve payments in excess of $10,000;

(vi) all Capital Lease Obligations;

(vii) under which Seller has, directly or indirectly made any loan, extension of credit (other than in the ordinary course of business consistent with past practices) or capital contribution to, or investment in, any third party;

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(viii) for any mortgage, pledge or security agreement, deed of trust or other instrument granting a Lien (other than Permitted Liens) upon any property of either of the Stations, in each case that may bind Buyer upon or as a result of the consummation of the transactions contemplated by this Agreement;

(ix) containing a guarantee or indemnification by either of the Stations, in each case that may bind Buyer upon or as a result of the consummation of the transactions contemplated by this Agreement;

(x) containing any material noncompetition or other business limitation restrictions binding on (A) either of the Stations or its employees or consultants or (B) any Affiliate of the Stations, in each case that may bind Buyer upon or as a result of the consummation of the transactions contemplated by this Agreement;

(xi) involving a partnership, joint venture or similar agreement with another party, in each case that may bind Buyer upon or as a result of the consummation of the transactions contemplated by this Agreement;

(xii) for any agreement with any manager, director or officer of Seller or with any “associate” or any member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the 1934 Act) of any such director or officer;

(xiii) involving compensation to any employee or consultant in excess of $50,000 or for the employment of any employee or consultant for a term greater than three (3) months; and involving any labor agreement or collective bargaining agreement of either of the Stations.

(b) No default (with the lapse of time or giving of a notice or both) on the part of Seller and, to the Knowledge of Seller any other party thereto, exists under any of the Contracts other than such defaults that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) Each Contract is in full force and effect and constitutes the legal and binding obligation of, and is legally enforceable against, Seller in accordance with its terms and, to the Knowledge of Seller, is legally enforceable against the other parties thereto, except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(d) Seller has previously furnished to Buyer prior to the date of this Agreement true and complete copies of all written Contracts listed on Schedule 3.05(a), including all amendments, modifications and supplements thereto, and any assignments thereof, and have previously described to Buyer the material provisions of all oral and pending Contracts.

(e) There are no leasing commissions or similar payments due, arising out of, resulting from or with respect to any Lease that are owed by Seller.

(f) Schedule 3.05(f) sets forth, as of the date set forth thereon, all Contracts relating to Program Rights, true and complete copies of which Contracts have been previously furnished to Buyer prior to the date of this Agreement. Schedule 3.05(f) also sets forth (i) an accurate schedule of material programming payments and usage report in respect of Program Rights for calendar years 2002 and 2003, (ii) an

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accurate schedule setting forth the material feature film inventory of the Stations as of November 30, 2002, (iii) an accurate schedule of the material cash programming assets of the Stations dated as of November 30, 2002, (iv) an accurate schedule of the material cash programming liabilities of the Stations dated as of November 30, 2002 and (v) an accurate schedule of the material barter programming assets dated as of November 30, 2002.

SECTION 3.06 Intangible Property.

(a) There are no claims, demands or proceedings pending or, to the Knowledge of Seller, threatened by any third party pertaining to or challenging Seller’s right to use any of the Intangible Property or that any Intangible Property or any services provided, process used or products manufactured, produced or used or sold by Seller do or may conflict with, or infringe or otherwise violate the rights of third parties.

(b) To Seller’s Knowledge, there is no trademark, trade name, patent or copyright owned by a third party that Seller is using in the Business without valid license to do so.

(c) Except for the Excluded Assets, the Intangible Property includes all material Copyrights, Patents and Trademarks, including rights in and to call letters used in the operation of the Stations.

(d) Except as set forth on Schedule 3.06(e), all material Intangible Property, including the call letters necessary for or used in the Business, has been duly applied for or registered in, filed in or issued by, as applicable, the appropriate Governmental Authority where such registration, filing or issuance is necessary for the Business, and all such filings, registrations and issuances are valid and in good standing.

(e) Except for the Excluded Assets, and except for third party Copyrights used under valid license or agreement, all material Copyrights and Trademarks owned by Seller that are registered or filed are described, listed or set forth on Schedule 3.06(e), respectively, all of which are transferable to Buyer without the consent of any third party and none of which have been licensed to any third party.

(f) Seller has not received any written notice, or otherwise have Knowledge, that any of the owned Intangible Property is the subject of a judicial or administrative finding, opinion or office action or has been adjudged invalid, unenforceable or unregistrable in whole or in part. To the Knowledge of Seller, the rights in each Intangible Property are valid and enforceable.

SECTION 3.07 Real Property.

(a) Except as set forth on Schedule 3.07(a), Seller has (A) good, marketable and insurable fee simple absolute title or (B) valid leasehold or other interests, as applicable, in the Real Property, in each case free and clear of any and all Liens other than (i) Permitted Liens and, (ii) Liens that will be discharged on or prior to the Closing Date by Seller. Seller owns, leases, subleases, licenses or uses no real property in the operation of the Station other than the Real Property. True and complete copies of (i) the last deed of record, title insurance policies and surveys pertaining to any owned Real Property and (ii) the Leases, in each case have heretofore been furnished by Seller to Buyer. Upon the Closing, all

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right, title and interest of Seller in, to and under the Leases and the Real Property will be transferred to Buyer free and clear of all Liens other than Permitted Liens.

(b) Seller has not subjected the Real Property to any easements, rights, duties, obligations, covenants, conditions, restrictions, limitations or agreements not of record that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) Seller has not received written notice of or otherwise has Knowledge of any pending condemnation or similar proceeding affecting the Real Property or any portion thereof, and to the Knowledge of Seller, no such condemnation or similar proceeding is presently contemplated or threatened that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(d) Seller has not received any written notice from any insurance company of any defects or inadequacies in the Real Property or any part thereof that would materially adversely affect the insurability of the Real Property or the premiums for the insurance thereof. Seller has not received any notice from any insurance company that has issued or refused to issue a policy with respect to any portion of the Real Property or by any board of fire underwriters (or other body exercising similar functions) requesting the performance of any repairs, alterations or other work with which compliance has not been made.

(e) Except as disclosed on Schedule 3.07(e), there are no parties in possession of any portion of the Real Property other than Seller, whether as lessees, sublessees, licensees or tenants at will.

(f) To Seller’s Knowledge, the current use of the Real Property does not violate any restrictive covenants affecting the Real Property or otherwise violate in any material respect any Law. To Seller’s Knowledge, there is no Law now in existence the operation of which would require Seller to make any material expenditure to modify or improve any of the Real Property or to bring such Real Property into substantial compliance therewith. To the Knowledge of Seller, there are no facts that would prevent any portion of the Real Property from being occupied after the Closing in substantially the same manner as currently occupied.

(g) The Real Property has reasonably adequate access to and from completed, dedicated and accepted public roads, and there is no pending or, to the Knowledge of Seller, threatened Action that would materially impair or curtail such access. To Seller’s Knowledge, all towers, guy anchors, buildings and other improvements are wholly within the lot limits of the applicable Real Property and do not encroach on any adjoining premises, except for such encroachments as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To Seller’s Knowledge, there are no material encroachments upon any of the owned parcels of Real Property or adjoining parcels by buildings, structures or improvements that could reasonably prevent the use of each such parcel of Real Property as it is currently used.

(h) There are no structural, electrical, mechanical, plumbing, air conditioning, heating or other defects in the buildings located on the Real Property, and the roofs of the buildings located on the Real Property are free from leaks and in good condition, except for such defects or leaks as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(i) All amounts owing to any architect, contractor, subcontractor or materialman for labor or materials performed, rendered or supplied to or in connection with the Real Property have been or shall have been paid prior to Closing.

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SECTION 3.08 Title to Purchased Assets; Liens.

Seller have good and valid title to or valid leasehold interests in all of the Purchased Assets, free and clear of any and all Liens (other than Permitted Liens and Liens that will be discharged by Seller on or prior to the Closing Date). At the Closing, all of the Purchased Assets shall be transferred to Buyer free and clear of any and all Liens (other than Permitted Liens).

SECTION 3.09 Sufficiency of Assets.

Other than the Excluded Assets, the Purchased Assets constitute all of the property and assets used or held for use in the Business as conducted by Seller and constitute all of the assets and properties necessary for the operation of the Business as currently conducted by Seller.

SECTION 3.10 Condition of Equipment.

Those material items of Equipment constituting transmitting and studio equipment are operating in accordance with FCC requirements; and each other material item of Equipment is in good condition and repair, ordinary wear and tear excepted, and is not in need of repair or replacement. All material operating systems and computer Software are (A) operating satisfactorily for the task to which they are being applied, and in accordance with all vendor warranties and vendor-supplied user documentation, (B) reasonably capable of handling existing and currently contemplated work volumes and (C) not in imminent need of repair or replacement.

SECTION 3.11 Financial Information.

(a) Attached as Schedule 3.11(a) are: (a) unaudited balance sheets of the Stations as at December 31, 2000 and 2001, and the related unaudited statements of income for the fiscal years then ended; (b) unaudited balance sheets of the Stations as at November 30, 2002 (the November 30, 2002 balance sheets of the Stations are referred to herein as the “Reference Balance Sheets”) and the related unaudited statements of income for the eleven (11) months then ended, certified by Seller’s chief financial officer (collectively, the “Reference Financial Statements”).

(b) The Reference Financial Statements (A) are in accordance with the books and records of the Stations, (B) have been prepared in accordance with GAAP except for the elimination of footnotes and as otherwise set forth on Schedule 3.11(b)(1), (C) fairly present in all material respects the financial condition of the Stations as at the dates indicated and the results of operations for the periods then ended and (D) do not reflect any (i) unusual or infrequently occurring items or (ii) related party transactions, in each case, except as set forth on Schedule 3.11(b)(2).

(c) The books and records of the Stations (A) reflect all items of income and expense and all assets and liabilities required to be reflected therein in accordance with GAAP except as set forth on Schedule 3.11(c) and (B) are in all material respects complete and correct.

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(d) A true and complete copy of Seller’s 2002 and 2003 monthly operating budgets for both Stations is attached hereto as Schedule 3.11(d).

(e) Seller makes no representation or warranty whatsoever with respect to the future operation or prospects of the Stations or the ability of the Business or the Buyer to achieve any budgeted performance. Seller gives no assurance that the Business will be profitable or will continue as a going concern.

(f) At Closing Seller will cause PricewaterhouseCoopers LLP to deliver to Buyer an Agreed Upon Procedures Letter covering the Reference Financial Statements in the form attached hereto as Exhibit B.

SECTION 3.12 Absence of Certain Changes or Events.

(a) Except as disclosed in Schedule 3.12(a), since the Balance Sheet Date, the Business has been conducted in the ordinary course consistent with past practice.

(b) Since the Balance Sheet Date through the date hereof and except as set forth in Schedule 3.12(b) or as contemplated by this Agreement, there has not been:

(i) any event, occurrence, development or state of circumstances or facts that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect;

(ii) any incurrence, assumption or guarantee by Seller of any indebtedness for borrowed money with respect to the Business other than in the ordinary course of business consistent with past practices, in each case that may bind or obligate Buyer or any of its Affiliates in any way upon or as a result of the consummation of the transactions contemplated hereby;

(iii) any making of any loan, advance or capital contributions to or investment in any Person other than loans, advances, capital contributions or investments made in the ordinary course of business consistent with past practices, in each case that may bind or obligate Buyer or any of its Affiliates in any way upon or as a result of the consummation of the transactions contemplated hereby;

(iv) any damage, destruction or loss, whether or not covered by insurance, with respect to the property and assets of the Stations having a replacement cost of more than $10,000 for any single loss or $20,000 for all such losses;

(v) instituted or settled any material legal proceeding by Seller relating to the Business;

(vi) any transaction or commitment made, or any contract or agreement entered into, by Seller relating to the Business or Purchased Assets (including the acquisition or disposition of any assets) or any relinquishment by Seller of any contract or other right, in either case, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement;

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(vii) any material change in the Stations’ usage or patterns of usage of Program Rights, any material change in the broadcast hours or in the percentages of types of programming broadcast by the Stations or any other material change in the programming policies of the Stations;

(viii) the creation or other incurrence by Seller of any Lien on any asset relating to the Business other than Permitted Liens;

(ix) any (A) establishment of any bonus, insurance, employment, severance, deferred compensation, pension, retirement, profit sharing, stock option (including any grant of any stock options, stock appreciation rights, performance awards or restricted stock awards), stock purchase or other employee benefit plan (or any amendment to any such existing agreement), (B) grant of any severance or termination pay to any officer of Seller or employee of the Business, or (C) increase or change to the rate or nature of the compensation (including wages, salaries and bonuses) that is paid or payable or to become payable to any Person employed by the Stations, except (x) in each case, as may be required by Law or existing contracts or applicable collective bargaining agreements that have previously been disclosed to Buyer and (y) in the ordinary course of business consistent with past practices with respect to Persons who are not either (i) responsible for any principal administrative, operating or financial function of the Business or (ii) talent;

(x) any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Stations, which employees were not subject to a collective bargaining agreement at the Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any employees of the Stations;

(xi) any sale of Real Property;

(xii) any change in any method of accounting or accounting practice by Seller with respect to the Business except for any such change required by reason of a concurrent change in GAAP; or

(xiii) any agreement or commitment to do anything set forth in this Section 3.12.

SECTION 3.13 Absence of Litigation.

Except as set forth in Schedule 3.13(a)(1), there is no material Action pending or, to the Knowledge of Seller, threatened against or affecting Seller or any of its properties or assets before any Governmental Authority. Except as set forth in Schedule 3.13(a)(2), neither Seller nor any of its properties or assets is operating under or subject to any Governmental Order that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.14 Compliance with Laws.

Except as set forth in Schedule 3.14 and except for matters relating to the FCC which are addressed by Section 3.15, Seller is not in material violation of, and has not since January 1, 2000 violated in any material respect, and, to the Knowledge of Seller, is not under investigation with respect to and has not been threatened to be charged with or given notice of any material violation of, any applicable Law or

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Governmental Order, except for violations that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.15 FCC Matters; Qualification.

(a) Schedule 3.15(a)(1) contains a true and complete list of the FCC Licenses, and there are no other licenses, permits or other authorizations from the FCC required for the lawful operation of the Stations substantially in the manner now operated. Seller has delivered true, correct and complete copies of the FCC Licenses to Buyer, including any and all amendments and modifications thereto. The FCC Licenses were, to Seller’s Knowledge, validly issued by the FCC, are validly held by Seller and are in full force and effect. All FCC actions with respect to the Stations’ main analog and digital licenses are Final Orders. The FCC Licenses have been issued for the full terms customarily issued to a broadcast television stations in the State of Georgia, and the FCC Licenses are not subject to any condition except for conditions applicable to broadcast television licenses generally or otherwise disclosed in Schedule 3.15(a)(2). All required FCC regulatory fees with respect to the FCC Licenses have been paid. Seller has filed or made all applications, reports, and other disclosures required by the FCC to be filed or made by Seller with respect to the Station in the current license term. Seller has no reason to believe that the FCC will not renew the FCC Licenses in the ordinary course.

(b)	(i)	Except as set forth on Schedule 3.15(b)(i), the Columbus Station, including both analog Channel 54 and DTV Channel 49, is operating at full power and not pursuant to any temporary waiver. Seller has constructed and is operating DTV Channel 49 in accordance with its FCC license for that channel. Except as set forth on Schedule 3.15(b)(1), Seller has no applications pending before the FCC relating to the operation of the Columbus Station.
	(ii)	Except as set forth on Schedule 3.15(b)(ii), the Augusta Station, including both analog Channel 54 and DTV Channel 51, is operating at full power and not pursuant to any temporary waiver. Seller has constructed and is operating DTV Channel 54 in accordance with its FCC license for that channel. Except as set forth on Schedule 3.15(b)(2), Seller has no applications pending before the FCC relating to the operation of the Augusta Station.

(c) Except as set forth in Schedule 3.15(c), no qualifications, registrations, filings, privileges, franchises, licenses, permits, approvals or authorizations of any Governmental Authority other than the FCC Licenses are required to own and operate the Stations as television broadcast stations in substantially the same manner as the Stations are being operated as of the date hereof and the Closing Date.

(d) Except as set forth on Schedule 3.15(d)(1), Seller has operated the Stations, their physical facilities, electrical and mechanical systems and transmitting and studio equipment substantially in compliance with the Communications Act and the FCC Licenses. To the Knowledge of Seller, all antenna support structures used in the operation of the Stations have been registered with the FCC, if registration is required, and comply with all other requirements of the FCC and the Federal Aviation Administration. Except as set forth in Schedule 3.15(d)(2), to the Knowledge of Seller, there are no applications, petitions, complaints, proceedings or other actions pending or threatened before the FCC relating to the Stations, other than proceedings affecting the broadcast television industry generally.

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(e) Seller is qualified under the Communications Act to assign the FCC Licenses to Buyer. To the Knowledge of Seller, there is no fact or circumstance relating to the Stations or Seller or any of its Affiliates that would cause the FCC to deny the FCC Applications. Seller has no reason to believe that the FCC Applications might be challenged or might not be granted by the FCC in the ordinary course due to any fact or circumstance relating to the Seller’s operation of the Stations or of Seller or any of its Affiliates.

SECTION 3.16 Cable and Satellite Matters.

(a)	(i)	Schedule 3.16(a)(i) contains a list, including channel positions, of all cable television systems in the Columbus Nielsen Designated Market Area (the “Columbus DMA”) on which the Columbus Station’s signal is presently carried (“Columbus Market Cable Systems”). Seller has timely made must-carry elections with respect to the Columbus Market Cable Systems. No Columbus Market Cable System has provided written notice to Seller of any signal quality issue or failed to respond to a request for carriage or, to the Knowledge of Seller, sought any form of relief from carriage of the Columbus Station from the FCC. Seller has not received any written notice of any Columbus Market Cable System’s intention to delete the Columbus Station from carriage or to change the Columbus Station’s channel position on such cable system. Seller has no petition pending before the FCC to extend the Columbus Station’s market for cable carriage purposes beyond the Columbus DMA.
	(ii)	Schedule 3.16(a)(ii) contains a list, including channel positions, of all cable television systems in the Augusta Nielsen Designated Market Area (the “Augusta DMA”) on which the Augusta Station’s signal is presently carried (“Augusta Market Cable Systems”). Seller has timely made must-carry elections with respect to the Augusta Market Cable Systems. No Augusta Market Cable System has provided written notice to Seller of any signal quality issue or failed to respond to a request for carriage or, to the Knowledge of Seller, sought any form of relief from carriage of the Augusta Station from the FCC. Seller have not received any written notice of any Augusta Market Cable System’s intention to delete the Augusta Station from carriage or to change the Augusta Station’s channel position on such cable system. Seller has no petition pending before the FCC to extend the Augusta Station’s market for cable carriage purposes beyond the Augusta DMA
(b)	(i)	Schedule 3.16(b)(i) contains a list of the cable systems that, to the Knowledge of Seller, carry the Columbus Station, including the Columbus Station’s channel position, where known, on such cable systems outside the Columbus DMA.
	(ii)	Schedule 3.16(b)(ii) contains a list of the cable systems that, to the Knowledge of Seller, carry the Augusta Station, including the Augusta Station’s channel position, where known, on such cable systems outside the Augusta DMA.
(c)	Schedule 3.16(c) contains a list of all retransmission consent, channel positioning or other agreements with cable systems with respect to the Stations, and Seller has previously furnished Buyer with true and correct copies of all such agreements.
(d)	(i)	With respect to the Columbus Station, Seller timely made must-carry elections or has entered into retransmission consent agreements with DirectTV. Schedule 3.16(d)(i)(1) lists these retransmission consent agreements, and Seller has previously furnished Buyer with true and

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correct copies of this agreement. DirecTV has not advised Seller or any of its Affiliates of any signal quality or other issues with respect to the Columbus Station’s retransmission consent elections. Except as disclosed on Schedule 3.16(d)(i)(2), the Seller has no unresolved disputes with satellite carriers with respect to the carriage of the Columbus Station.

(ii)

With respect to the Augusta Station, Seller timely made must-carry elections or have entered into retransmission consent agreements with DirectTV. Schedule 3.16(d)(ii)(1) lists these retransmission consent agreements, and Seller has previously furnished Buyer with true and correct copies of these agreements. DirecTV has not advised Seller or any of its Affiliates of any signal quality or other issues with respect to the Augusta Station’s retransmission consent elections. Except as disclosed on Schedule 3.16(d)(ii)(2), the Seller has no unresolved disputes with satellite carriers with respect to the carriage of the Augusta Station.

SECTION 3.17 Employees; Labor Matters.

(a) Schedule 3.17(a) sets forth a true and complete list, dated as of the date set forth thereon, of all individuals employed by the Stations, including the names, date of hire, current rate of compensation, employment status (i.e., active, disabled, on authorized leave and reason therefor), department, title, whether covered by a collective bargaining agreement and whether full-time, part-time or per-diem. Each such employee is employed by Seller.

(b) Except as set forth on Schedule 3.17(b), the Business is not subject to or bound by any labor agreement or collective bargaining agreement. Seller is in compliance with all currently applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practice, except for such compliance the failure of which or the engagement of which could not reasonably be expected to have a Material Adverse Effect. There is no unfair labor practice complaint pending or, to the Knowledge of Seller, threatened against Seller before the National Labor Relations Board. No strike or other labor dispute involving Seller is pending or, to the Knowledge of Seller, threatened, and, to the Knowledge of Seller, there is no activity involving any Station Employee seeking to certify a collective bargaining unit or engaging in any other organizational activity.

SECTION 3.18 Employee Benefit Plans.

(a) Schedule 3.18(a)(1) identifies each Employee Plan. Seller has previously furnished to Buyer copies of the Employee Plans (and, if applicable, related trust agreements) and all amendments thereto and written interpretations thereof together with the three most recent annual reports (Form 5500 including, if applicable, Schedule B thereto) and the most recent actuarial valuation report prepared in connection with any Employee Plan. Schedule 3.18(a)(2) identifies each Employee Plan that is (i) a Multiemployer Plan, (ii) a Title IV Plan or (iii) maintained in connection with any trust described in Section 501(c)(9) of the Code. Seller has provided Buyer with complete age, salary, service and related data as of September 30, 2002 for all employees covered under any Employee Plan

(b) Except as set forth on Schedule 3.18(b), neither Seller nor any of its ERISA Affiliates have (i) engaged in, or is a successor or parent corporation to an entity that has engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably expects to incur prior to the Closing

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Date (A) any liability under Title IV of ERISA arising in connection with the termination of, or a complete or partial withdrawal from, any plan covered or previously covered by Title IV of ERISA or (B) any liability under Section 4971 of the Code that in either case could become a liability of Buyer or any of its ERISA Affiliates after the Closing Date. Except as set forth on Schedule 3.18(b), no condition exists that (i) could constitute grounds for termination by the PBGC of any employee benefit plan that is subject to Title IV of ERISA that is maintained by Seller or any of its ERISA Affiliates or (ii) presents a material risk of complete or partial withdrawal from any Multiemployer Plan, as defined in Section 3(37) of ERISA, which could result in Seller or Buyer or any ERISA Affiliate of Seller or Buyer incurring a withdrawal liability within the meaning of Section 4201 of ERISA. The assets of Seller are not now, nor will they after the passage of time be, subject to any Lien imposed under Code Section 412(n) by reason of a failure of Seller to make timely installments or other payments required under Code Section 412. Except as set forth on Schedule 3.18(b), if a “complete withdrawal” by Seller and all of its ERISA Affiliates were to occur as of the Closing Date with respect to all Multiemployer Plans, neither Seller nor any of its ERISA Affiliates would incur any material withdrawal liability under Title IV of ERISA.

(c) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period since its adoption; each trust created under any such Plan is exempt from Tax under Section 501(a) of the Code and has been so exempt since its creation. Seller has previously provided Buyer with the most recent determination letter of the IRS relating to each such Employee Plan. Except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Employee Plan has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code.

(d) To Seller’s Knowledge, Seller has no current or projected liability in respect of post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees of Seller, except as required to avoid excise tax under Section 4980B of the Code. No condition exists that would prevent Seller from amending or terminating any Employee Plan providing health or medical benefits in respect of any Active Employee other than limitations imposed under the terms of a collective bargaining agreement.

(e) All contributions and payments accrued under each Employee Plan, determined in accordance with prior funding and accrual practices, as adjusted to include proportional accruals for the period ending on the Closing Date, will be discharged and paid on or prior to the Closing Date except to the extent (i) reflected as a liability on the Closing Balance Sheets or (ii) retained by Seller. There has been no amendment to, written interpretation of or announcement whether or not written) by Seller or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Plan that would increase materially the expense of maintaining such Employee Plan above the level of the expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof.

(f) Except as set forth on Schedule 3.18(f), there is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of the Stations that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code.

(g) Except as set forth on Schedule 3.18(g) and except as otherwise provided in Section 8.07, no employee or former employee of the Stations will become entitled to any bonus, retirement, severance, job

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security or similar benefit or enhanced such benefit (including acceleration of vesting or exercise of an incentive award) as a result of the transactions contemplated hereby.

(h) Except as set forth on Schedule 3.18(h), Seller does not have currently in place any stay bonus plan or arrangement.

SECTION 3.19 Environmental Matters.

(a) Except as otherwise disclosed on Schedule 3.19(a), to Seller’s Knowledge:

(i) no notice of violation, demand, citation, summons or order has been received, no complaint has been filed, no penalty has been assessed and no investigation or Action or review is pending or threatened by any Governmental Authority or other Person with respect to any matters relating to Seller or the Stations and relating to or arising out of any Environmental Law;

(ii) there are no liabilities of or relating to Seller or the Stations of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, arising under or relating to any Environmental Law, and there are no facts, conditions, situations or set of circumstances that could reasonably be expected to result in or be the basis for any such liability;

(iii) no Hazardous Material, incinerator, sump, surface impoundment, lagoon, landfill, septic, wastewater treatment or other disposal system or underground storage tank (active or inactive) is or has been present at, on or under the Real Property except, in each case, in compliance with Environmental Laws;

(iv) from the date Seller acquired the Stations until the Closing Date, no Hazardous Material has been Released in violation of Environmental Laws at, on or under any of the Real Property;

(v) neither the Real Property nor any property to which Seller or the Stations have, directly or indirectly, transported or arranged for the transportation of any Hazardous Material is listed or proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or local list of sites requiring investigation or clean-up; and

(vi) the Business is and the Seller is in compliance in all material respects with all Environmental Laws and have obtained and are in compliance with all Environmental Permits; such Environmental Permits are valid and in full force and effect and will not be terminated or impaired or become terminable, in whole or in part, as a result of the transactions contemplated hereby.

(b) Since January 1, 2000, there has been no environmental investigation, study, audit, test, review or other analysis conducted of which Seller has Knowledge in relation to the Stations or any property or facility now or previously owned, leased or operated by the Stations that has not been previously delivered to Buyer.

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SECTION 3.20 Taxes.

Except as set forth in Schedule 3.20, (a) Seller has timely filed or been included in, or will timely file or be included in, all material Tax Returns required to be filed by it or in which it is to be included with respect to Taxes for any period ending on or before the Closing Date, (b) all material Taxes that are due with respect to the Seller have been paid except to the extent such Taxes are being contested in good faith, (c) no deficiency for any material amount of Tax has been asserted or assessed by a Tax authority against Seller or for which Seller may be liable, (d) there are no judicial proceedings with respect to material Taxes due from Seller; and (e) there is no contract, agreement, plan or arrangement covering any Person that, individually or collectively, could give rise to the payment of any amount that would not be deductible by reason of Section 280G of the Code.

SECTION 3.21 Computer Software and Hardware.

All Software owned or licensed by Seller or, to Seller’s Knowledge, used or held for use in the Business is described on Schedule 3.21, which sets forth the source of Seller’s entitlement to use such Software, a description of such Software and its function with respect to the Business, and identifies any licenses and contracts for the development and/or conveyance of any rights with respect to such Software, including any sublicenses granted by Seller. There are no restrictions which would preclude, or result in any charge for, Buyer’s continued use of such Software in the Business as currently conducted.

SECTION 3.22 Brokers.

Other than Kalil & Co., whose fees and costs shall be paid by Seller, there is no broker, finder, investment banker or other intermediary that has been retained by or is authorized to act on behalf of Seller who or that might be entitled to any fee or commission from Buyer or any of its Affiliates in connection with the transactions contemplated by this Agreement or the Ancillary Agreements.

ARTICLE IV

BUYER’S REPRESENTATIONS AND WARRANTIES

Buyer represents and warrants to the Seller as of the date hereof and as of the Closing as follows:

SECTION 4.01 Corporate Existence and Power.

Buyer is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. Buyer is duly qualified to conduct business in Georgia.

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SECTION 4.02 Corporate Authorization.

(a) The execution and delivery of this Agreement and the Ancillary Agreements by Buyer, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby are within Buyer’s corporate powers and have been duly authorized by all requisite corporate action on the part of Buyer.

(b) This Agreement has been, and at the Closing each Ancillary Agreement will be, duly executed and delivered by Buyer. This Agreement (assuming due authorization, execution and delivery by Seller) constitutes, and each Ancillary Agreement to which Buyer will be a party will constitute when executed and delivered by Buyer, the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

SECTION 4.03 Governmental Authorization.

The execution, delivery and performance by Buyer of this Agreement and each Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby require no action by or in respect of, or filing with or notification to, any Governmental Authority other than (a) the FCC, and (b) any such action by or in respect of or filing with any Governmental Authority as to which the failure to take, make or obtain could not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Buyer or on Buyer’s ability to perform its obligations under this Agreement or the Ancillary Agreements.

SECTION 4.04 Noncontravention.

The execution, delivery and performance of this Agreement by Buyer and each Ancillary Agreement to which Buyer will be a party and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with the certificate of incorporation or by-laws of Buyer, (b) assuming compliance with the matters referred to in Section 4.03, conflict with or violate any Law or Governmental Order applicable to Buyer, (c) require any consent or other action by or notification to any Person under, constitute a default under, or give to any Person any rights of termination, amendment, acceleration or cancellation of any right or obligation of Buyer or to a loss of any benefit relating to the Business to which Buyer is entitled under, any provision of any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other agreement or instrument to which Buyer is a party or by which any of Buyer’s assets is or may be bound or (d) result in the creation or imposition of any Lien on any asset of Buyer, except for Permitted Liens, except, in the cases of clauses (b), (c) and (d), for any such violations, consents, actions, defaults, rights or losses as could not have, individually or in the aggregate, a material adverse effect on Buyer or on Buyer’s ability to perform its obligations under this Agreement or the Ancillary Agreements.

SECTION 4.05 Absence of Litigation.

There are no Actions pending against or, to Buyer’s knowledge, threatened against Buyer before any Governmental Authority that in any manner challenges or seeks to prevent, enjoin, alter or delay materially the transactions contemplated by this Agreement.

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SECTION 4.06 FCC Qualification.

Buyer is qualified under the Communications Act to acquire the FCC Licenses from Seller. To Buyer’s Knowledge, there is no fact or circumstance relating to the Stations, Buyer or any of its Affiliates that would cause the FCC to not grant the applications in the ordinary course.

SECTION 4.07 Brokers.

There is no broker, finder, investment banker or other intermediary that has been retained by or is authorized to act on behalf of Buyer who or that might be entitled to any fee or commission from Seller upon consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

SECTION 4.08 Due Diligence.

Buyer has had an opportunity to conduct due diligence on the Purchased Assets and Assumed Liabilities. Buyer has visited and inspected the Real Property. Buyer is not relying on Seller’s disclosures with respect to any future budgets, prospects or operations of the Business.

ARTICLE V

COVENANTS OF THE SELLER

SECTION 5.01 Operations Pending Closing.

Except as otherwise set forth herein and subject to the provisions of Section 7.03 regarding control of the Stations, after the date of this Agreement and prior to the Closing, Seller shall:

(a) operate or cause the operation of the Stations in the ordinary course of business consistent with past practices and use commercially reasonable best efforts to preserve substantially intact the relationships of the Stations with their customers, employees, suppliers, licensors, licensees, distributors and others with whom the Stations deal;

(b) operate the Stations substantially in compliance with the Communications Act and not cause or permit, or agree or commit to cause or permit, by act or failure to act, any of the FCC Licenses to expire or to be revoked, suspended or adversely modified, or take or fail to take, any action that would be reasonably likely to cause the FCC or any other Governmental Authority to institute proceedings for the suspension, revocation or adverse modification of any of the FCC Licenses;

(c) until the Unaudited Financial Statements are prepared, not make any change in any method of accounting or accounting practice utilized in the preparation of the Reference Financial Statements, and from and after the date of the Unaudited Financial Statements, not make any change in any method of accounting or accounting practice utilized in the preparation of the Unaudited Financial Statements, in each case, except for any such change required by reason of a concurrent change in GAAP;

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(d) not sell, lease, license or otherwise dispose of any assets or properties relating to the Stations except (i) pursuant to existing contracts or commitments or (ii) in the ordinary course of business consistent with past practices;

(e) not enter into or agree to enter into any agreement to sell, purchase or encumber any parcel of Real Property;

(f) maintain the Equipment in good operating condition, ordinary wear and tear excepted, and replace with a substantially equivalent asset of substantially equivalent quality or utility any of the Equipment that shall not be working or shall be lost, stolen or destroyed;

(g) except as otherwise provided in Section 8.07, (A) not hire any Person without Buyer’s prior written consent; (B) not increase or otherwise change the rate or nature of, or prepay, the compensation (including wages, salaries and bonuses) that is paid or payable to any Person employed by the Stations, except pursuant to existing compensation and fringe benefit plans, practices and arrangements that have been furnished (in the case of such plans) or disclosed (in the case of such practices and arrangements) to Buyer prior to the date of this Agreement; (C) not enter into, renew or allow the renewal of or entering into, any employment or consulting agreement or other contract or arrangement with respect to the performance of personal services for the Stations without Buyer’s prior written consent; (D) not increase or otherwise change the rate or nature of severance or other termination benefits that are paid or payable to any Person employed by the Stations; and (E) not agree or commit to do any of the foregoing provided, however, that with respect to clauses (A) and (C) of this Section 5.01(g), if Buyer does not provide its consent, Seller may nonetheless take such action(s) as described in such clauses, provided that Buyer does not upon consummation of the transactions contemplated by this Agreement incur any liability or obligation relating to or arising from such action(s).

(h) except with Buyer’s prior written consent, which consent shall not be unreasonably withheld, and except as otherwise provided in Section 8.07, and with respect to Program Rights described in Section 5.01(i) below, (A) not enter into, or become obligated under, any agreement or commitment on behalf of the Stations for an amount greater than $50,000, or (B) not change, amend, terminate or otherwise modify or agree or commit to change, amend, terminate or otherwise modify any Contract (other than advertising sales contracts for cash only) in any material respect except for those Contracts that terminate or expire prior to the Closing Date by their own terms;

(i) without limiting the restrictions contained in Section 5.01(h): (A) keep Buyer apprised of material developments in negotiations for existing and proposed Program Rights agreements which are not either completed or do not expire by their own terms prior to the Closing and promptly provide Buyer with copies of all such Program Rights agreements entered into by or on behalf of the Station; and (B) use commercially reasonable best efforts to include the following language in each such Program Rights agreement to be negotiated and executed from and after the date of this Agreement other than such agreements set forth on Schedule 3.05(a): (i) as to the Columbus Station, “If Columbus Station becomes commonly owned or operated with any television station in the Columbus Nielsen Designated Market Area, the programs may be broadcast on the Station or such other station(s) or any of them.”; and (ii) as to the Augusta Station, “If Augusta Station becomes commonly owned or operated with any television station in the Augusta Nielsen Designated Market Area, the programs may be broadcast on the Station or such other station(s) or any of them.”

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(j) not enter into or agree or commit to enter into any new Tradeout Agreement relating to the Stations prior to Closing that will not be fully performed prior to the Closing without Buyer’s prior written consent;

(k) (A) utilize the Program Rights only in the ordinary course of business consistent with past practices and substantially in accordance with the anticipated usage of such Program Rights as set forth on Schedule 3.05(f) and (B) not sell or otherwise dispose of any such Program Rights and make payments on Program Rights and agreements on a basis consistent with past practices and otherwise in accordance with this Agreement;

(l) except as otherwise provided in Section 8.07, not adopt, or agree or commit to adopt, any Employee Plan or other pension, profit sharing, deferred compensation or similar plan, program or trust on behalf of personnel of the Stations, or modify or agree or commit to modify the Employee Plans insofar as they relate to personnel of the Stations, other than modifications or agreements or commitments to make any adoptions or modifications that apply to similarly situated employees of Seller;

(m) in the event that the collective bargaining agreements expire prior to the Closing Date, seek the consent of the appropriate international and local union(s) to a short-term extension of the expiring agreement(s) to enable Buyer to negotiate the terms of said agreement(s) after the Closing Date, and, in the event the consent to such an extension is not obtained, to confer in advance with Buyer about all applicable issues subject to bargaining; provided that Seller shall, to the extent permitted by applicable Law, propose that such collective bargaining agreements provide for a term of one year but in no event more than three (3) years;

(n) promptly notify Buyer of any attempted or actual collective bargaining organizing activity with respect to Station Employees; and not propose, to the extent permitted by Law, that any collective bargaining agreement applicable to any Station Employees be binding by any “successor” employer of such employees;

(o) follow the Stations’ usual and customary policies with respect to (A) extending credit for sales of broadcast time on the Stations and (B) collecting accounts receivable relating to the Stations arising from such extension of credit;

(p) (A) promote and advertise the Stations, (B) promote and advertise, including on-air promotion and advertising, any program that is currently airing on the Stations, in each case consistent with past practices, and (C) make expenditures or commitments to make expenditures consistent with past practices;

(q) not make or agree or commit to make any capital expenditure greater than $5,000 in connection with any particular project or greater than $25,000 in total, without Buyer’s prior written consent, which consent shall not be unreasonably withheld; and

(r) timely make any must-carry/retransmission election that must be made prior to the Closing Date, provided that Seller shall not elect must-carry (by default or otherwise) or enter into a retransmission consent agreement without first conferring with Buyer, or, prior to June 15, 2003, without Buyer’s consent, which may not be unreasonably withheld.

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SECTION 5.02 Access to Information.

(a) From the date hereof until the Closing Date, upon reasonable notice, Seller shall (i) give Buyer, its counsel, financial advisors, auditors and other authorized representatives full access during normal business hours to the offices, properties, books and records of the Stations, (ii) furnish to Buyer, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Stations as such Persons may from time to time reasonably request and (iii) instruct the employees, counsel and financial advisors of Seller to cooperate with Buyer in its investigation of the Stations; provided, however, that any investigation pursuant to this Section 5.02(a) shall be conducted in such manner as not to unreasonably interfere with the conduct of the Business or any of the businesses or operations of Seller. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller hereunder.

(b) On and after the Closing Date, Seller will hold, and will use their commercially reasonable best efforts to cause their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Buyer, Buyer’s Affiliates and the Business.

(c) On and after the Closing Date, Seller will afford promptly to Buyer and its agents reasonable access to its books of account, financial and other records (including accountant’s work papers), information, employees and auditors to the extent necessary or reasonably useful for Buyer in connection with any audit, investigation, dispute or litigation or any other reasonable business purpose relating to the Business; provided that any such access by Buyer shall not unreasonably interfere with the conduct of the businesses or operations of Seller or any Affiliate of Seller.

SECTION 5.03 Title Insurance and Surveys.

From the date hereof until the Closing Date, Seller shall cooperate with Buyer so that Buyer can promptly obtain the following (at Buyer’s expense):

(a) Preliminary reports on title covering a date subsequent to the date of this Agreement, issued by the Title Company, which preliminary reports shall contain commitments (the “Title Commitments”) of the Title Company to issue an ALTA title insurance policy or policies (the “Title Policy”) insuring the interests of Buyer (or its designee) in each owned parcel of the Real Property subject only to the Permitted Liens. The Seller shall execute a title affidavit that shall be in form and substance reasonably satisfactory to Seller and the Title Company.

(b) Surveys of the owned parcels of Real Property as of a date subsequent to the date of this Agreement.

(c) A Phase I Environmental Site Assessment Report prepared consistent with ASTM Standard 1527-00 concerning the Real Property from an environmental engineering firm retained by Buyer that shall confirm, in a manner reasonably satisfactory to Buyer, the non-existence of any Hazardous Materials on or about the Real Property or any material violation of Environmental Laws.

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SECTION 5.04 Financial Reports.

(a) Within twenty-five (25) days after the end of each month following the date of this Agreement until the Closing Date, Seller shall furnish Buyer with a copy of the monthly unaudited financial reports for the Stations (including balance sheets and income statements) for each such month and the fiscal year to the end of such month). All of the foregoing financial statements shall comply with the requirements concerning financial statements set forth in Section 3.11(b).

(b) Seller shall deliver to Buyer no later than March 1, 2003, the unaudited balance sheets of the Stations as of December 31, 2002 (the “Unaudited Balance Sheets”), and the related unaudited statements of income of the Stations for the year then ended, together with all schedules thereto, (collectively with the Unaudited Balance Sheets, the “Unaudited Financial Statements”) (A) prepared in accordance with the books and records of the Stations, (B) prepared in accordance with GAAP applied on a basis consistent with the past practices of the Stations with the exception of omission of footnotes and (C) which present fairly in all material respects the financial condition of the Stations as at December 31, 2002 and the results of their operations for the period then ended. Seller shall pay all costs, fees and expenses in connection with the preparation of the Unaudited Financial Statements.

(c) Buyer and its independent auditors shall be permitted to review and make copies reasonably required of the (i) working papers of Seller and their independent auditors relating to the Unaudited Financial Statements and (ii) any supporting schedules, analyses and other documentation relating to the Unaudited Financial Statements.

(d) At Closing Seller will cause PricewaterhouseCoopers LLP to deliver to Buyer an Agreed Upon Procedures Letter covering the Unaudited Financial Statements in the form attached hereto as Exhibit C.

SECTION 5.05 Intentionally Left Blank.

SECTION 5.06 Estoppel Certificates.

Seller shall obtain estoppel certificates in a form reasonably acceptable to Buyer, executed by each of the landlords of the Leases, and upon the receipt of any such estoppel certificate, Seller shall deliver such estoppel certificates to Buyer as promptly as practicable but in no event less than five (5) days prior to the Closing Date.

SECTION 5.07 Risk of Loss.

(a) Upon the occurrence prior to the Closing of any casualty loss, damage or destruction material to the operation of the Stations, Seller shall promptly give Buyer written notice setting forth in detail the extent of such loss, damage or destruction and the cause thereof if known. Seller shall use their commercially reasonable best efforts to commence promptly and thereafter to proceed diligently to repair or replace any such lost, damaged or destroyed property whether such loss, damage or destruction occurs prior to, on or after the date of this Agreement, such efforts to include the payment

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of any applicable insurance policy deductibles. However, in the event that such repair or replacement is not fully completed prior to the Closing Date, or the loss, damage or destruction causes either Station to be off the air for forty-eight (48) consecutive hours or more, then Buyer may elect to (i) consummate the transactions contemplated hereby on the Closing Date, in which event Seller shall assign to Buyer the portion of the insurance proceeds, if any, not previously expended by the Seller to repair or replace the damaged or destroyed property, (ii) terminate this Agreement, or (iii) delay the Closing Date until fifteen (15) days after Seller gives written notice to Buyer of completion of the repair or replacement of the damaged or destroyed property; provided that in no event shall Buyer delay the Closing to a date more than sixty (60) days after the Termination Date; provided further that if Seller is unable through its commercially reasonable best efforts to complete such repair or replacement within sixty (60) days after the casualty, Buyer may then terminate this Agreement.

(b) If the Closing does occur as contemplated under Section 5.07(a)(i), the Purchase Price shall not be adjusted by reason of such casualty or such assignment of the insurance proceeds to Buyer.

ARTICLE VI

COVENANTS OF BUYER

SECTION 6.01. Access to Information.

On and after the Closing Date, upon reasonable notice, Buyer will afford promptly to Seller and its agents reasonable access to its properties, books and records relating exclusively to any period ending on or before the Closing Date and to employees of Buyer to the extent necessary to establish facts related to such period.

ARTICLE VII

COVENANTS OF BUYER AND SELLER

SECTION 7.01. Commercially Reasonable Efforts; Further Assurances.

(a) Subject to the terms and conditions of this Agreement, Buyer and Seller will use their commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or desirable under applicable Law to consummate the transactions contemplated by this Agreement; provided that notwithstanding anything to the contrary contained in this Agreement, neither Buyer nor any of its Affiliates shall be required to sell or otherwise dispose of, hold separate (through the establishment of a trust or otherwise), divest itself of, or limit the ownership or operations of all or any portion of its businesses, assets or operations.

(b) Also in furtherance and not in limitation of Section 7.01(a), Buyer and the Seller shall prepare and file with the FCC as soon as practicable but in no event later than fifteen (15) Business Days after the execution of this Agreement, the requisite applications (the “FCC Applications”) and other necessary instruments or documents requesting the FCC Consent and thereupon prosecute such applications with all reasonable diligence to obtain the requisite FCC Consent; provided, however, neither Buyer nor the Seller shall be required to pursue any course of action that would have a Material Adverse Effect on Buyer or Seller, respectively. Buyer shall pay one-half (1/2) and Seller shall pay one-half (1/2) of the

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FCC filing fees relating to the transactions contemplated hereby, irrespective of whether the transactions contemplated by this Agreement are consummated. Buyer and Seller each shall oppose any petitions to deny or other objections filed with respect to the FCC Applications to the extent such petition or objection relates to such party. The parties hereto shall not take any intentional action that would, or intentionally fail to take any action which such action or failure to take such action would reasonably be expected to have the effect of materially delaying the receipt of the FCC Consent. If the Closing shall not have occurred for any reason within the original effective period of the FCC Consent, and no party shall have terminated this Agreement under Article XI, the parties hereto shall jointly request an extension of the effective period of the FCC Consent. No extension of the FCC Consent shall limit the right of any party to exercise its rights under Article XI.

(c) In connection with the efforts referenced in Sections 7.01(a) and 7.01(b) to obtain the FCC Consent, Buyer and Seller shall use commercially reasonable efforts to (A) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (B) keep the other party informed in all material respects of any material communication received by such party from, or given by such party to, if and to the extent applicable, the Federal Trade Commission (the “FTC”), the Antitrust Division of the Department of Justice (the “DOJ”), the FCC or any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party and (C) permit the other party to review any material communication given by it to, and consult with each other in advance of and be permitted to attend any meeting or conference with, if and to the extent applicable, the FTC, the DOJ, the FCC or any such other Governmental Authority or, in connection with any proceeding by a private party, with any other Person, in each case regarding any of the transactions contemplated by this Agreement. For purposes of this Agreement, “Antitrust Laws” means the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and all other federal, state and foreign, if any, Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

(d) At Buyer’s request, Seller shall provide its written permission, pursuant to Section 73.3517 of the FCC’s rules, for Buyer to file in its own name applications to modify the digital television construction permits of the Stations to specify the basic technical parameters of the Stations’ as constructed and operating under their initial Digital Television Broadcast Special Temporary Authorities, as extended by the FCC (“DTV Modification Applications”) or at some other power level or antenna height as may be determined by Buyer. The DTV Modification Applications, if filed, will state that implementation thereof is contingent on consummation of the acquisition of the Stations by Buyer. Buyer will be responsible for the costs related to the DTV Modification Applications

SECTION 7.02. Certain Filings; Further Actions.

The Seller and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material Contracts, in connection with the consummation of the transactions contemplated by this Agreement, (ii) in seeking to assign or negotiate the affiliate agreement with Fox Networks, Inc., and (iii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers; provided, however, that neither Seller nor Buyer shall be required to pay

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consideration to obtain any such consent, approval or waiver and Seller shall not agree to or permit the amendment of any Contract of the Station or relating to the Business in order to obtain any consent or approval.

SECTION 7.03. Control Prior to Closing.

The parties acknowledge and agree that, for the purposes of the Communications Act, this Agreement and, without limitation, the covenants in Article V, are not intended to and shall not be construed to transfer control of the Station from Seller to Buyer.

SECTION 7.04. Public Announcements.

The parties shall agree on the terms of the press release that announces the transactions contemplated hereby and thereafter agree to consult with each other before issuing any press release or making any public announcement with respect to this Agreement or the transactions contemplated hereby, including any press releases or public statements the making of which may be required by applicable Law or any listing agreement with any national securities exchange. Nothing herein shall be interpreted to prohibit announcements or press releases required to be made by Seller under applicable law, practice, or regulation as advised by Seller’s counsel.

SECTION 7.05. Notices of Certain Events.

Seller and Buyer shall each promptly notify the other of:

(a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(b) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;

(c) in the case of Seller, any Action commenced or, to the Knowledge of Seller, threatened against, relating to or involving or otherwise affecting the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.13 or that relates to the consummation of the transactions contemplated by this Agreement; and

(d) in the case of Buyer, any Action commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting Buyer that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.05 or that relates to the consummation of the transactions contemplated by this Agreement.

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ARTICLE VIII

PENSION, EMPLOYEE AND UNION MATTERS

SECTION 8.01. Employment.

(a) Attached as Schedule 8.01 is a list of all individuals employed by Seller in connection with the business and operations of the Stations (“Active Employees”). Seller understands that Buyer may hire some or all of the Active Employees of Seller. Notwithstanding the foregoing, Buyer shall have no obligation to hire any of Seller’s employees and shall have no liabilities of any kind in connection with any such employees arising from their employment by Seller. Any employees hired by Buyer shall enter into a new employment relationship with Buyer subject to terms and conditions established by Buyer and Buyer shall have no responsibility for any payroll taxes, accrued vacation pay, fringe benefits or other prepaid or deferred obligations for any employee of Seller who enters into the employment of Buyer arising from any period before such employee enters into an employment relationship with Buyer. Within thirty (30) days prior to the Closing Date, Buyer shall deliver to Seller in writing a list of the employees it intends to offer employment (the “Transferred Employees”). On the Closing Date, Seller shall terminate all employees of the Stations, except only those employees of Seller that Buyer and Seller agree shall remain in the employ of Seller.

(b) Seller agrees to use reasonable efforts to facilitate the transition of the Transferred Employees to employment with Buyer as of the Closing Date. Such reasonable efforts shall include affording Buyer reasonable opportunities prior to the Closing Date to review employment records (other than medical and individual performance or evaluation records), as permitted by Law, of the Transferred Employees, to discuss terms and conditions of employment with Buyer as of the Closing Date and to distribute to the Transferred Employees forms and documents relating to employment with Buyer to the Transferred Employees.

(c) Except as prohibited by Law, after the Closing Seller shall deliver to Buyer originals or copies of all personnel files and records (including medical records, if any, but excluding benefit plan records) related to the Transferred Employees, and Seller shall have reasonable continuing access to such files and records thereafter.

(d) Buyer agrees to use reasonable efforts to accommodate the Seller’s activities in connection with the termination of its business activities, including allowing up to five employees of Seller, if not hired by Buyer, to remain rent-free in suitable space on the premises of the Stations for up to sixty (60) days following the Closing and permitting Seller’s former accounting employees who are hired by Buyer to prepare Seller’s financial and other reports at Seller’s expense.

SECTION 8.02. Intentionally Left Blank.

SECTION 8.03. Employee Welfare Plans.

Seller shall be responsible for: (x) claims for medical and dental benefits, disability benefits, life insurance benefits and workers compensation that are incurred prior to the first date of employment with Buyer (the “Employment Commencement Date”); and (y) claims related to “COBRA” coverage attributable to

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“qualifying events” occurring prior to the Employment Commencement Date, in each case with respect to any Transferred Employees and their beneficiaries and dependents. Buyer shall be solely responsible for: (i) medical and dental benefits, disability benefits, life insurance benefits and workers compensation benefits for claims incurred from and after the Employment Commencement Date for Active Employees; and (ii) claims relating to “COBRA” coverage attributable to “qualifying events” occurring from and after the Employment Commencement Date, in each case with respect to any Transferred Employees and their beneficiaries and dependents. For purposes of the foregoing, a medical/dental claim shall be considered incurred when the medical services are rendered or medical supplies are provided, and not when the condition arose. A life insurance or workers compensation claim shall be considered incurred prior to a particular date if the injury or condition giving rise to the claim occurs prior to such date. A disability claim shall be deemed to be incurred when the employee is declared disabled under the terms of the applicable disability plan. Transferred Employees shall be given credit under Buyer’s welfare plans for deductibles and out-of-pocket expenses incurred while employed by Seller in the relevant calendar year.

SECTION 8.04. Vacation.

Buyer will assume all liabilities for unpaid, accrued vacation of each Transferred Employee as of the Closing Date to the extent such accrued vacation does not exceed the vacation to which such Transferred Employee would be entitled under the terms of Buyer’s vacation policy as currently in effect, giving credit under Buyer’s vacation policy for service with the Seller, and shall permit Transferred Employees to use their vacation entitlement accrued as of the Closing Date until 6 months from the Closing Date or the end of the calendar year during which the Closing occurs, whichever is later. Any additional unpaid accrued vacation to which any Transferred Employee is entitled shall be retired in consideration of payment thereof by the Seller to such Transferred Employee on the Closing Date. Service with both the Seller and Buyer shall be taken into account in determining Transferred Employees’ vacation entitlement under Buyer’s vacation policy after the Closing Date.

SECTION 8.05. Intentionally Left Blank.

SECTION 8.06. Non-Solicitation by Seller.

(a) Seller agrees that for a period of one (1) year after the Closing Date, it will not, and will cause its Subsidiaries not to, directly or indirectly, solicit for employment or employ, either as an employee or a consultant, any Transferred Employee of the Stations who was an employee of the Stations at the Closing.

(b) The parties acknowledge and agree that the restrictions contained in Section 8.06(a) are a reasonable and necessary protection of the immediate interests of Buyer, and any violation of these restrictions would cause substantial injury to Buyer and Buyer would not have entered into this Agreement without receiving the additional consideration offered by Seller binding itself to these restrictions. In the event of a breach or a threatened breach by Seller of these restrictions, Buyer shall be entitled to apply to any court of competent jurisdiction for an injunction restraining such Person from such breach or threatened breach (without the necessity of proving the inadequacy of money damages as a remedy); provided, however, that the right to apply for injunctive relief shall not be construed as prohibiting Buyer from pursuing any other available remedies for such breach or threatened breach.

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SECTION 8.07. Seller Stay Bonuses.

Seller agrees that if Seller puts into place any stay bonus plan or arrangement after the date of this Agreement, such plan or arrangement will provide that any Transferred Employee otherwise entitled to a stay bonus must continue employment with Buyer for a minimum period of sixty (60) days to be eligible therefor. Buyer agrees that Seller may put into place a stay bonus plan, arrangement, or agreement and use such additional separate sales incentive letter agreements designed to encourage retention, as Seller deem necessary, for one or more Station Employees, whether individually or for a specific group of employees and whether or not any such Station Employee may become a Transferred Employee.

ARTICLE IX

TAX MATTERS

SECTION 9.01. Bulk Sales.

Seller and Buyer hereby waive compliance with the provisions of any applicable bulk sales law and no representations, warranty or covenant contained in this Agreement shall be deemed to have been breached as a result of such non-compliance. Seller hereby agrees to indemnify, defend and hold Buyer harmless from and against any and all Losses arising out of or relating to claims asserted against Buyer pursuant to any applicable bulk sales law with respect to the Purchased Assets.

SECTION 9.02. Transfer Taxes.

All Transfer Taxes arising out of or in connection with the transactions effected pursuant to this Agreement shall be divided equally between (i) Buyer and (ii) Seller. The party that has the primary responsibility under applicable law for the payment of any particular Transfer Tax shall prepare and file the relevant Tax Return and notify the other party in writing of the Transfer Taxes shown on such Tax Return. The other party shall pay the first party an amount equal to one-half of such Transfer Taxes in immediately available funds no later than the date that is the later of (i) five Business Days after the date of such notice or (ii) two Business Days prior to the due date for such Transfer Taxes. The first party shall promptly remit the Transfer Taxes to the proper Governmental Authority.

ARTICLE X

CONDITIONS TO CLOSING

SECTION 10.01. Conditions to Obligations of Buyer and Seller.

The obligations of Buyer and the Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of each of the following conditions:

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(a) Any applicable waiting period, clearance, approval or filing under any Antitrust Law or regulation relating to the transactions contemplated hereby shall have expired or been terminated or shall have been obtained or made.

(b) No provision of any applicable Law and no Governmental Order shall prohibit the consummation of the Closing.

(c) The FCC Consent shall have been granted and shall be in full force and effect.

(d) There shall not be instituted or pending any Action challenging this Agreement or the transactions contemplated hereby or seeking to restrain, alter, prohibit or otherwise materially interfere with the Closing by any Person before any Governmental Authority.

SECTION 10.02. Conditions to Obligations of the Seller.

The obligations of the Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of each of the following further conditions:

(a)    (i) Buyer shall have performed and complied with in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date;

(ii) the representations and warranties of Buyer contained in this Agreement and in any certificate or other writing delivered by Buyer pursuant hereto (A) that are qualified by materiality or Material Adverse Effect shall be true and correct and (B) that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects, in each case at and as of the Closing Date as if made at and as of such date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date need be true and correct, or true and correct in all material respects, as the case may be, only as of such specified date); and

(iii) Seller shall have received a certificate signed by the Chief Executive Officer of Buyer to the foregoing effect.

(b) The Seller shall have received an opinion of Thomas B. Henson, special counsel to Buyer, dated the Closing Date, in form and substance reasonably satisfactory to Seller, with respect to the matters specified in Sections 4.01, 4.02 and 4.04.

(c) Seller shall have received all documents they may reasonably request relating to the existence of Buyer and the authority of Buyer for this Agreement, all in form and substance reasonably satisfactory to Seller, including a true and complete copy, certified by the Secretary or Assistant Secretary of Buyer, of the resolutions duly and validly adopted by the Board of Directors of Buyer evidencing its authorization of the execution and delivery of this Agreement and consummation of the transactions contemplated hereby.

(d) The FCC Consent shall be a Final Order and shall contain no provision materially adverse to any of Seller, Seller’s Affiliates, or the Stations.

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SECTION 10.03. Conditions to Obligations of Buyer.

The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of each of the following further conditions:

(a)    (i) Seller shall have performed and complied with in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date;

(ii) the representations and warranties of Seller contained in this Agreement and in any certificate or other writing delivered by Seller pursuant hereto (A) that are qualified by materiality or Material Adverse Effect shall be true and correct and (B) that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects, in each case at and as of the Closing Date as if made at and as of such date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date need be true and correct, or true and correct in all material respects, as the case may be, only as of such specified date); and

(iii) Buyer shall have received a certificate signed by the President of Seller to the foregoing effect.

(b) Buyer shall have received an opinion of Graham & Dunn, P.C., special counsel to the Seller dated the Closing Date and such other appropriate counsel, in form and substance reasonably satisfactory to Buyer, with respect to the matters specified in Sections 3.01, 3.02 and 3.04.

(c) Buyer shall have received all documents it may reasonably request relating to the existence of the Seller and the authority of Seller for this Agreement, all in form and substance reasonably satisfactory to Buyer, including a true and complete copy, certified by the Secretary or Assistant Secretary of Seller, of the resolutions duly and validly adopted by the Board of Directors of Seller evidencing its authorization of the execution and delivery of this Agreement and consummation of the transactions contemplated hereby.

(d) The Seller shall have received all Material Consents listed on Schedule 10.03(d).

(e) The FCC Consent shall be a Final Order and shall contain no provision materially adverse to any of Buyer, Buyer’s Affiliates, or the Station.

(f) Buyer shall have received the Title Commitments.

(g) During the thirty (30) days immediately preceding what would otherwise be the Closing Date, and on the Closing Date, the Stations shall have been and shall be operating continuously with all of their normal broadcasting capability schedule other than any interruption of a duration no longer than four (4) hours.

(h) Buyer shall have either entered into an affiliate agreement, or satisfied itself that an affiliation agreement can be negotiated with Fox Broadcasting Corp.

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(h) Buyer shall have received from PricewaterhouseCoopers the Agreed Upon Procedures Letters for the Reference Financial Statements and the Unaudited Financial Statements.

(i) Buyer shall have received from GA Business Net an assignment of its entire right, title and interest in and to the domain name “www.wfxg.com”.

(j) Buyer shall have received from V’Roooom Technology, Inc. an assignment of its entire right, title and interest in and to the domain name “www.wxtx.com.”

ARTICLE XI

TERMINATION

SECTION 11.01. Termination.

This Agreement may be terminated at any time prior to the Closing as follows:

(a) by the mutual written consent of Seller and Buyer;

(b) either by Seller or by Buyer:

(i) if the Closing shall not have occurred on or before June 30, 2003 (the “Termination Date”) or such other date contemplated by Section 5.07 of this Agreement; provided, however, that the right to terminate this Agreement under this Section 11.01(b)(i) shall be suspended as to any party whose breach, misrepresentation or failure to fulfill any material obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur prior to such date;

(ii) if there shall be any Law that restrains or prohibits consummation of the transactions contemplated hereby or if a final, nonappealable Governmental Order is issued restraining or otherwise prohibiting consummation of the transactions contemplated hereby; or

(iii) if the FCC has designated the FCC Applications for evidentiary hearing.

(c) by Seller upon a breach of any representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement, or if any representation or warranty of Buyer shall have become untrue, in either case such that the condition set forth in Section 10.02(a) would not be satisfied, unless such breach or untruth can be cured prior to Closing and after receipt of notice thereof Buyer proceeds in good faith to cure such breach or untruth as promptly as practicable;

(d) by Buyer upon a breach of any representation, warranty, covenant or agreement on the part of Seller set forth in this Agreement, or if any representation or warranty of Seller shall have become untrue, in either case such that the condition set forth in Section 10.03(a) would not be satisfied, unless such breach or untruth can be cured prior to Closing and after receipt of notice thereof the Seller proceed in good faith to cure such breach or untruth as promptly as practicable;

(e) by Buyer as set forth in Section 5.07(a); or

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(f) by Buyer if either Station shall have for a period of forty-eight (48) consecutive hours or more (A) ceased broadcasting on its authorized analog frequency, or (B) been broadcasting its analog signal at a reduced power level, which reduction is reasonably likely to materially and adversely affect the operations or business of the Station; provided that Buyer must exercise this termination right within thirty (30) days after the date on which either Station has resumed uninterrupted broadcasting on its authorized analog frequency or resumed broadcasts at full power, as the case may be.

Notwithstanding the foregoing, neither party may terminate this Agreement pursuant to clause (c) or (d) of this Section 11.01 if any representation or warranty of the party seeking to terminate is materially inaccurate or breached or such party has failed to comply with or satisfy, in all material respects, its covenants and agreements made hereunder.

The party desiring to terminate this Agreement pursuant to this Section11.01 (other than pursuant to Section 11.01(a)) shall give notice of such termination to the other party.

SECTION 11.02. Effect of Termination.

(a) In the event of the termination of this Agreement pursuant to Section 11.01 of this Agreement, this Agreement shall become void and have no effect, except that (i) the provisions of this Section 11.02, Article 13 and Section 2.06(c) of this Agreement shall survive any such termination, and (ii) subject to the provisions of Section 11.02(b), a termination pursuant to Section 11.01(b)(iii), 11.01(c) or 11.01(d) of this Agreement shall not relieve the breaching party from Liability for an uncured breach of a representation, warranty, covenant, or agreement giving rise to such termination.

(b)    (i) If the non-occurrence of Closing is the result of a default by Buyer of its representations or warranties or any of its covenants or agreements hereunder, and Seller is not in default on any of its representations or warranties or any of its covenants or agreements hereunder, then Seller shall be entitled to receive payment of the Escrow Amount (the “Default Payment”).

(ii) The Default Payment to be made to Seller pursuant to this Section 11.02(b) shall be deemed to be liquidated damages paid to compensate Seller for the damages resulting to Seller from Buyer’s default. The parties agree that actual damages pursuant to a breach of this Agreement prior to the Closing Date would be impossible to measure. Receipt of the Default Payment shall be the sole and exclusive remedy that Seller shall have in the event of such default and shall constitute a waiver of any and all other legal or equitable rights or remedies that Seller may otherwise have as a result of a default by Buyer. In consideration of the receipt of the Default Payment as liquidated damages, Seller may not obtain any further legal or equitable relief, including specific performance, to which it may otherwise have been entitled and Buyer shall have no further liability to Seller as a result of any such default.

(iv) If the Closing does not occur due to the nonfulfillment of any of the conditions in Article 10, without Buyer being in default in the performance of any of its representations or warranties or any of its covenants or agreements under this Agreement, Seller shall not be entitled to the Escrow Amount and, promptly after the termination of this Agreement, the Escrow Amount shall be returned to Buyer.

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ARTICLE XII

SURVIVAL; INDEMNIFICATION

SECTION 12.01. Survival.

The representations and warranties of the parties hereto contained in or made pursuant to this Agreement or in any certificate or other writing furnished pursuant hereto or in connection herewith shall survive in full force and effect until the first anniversary of the Closing Date; provided that (i) any and all covenants and agreements shall survive indefinitely, (ii) the representations and warranties in Sections 3.01, 3.02, 3.21, 4.01, 4.02 and 4.07 shall survive indefinitely; (iii) the representations and warranties in Sections 3.17, 3.18, 3.19 and 3.20 and the covenants, agreements, representations and warranties contained in Articles VIII and IX shall survive until expiration of the statute of limitations applicable to the matters covered thereby (giving effect to any waiver, mitigation or extension thereof), if later, and (iv) Section 2.07 shall survive until the proration adjustment contemplated therein has been completed. Notwithstanding the preceding sentence, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.

SECTION 12.02. Indemnification by Buyer.

(a) Buyer shall indemnify against and hold Seller and Parent, its Affiliates and its employees, officers and directors (collectively, the “Seller Indemnified Parties”) harmless from, and agrees to promptly defend any Seller Indemnified Party from and reimburse any Seller Indemnified Party for, any and all losses, damages, costs, expenses, liabilities, obligations and claims of any kind (including any Action brought by any Governmental Authority or Person and including reasonable attorneys’ fees and expenses reasonably incurred) (collectively, “Losses”), which such Seller Indemnified Party may at any time suffer or incur, or become subject to, as a result of or in connection with:

(i) any failure of any representation or warranty of Buyer (whether made in or pursuant to this Agreement or in any instrument or certificate delivered by Buyer at the Closing in accordance herewith) to be true when made and at and as of the Closing Date as if made at and as of such date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date need be true only as of such specified date), in each case determined without regard to any material adverse effect qualification contained in any representation or warranty (each such misrepresentation and breach of warranty, or such failure of any representation or warranty to be true, a “Buyer Warranty Breach”);

(ii) any failure by Buyer to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the documents and/or other instruments delivered by Buyer pursuant to this Agreement;

(iii) the Assumed Liabilities; and

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(iv) to the extent arising from the operation of the Stations by Buyer from and after the Closing Date, except to the extent indemnified by Seller under Section 12.03.

(b) Notwithstanding any other provision to the contrary, Buyer shall not be required to indemnify and hold harmless any Seller Indemnified Party pursuant to Section 12.02(a)(i): (A) unless such Seller Indemnified Party has asserted a claim with respect to such matters within the applicable survival period set forth in Section 12.01 and (B) until the aggregate amount of the Seller Indemnified Parties’ Losses resulting from Buyer Warranty Breach exceeds $150,000, and then only to the extent of such Losses in excess of such amount; provided, however, that the cumulative indemnification obligation of Buyer under this Article XII shall in no event exceed $2.5 million.

SECTION 12.03. Indemnification by Seller.

(a) Seller shall indemnify against and hold Buyer, its Affiliates and their respective employees, officers and directors (collectively, the “Buyer Indemnified Parties”) harmless from, and agrees to promptly defend any Buyer Indemnified Party from and reimburse any Buyer Indemnified Party for, any and all Losses that such Buyer Indemnified Party may at any time suffer or incur, or become subject to, as a result of or in connection with:

(i) any failure of any representation or warranty of Seller (whether made in or pursuant to this Agreement or in any instrument or certificate delivered by the Seller at the Closing in accordance herewith) to be true when made and at and as of the Closing Date as if made at and as of such date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date need be true only as of such specified date), in each case determined without regard to any Material Adverse Effect qualification contained in any representation or warranty (other than Section 3.12(b)(i)) (each such misrepresentation and breach of warranty, or such failure of any representation or warranty to be true, a “Seller Warranty Breach”);

(ii) any failure by Seller to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the documents and/or other instruments delivered by Seller pursuant to this Agreement;

(iii) the Excluded Assets;

(iv) the Excluded Liabilities, other than those set forth in Section 2.04(d)

(v) the Seller Environmental Liabilities; and

(vi) to the extent arising from the operation of the Stations before the Closing Date other than as a result of or in connection with any Assumed Liability.

(b) Notwithstanding any other provision to the contrary, Seller shall not be required to indemnify and hold harmless any Buyer Indemnified Party pursuant to Section 12.03(a)(i): (A) unless such Buyer Indemnified Party has asserted a claim with respect to such matters within the applicable survival period set forth in Section 12.01 and (B) until the aggregate amount of the Buyer Indemnified Parties’ Losses resulting from Seller Warranty Breaches exceeds $150,000, and then only to the extent of such

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Losses in excess of such amount; provided, however, that the cumulative indemnification obligation of Seller under this Section 12.03 and Section 9.01 shall in no event exceed $2.5 million.

(c) Parent, by its execution of this Agreement, hereby absolutely and unconditionally guarantees the full performance by Seller of its obligations under Section 12.03(a), subject to the limitations of Section 12.03(b).

SECTION 12.04. Notification of Claims.

(a) A party entitled to be indemnified pursuant to Section 12.02 or 12.03 (the “Indemnified Party”) shall promptly notify the party liable for such indemnification (the “Indemnifying Party”) in writing of any claim or demand which the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement; provided, however, that a failure to give prompt notice or to include any specified information in any notice will not affect the rights or obligations of any party hereunder except and only to the extent that, as a result of such failure, any party which was entitled to receive such notice was damaged as a result of such failure. Subject to the Indemnifying Party’s right to defend in good faith third party claims as hereinafter provided, the Indemnifying Party shall satisfy its obligations under this Article XII within thirty (30) days after the receipt of written notice thereof from the Indemnified Party.

(b) If the Indemnified Party shall notify the Indemnifying Party of any claim or demand pursuant to Section 12.04(a), and if such claim or demand relates to a claim or demand asserted by a third party against the Indemnified Party which the Indemnifying Party acknowledges is a claim or demand for which it must indemnify or hold harmless the Indemnified Party under Section 12.02 or 12.03, the Indemnifying Party shall have the right to employ counsel reasonably acceptable to the Indemnified Party to defend any such claim or demand asserted against the Indemnified Party for so long as the Indemnifying Party shall continue in good faith to diligently defend against such action or claim. The Indemnified Party shall have the right to participate in the defense of any such claim or demand at its own expense. The Indemnifying Party shall notify the Indemnified Party in writing, as promptly as possible (but in any case five (5) Business Days before the due date for the answer or response to a claim) after the date of the notice of claim given by the Indemnified Party to the Indemnifying Party under Section 12.04(a) of its election to defend in good faith any such third party claim or demand. So long as the Indemnifying Party is defending in good faith any such claim or demand asserted by a third party against the Indemnified Party, the Indemnified Party shall not settle or compromise such claim or demand without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld, and the Indemnified Party shall make available to the Indemnifying Party or its agents all records and other material in the Indemnified Party’s possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Indemnifying Party elects to defend any such claim or demand, the Indemnified Party shall have no obligations to do so. In the event the Indemnifying Party elects not to defend such claim or action or if the Indemnifying Party elects to defend such claim or action but fails to diligently defend such claim or action in good faith, the Indemnified Party shall have the right to settle or compromise such claim or action without the consent of the Indemnifying Party, except that the Indemnified Party shall not settle or compromise any such claim or demand, unless the Indemnifying Party is given a full and completed release of any and all liability by all relevant parties relating thereto.

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ARTICLE XIII

GENERAL PROVISIONS

SECTION 13.01. Expenses.

Except as may be otherwise specified herein, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

SECTION 13.02. Notices.

All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received (a) on the date of personal delivery, (b) on the date of transmission, if sent by facsimile, (c) one (1) Business Day after having been dispatched via a nationally recognized overnight courier service, or (d) three (3) Business Days after being sent by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 13.02):

(a) if to Seller:

Fisher Broadcasting-Georgia, LLC

1525 One Union Square

600 University Street

Seattle, Washington 98101-3185

Attention: Benjamin Tucker

With a copy to:

Graham & Dunn, PC

1420 Fifth Avenue

33^rd Floor

Seattle, Washington 98101-2390

Attention: Jack Strother

(b) if to Buyer:

Southeastern Media Holdings, Inc.

3500 Colonnade Parkway, Suite 600

Birmingham, Alabama 35243

Attention: Michael E. Reed

With a copy to:

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Thomas B. Henson

6100 Fairview Road, Suite 650

Charlotte, North Carolina 28210

SECTION 13.03. Headings.

The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

SECTION 13.04. Severability.

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced because of any Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

SECTION 13.05. Entire Agreement.

This Agreement, the Confidentiality Agreement, the Ancillary Agreements and any agreements and other documents entered into contemporaneously with this Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, between the Seller on the one hand and Buyer on the other hand with respect to the subject matter hereof and thereof, except as otherwise expressly provided herein.

SECTION 13.06. Successors and Assigns.

This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto.

SECTION 13.07. No Recourse.

Notwithstanding any of the terms or provisions of this Agreement, the Seller and Buyer agree that neither it nor any Person acting on its behalf may assert any claims or cause of action against any employee, officer or director of the other party or stockholder of such other party in connection with or arising out of this Agreement or the transactions contemplated hereby.

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SECTION 13.08. No Third-Party Beneficiaries.

This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

SECTION 13.09. Amendments and Waivers.

(a) This Agreement may not be amended or modified except by an instrument in writing signed by Seller and Buyer.

(b) At any time prior to the Closing, any party may (i) extend the time for the performance of any of the obligations or other acts of any other party hereto, (ii) waive any inaccuracies in the representations and warranties of the other party hereto contained herein or in any document delivered pursuant hereto or (iii) waive compliance by the other party hereto with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby.

(c) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

SECTION 13.10. Governing Law.

This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Georgia.

SECTION 13.11. Counterparts.

This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 13.13. No Presumption.

This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

FISHER BROADCASTING-GEORGIA, LLC
By:	/s/    BENJAMIN W. TUCKER
	Benjamin W. Tucker, President

SOUTHEASTERN MEDIA HOLDINGS, INC.
By:	/s/    MICHAEL E. REED
	Michael E. Reed, President

For the limited purpose of its obligations under Section 12.03(c), Parent is made a party to this Agreement by its execution below:

FISHER BROADCASTING COMPANY
By:	/s/    BENJAMIN W. TUCKER
	Benjamin W. Tucker, President

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Schedules

The following Schedules include exceptions and qualifications to the representations and warranties of Fisher Broadcasting-Georgia, LLC (the “Seller”) contained in Section 3 of the Asset Purchase Agreement (the “Agreement”) by and between the Seller and Southeastern Media Holdings, Inc. and should be considered an integral part of the Agreement. The section numbers of the Schedules correspond to the section numbers in the Agreement; however, any information disclosed herein under any section number or in any schedule to the Agreement or other information provided to Buyer by Seller shall be deemed disclosed and incorporated into any other section or schedule under the Agreement where such disclosure would be appropriate. Any terms defined in the Agreement shall have the same meaning when used in the Schedules as when used in the Agreement, unless the context otherwise requires.

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EX-3.1

Exhibit 3.1

BYLAWS

OF

FISHER COMMUNICATIONS, INC.

(Incorporated Under the Laws of the State of Washington)

As amended April 24, 2003

ARTICLE I

REGISTERED OFFICE

The location and post office address of the registered office of the corporation shall be 1525 One Union Square, Seattle, Washington 98101.

ARTICLE II

STOCKHOLDERS’ MEETINGS

1. Annual Meeting. The annual meeting of the stockholders of the corporation for the election of Directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held each year at the principal place of business of the corporation (unless a different place within or without the State of Washington is specified in the notice of the meeting), on a day in the last two weeks of April to be set by the Directors, at 10:00 o’clock in the forenoon unless otherwise stated in the notice of meeting. In the event of failure to hold an election of Directors at the annual meeting of the stockholders or in the event the annual meeting of the stockholders shall be omitted by oversight or otherwise, a meeting of the stockholders may be held at a later date for the election of Directors and for the transaction of such other business as may properly come before the meeting. Any election held or other business transacted at any such later meeting shall be as valid as if done or transacted at the annual meeting of the stockholders. Any such later meeting shall be called in the same manner as a special meeting of the stockholders and notice of the time, place and purpose thereof shall be given in the same manner as notice of a special meeting of the stockholders.

2. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the Board of Directors to be held at such time and place as the Board may prescribe. At any time, upon the request of the Chairman of the Board, the President, or of any three (3) Directors, or of any stockholder or stockholders holding in the aggregate at least twenty percent (20%) of the voting power of all stockholders, it shall be the duty of the Secretary to call a special meeting of the stockholders to be held at such place and at such time as the Secretary may fix, not less than ten (10) nor more than sixty (60) days after the receipt of said request, and if the Secretary shall neglect or refuse to issue such call, the Directors or stockholders making the request may do so.

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3. Notices of Meetings. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, unless a purpose of the meeting is to act on an amendment to the Articles of Incorporation, a plan of merger or share exchange, a proposed sale of all or substantially all of the assets of the corporation, or the dissolution of the corporation, in which case notice will be delivered not less than twenty (20) nor more than sixty (60) days before the date of the meeting. Notice of any shareholders’ meeting will be delivered either personally or by mail, by or at the direction of the Chairman of the Board, the President, the Secretary, or the person or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at his address as it appears in the stockholder address records of the corporation, with postage thereon prepaid.

4. Waiver of Notice. Notice of any stockholders’ meeting may be waived in writing by any stockholder at any time, either before or after any such meeting, and shall be deemed waived by the presence of such stockholder at the meeting unless such stockholder (a) shall have made his written objection to the transaction of business at such meeting for the reason that it is not lawfully called or convened, and (b) shall, at or prior to the commencement of such meeting, deliver such written objection to the chairman of the meeting or other officer of the corporation present at such meeting.

5. Adjourned Meetings. An adjournment or adjournments of any stockholders’ meeting may be taken until such time and place as those present may determine without new notice being given, whether by reason of the failure of a quorum to attend or otherwise; but any meeting at which Directors are to be elected shall be adjourned only from day to day until such Directors are elected. If a new record date for the adjourned meeting is or must be fixed, however, notice of the adjourned meeting must be given to persons who are stockholders as of the new record date.

6. Quorum of Stockholders. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter under consideration shall be the act of the stockholders, unless the vote of a greater number is required by law or by the Articles of Incorporation.

7. Voting of Shares. Each outstanding share shall be entitled to one vote on each matter submitted, except in the case of election of Directors as provided in this section. All voting at stockholders’ meetings shall be by voice vote, unless any qualified voter or voters holding a minimum of one percent (1%) of the outstanding shares of voting stock shall demand a vote by ballot. A stockholder may vote either in person or by proxy executed in writing by the stockholder or his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in such proxy. At each election for Directors, every stockholder entitled to vote at such election shall have the right to vote in person or by proxy the number of shares owned by him for as many persons as there are Directors to be elected and for whose election he has a right to vote, or to cumulate his votes by giving one candidate as many votes as the number of such Directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of such candidates.

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8. Business and Nominations at Shareholders’ Meetings.

(a) Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the shareholders may be made at an annual meeting of shareholders (i) pursuant to the corporation’s notice with respect to such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any shareholder of record of the corporation who was a shareholder of record at the time of the giving of the notice provided for in the following paragraph, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this section.

(b) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of the foregoing paragraph, (1) the shareholder must have given timely notice thereof in writing to the Secretary of the corporation, (2) such business must be a proper matter for shareholder action under the Washington Business Corporation Act, (3) if the shareholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the corporation with a Solicitation Notice, as that term is defined in this paragraph, such shareholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the corporation’s voting shares reasonably believed by such shareholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be nominated by such shareholder, and must, in either case, have included in such materials the Solicitation Notice and (4) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 8 of Article II, the shareholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 8 of Article II. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not less than 90 days or more than 120 days prior to the first anniversary (the “Anniversary”) of the date on which the corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to, or delayed by more than 30 days after, the anniversary of the preceding year’s annual meeting, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120^th day prior to the date of the annual meeting and not later than the close of business on the later of (i) the 90th day prior to the date of the annual meeting or (ii) the 10th day following the day on which public announcement of the date of such meeting is first made. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such person’s written consent to serve as a director if elected; (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they

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appear on the corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the corporation that are owned beneficially and of record by such shareholder and such beneficial owner, and (iii) whether either such shareholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the corporation’s voting shares to elect such nominee or nominees (an affirmative statement of such intent, a “Solicitation Notice”).

(c) Notwithstanding anything in the second sentence of the second paragraph of this Section 8 of Article II to the contrary, in the event that the number of directors to be elected to the Board is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 100 days prior to the Anniversary, a shareholder’s notice required by this Section 8 of Article II shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

(d) Only persons nominated in accordance with the procedures set forth in this Section 8 of Article II shall be eligible to serve as directors and only such business shall be conducted at an annual meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 8 of Article II. The chair of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposed business or nomination shall not be presented for shareholder action at the meeting and shall be disregarded.

(e) Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting (i) by or at the direction of the Board or (ii) by any shareholder of record of the corporation who is a shareholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 8 of Article II. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder’s notice required by the second paragraph of this Section 8 of Article II shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 120^th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.

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(f) For purposes of this section, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(g) Notwithstanding the foregoing provisions of this Section 8 of Article II, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 8 of Article II. Nothing in this Section 8 of Article II shall be deemed to affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

ARTICLE III

BOARD OF DIRECTORS

1. Number and Qualifications. The business and affairs of the corporation shall be managed by a board of eleven (11) Directors who need not be stockholders of the corporation nor residents of the State of Washington.

2. Election – Term of Office. The Board of Directors shall be divided into three classes: Class 1, Class 2, and Class 3. Each such Class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. In no event shall a Class be comprised of fewer than 3 directors. Each director shall serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which such director was elected; provided, however, that each initial director in Class 1 shall hold office until the annual meeting of shareholders in 1997; each initial director in Class 2 shall hold office until the annual meeting of shareholders in 1998; and each initial director in Class 3 shall hold office until the annual meeting of shareholders in 1999; and in each case until their successors are duly elected and have qualified or until their earlier resignation, removal from office or death. In the event of an increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the Class in which he or she is a member until the expiration of his or her current term, or his or her earlier resignation, removal from office or death, and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three Classes of Directors so as to maintain such classes as nearly equal as possible.

3. Vacancies. Except as otherwise provided by law, vacancies in the Board of Directors, whether caused by resignation, death or otherwise, may be filled by a majority of the remaining Directors attending any regular meeting of the Board of Directors, or any special meeting if the notice of such special meeting indicates that filling such vacancy is a purpose of the meeting. A Director thus elected to fill in a vacancy shall hold office during the unexpired term of his predecessor and until his successor is elected and qualified.

4. Annual Meeting. The first meeting of each newly elected Board of Directors shall be known as the annual meeting thereof and shall be held immediately after and at the same place as the annual stockholders’ meeting or any later stockholders’ meeting at which a Board of Directors is elected.

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5. Chairman of the Board. At its annual meeting, the Board of Directors shall elect a Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders, the Directors, and the Executive Committee, and shall perform such other duties as may from time to time be assigned by the Board or the Executive Committee.

6. Regular Meetings. Regular Meetings of the Board of Directors shall be held on such dates and at such times and places as the Board of Directors by resolution may decide.

7. Special Meetings. Special meetings of the Board of Directors may be held at any time or at any place whenever called by the Chairman of the Board, the President or by the Secretary at the request of any three (3) or more Directors.

8. Place of Meetings. Any meeting of the Board of Directors may be held within or without the State of Washington.

9. Notice of Meetings. Notice of the annual meeting of the Board of Directors shall not be required. Notice of the time and place of all other meetings of the Board of Directors shall be given by the Chairman of the Board, the President, the Secretary or any person or persons calling the meeting by mail, radio, telegram or personal communication over the telephone or otherwise, at least three (3) days prior to the day upon which the meeting is to be held; provided, that no notice need be given if the time and place thereof shall have been fixed by resolution of the Board of Directors and a copy of such resolution has been mailed to every Director at least three (3) days before the first of any meeting or meetings held in pursuance thereof.

10. Waiver of Notice. Notice of any meeting of the Board of Directors need not be given to any Director if such notice is waived in a writing signed by the Director, whether before or after such meeting is held, and delivered to the corporation for inclusion in the minutes or filing with the corporate records. Notice of any meeting shall be deemed waived by the presence of a Director at the meeting unless such Director (a) at the beginning of the meeting or promptly upon the Director’s arrival, shall have made his written objection to the holding of the meeting or the transaction of business at the meeting, and (b) does not thereafter vote for or assent to action taken at the meeting. Any meeting of the Board shall be a legal meeting without any notice thereof having been given if all of the Directors are either present, other than for the sole purpose just described, or waive notice thereof.

11. Directors’ Fees. Each Director shall receive a fee, as set by the Board of Directors from time to time, for services rendered at each regular or special meeting of the Board of Directors or meeting of a committee thereof and, in addition, shall be reimbursed for expenses of travel and lodging reasonably incurred in attending any such meeting. In addition to the foregoing, each outside Director shall receive an annual retainer fee as set by the Directors. An outside Director is a Director who is not a salaried officer or employee of this corporation or any of its subsidiaries. Nothing in this section shall be construed to preclude a Director from serving the corporation in any other capacity and receiving compensation therefor. If there are simultaneous Board Meetings of Fisher companies, and a Director of Fisher Communications, Inc. is a Director of one or more of the other companies involved, he will receive only one fee for the meeting, namely his fee as Director of Fisher Communications, Inc.

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12. Quorum of Directors. A majority of the number of Directors fixed by these Bylaws shall constitute a quorum for the transaction of business, but a less number may adjourn any meeting from time to time and the same may be held without further notice. When a quorum is present at any meeting, a majority vote of the members in attendance shall decide any question brought before such meeting, except that no sale or exchange of unissued stock shall be made without the affirmative vote of three-fourths (3/4) of the entire Board of Directors declaring that the sale or exchange of such stock is necessary for a specific business purpose of the corporation other than the acquisition of additional capital funds in cash. The act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

ARTICLE IV

COMMITTEES

1. Designation of Committees. The Board of Directors of this corporation may, by resolution adopted at any regular or special meeting of such Board, designate from among its members one or more committees each of which shall have two or more members and, to the extent provided in this Article IV or in such resolution, shall have and may exercise all of the authority of the Board of Directors, but no such committee shall have the authority of the Board of Directors in reference to: amending the Articles of Incorporation or the Bylaws of the corporation, adopting a plan of merger or consolidation, recommending to the shareholders, the sale, lease, exchange or other disposition of all or substantially all the property and assets of the corporation other than in the usual and regular course of its business, or recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof. The designation of any such committee by the Board of Directors and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any of its members, of any responsibility imposed by law.

2. Executive Committee.

(a) Membership. The Executive Committee shall be comprised of the Chairman of the Board, the President and three (3) other Directors elected by the Board of the Directors. Members of the Executive Committee shall be elected by the Board of Directors at each annual meeting, to hold office until their successors are elected and qualified. The Chairman of the Board shall be chairman of the Committee unless the Board designates some other member of the Committee as its chairman. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board.

(b) Vacancies. Vacancies on the Committee arising from any cause may be filled by the Board of Directors at any regular or special meeting.

(c) Powers and Duties. The Executive Committee shall have and may exercise all of the authority of the Board of Directors. The Executive Committee shall specifically have the power and duty to vote the stock of fully and partially owned subsidiary companies, which power and duty of the Executive Committee shall include authority to make all determinations and decisions with respect thereto. All actions of the Executive Committee shall be recorded in minutes of its meetings and shall be reported to the Board of Directors at its meeting next succeeding any such action and shall be subject to revision or alteration by the Board, except that existing rights of third parties shall not be affected thereby.

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(d) Rules of Procedure. The Executive Committee shall fix its own rules of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the President, the chairman of the Committee if not the President, or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolutions.

3. Compensation Committee.

(a) Membership. The Compensation Committee shall consist of not less than four (4) Directors of the corporation elected by the Board of Directors, none of whom shall be an employee of the corporation or of any of its subsidiaries. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board.

(b) Vacancies. Vacancies on the Committee arising from any cause may be filled by the Board of Directors at any regular or special meeting.

(c) Powers and Duties. The Compensation Committee shall:

(1) Review and establish the salary of officers and selected other key management employees of the corporation and its subsidiaries;

(2) Review and establish all cash bonuses under and pursuant to the Management Incentive Plans of the corporation and its subsidiaries;

(3) Review and recommend changes in compensation for members of the corporation’s Board of Directors and its Chairman;

(4) Administer the Fisher Communications Incentive Plans and review and establish all stock options and stock rights to be granted to officers and selected other key management employees of the corporation and its subsidiaries, pursuant to such Plans;

(5) Authorize the enrollment of selected management employees of the corporation and its subsidiaries as new participants in the supplemental pension plans;

(6) Recommend to the Board any additional compensation or employee benefit programs of a substantial nature and changes to existing programs of the corporation or its subsidiaries;

(7) Record all actions of the Committee in minutes of its meetings; and

(8) Report to the Board compensation actions of the Committee prior to their effective date.

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(d) Rules of Procedure. The Compensation Committee shall fix its own rules of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution.

4. Audit Committee.

(a) Membership. The Membership of the Audit Committee shall be determined in accordance with the Audit Committee Charter.

(b) Vacancies. Vacancies on the Committee arising from any cause may be filled by the Board of Directors at any regular or special meeting.

(c) Powers and Duties. The Audit Committee shall have the powers, responsibilities and duties as set forth in the Audit Committee Charter.

(d) Rules of Procedure. The Audit Committee shall fix its own rules of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution.

5. Nominating Committee.

(a) Membership. The Nominating Committee shall consist of not less than five (5) Directors of the corporation elected by the Board of Directors, none of whom shall be an employee of the corporation or of any of its subsidiaries. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board.

(b) Vacancies. Vacancies on the Committee arising from any cause may be filled by the Board of Directors at any regular or special meeting.

(c) Powers and Duties. The Nominating Committee shall:

(1) Review qualifications of candidates for Board membership from whatever source received;

(2) Recommend to the Board the slate of Director candidates to be proposed for election by stockholders at the annual meeting;

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(3) Recommend to the Board candidates to fill Director vacancies which occur between annual meetings of stockholders;

(4) Recommend to the Board criteria regarding personal qualifications for nomination as Director, including experience, skills, affiliations and characteristics;

(5) Recommend to the Board criteria regarding the composition of the Board, including total size and number of employee-Directors;

(6) Recommend to the Board criteria relating to tenure as a Director, including retirement age and continuation of a Director in an honorary or similar capacity;

(7) Record all actions of the Committee and minutes of its meeting; and

(8) Report to the Board all actions and recommendations of the Committee.

(d) Rules of Procedure. The Nominating Committee shall fix its own rules of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution.

6. Planning Committee

(a) Membership. The Planning Committee shall consist of the Chairman of the Board and not less than three (3) other Directors of the corporation elected by the Board of Directors, none of whom shall be an employee of the corporation or any of its subsidiaries. Each member of the Committee shall continue as a member at the pleasure of the Board.

(b) Vacancies. Vacancies on the Committee arising from any cause may be filled by the Board of Directors at any regular or special meeting.

(c) Powers and Duties. The Planning Committee shall:

(1) Meet and consult with management from time to time on management’s strategic and operational planning for the corporation. Any matters requiring approval by the Directors shall be referred by the Committee to the Board of Directors.

(2) Regularly oversee the progress being made by management in its implementation of strategic and operational plans and report to the Board of Directors the conclusions and recommendations of the Committee.

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(d) Rules of Procedure. The Planning Committee shall fix its own rules of procedure to carry out its duties and shall meet where and as provided by such rules. Such special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolutions.

ARTICLE V

OFFICERS

1. Officers Enumerated – Election. The officers of the corporation shall be a President, one or more Vice Presidents, a Secretary and a Treasurer, and such assistants to such officers as the Board of Directors may determine, all of whom shall be elected by the Board of Directors at the annual meeting thereof to hold office for the term of one year and until their successors are elected and qualified.

2. Qualification. None of the officers of the corporation except the President need be a Director. Excluding the President, any two of the other corporate offices may be combined in one person.

3. President. The President shall be the chief executive officer of the corporation and, subject to the Board of Directors and the Executive Committee, shall supervise and control the business and affairs of the corporation. In the absence of the Chairman of the Board, the President shall preside at meetings of the stockholders, the Directors and the Executive Committee.

4. Vice Presidents. Each Vice President shall perform such duties as the Board of Directors, the Executive Committee, or the President may from time to time designate or assign. In the absence or disability of the President, one of the Vice Presidents, in the order determined by the order of their election, shall act as President, but a Vice President who is not a Director cannot succeed to or fill the office of President.

(a) One such Vice President shall be designated Chief Financial Officer and be accountable for the corporation’s overall financial plans and policies, consistent with the corporation’s Financial Accounting Charter, and the conduct of the corporation’s relationships with banks and lending institutions, and the financial community. The chief financial officer shall also have charge and custody of and be responsible for all funds and securities of the corporation. He shall deposit all such funds in the name of the corporation in such depositories or invest them in such manner as may be designated or approved by the Board of Directors, and shall authorize disbursement of the funds of the corporation in payment of just demands against the corporation.

5. Secretary. The Secretary shall issue notices of meetings of stockholders and Directors and shall make and keep minutes of meetings of stockholders and Directors. The Secretary shall keep and, when proper, affix the seal of the corporation. The Secretary shall keep the stock book of the corporation, a record of certificates representing shares of stock issued by the corporation, and a record of transfers of such certificates. The Secretary shall exercise the usual authority pertaining to the office of Secretary, and he shall perform such other duties as the Board of Directors, the Executive Committee or the President may from time to time designate.

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6. Vacancy. Vacancies in any office arising from any cause may be filled by the Board of Directors at any regular or special meeting.

7. Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it shall deem necessary or expedient. Such other officers shall hold their offices for terms as provided in Section 1 of this Article V and such other agents shall hold their offices for such period as shall be determined from time to time by the Board of Directors. Such other officers and agents shall exercise such authority and perform such duties as the Board of Directors, Executive Committee or President may prescribe, which authority and duties may include, in the case of the other officers, one or more of the duties of the named officers of the corporation.

8. Removal of Officers. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interest of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

9. Salaries. Salaries of all officers and agents of the corporation appointed by the Board of Directors shall be fixed by the Board of Directors.

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ARTICLE VI

STOCK

1. Certificate of Stock. Certificates of stock shall be issued in numerical order and each stockholder shall be entitled to a certificate signed by the President or Vice President and the Secretary or an Assistant Secretary and sealed with the corporate seal. Every certificate of stock shall state (1) the name of the corporation and that it is incorporated under the laws of the State of Washington, (2) the name of the registered holder of the shares represented thereby, and (3) the number and class of shares the certificate represents.

2. Transfers. Shares of stock may be transferred by delivery of the certificates therefor accompanied either by an assignment in writing on the back of the certificate or by a separate written assignment and power of attorney to transfer the same, which in either event is signed by the record holder of the certificate. No transfer shall be valid, except as between the parties thereto, until such transfer shall have been made upon the books of the corporation, as maintained by the transfer agent, if any. Except as otherwise specifically provided in these Bylaws, no shares of stock shall be transferred on the books of the corporation until the outstanding certificate or certificates therefor have been surrendered to the corporation, or to the transfer agent, if any.

3. Stockholders of Record. The corporation, or the transfer agent, if any, shall be entitled to treat the holder of record on the books of the corporation of any share or shares of stock as the holder in fact thereof for all purposes, including the payment of dividends on such stock and the right to vote on such stock.

4. Loss or Destruction of Certificates. In case of loss or destruction of any certificate of stock, another may be issued in its place upon proof of such loss or destruction and upon the giving of a satisfactory bond of indemnity to the corporation. A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, or of the transfer agent, if any, it is proper to do so.

5. Closing of Transfer Books. The Board of Directors may close, or direct the transfer agent, if any, to close the books of the corporation against transfers of stock of the corporation for such period as the Directors may from time to time determine, in anticipation of stockholders’ meetings, the payment of any dividend or distribution, or any change, conversion or exchange of shares of the corporation.

6. Regulations. The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient, or may delegate to a transfer agent, if any, such power and authority to make such rules and regulations concerning the issue, transfer, conversion and registration of certificates for shares of the stock of the corporation not inconsistent with these Bylaws, the Articles of Incorporation, or the laws of the State of Washington.

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ARTICLE VII

BOOKS AND RECORDS

1. Records of Corporate Meetings and Share Register. The corporation shall keep either at its principal place of business or at its registered office (a) complete records of all of the proceedings of the Board of Directors and stockholders, and (b) a share register giving the names of the stockholders in alphabetical order and showing their respective addresses, the number of shares held by each and the dates upon which they acquired the same; provided, however, such share register may be maintained by the transfer agent of the corporation, if any.

2. Copies of Resolutions. Any person dealing with the corporation may rely upon a copy of any of the records of the proceedings, resolutions or votes of the Board of Directors or stockholders when certified by the President, a Vice President, the Secretary or an Assistant-Secretary.

ARTICLE VIII

CORPORATE SEAL

The corporate seal of the corporation shall consist of a flat-faced circular die producing in raised form, words, letters and figures, the design of which shall conform to the impression which appears upon this page opposite to this Bylaw.

ARTICLE IX

INDEMNIFICATION

1. Definitions. As used in this Article IX and, if applicable, Article V of the corporation’s Articles of Incorporation:

(a) The term “egregious conduct” by a person shall mean acts or omissions that involve intentional misconduct or a knowing violation of law, conduct violating Section 23B.08.310, as amended, of the Revised Code of Washington, or participation in any transaction from which the person personally received a benefit in money, property, or services to which the person is not legally entitled.

(b) The term “finally adjudged” shall mean stated in a final judgment based on clear and convincing evidence by a court having jurisdiction, from which there is no further right to appeal.

(c) The term “director” shall mean any person who is a director of the corporation or a subsidiary corporation and any person who, while a director of the corporation or a subsidiary corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan maintained by the corporation or any subsidiary corporation; and “conduct as a director” shall include conduct while such a person is or was acting in any of such capacities.

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(d) The term “officer-director” shall mean any person who is simultaneously both an officer and director of the corporation, or an officer and director of a subsidiary corporation, and any person who, while simultaneously both an officer and director of the corporation, or a subsidiary corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan maintained by the corporation or any subsidiary corporation; and “conduct as an officer-director” shall include conduct while such a person is or was acting as an officer of the corporation or a subsidiary corporation or in any of such capacities.

(e) The term “subsidiary corporation” shall mean any corporation or limited liability company at least 51 percent of the voting interests of which is held beneficially by the corporation.

(f) No person shall be deemed to be serving at the request of the corporation unless the Board of Directors has expressly stated so in a duly adopted resolution.

2. Indemnification – Generally. The corporation shall indemnify any person who is, or is threatened to be made, a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, and whether by or in the right of the corporation or its stockholders or by any other party, by reason of the fact that the person is or was a director or officer-director against judgments, penalties or penalty taxes, fines, settlements (even if paid or payable to the corporation or its stockholders or to a subsidiary corporation) and reasonable expenses, including attorneys’ fees, actually incurred in connection with such action, suit or proceeding unless the liability and expenses were on account of conduct finally adjudged to be egregious conduct. The reasonable expenses, including attorneys’ fees, of such person incurred in connection with such action, suit or proceeding shall be paid or reimbursed by the corporation, upon request of such person, in advance of the final disposition of such action, suit or proceeding upon receipt by the corporation of a written, unsecured promise by the person to repay such amount if it shall be finally adjudged that the person is not eligible for indemnification. All expenses incurred by such person in connection with such action, suit or proceeding shall be considered reasonable.

3. No Determination. Except as stated in Section 4 of this Article IX, no action by the board of directors, the stockholders, independent counsel, or any other person or persons shall be necessary or appropriate to the determination of the corporation’s indemnification obligation in any specific case, to the determination of the reasonableness of any expenses incurred by a person entitled to indemnification under this Article IX or Article V of the corporation’s Articles of Incorporation, nor to the authorization of indemnification in any specific case.

4. Limitation on Expenses. Notwithstanding Section 3 of this Article IX, the corporation shall not be obligated to indemnify any person for any expenses, including attorneys’ fees, incurred to assert any claim against the corporation or a subsidiary corporation (except a claim based on Section 6 of this Article IX) or against any person related to or associated with the corporation or a subsidiary corporation.

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5. Submission of Claim; Presumption. If a claim under this Article IX or Article V of the corporation’s Articles of Incorporation is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, except in the case of a claim for expenses incurred in defending an action, suit or proceeding in advance of its final disposition, in which case the applicable period shall be 20 days, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, to the extent successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. The claimant shall be presumed to be entitled to indemnification under Article V of the corporation’s Articles of Incorporation and this Article IX upon submission of a written claim (and, in an action brought to enforce a claim for expenses incurred in defending any action, suit or proceeding in advance of its final disposition, where the required undertaking has been tendered to the corporation), and thereafter the corporation shall have the burden of proving that the claimant is not so entitled. The claimant is entitled to indemnification even if the corporation (including its Board of Directors, independent legal counsel or its stockholders) failed to determine prior to the commencement of such action that indemnification or reimbursement or advancement of expenses to the claimant is proper in the circumstances or even if the corporation (including its Board of Directors, independent legal counsel or its stockholders) actually determined that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses.

6. Enforcement Expenses. The corporation shall indemnify any person granted indemnification rights under this Article IX or Article V of the corporation’s Articles of Incorporation against any reasonable expenses incurred by the person to enforce such rights.

7. Set-Off. Any person granted indemnification rights under this Article IX or Article V of the corporation’s Articles of Incorporation may directly assert such rights in set-off of any claim raised against the person by or in the right of the corporation and shall be entitled to have the same tribunal that adjudicates the corporation’s claim adjudicate the person’s entitlement to indemnification by the corporation.

8. Rights Not Exclusive. The right to indemnification and the payment of expenses incurred in defending an action, suit or proceeding in advance of its final disposition conferred by this Article IX and Article V of the corporation’s Articles of Incorporation shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

9. Officers, Employees and Agents. As provided by the Washington Business Corporation Act, as amended from time to time, the corporation may by action of its Board of Directors provide indemnification and pay expenses in advance of the final disposition of an action, suit or proceeding to officers, employees and agents of the corporation or a subsidiary corporation with the same scope and effect as the provisions of this Article IX and Article V of the corporation’s Articles of Incorporation with respect to the indemnification and advancement of expenses of directors and officer-directors.

10. Cessation of Service. The indemnification rights provided in this Article IX and Article V of the corporation’s Articles of Incorporation shall continue as to a person who has ceased to be a director or officer-director and shall inure to the benefit of the heirs, executors, and administrators of such person.

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11. Interpretation. The provisions of this Article IX shall be construed to be adopted in furtherance of, and not in limitation of, Article V of the corporation’s Articles of Incorporation.

12. Amendment and Repeal. Notwithstanding anything in these Bylaws to the contrary, this Article IX may only be amended by the stockholders in accordance with the statutory requirements that would be applicable to such stockholder action if this Article IX were part of the corporation’s Articles of Incorporation. No amendment or repeal of this Article IX or Article V of the corporation’s Articles of Incorporation shall adversely affect any right or protection of a director or officer-director or person formerly serving in any of such capacities existing at the time of such amendment or repeal with respect to acts or omissions occurring prior to such amendment or repeal.

13. Severability. Each of the substantive provisions of this Article IX and Article V of the corporation’s Articles of Incorporation is separate and independent of the others, so that if any provision of this Article IX or Article V of the corporation’s Articles of Incorporation shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other provisions.

ARTICLE X

AMENDMENT OF BYLAWS

1. By the Stockholders. These Bylaws may be amended, altered or repealed at any regular or special meeting of the stockholders if notice of the proposed alteration or amendment is contained in the notice of the meeting.

2. By the Board of Directors. These Bylaws may be amended, altered or repealed, so long as consistent with the Articles of Incorporation, by the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Board if notice of the proposed alteration or amendment is contained or transmitted in the notice of the meeting. Any action of the Board of Directors with respect to the amendment, alteration or repeal of these Bylaws is hereby made expressly subject to change or repeal by the stockholders.

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EX-10.1

Exhibit 10.1

July 23, 2002

Fisher Broadcasting-Georgia, LLC

WFXG-TV

600 University Street, Suite 1525

Seattle, Washington 98101

Attn: Ben Tucker, President

Re: WFXG (Augusta, GA)

Dear Mr. Tucker:

This letter confirms that Fox Broadcasting Company (“FOX”) and Fisher Broadcasting-Georgia, LLC (“Licensee”) have agreed that notwithstanding anything to the contrary in the Station Affiliation Agreement (“Agreement”) dated April 20, 2001 between Licensee and FOX, Licensee and FOX hereby agree to extend the term of the Agreement, and the Agreement shall end on June 30, 2007.

AGREED AND ACCEPTED:

FOX BROADCASTING COMPANY		FISHER BROADCASTING-GEORGIA, LLC
By:	/s/    [ILLEGIBLE]	By:	/s/    BEN TUCKER
Its:	President	Its:	President

EX-10.2

Exhibit 10.2

July 23, 2002

Fisher Broadcasting-Georgia, LLC

WXTX-TV

600 University Street, Suite 1525

Seattle, Washington 98101

Attn: Ben Tucker, President

Re: WXTX (Columbus, GA)

Dear Mr. Tucker:

This letter confirms that Fox Broadcasting Company (“FOX”) and Fisher Broadcasting-Georgia, LLC (“Licensee”) have agreed that notwithstanding anything to the contrary in the Station Affiliation Agreement (“Agreement”) dated April 20, 2001 between Licensee and FOX, Licensee and FOX hereby agree to extend the term of the Agreement, and the Agreement shall end on June 30, 2007.

AGREED AND ACCEPTED:

FOX BROADCASTING COMPANY		FISHER BROADCASTING-GEORGIA, LLC
By:	/s/    [ILLEGIBLE]	By:	/s/    BEN TUCKER
Its:	President	Its:	President

EX-99.1

Exhibit 99.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fisher Communications, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I William W. Krippaehne Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2003

/s/    WILLIAM W. KRIPPAEHNE JR.        

William W. Krippaehne Jr.

President and Chief Executive Officer

*A signed original of this written statement required by Section 906 has been provided to Fisher Communications, Inc., and will be retained by Fisher Communications, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.2

Exhibit 99.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fisher Communications, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I David D. Hillard, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2003

/s/    DAVID D. HILLARD        

David D. Hillard

Senior Vice President and

Chief Financial Officer

*A signed original of this written statement required by Section 906 has been provided to Fisher Communications, Inc., and will be retained by Fisher Communications, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.