10-Q

UNITED STATES

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, 2009

or

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

For the transition period from                      to                     

Commission File Number: 0-22439

FISHER COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

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

100 Fourth Ave. N., Suite 510

Seattle, Washington 98109

(Address of Principal Executive Offices) (Zip Code)

(206) 404-7000

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

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

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

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

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 May 1, 2009: 8,750,216

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

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

1.	Condensed Consolidated Statements of Operations: Three months ended March 31, 2009 and 2008	3
2.	Condensed Consolidated Balance Sheets: March 31, 2009 and December 31, 2008	4
3.	Condensed Consolidated Statements of Cash Flows: Three months ended March 31, 2009 and 2008	5
4.	Condensed Consolidated Statements of Comprehensive Loss: Three months ended March 31, 2009 and 2008	6
5.	Unaudited Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Submission of Matters to a Vote of Security Holders	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
SIGNATURES		33
EXHIBIT INDEX		34

2

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended March 31,
(In thousands, except per-share amounts) (Unaudited)	2009			2008
Revenue	$	28,513		$	38,055
Costs and expenses
Direct operating costs (exclusive of amortization of program rights of $2,296 and $2,446, respectively, and depreciation and amortization of $2,781 and $2,581, respectively, reported separately below)		15,828			17,361
Selling, general and administrative expenses		12,440			13,857
Amortization of program rights		2,296			2,446
Depreciation and amortization		3,332			3,109
		33,896			36,773
Income (loss) from operations		(5,383	)		1,282
Gain on extinguishment of senior notes		1,792			—
Other income, net		294			1,030
Interest expense		(3,265	)		(3,358	)
Loss from continuing operations before income taxes		(6,562	)		(1,046	)
Benefit for federal and state income taxes		(2,297	)		(226	)
Loss from continuing operations		(4,265	)		(820	)
Loss from discontinued operations, net of income taxes		—			(246	)
Net loss	$	(4,265	)	$	(1,066	)
Loss per share:
From continuing operations	$	(0.49	)	$	(0.09	)
From discontinued operations		—			(0.03	)
Net loss per share	$	(0.49	)	$	(0.12	)
Loss per share assuming dilution:
From continuing operations	$	(0.49	)	$	(0.09	)
From discontinued operations		—			(0.03	)
Net loss per share assuming dilution	$	(0.49	)	$	(0.12	)
Weighted average shares outstanding		8,769			8,728
Weighted average shares outstanding assuming dilution		8,769			8,728

See accompanying notes to condensed consolidated financial statements.

3

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share amounts) (Unaudited)	March 31,   2009			December 31, 2008
ASSETS
Current assets
Cash and cash equivalents	$	60,880		$	31,835
Short-term investments		9,987			59,697
Receivables, net		20,579			26,044
Income taxes receivable		3,274			2,763
Deferred income taxes		1,763			1,763
Prepaid expenses and other assets		3,250			2,200
Television and radio broadcast rights		3,820			6,106
Total current assets		103,553			130,408
Marketable securities, at market value		745			769
Cash value of life insurance and retirement deposits		17,601			17,425
Television and radio broadcast rights		44			48
Goodwill		13,293			13,293
Intangible assets		40,956			41,015
Investment in equity investee		1,261			1,300
Deferred financing fees and other assets		4,343			4,838
Deferred income taxes		15,327			13,757
Property, plant and equipment, net		148,514			148,440
Total assets	$	345,637		$	371,293
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	3,081		$	4,339
Accrued payroll and related benefits		5,216			4,301
Interest payable		485			3,773
Television and radio broadcast rights payable		3,846			6,124
Current portion of accrued retirement benefits		1,254			1,254
Other current liabilities		5,758			5,712
Total current liabilities		19,640			25,503
Long-term debt		134,850			150,000
Accrued retirement benefits		19,435			19,439
Other liabilities		10,970			11,607
Commitments and contingencies
Stockholders’ equity
Common stock, shares authorized 12,000,000, $1.25 par value; issued and outstanding 8,744,657 as of March 31, 2009 and 8,737,281 as of December 31, 2008		10,931			10,922
Capital in excess of par		11,395			11,140
Accumulated other comprehensive loss, net of income taxes:
Unrealized loss on marketable securities		(182	)		(158	)
Accumulated loss		(2,532	)		(2,545	)
Prior service cost		(168	)		(178	)
Retained earnings		141,298			145,563
Total stockholders’ equity		160,742			164,744
Total liabilities and stockholders’ equity	$	345,637		$	371,293

See accompanying notes to condensed consolidated financial statements.

4

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended March 31,
(In thousands) (Unaudited)	2009			2008
Cash flows from operating activities
Net loss	$	(4,265	)	$	(1,066	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,332			3,127
Deferred income taxes		(1,570	)		(1,370	)
Amortization of deferred financing fees		130			158
Amortization of program rights		2,296			2,446
Gain on extinguishment of senior notes		(1,792	)		—
Payments for television and radio broadcast rights		(2,298	)		(3,483	)
Amortization of short-term investment discount		(290	)		—
Net amortization of non-cash contract termination fee		(365	)		—
Equity in operations of equity investees		39			22
Stock-based compensation		299			165
Other		44			57
Change in operating assets and liabilities
Receivables		5,465			436
Prepaid expenses and other current assets		(1,050	)		(670	)
Cash value of life insurance and retirement deposits		(176	)		(201	)
Other assets		56			(22	)
Trade accounts payable, accrued payroll and related benefits, interest payable, and other current liabilities		(3,585	)		(3,190	)
Income taxes receivable and payable		(499	)		(2,889	)
Accrued retirement benefits		(4	)		10
Other liabilities		(221	)		(430	)
Net cash used in operating activities		(4,454	)		(6,900	)
Cash flows from investing activities
Purchases of marketable securities		—			(22	)
Redemption of short-term investments		50,000			—
Proceeds from sales of marketable securities		—			110
Purchase of television stations		—			(52,365	)
Decrease in restricted cash		—			52,365
Purchase of property, plant and equipment		(3,413	)		(1,296	)
Net cash provided by (used in) investing activities		46,587			(1,208	)
Cash flows from financing activities
Borrowings under borrowing agreements		—			8,000
Repurchase of senior notes		(13,050	)		—
Payment of capital lease obligation		(38	)		(35	)
Net cash (used in) provided by financing activities		(13,088	)		7,965
Net increase (decrease) in cash and cash equivalents		29,045			(143	)
Cash and cash equivalents, beginning of period		31,835			6,510
Cash and cash equivalents, end of period	$	60,880		$	6,367

See accompanying notes to condensed consolidated financial statements.

5

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Three months ended March 31
(In thousands) (Unaudited)	2009			2008
Net loss	$	(4,265	)	$	(1,066	)
Other comprehensive loss:
Unrealized loss on marketable securities		(37	)		(27,231	)
Effect of income taxes		13			9,531
Accumulated loss		20			13
Effect of income taxes		(7	)		(4	)
Prior service cost		15			12
Effect of income taxes		(5	)		(4	)
Reclassification adjustment for gains included in net income					11
Effect of income taxes					(4	)
Other comprehensive loss		(1	)		(17,676	)
Comprehensive loss	$	(4,266	)	$	(18,742	)

See accompanying notes to condensed consolidated financial statements.

6

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments which are necessary to state fairly the consolidated financial position, results of operations, and cash flows of Fisher Communications, Inc. and its consolidated subsidiaries (“Company”) as of and for the periods indicated. Any adjustments are of a normal recurring nature. Fisher Communications, Inc.’s principal wholly owned subsidiaries include Fisher Broadcasting Company and Fisher Media Services Company. The Company presumes that users of the interim financial information herein have read or have access to the Company’s audited consolidated financial statements and that the adequacy of additional disclosure needed for a fair statement, except in regard to material contingencies or recent subsequent events, may be determined in that context. Accordingly, footnote and other disclosures which would substantially duplicate the disclosures contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (“2008 Form 10-K”), filed by the Company on March 16, 2009, have been omitted. The financial information herein is not necessarily representative of a full year’s operations.

Reclassifications. The results of operations of Pegasus News, Inc. have been reclassified from continuing operations to discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2008. Additionally, the results of operations of five small-market radio stations in Montana, previously classified as discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2008, have been presented as continuing operations. See Note 7 to the condensed consolidated financial statements. The reclassifications had no effect on net loss, shareholders’ equity or cash flows from operating, investing or financing activities.

2. Summary of Significant Accounting Policies

The significant accounting policies used in preparation of the condensed consolidated financial statements are disclosed in the Company’s 2008 Form 10-K. With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2009, as compared to the recent accounting pronouncements described in the Company’s 2008 Form 10-K, that are of significance, or potential significance, to the Company.

Effective January 1, 2009, the Company adopted Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”) that amends the factors considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). FSP 142-3 requires a consistent approach between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of an asset under SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”). The FSP also requires enhanced disclosures when an intangible asset’s expected future cash flows are affected by an entity’s intent and/or ability to renew or extend the arrangement. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.

Effective January 1, 2009, the Company adopted SFAS 141(R). Under SFAS 141(R), an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred; that restructuring costs generally be expensed in periods subsequent to the acquisition date; and that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes. For the Company, SFAS 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of January 1, 2009, with the exception of the accounting for valuation allowances on deferred taxes and acquired contingencies under SFAS No. 109, “Accounting for Income Taxes”. The adoption of SFAS 141(R) did not have any impact on the Company’s consolidated financial statement as of and for the three months ended March 31, 2009.

7

Effective January 1, 2009, the Company adopted FSP 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 delayed the effective date of SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until the beginning of the first quarter of fiscal 2009. These include goodwill and other non-amortizable intangible assets. The adoption of SFAS 157 to non-financial assets and liabilities did not have a significant impact on the Company’s consolidated financial statements.

3. Fair Value Measurements

The Company measures certain financial assets at fair value on a recurring basis, including cash equivalents and marketable securities. The fair value of these financial assets was determined based on three levels of inputs, of which, the first two levels are considered observable and the last unobservable. The three levels of inputs that may be used to measure fair value are as follows:

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

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

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

Assets and liabilities measured at fair value on a recurring basis consist solely of marketable securities. As of March 31, 2009 and December 31, 2008, the reported fair value of marketable securities, using Level 1 inputs, was $745,000 and $769,000, respectively.

4. Goodwill and Intangible Assets

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

	March 31, 2009							December 31, 2008
	Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
Goodwill (1)	$	13,293	$	—		$	13,293	$	13,293	$	—		$	13,293
Intangible assets:
Broadcast licenses (1)	$	37,430	$	—		$	37,430	$	37,430	$	—		$	37,430
Other intangible assets		285		—			285		285		—			285
Intangible assets subject to amortization (2)
Network affiliation agreement		3,560		(319	)		3,241		3,560		(260	)		3,300
Total intangible assets	$	41,275	$	(319	)	$	40,956	$	41,275	$	(260	)	$	41,015

(1) Goodwill and broadcast licenses are considered indefinite-lived assets for which no periodic amortization is recognized. The television and radio broadcast licenses are issued by the Federal Communications Commission (“FCC”) and provide the Company with the exclusive right to utilize certain frequency spectrum to air its stations’ programming. While FCC licenses are issued for only a fixed time, renewals of FCC licenses have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of its FCC licenses.

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(2) Intangible assets subject to amortization are amortized on a straight-line basis. Total amortization expense for intangible assets subject to amortization for the three months ended March 31, 2009 and 2008 was $59,000 and $82,000 ($17,000 of which is included in discontinued operations), respectively.

The Company follows SFAS 142, which requires it to test goodwill and intangible assets for impairment at least annually, or whenever events indicate that impairment may exist. The Company has determined that the impairment test should be conducted at the operating segment level (which is at a reporting unit level), which, with respect to the broadcast operations, requires separate assessment of each of the Company’s television and radio station groups. The Company determines fair value based on valuation methodologies that include an analysis of market transactions for comparable businesses, discounted cash flows, and a review of the underlying assets of the reporting unit.

As required by SFAS 142, the Company tested its FCC licenses and goodwill for impairment at March 31, 2009, between the annual impairment tests, because the Company believed events had occurred and circumstances had changed that would more likely than not reduce the fair value of the Company’s reporting units and intangible assets below their carrying amounts. These first quarter events included: (a) the decline of the price of the Company’s common stock; (b) the decline in overall economic conditions; and (c) the decline in advertising revenues at the Company’s radio and television stations.

The impairment test for FCC licenses consists of a station-by-station comparison of the carrying amount of each FCC license with its respective fair value using a discounted cash flow analysis.

Determining the fair value of the Company’s reporting units and intangible assets requires the Company’s management to make a number of judgments about assumptions and estimates that are highly subjective and are based on unobservable inputs. The actual results may differ from these assumptions and estimates; and it is possible that such differences could have a material impact on the Company’s financial statements. In addition to the various inputs (i.e. market growth, operating profit margins, discount rates) that the Company uses to calculate the fair value of its FCC licenses and reporting units, the Company evaluates the reasonableness of its assumptions by comparing the total fair value of all its reporting units to the Company’s total market capitalization; and by comparing the fair value of its reporting units and FCC licenses to recent sale transactions.

As of March 31, 2009, the Company used the income approach to test its FCC licenses for impairments. The Company used the same assumptions disclosed in its 2008 Form 10-K. The following assumptions were used: (a) a discount rate of 13.0%; (b) market growth rates ranging from 1.0% – 2.0%; and (c) operating profit margins ranging from 18.0% – 48.0%.

As of March 31, 2009, the Company used the income approach to test its goodwill for impairments. The Company used the assumptions without material changes, as disclosed in its 2008 Form 10-K. The following assumptions were used: (a) a discount rate of 13.0%; (b) market growth rates ranging from (0.4) % – 2.0%; and (c) operating profit margins ranging from 7.0% – 25.0%. These assumptions are based on: (a) the actual historical performance of the Company’s stations; (b) management’s estimates of future performance of the Company’s stations; and (c) the same market growth assumptions used in the calculation of the fair value of the Company’s FCC licenses.

As of March 31, 2009, the Company used the income approach to determine the fair value of the network affiliation agreement. The Company used the assumptions without material changes as disclosed in its 2008 Form 10-K. The following assumptions were used: (a) a discount rate of 13.0%; (b) market growth rate of 1.1%; and (c) operating profit margin of 28.0% – 37.0%.

9

As of March 31, 2009, the Company’s total market capitalization was $75.4 million less than its equity book value. The Company believes that this difference can be attributed to the recent volatility of its stock price in the current economic environment and to the control premium that a market participant may pay to acquire the Company. Further decreases in the Company’s market capitalization could trigger the Company to test its broadcast licenses and goodwill for further impairment.

As of March 31, 2009, as a result of the testing carried out by the Company, there was no impairment to the Company’s goodwill and intangible assets balances.

The following table presents the estimated amortization expense for the Company’s intangible assets for the remainder of 2009 and each of the next five years and thereafter (in thousands):

Year ending December 31,
2009	$	177
2010		236
2011		236
2012		236
2013		236
2014		236
Thereafter		1,884
	$	3,241

5. Short-Term Investments

The Company’s short-term investments are comprised of commercial paper with original maturities of greater than 91 days but less than one year. The Company has classified its short-term investments as held-to-maturity as the Company has the intent and ability to hold these securities to maturity. The securities are carried at amortized cost using the specific identification method and interest income is recorded using an effective interest rate with the associated discount amortized to interest income. As of March 31, 2009, the carrying value of the Company’s short-term investments of $10 million approximates fair value, based on broker estimates.

6. Extinguishment of Senior Notes

In the first quarter of 2009, the Company repurchased $15.15 million aggregate principal amount of its 8.625% senior notes due in 2014 (“Senior Notes”), at an average price of $861.40 per $1,000 principal amount. The total consideration for the repurchase was $13.05 million in cash plus accrued interest of $498,000. A gain on extinguishment of debt was recorded net of a charge for related unamortized debt issuance costs of $308,000, resulting in a net gain of $1.8 million. The gain is presented as “Gain on extinguishment of senior notes” in the Company’s condensed consolidated statement of operations.

7. Discontinued Operations

During the fourth quarter of 2008, the Company determined that in view of the uncertainty surrounding the timing or probability of a sale of five radio stations in Montana, the requirements of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” necessary to classify the radio stations as discontinued operations were no longer met. As a result, the assets and liabilities of the five stations have been classified as held for use in the condensed consolidated balance sheets as of March 31, 2009 and December 31, 2008, and the results of operations of the five stations have been classified as continuing operations in the Company’s condensed consolidated statements of operations for all periods presented.

10

On December 31, 2008, the Company sold Pegasus News, Inc. (“Pegasus”), a local news service, specializing in providing personalized online local news, information and advertising in Dallas, Texas. Net proceeds of the sale were $1.46 million. As consideration for the sale, the buyer paid the Company $1.5 million in cash and granted the Company and its affiliates a royalty-free, non-exclusive, non-transferable license to use certain related technology in its existing television and radio markets to deliver personalized online local news, information and advertising. In accordance with SFAS 144, the Company has reported the results of operations of Pegasus as discontinued operations in the accompanying condensed consolidated statement of operations for the three months ended March 31, 2008. The operations of Pegasus were included in the Company’s television segment.

Operational data for Pegasus included in discontinued operations is summarized as follows (in thousands):

	Three months ended March 31, 2008
Revenue	$	26
Loss from discontinued operations before income taxes		(378	)
Provision (benefit) for income taxes		(132	)
Loss from discontinued operations	$	(246	)

8. Television and Radio Broadcast Rights and Other Broadcast Commitments

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

As of March 31, 2009, the Company had commitments under license agreements of $29.8 million for future rights to broadcast television programs through 2013. The broadcasting subsidiary acquired exclusive rights to sell available advertising time for a radio station in Seattle under which the Company has commitments for monthly payments totaling $4.3 million through 2011.

9. Retirement Benefits

The Company has a noncontributory supplemental retirement program for former key members of management. No new participants have been admitted since 2001 and no current Company executive officers participate in this program. In June 2005, the program was amended to freeze the accrual of all benefits to active participants provided under the program. The program provides for vesting of benefits under certain circumstances. Funding is not required, but generally, the Company has acquired annuity contracts and life insurance on the lives of the individual participants to assist in the payment of retirement benefits. The Company is the owner and beneficiary of such policies; accordingly, the cash values of the policies as well as the accrued liability are reported in the Company’s condensed consolidated financial statements. The program requires continued employment through the date of expected retirement. The cost of the program is accrued over the average expected future lifetime of the participants.

11

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

	Three months ended March 31,
	2009		2008
Interest cost	$	271	$	275
Amortization of loss		28		15
Net periodic pension cost	$	299	$	290

For the three months ended March 31, 2009 and 2008, the discount rate used to determine net periodic pension cost was 5.50% and 5.88%, respectively.

10. Loss per share

Net loss per share is based upon the weighted average number of shares outstanding during the period. Net loss per share assuming dilution is based upon the weighted average number of shares and share equivalents outstanding, including the potentially dilutive impact of stock options and restricted stock rights/units issued under the Company’s incentive plans. Common stock options and restricted stock rights/units are converted using the treasury stock method.

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

	Three months ended March 31,
	2009			2008
Loss from continuing operations	$	(4,265	)	$	(820	)
Loss from discontinued operations, net of income taxes		—			(246	)
Net loss	$	(4,265	)	$	(1,066	)
Weighted average shares outstanding - basic		8,769			8,728
Weighted effect of dilutive options and rights		—			—
Weighted average shares outstanding assuming dilution		8,769			8,728
Loss per share:
From continuing operations	$	(0.49	)	$	(0.09	)
From discontinued operations		—			(0.03	)
Net loss per share	$	(0.49	)	$	(0.12	)
Loss per share assuming dilution:
From continuing operations	$	(0.49	)	$	(0.09	)
From discontinued operations		—			(0.03	)
Net loss per share assuming dilution	$	(0.49	)	$	(0.12	)

For the three months ended March 31, 2009 and 2008, the effect of 19,453 and 38,287 restricted stock rights/units and options to purchase 263,075 and 274,255 shares are excluded from the calculation of weighted average shares outstanding, respectively, because such rights/units and options were anti-dilutive; therefore, there is no difference in the calculation between basic and diluted per-share amounts.

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11. Stock-Based Compensation

The Company records stock-based compensation expense related to stock-based awards under SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). Stock-based compensation expense for the three months ended March 31, 2009 and 2008 was $299,000 and $165,000, respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

12. Income Taxes

As required by accounting rules for interim financial reporting, the Company records its income tax provision or benefit based upon its estimated annual effective tax rate, which is estimated as 35% and 21.6% for the three months ended March 31, 2009 and 2008, respectively. The 2009 estimated effective tax rate was higher than in the same period in 2008 primarily due to the relationship between the amount of estimated annual permanent differences and changes in discrete or other non recurring items and the Company’s estimated annual pre-tax income or loss.

The U.S. federal statute of limitations remains open for the year 2006 and onward. The Internal Revenue Service (“IRS”) is currently conducting a field examination of the Company’s 2006 and 2007 U.S. tax returns. The IRS completed a field examination of the Company’s 2003, 2004 and 2005 U.S. tax returns during March 2008, and the Company paid final notice of settlement in the amount of $68,000. The Company recognizes tax expense related to agreed-upon tax adjustments currently as part of its income tax provision and recognizes interest related to uncertain tax positions in interest expense. The Company recognized interest and penalties in the amount of $180,000 related to uncertain tax positions for the three months ended March 31, 2009. As of March 31, 2008 and December 31, 2008, the Company had not accrued any interest or penalties related to uncertain tax positions.

13. Segment Information

The Company reports financial data for three segments: television, radio, and Fisher Plaza. The television segment includes the operations of the Company’s 20 owned and operated network-affiliated television stations (including a 50%-owned television station) and internet business. The radio segment includes the operations of the Company’s eight radio stations. Corporate expenses are allocated to the television and radio segments based on actual expenditures incurred or based on a pro-rata basis of actual costs. The Fisher Plaza segment includes the operations of a communications center located near downtown Seattle that serves as home of the Company’s Seattle television and radio operations, the Company’s corporate offices, and third-party tenants.

Certain reclassifications have been made to prior period financial information to conform to the current presentation. Reclassifications include the results of Pegasus from continuing operations to discontinued operations, and the results of the five remaining small-market radio stations from discontinued operations to continuing operations. See Note 7. These reclassifications have no effect on previously reported net loss.

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

	Three months ended March 31,
	2009		2008
Television	$	20,283	$	27,909
Radio		4,888		6,875
Fisher Plaza		3,342		3,313
Corporate and eliminations		—		(42	)
	$	28,513	$	38,055

For the three months ended March 31, 2009 and 2008, inter-segment sales amounted to $0 and $42,000, respectively, relating primarily to telecommunications fees charged from Fisher Plaza.

13

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

	Three months ended March 31,
	2009			2008
Television	$	(3,593	)	$	2,548
Radio		(74	)		(373	)
Fisher Plaza		1,509			1,414
Corporate and eliminations		(3,225	)		(2,307	)
Total segment income (loss) from continuing operations		(5,383	)		1,282
Gain on extinguishment of senior notes		1,792			—
Other income, net		294			1,030
Interest expense		(3,265	)		(3,358	)
Consolidated loss from continuing operations before income taxes	$	(6,562	)	$	(1,046	)

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

	March 31, 2009		December 31, 2008
Television	$	107,647	$	125,633
Radio		15,319		16,838
Fisher Plaza		111,667		112,683
Corporate and eliminations		111,004		116,139
	$	345,637	$	371,293

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

14. Subsequent Event

In April 2009, the Company repurchased $10 million aggregate principal amount of Senior Notes for total consideration of $8.9 million in cash plus accrued interest of $72,000. A gain on extinguishment of debt will be recorded in the second quarter of 2009 net of a charge for related unamortized debt issuance costs of $196,000, or a net gain of $904,000.

15. Financial Information for Guarantors

As of March 31, 2009, the Company had $134.9 million aggregate principal amount of Senior Notes outstanding. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future 100% owned subsidiaries of the Company.

Presented below are condensed consolidated statements of operations for the three months ended March 31, 2009 and 2008, and cash flows for the three months ended March 31, 2009 and 2008. Also presented are the condensed consolidated balance sheets as of March 31, 2009 and December 31, 2008. The condensed consolidated information is presented for the Company (issuer) with its investments accounted for under the equity method, the 100%-owned guarantor subsidiaries, eliminations, and the Company on a consolidated basis. The Company (issuer) information consists primarily of corporate oversight and administrative personnel and related activities, as well as certain investments.

14

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

For the Three Months Ended March 31, 2009

(In thousands)	Fisher Communications, Inc.			100% Owned Guarantor Subsidiaries			Eliminations			Fisher Communications, Inc. and Subsidiaries
Revenue	$	—		$	28,513		$	—		$	28,513
Costs and expenses
Direct operating costs		103			15,674			51			15,828
Selling, general and administrative expenses		2,906			9,585			(51	)		12,440
Amortization of program rights		—			2,296			—			2,296
Depreciation and amortization		350			2,982			—			3,332
		3,359			30,537			—			33,896
Loss from operations		(3,359	)		(2,024	)		—			(5,383	)
Gain on extinguishment of senior notes		1,792			—			—			1,792
Other income, net		302			(8	)		—			294
Equity in income of subsidiaries		(1,375	)		—			1,375			—
Interest expense		(3,245	)		(20	)		—			(3,265	)
Loss before income taxes		(5,885	)		(2,052	)		1,375			(6,562	)
Benefit for federal and state income taxes		(1,620	)		(677	)		—			(2,297	)
Net income (loss)	$	(4,265	)	$	(1,375	)	$	1,375		$	(4,265	)

15

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

For the Three Months Ended March 31, 2008

(In thousands)	Fisher Communications, Inc.			100% Owned Guarantor Subsidiaries			Eliminations			Fisher Communications, Inc. and Subsidiaries
Revenue	$	—		$	38,061		$	(6	)	$	38,055
Costs and expenses
Direct operating costs		70			17,248			43			17,361
Selling, general and administrative expenses		2,493			11,413			(49	)		13,857
Amortization of program rights					2,446						2,446
Depreciation and amortization		231			2,878						3,109
		2,794			33,985			(6	)		36,773
Income (loss) from operations		(2,794	)		4,076			—			1,282
Other income, net		1,037			(7	)					1,030
Equity in income of subsidiaries		2,296						(2,296	)		—
Interest expense, net		(3,335	)		(23	)					(3,358	)
Income (loss) from continuing operations before income taxes		(2,796	)		4,046			(2,296	)		(1,046	)
Provision (benefit) for federal and state income taxes		(1,730	)		1,504						(226	)
Income (loss) from continuing operations		(1,066	)		2,542			(2,296	)		(820	)
Loss from discontinued operations, net of income taxes					(246	)					(246	)
Net income (loss)	$	(1,066	)	$	2,296		$	(2,296	)	$	(1,066	)

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Financial Information for Guarantors

Condensed Consolidated Balance Sheet

As of March 31, 2009

(In thousands)	Fisher Communications, Inc.			100% Owned Guarantor Subsidiaries			Eliminations			Fisher Communications, Inc. and Subsidiaries
ASSETS
Current Assets
Cash and cash equivalents	$	60,198		$	682		$	—		$	60,880
Short-term investments		9,987			—			—			9,987
Receivables, net		8			20,571			—			20,579
Due from affiliate		—			17,294			(17,294	)		—
Income taxes receivable		2,166			1,108			—			3,274
Deferred income taxes		521			1,242			—			1,763
Prepaid expenses and other assets		468			2,782			—			3,250
Television and radio broadcast rights		—			3,820			—			3,820
Total current assets		73,348			47,499			(17,294	)		103,553
Marketable securities, at market value		—			745						745
Investment in consolidated subsidiaries		229,727			—			(229,727	)		—
Cash value of life insurance and retirement deposits		17,601			—			—			17,601
Television and radio broadcast rights		—			44			—			44
Goodwill		—			13,293			—			13,293
Intangible assets		—			40,956			—			40,956
Investment in equity investee		—			1,261			—			1,261
Deferred income taxes		10,179			5,148			—			15,327
Deferred financing fees and other assets		2,685			1,658			—			4,343
Property, plant and equipment, net		3,403			145,111			—			148,514
Total Assets	$	336,943		$	255,715		$	(247,021	)	$	345,637
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	395		$	2,686		$	—		$	3,081
Due to affiliate		17,294			—			(17,294	)		—
Accrued payroll and related benefits		675			4,541			—			5,216
Interest payable		485			—			—			485
Television and radio broadcast rights payable		—			3,846			—			3,846
Current portion of accrued retirement benefits		1,254			—			—			1,254
Other current liabilities		1,496			4,262			—			5,758
Total current liabilities		21,599			15,335			(17,294	)		19,640
Long-term debt		134,850			—			—			134,850
Accrued retirement benefits		19,435			—			—			19,435
Other liabilities		317			10,653			—			10,970
Stockholders’ Equity
Common stock		10,931			1,131			(1,131	)		10,931
Capital in excess of par		11,395			164,234			(164,234	)		11,395
Accumulated other comprehensive income, net of income taxes:
Unrealized loss on marketable securities		(182	)		(182	)		182			(182	)
Accumulated loss		(2,532	)		—			—			(2,532	)
Prior service cost		(168	)		—			—			(168	)
Retained earnings		141,298			64,544			(64,544	)		141,298
Total Stockholders’ Equity		160,742			229,727			(229,727	)		160,742
Total Liabilities and Stockholders’ Equity	$	336,943		$	255,715		$	(247,021	)	$	345,637

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Financial Information for Guarantors

Condensed Consolidated Balance Sheet

As of December 31, 2008

(In thousands)	Fisher Communications, Inc.			100% Owned Guarantor Subsidiaries		Eliminations			Fisher Communications, Inc. and Subsidiaries
ASSETS
Current Assets
Cash and cash equivalents	$	31,141		$	694				$	31,835
Short-term investments		59,697								59,697
Receivables, net					26,044					26,044
Due from affiliate					14,473		(14,473	)		—
Income taxes receivable		2,462			301					2,763
Deferred income taxes		520			1,243					1,763
Prepaid expenses and other assets		176			2,024					2,200
Television and radio broadcast rights					6,106					6,106
Total current assets		93,996			50,885		(14,473	)		130,408
Marketable securities, at market value					769					769
Investment in consolidated subsidiaries		231,282					(231,282	)		—
Cash value of life insurance and retirement deposits		17,425								17,425
Television and radio broadcast rights					48					48
Goodwill					13,293					13,293
Intangible assets					41,015					41,015
Investments in equity investee					1,300					1,300
Deferred income taxes		8,622			5,135					13,757
Deferred financing fees and other assets		3,123			1,715					4,838
Property, plant and equipment, net		2,908			145,532					148,440
Total Assets	$	357,356		$	259,692	$	(245,755	)	$	371,293
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	1,002		$	3,337				$	4,339
Due to affiliate		14,473					(14,473	)		—
Accrued payroll and related benefits		499			3,802					4,301
Interest payable		3,773								3,773
Television and radio broadcast rights payable					6,124					6,124
Current portion of accrued retirement benefits		1,254								1,254
Other current liabilities		1,855			3,857					5,712
Total current liabilities		22,856			17,120		(14,473	)		25,503
Long-term debt		150,000								150,000
Accrued retirement benefits		19,439								19,439
Other liabilities		317			11,290					11,607
Stockholders’ Equity
Common stock		10,922			1,131		(1,131	)		10,922
Capital in excess of par		11,140			164,234		(164,234	)		11,140
Accumulated other comprehensive income - net of income taxes:
Unrealized gain on marketable securities		(158	)							(158	)
Accumulated loss		(2,545	)							(2,545	)
Prior service cost		(178	)							(178	)
Retained earnings		145,563			65,917		(65,917	)		145,563
Total Stockholders’ Equity		164,744			231,282		(231,282	)		164,744
Total Liabilities and Stockholders’ Equity	$	357,356		$	259,692	$	(245,755	)	$	371,293

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Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

For the Three Months Ended March 31, 2009

(In thousands)	Fisher Communications, Inc.			100% Owned Guarantor Subsidiaries			Eliminations		Fisher Communications, Inc. and Subsidiaries
Net cash provided by (used in) operating activities	$	(7,183	)	$	2,729		$	—	$	(4,454	)
Cash flows from investing activities
Redemption of short-term investments		50,000								50,000
Purchase of property, plant and equipment		(710	)		(2,703	)				(3,413	)
Net cash provided by (used in) investing activities		49,290			(2,703	)		—		46,587
Cash flows from financing activities
Repurchase of senior notes		(13,050	)							(13,050	)
Payment of capital lease obligation					(38	)				(38	)
Net cash used in financing activities		(13,050	)		(38	)		—		(13,088	)
Net increase (decrease) in cash and cash equivalents		29,057			(12	)		—		29,045
Cash and cash equivalents, beginning of period		31,141			694					31,835
Cash and cash equivalents, end of period	$	60,198		$	682		$	—	$	60,880

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Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

For the Three Months Ended March 31, 2008

(In thousands)	Fisher Communications, Inc.			100% Owned Guarantor Subsidiaries			Eliminations		Fisher Communications, Inc. and Subsidiaries
Net cash provided by (used in) operating activities	$	(8,369	)	$	1,469		$	—	$	(6,900	)
Cash flows from investing activities
Purchase of television stations		(52,365	)							(52,365	)
Decrease in restricted cash		52,365								52,365
Purchases of marketable securities					(22	)				(22	)
Proceeds from sale of marketable securities					110					110
Purchase of property, plant and equipment		(160	)		(1,136	)				(1,296	)
Net cash used in investing activities		(160	)		(1,048	)		—		(1,208	)
Cash flows from financing activities
Borrowings under borrowing agreements		8,000								8,000
Payment of capital lease obligation					(35	)				(35	)
Net cash provided by (used in) financing activities		8,000			(35	)		—		7,965
Net increase (decrease) in cash and cash equivalents		(529	)		386			—		(143	)
Cash and cash equivalents, beginning of period		5,804			706			—		6,510
Cash and cash equivalents, end of period	$	5,275		$	1,092		$	—	$	6,367

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

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q. Some of the statements in this quarterly report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as “aims”, “anticipates”, “believes”, “estimates”, “expects”, “hopes”, “intends”, “plans”, “predicts”, “projects” or “targets” or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. There are many risks and uncertainties that could cause actual results to differ materially from those predicted in our forward-looking statements, including, without limitation, those factors discussed under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed with the Securities and Exchange Commission on March 16, 2009. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, 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”, or “our”, we are referring to Fisher Communications, Inc. and its consolidated subsidiaries.

This discussion is intended to provide an analysis of significant trends and material changes in our financial condition and operating results during the three months ended March 31, 2009, compared with the corresponding period in 2008.

Overview

We are an integrated media company. We own and operate 13 full power (including a 50%-owned television station) and seven low power network-affiliated television stations and eight radio stations. Our television and radio stations are located in Washington, Oregon, Idaho, California and Montana. We also own and operate Fisher Plaza, a mixed-use commercial facility located near downtown Seattle that serves as the home for our corporate offices and our Seattle television and radio stations, and also lease space to a variety of unaffiliated companies, including media and communications companies.

Our broadcasting operations receive revenue from the sale of local, regional and national advertising and, to a much lesser extent, from network compensation, satellite and fiber transmission services, tower rental and commercial production activities. Our operating results are therefore sensitive to broad economic trends that affect the broadcasting industry in general, as well as local and regional trends, such as those affecting the West Coast economy. The advertising revenue of our stations is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring, and retail advertising in the period leading up to and including the holiday season. In addition, advertising revenue is generally higher during national election years due to spending by political candidates and advocacy groups. This political spending typically is heaviest during the fourth quarter.

21

Our television revenue is significantly affected by network affiliation and the success of programming offered by those networks. Our two largest television stations, KOMO TV and KATU TV, account for approximately 60% of our television broadcasting revenue and are affiliated with the ABC Television Network. Nine of our television stations are affiliated with the CBS Television Network (including a 50%-owned television station), one of our television stations is affiliated with the FOX Television Network, two of our television stations are independent and the remainder of our television stations are affiliated with Univision. Our broadcasting operations are subject to competitive pressures from traditional broadcasting sources, as well as from alternative methods of delivering information and entertainment, and these pressures may cause fluctuations in operating results.

In addition to our broadcasting operations, we own and operate Fisher Plaza, and we lease space to other companies that are attracted by the property location and the infrastructure provided at this facility. As of March 31, 2009, and December 31, 2008, approximately 97% of Fisher Plaza was occupied or committed for occupancy (43% was occupied by Fisher entities). Revenue and operating income from Fisher Plaza are dependent upon the general economic climate, the Seattle economic climate, the outlook of the telecommunications and technology sectors and real estate conditions, including the availability of space in other competing properties.

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

Significant Developments

The following significant developments affect the comparability of our financial statements for the three-month periods ended March 31, 2009 and 2008.

Repurchase of Senior Notes. In the first quarter of 2009, we repurchased $15.15 million aggregate principal amount of our 8.625% senior notes due 2014, for total consideration of $13.05 million in cash plus accrued interest of $0.5 million. A gain on extinguishment of debt was recorded net of a charge for related unamortized debt issuance costs of $308,000, resulting in a net gain of approximately $1.8 million.

Dividends on Safeco Corporation Common Stock. In the first quarter of 2008, we recorded dividends on our shares of Safeco Corporation common stock in the amount of $921,000. No dividend income was recorded in the first quarter of 2009, as we sold our remaining shares of Safeco Corporation common stock in June and July of 2008 resulting in pre-tax net proceeds of approximately $153.4 million.

Expiration of Seattle Mariners Radio Rights Agreement. In May 2002, we entered into a radio rights agreement (the “Mariners Agreement”) to broadcast Seattle Mariners baseball games on KOMO AM for the 2003 through 2008 baseball seasons. The impact of the Mariners Agreement was greater during periods that included the broadcast of Mariners baseball games; therefore the impact on the first and fourth quarters of each calendar year was less than for the second and third quarters of the calendar year. In July 2008, we announced that we would not renew the Mariners Agreement; therefore, the 2008 season was the final year of our commitments under the Mariners Agreement as all commitments under the agreement had been satisfied. The results for the first quarter of 2008 reflect expenses related to the Mariners Agreement. No such expenses are reflected in the results for the first quarter of 2009.

Termination of National Advertising Representation Agreement. In April 2008, we terminated the agreement with our national advertising representation firm. The successor firm will satisfy our contractual termination obligation to the predecessor firm with no cash payment made by us. In the second quarter of 2008, we recognized a non-cash charge of $5.0 million to selling, general and administrative expenses, and we are amortizing the related net liability as a non-cash benefit over the five-year term of the new agreement. We recognized a $365,000 benefit due to this amortization in the first quarter of 2009.

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

Reclassifications. The results of operations of Pegasus News, Inc. have been reclassified from continuing operations to discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2008. Additionally, the results of operations of five small-market radio stations in Montana, previously classified as discontinued operations in the condensed consolidated statement of operations for the three months ended March 31, 2008, have been presented as continuing operations. See Note 7 to the condensed consolidated financial statements. The reclassifications had no effect on net loss, shareholders’ equity or cash flows from operating, investing or financing activities.

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Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates including, but not limited to, those affecting revenues, goodwill and intangibles impairment, the useful lives of tangible and intangible assets, valuation allowances for receivables and broadcast rights, stock-based compensation expense, income tax provisions, valuation allowances for deferred income taxes assets, liabilities and contingencies. The brief discussion below is intended to highlight some of the judgments and uncertainties that can impact the application of these policies and the specific dollar amounts reported on our financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. Many of our estimates or judgments are based on anticipated future events or performance, and as such are forward-looking in nature, and are subject to many risks and uncertainties, including those discussed below and elsewhere in this quarterly report on Form 10-Q. Except as otherwise required by law, we do not undertake any obligation to update or revise this discussion to reflect any future events or circumstances

For a detailed discussion of our critical accounting policies and estimates, please refer to our 2008 Form 10-K for the year ended December 31, 2008.

There have been no material changes in the application of our critical accounting policies and estimates subsequent to that report. We have discussed the development and selection of these critical accounting estimates with the Audit Committee of our board of directors.

Consolidated Results of Operations

We report financial data for three segments: television, radio and Fisher Plaza. The television segment includes the operations of 20 owned and operated network-affiliated television stations (including a 50%-owned television station) and internet business. The radio segment includes the operations of three Seattle radio stations and five Montana radio stations. Corporate expenses of the broadcasting business unit are allocated to the television and radio segments based on actual expenditures incurred or based on a ratio that approximates historical revenue and operating expenses of the segments. The Fisher Plaza segment consists of the operations of Fisher Plaza, a communications center located near downtown Seattle that serves as the home of our Seattle-based television and radio operations, our corporate offices, and third-party tenants. Fisher-owned entities that reside at Fisher Plaza do not pay rent; however, Fisher-owned entities do pay common-area maintenance expenses. The segment data includes additional allocation of depreciation and certain operating expenses from Fisher Plaza to our Seattle-based television and radio operations.

23

The following table sets forth our results of operations for the three months ended March 31, 2009 and 2008, including the dollar and percentage variances between such periods. Percentage variances have been omitted where they are not considered meaningful.

	Three months ended March 31,						Variance
(Dollars in thousands) (Unaudited)	2009			2008			$			%
Revenue
Television	$	20,283		$	27,909		$	(7,626	)	(27.3	%)
Radio		4,888			6,875			(1,987	)	(28.9	%)
Fisher Plaza		3,342			3,313			29		0.9	%
Corporate and eliminations		—			(42	)		42		(100.0	%)
Consolidated		28,513			38,055			(9,542	)	(25.1	%)
Direct Operating Costs
Television		12,058			12,853			(795	)	(6.2	%)
Radio		2,285			3,098			(813	)	(26.2	%)
Fisher Plaza		947			927			20		2.2	%
Corporate and eliminations		538			483			55		11.4	%
Consolidated		15,828			17,361			(1,533	)	(8.8	%)
Selling, general and administrative expenses
Television		7,366			8,548			(1,182	)	(13.8	%)
Radio		2,479			3,462			(983	)	(28.4	%)
Fisher Plaza		123			140			(17	)	(12.1	%)
Corporate and eliminations		2,472			1,707			765		44.8	%
Consolidated		12,440			13,857			(1,417	)	(10.2	%)
Amortization of program rights
Television		2,296			1,991			305		15.3	%
Radio		—			455			(455	)	(100.0	%)
Consolidated		2,296			2,446			(150	)	(6.1	%)
Depreciation and amortization
Television		2,156			1,969			187		9.5	%
Radio		198			233			(35	)	(15.0	%)
Fisher Plaza		763			832			(69	)	(8.3	%)
Corporate		215			75			140		186.7	%
Consolidated		3,332			3,109			223		7.2	%
Income (loss) from operations
Television		(3,593	)		2,548			(6,141	)
Radio		(74	)		(373	)		299
Fisher Plaza		1,509			1,414			95
Corporate and eliminations		(3,225	)		(2,307	)		(918	)
Consolidated		(5,383	)		1,282			(6,665	)
Gain on extinguishment of senior notes		1,792			—			1,792
Other income, net		294			1,030			(736	)
Interest expense, net		(3,265	)		(3,358	)		93
Loss from continuing operations before income taxes		(6,562	)		(1,046	)		(5,516	)
Benefit for federal and state income taxes		(2,297	)		(226	)		(2,071	)
Loss from continuing operations		(4,265	)		(820	)		(3,445	)
Loss from discontinued operations, net of income taxes		—			(246	)		246
Net loss	$	(4,265	)	$	(1,066	)	$	(3,199	)

24

Comparison of Three-Month Periods Ended March 31, 2009 and 2008

Revenue

The current U.S. financial crisis and broader economic slowdown and the resulting sharp declines in advertising spending have negatively impacted our television and radio revenue for the three-month period ended March 31, 2009.

Automotive-related advertising, our largest advertising category, decreased 62% for the three-month period ended March 31, 2009 as compared to the same period in 2008. Other similar major categories such as, retailing (down 34%) and professional services (down 23%) have followed a consistent downward trend over the past year. This trend is primarily due to the current condition of the automotive industry and general economic downturn and resulting decline in the demand for advertising from these and other business categories. A continued pattern of deterioration in advertising revenue from these sources could materially and adversely affect our future results of operations.

Television revenue decreased in the three-month period ended March 31, 2009 compared to the same period in 2008, primarily due to sharp declines in local, national and political advertising spending by customers in this broad economic downturn, offset by an increase in retransmission revenue. The decrease in local advertising revenues was due to general economic pressure now impacting a number of local economies, including those on the West Coast, primarily in the housing, automobile and retail segments. The decrease in national advertising sales was due to the same general economic factors, which has impacted most national advertising categories, particularly automotive spending.

Revenues from our ABC-affiliated stations decreased 31.4% and revenues from our CBS-affiliated stations decreased 22.6% in the three-month period ended March 31, 2009 as compared to the same period in 2008, primarily due to reduced local, national and political advertising revenue. Revenues from our Spanish-language television stations remained constant in the three-month period ended March 31, 2009, respectively, as compared to the same period in 2008.

We completed negotiations for new retransmission consent agreements with over 50 distribution partners in the fourth quarter of 2008 and the first quarter of 2009. Retransmission revenue increased 39% from the first quarter of 2008, not including expected retransmission fees of approximately $950,000 to $1 million not recorded in the first quarter attributable to contracts for which key financial terms have been negotiated but which remained unexecuted at quarter end. For each of these contracts, we expect to record the retransmission fees for the period from January 1, 2009 through the date of execution as revenue in the quarter the agreement is executed. We currently expect that most of these remaining contracts will be executed in the second quarter of 2009, although there can be no assurances as to the actual timing of the execution of these agreements.

Radio revenue decreased 29% in the three-month period ended March 31, 2009 compared to the same period in 2008, primarily due to decreased local, national and non-traditional advertising revenue resulting from the general economic downturn. Radio revenue for the three-month period ended March 31, 2008 also included revenue from our Mariners contract, which was not renewed for 2009.

The revenue increase at Fisher Plaza in the three-month period ended March 31, 2009, as compared to the same period in 2008, was primarily due to increased rental revenues and service fees, as well as increased electrical infrastructure fees and tenant reimbursements. As of March 31, 2009, approximately 97% of Fisher Plaza was occupied or committed for occupancy (43% was occupied by Fisher entities), unchanged from December 31, 2008.

Direct operating costs

Direct operating costs consist primarily of costs to produce and promote broadcast programming for the television and radio segments, and costs to operate Fisher Plaza. Many of these costs are relatively fixed in nature and do not necessarily vary on a proportional basis with revenue.

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The decrease in direct operating costs for the television segment in the three-month period ended March 31, 2009 compared to the same period in 2008, resulted primarily from our efforts to reduce operating expenses, such as headcount costs and administrative costs, in this difficult economic environment. We continue to look at cost efficiencies in our operating cost base.

Direct operating costs decreased for the radio segment in the three-month period ended March 31, 2009 as compared to the same period in 2008. The decrease was primarily due to non-renewal of the Mariners Agreement in 2008, as well as decreased compensation-related costs associated with news and programming.

Direct operating costs increased at Fisher Plaza in the three-month period ended March 31, 2009 as compared to the same period in 2008, primarily due to higher repair and maintenance expenses.

The corporate and eliminations category consists primarily of the reclassification and elimination of certain operating expenses between operating segments. For example, KOMO TV and the Seattle-based radio stations recognize facilities-related expenses as selling, general and administrative expenses, while Fisher Plaza records the reimbursement of these intercompany expenses as a reduction of direct operating costs.

Selling, general and administrative expenses

The decrease in selling, general and administrative expenses in the television segment in the three-month period ended March 31, 2009 compared to the same period in 2008, was primarily due to reduced compensation and marketing costs, due to reduced headcount and administrative costs. The 2009 results also reflect the benefit related to the amortization of the liability recorded upon the termination of our national advertising representation agreement.

The decrease in selling, general and administrative expenses in our radio segment in the three-month period ended March 31, 2009 compared to the same period in 2008 was primarily due to the non-renewal of the Mariners Agreement in 2008, as well as decreased compensation and marketing costs.

Selling, general and administrative expenses decreased at Fisher Plaza in the three-month period ended March 31, 2009 compared to the same period in 2008 primarily due to reduced tenant marketing expenses for Fisher Plaza.

Our corporate selling, general and administrative expenses increased in the three-month period ended March 31, 2009 compared to the same period in 2008 primarily due to increased compensation costs, legal fees related to agreement negotiations and shareholder activity, and professional fees, related to additional tax consulting work completed in the quarter.

Amortization of program rights

Amortization of program rights for the television segment increased in the three-month period ended March 31, 2009 compared to the same period in 2008, primarily due to programming costs incurred for our two Bakersfield, California stations, which was partially offset by the renewal of several syndicated television programming contracts at reduced rates.

Amortization of program rights for the radio segment in the three-month period ended March 31, 2008 was related to the Mariners Agreement.

Depreciation and amortization

Depreciation and amortization for the television segment increased in the three-month period ended March 31, 2009 compared to the same period in 2008 primarily due to investments in upgrading our broadcasting equipment at KOMO and KATU.

Depreciation and amortization for the radio and Fisher Plaza segments decreased in the three-month period ended March 31, 2009 compared to the same period in 2008, as certain assets have become fully depreciated.

Corporate depreciation and amortization increased in the three-month period ended March 31, 2009 compared to the same period in 2008, primarily due to asset additions associated with information technology infrastructure upgrades.

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Other income, net

Other income, net, consists primarily of interest income for the three-month period ended March 31, 2009 and of interest and dividend income for the three-month period ended March 31, 2008. During the three-month period ended March 31, 2008 dividends of $921,000 were received on our previously-owned shares of Safeco Corporation.

Gain on extinguishment of senior notes

In the three-month period ended March 31, 2009, we repurchased $15.15 million aggregate principal amount of Senior Notes, at an average price of $861.40 per $1,000 principal amount. The total consideration for the repurchase was $13.05 million in cash plus accrued interest of $498,000. A gain on extinguishment of debt was recorded net of a charge for related unamortized debt issuance costs of $308,000, resulting in a net gain of $1.8 million

Interest expense, net

Interest expense, net, consists primarily of interest on the Senior Notes and amortization of the related loan fees, as well as interest during the three-month period ended March 31, 2008 on outstanding borrowings under our former $20 million revolving credit facility. Interest expense in the three-month period ended March 31, 2009 decreased from the same period in 2008, primarily due to the repayment of $15.15 million aggregate principal amount of Senior Notes in the most recent quarter. Additionally, $8.0 million was outstanding under our revolving credit facility as of March 31, 2008. We terminated the revolving credit facility in December 2008.

Provision for federal and state income taxes

Our effective tax increased to 35.0% in 2009 from 21.6% in 2008 primarily due to a decrease in permanent differences. In 2008, the permanent differences that reduced the effective tax rate were due to the related dividends deduction on the dividends on our previously owned shares of Safeco common stock. Our effective tax rate is calculated on the statutory rate of 35%, increased or decreased for estimated permanent differences, including non-deductible expenses, and changes in discrete or other non recurring items, including federal or state tax audit adjustments. As required by accounting rules for interim financial reporting, we record our income tax provision or benefit based upon our estimated annual effective tax rate.

Due to the uncertainty of our ability to generate sufficient state taxable income to realize our deferred state tax assets, a 100% valuation allowance has been established for these deferred tax assets. As a result, our effective tax rate is not affected by changes in the state tax rates.

Loss from discontinued operations, net of income taxes

The loss from discontinued operations for the three-month period ended March 31, 2008 was related to the operations of Pegasus News, Inc., a local news service, specializing in providing personalized online local news, information and advertising in Dallas, Texas, and is presented net of income taxes. See Note 7 to our condensed consolidated financial statements for more information on our discontinued operations.

Liquidity and Capital Resources

Liquidity

Our liquidity is primarily dependent upon our net cash from operating activities and our cash, cash equivalents and short-term investments. Our net cash from operating activities is sensitive to many factors, including changes in working capital, and the timing of cash receipts and payments and the timing and magnitude of capital expenditures. Working capital at any specific point in time is dependent upon many variables, including operating results, receivables, capital expenditures, the timing of cash receipts and payments. We currently intend to finance working capital, debt service and capital expenditures primarily through operating activities.

The extensive weakening of the U.S. economy and tightening investment and credit markets has had a significant impact on advertising spending by our customers in various categories. If the current challenging general economic conditions continue, we believe that our revenue, cash flow from operations and net income will continue to be negatively impacted and may continue to decline from historical levels.

We expect cash flows from operations and our cash, cash equivalents and short-term investments to provide sufficient liquidity to meet our cash requirements for operations, projected working capital requirements, planned capital expenditures and commitments for at least the next twelve months.

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Capital Resources

Cash, cash equivalents and short-term investments were approximately $70.9 million as of March 31, 2009 compared to $91.5 million as of December 31, 2008. The decrease was primarily due to the repurchase of Senior Notes for $13.05 million and the use of cash for operations during the three-month period ended March 31, 2009.

In December 2008, we terminated our $20.0 million senior credit facility. The credit facility was collateralized by substantially all of our assets (excluding certain real property). In the future, we may obtain a replacement facility depending on market conditions and our current needs.

As of December 31, 2008 we had outstanding $150 million aggregate principal amount of Senior Notes. See “Description of Indebtedness” below. In the first quarter of 2009, we repurchased $15.15 million aggregate principal amount of Senior Notes for total consideration of $13.05 million in cash plus accrued interest of $0.5 million. In April 2009, we repurchased an additional $10.0 million aggregate principal amount of Senior Notes for total consideration of $8.9 million in cash plus accrued interest of $72,000. We may repurchase additional Senior Notes during the remainder of 2009 using cash on hand.

Net cash used in operating activities

Net cash used in operating activities in the three-month period ended March 31, 2009 was $4.5 million, compared to cash used in operating activities of $6.9 million in the three-month period ended March 31, 2008. Net cash used in operating activities consists of our net loss, adjusted by non-cash expenses such as depreciation and amortization, stock-based compensation, and deferred income tax, further adjusted for the changes in operating assets and liabilities. Additionally, in the three-month period ended March 31, 2009, we recognized a non-cash gain of approximately $1.8 million on the extinguishment of $15.15 million aggregate principal amount of Senior Notes.

Net cash provided by (used in) investing activities

Net cash provided by investing activities in the three-month period ended March 31, 2009 was $46.6 million, compared to net cash used in investing activities of $1.2 million in the three-month period ended March 31, 2008. During the first quarter of 2009, cash flows provided by investing activities consisted primarily of proceeds of $50.0 million from the redemption of commercial paper, offset by $3.4 million in purchases of property, plant and equipment. During 2008, cash flows used in investing activities consisted primarily of a decrease in restricted cash of $52.4 million, offset by $52.4 million for the purchase of television stations and $1.3 million in purchases of property, plant and equipment.

Net cash provided by (used in) financing activities

Net cash used in financing activities in the three-month period ended March 31, 2009 was $13.1 million, primarily due to the retirement of $15.15 million aggregate principal amount of Senior Notes. Net cash provided by financing activities in the three-month period ended March 31, 2008 was $8.0 million, primarily due to borrowings under our former senior credit facility.

Description of Indebtedness

As of March 31, 2009, we had $134.9 million aggregate principal amount of Senior Notes outstanding. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by our current and future material domestic subsidiaries. Interest on the Senior Notes is payable semiannually in arrears on March 15 and September 15 of each year.

Our Senior Notes indenture contains provisions that limit our ability to distribute proceeds from asset sales, which includes the proceeds from the sale of our previously owned shares of Safeco Corporation common stock. In the event that we do not use the proceeds from asset sales for qualifying purposes (as specified in the indenture) within 360 days from the date of sale, we will be required to offer to repurchase outstanding Senior Notes at par value to the extent of such unused proceeds (the “Excess Proceeds”). Under the indenture, qualifying purposes include: (i) repayment of secured indebtedness; (ii) purchase of assets used or useful in our business; (iii) certain acquisitions of other companies; (iv) expenditures used or useful in our business; and (v) certain investments in our company or our subsidiaries. We expect that we will have used all of the proceeds from the sale of our previously owned Safeco shares for qualifying purposes and therefore will not have any Excess Proceeds that would require us to offer to repurchase Senior Notes.

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We are subject to various debt covenants and other restrictions under the Senior Notes indenture, including the requirement for early payments upon the occurrence of certain events, the violation of which could require repayment of the Senior Notes and affect our credit rating and access to other financing. We were in compliance with all debt covenant requirements at March 31, 2009.

Recent Accounting Pronouncements

Refer to Note 2 to our condensed consolidated financial statements included in Part 1, Item 1 of this report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest Rate Exposure

As of March 31, 2009 and December 31, 2008, all of our debt was at a fixed rate and totaled $134.9 million and $150.0 million, respectively. The fair market value of long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The estimated fair value of our long-term debt at March 31, 2009 was $118.0 million, which was approximately $16.9 million less than its carrying value. The estimated fair value of our long-term debt at December 31, 2008 was approximately $123.0 million, which was approximately $27.0 million less than its carrying value. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10% change in interest rates and, as of March 31, 2009, amounted to $5.8 million. Fair market values are determined based on market quotes by brokers. For fixed rate debt, interest rate changes do not impact book value, operations or cash flows.

Our short-term investments are comprised of commercial paper with original maturities of greater than 91 days but less than one year, and we have classified our short-term investments as held-to-maturity. The securities are carried at amortized cost using the specific identification method, and interest income is recorded using an effective interest rate with the associated discount amortized to interest income. Commercial paper prices are susceptible to changes in market interest rates. However, the relatively short-term nature of our commercial paper minimizes interest rate risk. Because our short-term investments are classified as held-to-maturity and carried at amortized cost, fluctuations in market interest rates do not affect the carrying value or interest income recognized. Due to the short duration and nature of these instruments, we do not believe that we have a significant exposure to interest rate risk related to our short-term investments. As of March 31, 2009 and December 31, 2008, our short-term investment carrying value of $10.0 million and $59.7 million, respectively, approximated fair value. Fair values for these instruments are estimated using best available evidence including broker quotes, prices for similar investments, interest rates and credit risk.

Marketable Securities Exposure

In 2008 we sold our remaining 2.3 million shares of Safeco Corporation common stock. Our investment in Safeco represented nearly all of our investments in marketable securities. Accordingly, our exposure to market risk in the area of securities prices was not significant as of March 31, 2009 or December 31, 2008.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of our fiscal quarter ended March 31, 2009. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of our fiscal quarter ended March 31, 2009, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We made no change in our internal control over financial reporting during the fiscal quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We intend to continue to refine our internal control over financial reporting on an ongoing basis, as we deem appropriate with a view towards continuous improvement.

30

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are parties to various claims, legal actions and complaints in the ordinary course of their businesses. In management’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 our consolidated financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

At March 31, 2009, we updated the risk factors in our 2008 Annual Report on Form 10-K as described below.

Continued difficulties in the automotive, retail and other key advertising categories could materially affect our results and common stock.

A significant portion of our revenue consists of advertising by companies in the retail and automotive sectors. Continued difficulties, including bankruptcies, in these and other key industries, are expected to adversely affect advertising spending. This reduction in spending could materially and adversely affect our results of operations and cash flows, and value of our common stock.

If we are unable to resolve our ongoing dispute with DISH Network and secure the carriage of our television stations’ signals over the DISH Network, our television stations may not be able to compete effectively, and our business and financial results may continue to be adversely affected.

Our retransmission consent agreement with the direct-to-home satellite operator, DISH Network, expired on December 17, 2008. As a result, our television stations have not been carried by DISH Network since December 2008. We continue to be in talks with DISH Network to reach an agreement that will allow our stations to return to DISH Network. However, there can be no assurance as to the timing or terms of any such agreement or whether, in fact, an agreement will be reached. Until we reach an agreement with DISH Network, our business and financial results may continue to be adversely affected, possibly materially.

Unfavorable resolution of tax return and positions could adversely affect our tax expense and our results of operations, cash flows and financial condition.

Our tax returns and positions are subject to review and audit by federal, state, and local taxing authorities. The U.S. federal statute of limitations remains open for the year 2006 and onward. The IRS is currently conducting a field examination of the Company’s 2006 and 2007 U.S. tax returns. An unfavorable outcome to the ongoing U.S. tax audit or any other tax audit could result in higher tax costs and payments, thereby negatively impacting our results of operations and cash flows. Our federal and state income tax returns are subject to periodic examination, and the tax authorities may challenge certain of our tax positions as a result of examinations. We believe our tax positions comply with applicable tax law, and we would vigorously defend these positions if challenged. The final disposition of any positions challenged by the tax authorities could require us to make additional tax payments. Such a resolution could also materially affect our effective tax rate for future periods.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

31

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

10.1+	2009 Salary Reduction Letter from Colleen B. Brown, dated February 27, 2009 (filed herewith).
10.2+	2009 Salary Reduction Letter from Joseph L. Lovejoy, dated March 9, 2009 (filed herewith).
10.3+	2009 Salary Reduction Letter from Robert I. Dunlop, dated February 27, 2009 (filed herewith).
10.4+	Fisher Communications, Inc. 2009 Management Short-Term Incentive Plan, as amended (filed herewith).
10.5+	Fisher Communications, Inc. 2008 Equity Incentive Plan, Amended as Restated as of March 10, 2009 (filed herewith).
10.6*	Letter Agreement, dated March 20, 2009, by and between Fisher Communications, Inc. and GAMCO Asset Management, Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Fork 8-K filed on March 26, 2009 (File No. 000-22439)).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer.
32.2	Section 1350 Certification of Chief Financial Officer.

* Incorporated by reference.

+ Management contract or compensatory plan or arrangement

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FISHER COMMUNICATIONS, INC.
Date: May 11, 2009	/s/ Joseph L. Lovejoy
	Joseph L. Lovejoy Senior Vice President and Chief Financial Officer (Signing on behalf of the registrant and as Principal Financial Officer)

33

EXHIBIT INDEX

Exhibit No.	Description
10.1+	2009 Salary Reduction Letter from Colleen B. Brown, dated February 27, 2009 (filed herewith).
10.2+	2009 Salary Reduction Letter from Joseph L. Lovejoy, dated March 9, 2009 (filed herewith).
10.3+	2009 Salary Reduction Letter from Robert I. Dunlop, dated February 27, 2009 (filed herewith).
10.4+	Fisher Communications, Inc. 2009 Management Short-Term Incentive Plan, as amended (filed herewith).
10.5+	Fisher Communications, Inc. 2008 Equity Incentive Plan, Amended as Restated as of March 10, 2009 (filed herewith).
10.6*	Letter Agreement, dated March 20, 2009, by and between Fisher Communications, Inc. and GAMCO Asset Management, Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Fork 8-K filed on March 26, 2009 (File No. 000-22439)).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certification of Chief Executive Officer.
32.2	Section 1350 Certification of Chief Financial Officer.

* Incorporated by reference.

+ Management contract or compensatory plan or arrangement

34

EX-10.1

Exhibit 10.1

[Fisher Letterhead]

DATE:	February 27, 2009
TO:	Compensation Committee Members
FROM:	Colleen B. Brown
RE:	Voluntary Salary Reduction

Consistent with my communication to the Board in early December and to the shareholders in late December, this letter will serve as formal notification to the Committee of my decision to take a voluntary 10% reduction in base salary for the 2009 compensation period.

This is in response to the worsening economic conditions the country is experiencing and its resulting impact on advertising.

I am also very pleased to inform you that Rob Dunlop is joining me in this effort by volunteering to reduce his salary by 10% for 2009. In addition, there are 25 other officers, managers, and employees who have joined together in an effort to help reduce expenses in 2009 and have taken similar voluntary reductions.

I am personally touched by the number of dedicated people that have chosen voluntarily to reduce their salaries or have foregone merit increases contractually due them, in an effort to do their part in helping Fisher through a very economically challenging environment. I think it speaks volumes to the spirit of this organization and the loyalty and commitment these individuals have demonstrated to seeing our mission through.

We have taken significant steps to control operating expenses and are pursuing additional ways to drive revenue and opportunity while reducing costs. We are faced with limited visibility for the year and anticipate extensive continued pressure on our business for the near term.

Please let me know if you have any questions.

EX-10.2

Exhibit 10.2

[Fisher Letterhead]

Date: March 9, 2009

To: Colleen Brown

From: Joe Lovejoy

Re: 2009 Salary Adjustment

Given the current, troubling economic environment and its impact on Fisher, I would like to make a personal contribution to Fisher’s continuing efforts to reduce costs. Accordingly, I would like to voluntarily reduce my 2009 salary by 5%, effective January 1, 2009.

I have appreciated your continuing support of my career at Fisher and feel this decision is the right one for these times.

EX-10.3

Exhibit 10.3

[Fisher Letterhead]

Date: February 27, 2009

To: Colleen Brown

Fr: Rob Dunlop

Re: Salary Reduction

Due to the declining economic conditions that have impacted Fisher, I wish to reduce my current base compensation by 10%. This is intended as a small contribution to reducing our 2009 operating expense and thereby assisting the company in improving cash flow.

Next week marks my 18^th year with Fisher and I am grateful for the growth and support I have received from this company. I appreciate the opportunity to contribute to the success of the organization.

Please let me know if you have any questions.

EX-10.4

Exhibit 10.4

Purpose

The purpose of the Management Short Term Incentive Plan (the Plan) is to reward performance by focusing Fisher Communications key management employees on setting high standards and achieving performance goals.

Administration of the Plan

The Compensation Committee of the Board of Directors of Fisher Communications (the Committee) will approve final disposition of all matters pertaining to the administration of the Plan. The Committee’s decisions affecting the construction of the Plan will be final and binding on all parties.

The President and Chief Executive Officer (CEO) of Fisher Communications, on behalf of the Committee, has the responsibility to administer the Plan. The CEO will review goals for all plan participants. The Committee will review and approve Company financial goals, individual goals and final performance results and payouts.

Responsibilities for actions taken under the Plan and associated time frames are:

Responsibilities	CEO	Participant	Finance and Administration	Committee
Goal setting for upcoming year (Company financial and individual)	December 2008-January 2009	December 2008-January 2009	October 2008-December 2008
Goal approval for upcoming year				March 2009
Evaluation of performance results at the end of the Plan period	January 2010-February 2010		January 2010-February 2010
Calculation of payouts	March 2010		March 2010
Approval of payouts and performance results for previous year				March 2010 meeting
Communication of payouts	March 2010
Payouts to participants		By March 15, 2010

Plan Period

The plan period is defined as January 1, 2009 through December 31, 2009.

Plan Participants

Participants in the Plan will be corporate officers and other key management employees approved by the Committee that are responsible for directing and performing functions that have significant impact on Fisher Communications’ performance. At the current time they are:

• President and Chief Executive Officer

• Senior Vice President, Chief Financial Officer

• Senior Vice President, Operations

• Vice President, Principal Accounting Officer

• Vice President, Senior Attorney and Corporate Secretary

• Vice President, Human Resources and Administration

• Vice President, Market Development

Newly hired employees who are added as participants to the Plan during the year may receive prorated incentive awards as recommended by the CEO and approved by the Committee.

Plan Performance Measures and Weights

Performance measures are established before the end of the first quarter of the Plan period.

Performance measures for all of the above employees will consist of 80% of the incentive based on Company Financial Performance or Fisher’s Adjusted EBITDA (which may be adjusted for certain circumstances by the Compensation Committee) and 20% of the incentive based on the achievement of individual objectives. Please refer to Matrix A for illustration of award potential for the Adjusted EBITDA component of the incentive.

Award Schedule

At the beginning of the Plan year, a performance/payout schedule will be developed that specifies threshold, target, and maximum Company financial performance levels and the corresponding percentage of the target award that would be earned for each performance level. Additionally, individual objectives are developed and approved by the CEO.

Target Incentive Awards

Target incentive awards are expressed as a percentage of base salary and vary by position level and accountabilities.

Payment of Awards

A participant’s payout is calculated as follows:

• Confirm target opportunity as % of base salary

• Assess level of Company financial performance versus target performance

• Assess level of individual objective performance versus target performance

• Determine payout as a percent of target for Company financial and individual performance results

Termination

Retirement or Disability — In the event of termination of employment through retirement or as a result of total disability as defined in Fisher Broadcasting benefit plans, the award will be prorated for the number of months of the year completed prior to termination. Retirement is defined as termination of employment on or after age 65. The award is contingent upon actual performance against goals during the months served. The award will be paid out at the normal payout date or earlier, at the discretion of the Committee.

Death — If the participant dies, any unpaid awards will be paid to his or her estate in one lump sum. The amount of the award will be prorated for the number of months of the year completed prior to the participant’s death. The award is contingent upon actual performance against goals during the months served. The award will be paid out at the normal payout date or earlier, at the discretion of the Committee.

Termination for Reasons Other Than Retirement, Disability or Death — In the event of termination of employment for any other reason, the participant will not be entitled to any incentive compensation for the Plan period subsequent to termination, unless otherwise approved by the Committee.

Amendment or Termination of the Plan — The Committee may terminate, amend or modify this Plan at any time.

Other Considerations

Right of Assignment — No right or interest in the Plan is assignable or transferable, or subject to any lien, directly, by operation of law, or otherwise, including levy, garnishment, attachment, pledge, or bankruptcy.

Right of Employment — Participation under this Plan does not guarantee any right to continued employment; management reserves the right to dismiss participants. Participation in any one Plan period does not guarantee the participant the right to participation in any subsequent Plan period.

Withholding for Taxes — Fisher Broadcasting has the right to deduct from all awards under this Plan any taxes required by law to be withheld with respect to such payments.

Matrix A

Corporate Performance (EBITDA) As % of Target	Payout as % Target
110%	200	%
109%	180	%
108%	160	%
107%	150	%
106%	140	%
105%	130	%
104%	120	%
103%	115	%
102%	110	%
101%	105	%
100%	100	%
99%	93	%
98%	75	%
97%	67	%
96%	57	%
< 96%	0	%

EX-10.5

Exhibit 10.5

FISHER COMMUNICATIONS, INC.

2008 EQUITY INCENTIVE PLAN

AS AMENDED AND RESTATED ON MARCH 10, 2009

SECTION 1. PURPOSE

The purpose of the Fisher Communications, Inc. 2008 Equity Incentive Plan is to attract, retain and motivate employees, officers and directors of the Company and its Related Companies by providing them the opportunity to acquire a proprietary interest in the Company and to align their interests and efforts to the long-term interests of the Company’s shareholders.

SECTION 2. DEFINITIONS

Certain capitalized terms used in the Plan have the meanings set forth in Appendix A.

SECTION 3. ADMINISTRATION

3.1 Administration of the Plan

The Plan shall be administered by the Board or the Compensation Committee, which shall be composed of two or more directors, each of whom is a “non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission and an “outside director” within the meaning of Section 162(m) of the Code, or any successor provision thereto.

3.2 Delegation

Notwithstanding the foregoing, the Board may delegate responsibility for administering the Plan with respect to designated classes of Eligible Persons to different committees consisting of two or more members of the Board, subject to such limitations as the Board deems appropriate, except with respect to Awards to Participants who are subject to Section 16 of the Exchange Act or Awards granted pursuant to Section 16 of the Plan. Members of any committee shall serve for such term as the Board may determine, subject to removal by the Board at any time. To the extent consistent with applicable law, the Board may authorize one or more senior executive officers of the Company to grant Awards to designated classes of

Eligible Persons, within limits specifically prescribed by the Board; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person subject to Section 16 of the Exchange Act. All references in the Plan to the “Committee” shall be, as applicable, to the Compensation Committee or any other committee or any officer to whom the Board has delegated authority to administer the Plan.

3.3 Administration and Interpretation by Committee

(a) Except for the terms and conditions explicitly set forth in the Plan and to the extent permitted by applicable law, the Committee shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board or a Committee composed of members of the Board, to (i) select the Eligible Persons to whom Awards may from time to time be granted under the Plan; (ii) determine the type or types of Award to be granted to each Participant under the Plan; (iii) determine the number of shares of Common Stock to be covered by each Award granted under the Plan; (iv) determine the terms and conditions of any Award granted under the Plan; (v) approve the forms of notice or agreement for use under the Plan; (vi) determine whether, to what extent and under what circumstances Awards may be settled in cash or shares of Common Stock or canceled or suspended; (vii) determine whether, to what extent and under what circumstances cash, shares of Common Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant; (viii) interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan; (x) delegate ministerial duties to such of the Company’s employees as it so determines; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.

(b) In no event, however, shall the Committee have the right, without shareholder approval, to (i) cancel or amend outstanding Options or SARs for the purpose of repricing, replacing or regranting such Options or SARs with Options or SARs that have a purchase or grant price that is less than the purchase or grant price for the original Options or SARs except in connection with adjustments provided in Section 15, or (ii) issue an Option or amend an outstanding Option to provide for the grant or issuance of a new Option on exercise of the original Option.

(c) The effect on the vesting of an Award of a Company-approved leave of absence or a Participant’s working less than full-time shall be determined by the Company’s chief human resources officer or other person performing that function or, with respect to directors or executive officers, by the Compensation Committee, whose determination shall be final.

(d) Decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, any Participant, any shareholder and any Eligible Person. A majority of the members of the Committee may determine its actions.

SECTION 4. SHARES SUBJECT TO THE PLAN

4.1 Authorized Number of Shares

Subject to adjustment from time to time as provided in Section 15.1, a maximum of 300,000 shares of Common Stock shall be available for issuance under the Plan. Shares issued under the Plan shall be drawn from authorized and unissued shares.

4.2 Share Usage

(a) Shares of Common Stock covered by an Award shall not be counted as used unless and until they are actually issued and delivered to a Participant. If any Award lapses, expires, terminates or is canceled prior to the issuance of shares thereunder or if shares of Common Stock are issued under the Plan to a Participant and thereafter are forfeited to or otherwise reacquired by the Company, the shares subject to such Awards and the forfeited or reacquired shares shall again be available for issuance under the Plan. Any shares of Common Stock (i) tendered by a Participant or retained by the Company as full or partial payment to the Company for the purchase price of an Award or to satisfy tax withholding obligations in connection with an Award, or (ii) covered by an Award that is settled in cash, or in a manner such that some or all of the shares of Common Stock covered by the Award are not issued, shall be available for Awards under the Plan. The number of shares of Common Stock available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares of Common Stock or credited as additional shares of Common Stock subject or paid with respect to an Award.

(b) The Committee shall also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment for grants or rights earned or due under other compensation plans or arrangements of the Company.

(c) Notwithstanding anything in the Plan to the contrary, the Committee may grant Substitute Awards under the Plan. Substitute Awards shall not reduce the number of shares authorized for issuance under the Plan. In the event that an Acquired Entity has shares available for awards or grants under one or more preexisting plans not adopted in contemplation of such acquisition or combination, then, to the extent determined by the Board or the Compensation Committee, the shares available for grant pursuant to the terms of such preexisting plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to holders of common stock of the entities that are parties to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock authorized for issuance under the Plan; provided, however, that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of such preexisting plans, absent the acquisition or combination, and shall only be made to individuals who were not employees or directors of the Company or a Related Company prior to such acquisition or combination. In the event

that a written agreement between the Company and an Acquired Entity pursuant to which a merger, consolidation or statutory share exchange is completed is approved by the Board and that agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, those terms and conditions shall be deemed to be the action of the Committee without any further action by the Committee, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants.

(d) notwithstanding the other provisions in this Section 4.2, the maximum number of shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate share number stated in Section 4.1, subject to adjustment as provided in Section 15.1.

SECTION 5. ELIGIBILITY

An Award may be granted to any employee, officer or director of the Company or a Related Company whom the Committee from time to time selects.

SECTION 6. AWARDS

6.1 Form, Grant and Settlement of Awards

The Committee shall have the authority, in its sole discretion, to determine the type or types of Awards to be granted under the Plan. Such Awards may be granted either alone or in addition to or in tandem with any other type of Award. Any Award settlement may be subject to such conditions, restrictions and contingencies as the Committee shall determine.

6.2 Evidence of Awards

Awards granted under the Plan shall be evidenced by a written notice or agreement (including an electronic notice or agreement) that shall contain such terms, conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan.

6.3 Deferrals

The Committee may permit or require a Participant to defer receipt of the payment of any Award if and to the extent set forth in the notice or agreement evidencing the Award at the time of grant. If any such deferral election is permitted or required, the Committee, in its sole discretion, shall establish rules and procedures for such payment deferrals, which may include the grant of additional Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits to deferred stock unit equivalents; provided, however, that the terms of any deferrals under this Section 6.3 shall comply with all applicable law, rules and regulations, including, without limitation, Section 409A of the Code.

6.4 Dividends and Distributions

Participants may, if and to the extent the Committee so determines and sets forth in the notice or agreement evidencing the Award at the time of grant, be credited with dividends paid with respect to shares of Common Stock underlying an Award in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including cash, shares of Common Stock, Restricted Stock or Stock Units.

SECTION 7. OPTIONS

7.1 Grant of Options

The Committee may grant Options designated as Incentive Stock Options or Nonqualified Stock Options.

7.2 Option Exercise Price

The exercise price for shares purchased under an Option shall be at least 100% of the Fair Market Value of the Common Stock on the Grant Date (and, with respect to Incentive Stock Options, shall not be less than the minimum exercise price required by Section 422 of the Code), except in the case of Substitute Awards.

7.3 Term of Options

Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Option shall be ten years from the Grant Date.

7.4 Exercise of Options

The Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and become exercisable, any of which provisions may be waived or modified by the Committee at any time. To the extent an Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery to or as directed or approved by the Company of a properly executed stock option exercise agreement or notice, in a form and in accordance with procedures established by the Committee, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement, if any, and such representations and agreements as may be required by the Committee, accompanied by payment in full as described in Sections 7.5 and 13. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one time, as determined by the Committee.

7.5 Payment of Exercise Price

The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid before the Company will issue the shares being purchased and must be in a form or a combination of forms acceptable to the Committee for that purchase, which forms may include:

(a) cash;

(b) check or wire transfer;

(c) having the Company withhold shares of Common Stock that would otherwise be issued on exercise of the Option that have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option;

(d) tendering (either actually or, so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock owned by the Participant that have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option;

(e) so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, and to the extent permitted by law, delivery of a properly executed exercise notice, together with irrevocable instructions to a brokerage firm designated or approved by the Company to deliver promptly to the Company the aggregate amount of proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or

(f) such other consideration as the Committee may permit.

7.6 Effect of Termination of Service

The Committee shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable, and the terms and conditions of such exercise, after a Termination of Service, any of which provisions may be waived or modified by the Committee at any time. If the exercise of the Option following a Participant’s Termination of Service, but while the Option is otherwise exercisable, would be prohibited solely because the issuance of Common Stock would violate either the registration requirements under the Securities Act or the Company’s insider trading policy, then the Option shall remain exercisable until the earlier of (a) the Option Expiration Date and (b) the expiration of a period of three months (or such longer period of time as determined by the Committee in its sole discretion) after the Participant’s Termination of Service during which the exercise of the Option would not be in violation of such Securities Act or insider trading policy requirements.

Notwithstanding the foregoing, in case a Participant’s Termination of Service occurs for Cause, all Options granted to the Participant shall automatically expire upon first notification to the Participant of such termination, unless the Committee determines otherwise. If a Participant’s employment or service relationship with the Company is suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Option shall likewise be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered after a Participant’s Termination of Service, any Option then held by the Participant may be immediately terminated by the Committee, in its sole discretion.

SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

Notwithstanding any other provisions of the Plan, the terms and conditions of any Incentive Stock Options shall in addition comply in all respects with Section 422 of the Code, or any successor provision, and any applicable regulations thereunder.

SECTION 9. STOCK APPRECIATION RIGHTS

9.1 Grant of Stock Appreciation Rights

The Committee may grant Stock Appreciation Rights to Participants at any time on such terms and conditions as the Committee shall determine in its sole discretion. An SAR may be granted in tandem with an Option or alone (“freestanding”). The grant price of a tandem SAR shall be equal to the exercise price of the related Option. The grant price of a freestanding SAR shall be established in accordance with procedures for Options set forth in Section 7.2. An SAR may be exercised upon such terms and conditions and for the term as the Committee determines in its sole discretion; provided, however, that, subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the SAR, the maximum term of a freestanding SAR shall be ten years, and in the case of a tandem SAR, (a) the term shall not exceed the term of the related Option and (b) the tandem SAR may be exercised for all or part of the shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option, except that the tandem SAR may be exercised only with respect to the shares for which its related Option is then exercisable.

9.2 Payment of SAR Amount

Upon the exercise of an SAR, a Participant shall be entitled to receive payment in an amount determined by multiplying: (a) the difference between the Fair Market Value of the Common Stock on the date of exercise over the grant price of the SAR by (b) the number of shares with respect to which the SAR is exercised. At the discretion of the Committee as set forth in the instrument evidencing the Award, the payment upon exercise of an SAR may be in cash, in shares, in some combination thereof or in any other manner approved by the Committee in its sole discretion.

9.3 Waiver of Restrictions

Subject to Section 18.5, the Committee, in its sole discretion, may waive any other terms, conditions or restrictions on any SAR under such circumstances and subject to such terms and conditions as the Committee shall deem appropriate.

SECTION 10. STOCK AWARDS, RESTRICTED STOCK AND STOCK UNITS

10.1 Grant of Stock Awards, Restricted Stock and Stock Units

The Committee may grant Stock Awards, Restricted Stock and Stock Units on such terms and conditions and subject to such repurchase or forfeiture restrictions, if any, which may be based on continuous service with the Company or a Related Company or the achievement of any performance goals, as the Committee shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award.

10.2 Vesting of Restricted Stock and Stock Units

Upon the satisfaction of any terms, conditions and restrictions prescribed with respect to Restricted Stock or Stock Units, or upon a Participant’s release from any terms, conditions and restrictions of Restricted Stock or Stock Units, as determined by the Committee, and subject to the provisions of Section 13, (a) the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely transferable by the Participant, and (b) Stock Units shall be paid in shares of Common Stock or, if set forth in the instrument evidencing the Awards, in cash or a combination of cash and shares of Common Stock. Any fractional shares subject to such Awards shall be paid to the Participant in cash.

10.3 Waiver of Restrictions

Subject to Section 18.5, the Committee, in its sole discretion, may waive the repurchase or forfeiture period and any other terms, conditions or restrictions on any Restricted Stock or Stock Unit under such circumstances and subject to such terms and conditions as the Committee shall deem appropriate.

SECTION 11. PERFORMANCE AWARDS

11.1 Performance Shares

The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall consist of a unit valued by reference to a designated number of shares of Common Stock, the value of which may be paid to the Participant by delivery of shares of Common Stock or, if set forth in the instrument evidencing the Award, cash, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. Subject to Section 18.5, the amount to be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.

11.2 Performance Units

The Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be awarded and determine the number of Performance Units and the terms and conditions of each such Award. Performance Units shall consist of a unit valued by reference to a designated amount of cash, which value may be paid to the Participant by delivery of cash, shares of Common Stock, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. Subject to Section 18.5, the amount to be paid under an Award of Performance Units may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.

SECTION 12. OTHER STOCK OR CASH-BASED AWARDS

Subject to the terms of the Plan and such other terms and conditions as the Committee deems appropriate, the Committee may grant other incentives payable in cash or in shares of Common Stock under the Plan.

SECTION 13. WITHHOLDING

The Company may require the Participant to pay to the Company the amount of (a) any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Award (“tax withholding obligations”) and (b) any amounts due from the Participant to the Company or to any Related Company (“other obligations”). The Company shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan until such tax withholding obligations and other obligations are satisfied.

The Committee may permit or require a Participant to satisfy all or part of the Participant’s tax withholding obligations and other obligations by (a) paying cash to the Company, (b) having the Company withhold an amount from any cash amounts otherwise due or to become due from the Company to the Participant, (c) having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Participant (or become vested, in the case of Restricted Stock) having a Fair Market Value equal to the tax withholding obligations and other obligations, or (d) surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax withholding obligations and other obligations. The value of the shares so withheld or tendered may not exceed the employer’s minimum required tax withholding rate.

SECTION 14. ASSIGNABILITY

No Award or interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose) or transferred by a Participant or made subject to attachment or similar proceedings otherwise than by will or by the applicable laws of descent and distribution, except to the extent the Participant designates one or more beneficiaries on a Company-approved form who may exercise the Award or receive payment under the Award after the Participant’s death. During a Participant’s lifetime, an Award may be exercised only by the Participant. Notwithstanding the foregoing and to the extent permitted by Section 422 of the Code, the Committee, in its sole discretion, may permit a Participant to assign or transfer an Award subject to such terms and conditions as the Committee shall specify.

SECTION 15. ADJUSTMENTS

15.1 Adjustment of Shares

In the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, statutory share exchange distribution to shareholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (a) the outstanding shares of Common Stock, or any securities exchanged therefor or received in their place, being exchanged for a different number or kind of securities of the Company or (b) new, different or additional securities of the Company or any other company being received by the holders of shares of Common Stock, then the Committee shall make proportional adjustments in (i) the maximum number and kind of securities available for issuance under the Plan; (ii) the maximum number and kind of securities issuable as Incentive Stock Options as set forth in Section 4.2; (iii) the maximum numbers and kind of securities set forth in Section 16.3; and (iv) the number and kind of securities that are subject to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Committee, as to the terms of any of the foregoing adjustments shall be conclusive and binding.

Notwithstanding the foregoing, the issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards. Also notwithstanding the foregoing, a dissolution or liquidation of the Company or a Company Transaction shall not be governed by this Section 15.1 but shall be governed by Sections 15.2 and 15.3, respectively.

15.2 Dissolution or Liquidation

To the extent not previously exercised or settled, and unless otherwise determined by the Committee in its sole discretion, Awards shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a vesting condition, forfeiture provision or repurchase right applicable to an Award has not been waived by the Committee, the Award shall be forfeited immediately prior to the consummation of the dissolution or liquidation.

15.3 Change in Control

Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, in the event of a Change in Control:

(a) All outstanding Awards, other than Performance Shares and Performance Units, shall become fully and immediately exercisable, and all applicable deferral and restriction limitations or forfeiture provisions shall lapse, immediately prior to the Change in Control and shall terminate at the effective time of the Change in Control; provided, however, that with respect to a Change in Control that is a Company Transaction, such Awards shall become fully and immediately exercisable, and all applicable deferral and restriction limitations or forfeiture provisions shall lapse, only if and to the extent such Awards are not converted, assumed or replaced by the Successor Company.

For the purposes of this Section 15.3(a), an Award shall be considered converted, assumed or replaced by the Successor Company if following the Company Transaction the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Company Transaction, the consideration (whether stock, cash or other securities or property) received in the Company Transaction by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Company Transaction is not solely common stock of the Successor Company, the Committee may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of the Option, for each share of Common Stock subject thereto, to be solely common stock of the Successor Company substantially equal in fair market value to the per share consideration received by holders of Common Stock in the Company Transaction. The determination of such substantial equality of value of consideration shall be made by the Committee, and its determination shall be conclusive and binding.

Except as otherwise provided in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, any such Awards that are converted, assumed or substituted for in the

Company Transaction and do not otherwise accelerate at that time shall automatically become fully vested and exercisable with respect to 100% of the unvested portion of the Award, and all applicable deferral and restriction limitations or forfeiture provisions shall lapse, in the event that the Participant’s employment with the Successor Company should terminate (i) in connection with such Company Transaction or (ii) subsequently within one year following such Company Transaction, unless such employment is terminated by the Successor Company for Cause or by the Participant voluntarily without Good Reason.

(b) All Performance Shares or Performance Units earned and outstanding as of the date the Change in Control is determined to have occurred shall be payable in full at the target level in accordance with the payout schedule pursuant to the instrument evidencing the Award. Any remaining Performance Shares or Performance Units (including any applicable performance period) for which the payout level has not been determined shall be prorated at the target payout level up to and including the date of such Change in Control and shall be payable in full at the target level in accordance with the payout schedule pursuant to the instrument evidencing the Award. Any existing deferrals or other restrictions not waived by the Committee in its sole discretion shall remain in effect.

(c) Notwithstanding the foregoing, the Committee, in its sole discretion, may instead provide in the event of a Change in Control that is a Company Transaction that a Participant’s outstanding Awards shall terminate upon or immediately prior to such Company Transaction and that such Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (x) the value of the per share consideration received by holders of Common Stock in the Company Transaction, or, in the event the Company Transaction is one of the transactions listed under subsection (c) in the definition of Company Transaction or otherwise does not result in direct receipt of consideration by holders of Common Stock, the value of the deemed per share consideration received, in each case as determined by the Committee in its sole discretion, multiplied by the number of shares of Common Stock subject to such outstanding Awards (to the extent then vested and exercisable or whether or not then vested and exercisable, as determined by the Committee in its sole discretion) exceeds (y) if applicable, the respective aggregate exercise price or grant price for such Awards.

(d) Further notwithstanding the foregoing, the Committee, in its sole discretion, may instead determine the effect of a Change in Control on outstanding Awards at the time of the Change in Control and in light of the circumstances surrounding the Change in Control.

15.4 Further Adjustment of Awards

Subject to Sections 15.2 and 15.3, the Committee shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation, dissolution or change in control of the Company, as defined by the Committee, to take such further action as it determines to be necessary or advisable with respect to Awards. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later,

extended or additional time for exercise, lifting restrictions and other modifications, and the Committee may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Committee may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation, dissolution or change in control that is the reason for such action.

15.5 No Limitations

The grant of Awards shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

15.6 Fractional Shares

In the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from such adjustment.

15.7 Section 409A of the Code

Notwithstanding anything in this Plan to the contrary, (a) any adjustments made pursuant to this Section 15 or any other amendments to Awards that are considered “deferred compensation” within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code and (b) any adjustments made pursuant to Section 15 or any other amendments to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustment or amendment the Awards either (i) continue not to be subject to Section 409A of the Code or (ii) comply with the requirements of Section 409A of the Code.

SECTION 16. CODE SECTION 162(m) PROVISIONS

Notwithstanding any other provision of the Plan, if the Committee determines, at the time Awards are granted to a Participant who is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 16 is applicable to such Award.

16.1 Performance Criteria

If an Award is subject to this Section 16, then the lapsing of restrictions thereon and the distribution of cash or shares of Common Stock pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one of or any combination of the following “performance criteria” for the Company as a whole or any business unit of the Company, as reported or calculated by the Company: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on

capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); revenues; operating margins; return on assets; return on equity; debt; debt plus equity; market or economic value added; stock price appreciation; total shareholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management or asset management metrics (together, the “Performance Criteria”).

Such performance goals also may be based on the achievement of specified levels of Company performance (or performance of an applicable affiliate or business unit of the Company) under one or more of the Performance Criteria described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) any reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company’s annual report to shareholders for the applicable year, (vi) acquisitions or divestitures, (vii) foreign exchange gains and losses, and (viii) gains and losses on asset sales. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that satisfies all requirements for “performance-based compensation” within the meaning of Section 162(m) of the Code, or any successor provision thereto.

16.2 Adjustment of Awards

Notwithstanding any provision of the Plan other than Section 15, with respect to any Award that is subject to this Section 16, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Covered Employee.

16.3 Limitations

Subject to adjustment from time to time as provided in Section 15.1, no Covered Employee may be granted Awards other than Performance Units subject to this Section 16 in any calendar year period with respect to more than 200,000 shares of Common Stock for such

Awards, except that the Company may make additional onetime grants of such Awards for up to 250,000 shares to newly hired or newly promoted individuals, and the maximum dollar value payable with respect to Performance Units or other awards payable in cash subject to this Section 16 granted to any Covered Employee in any one calendar year is $1,000,000.

The Committee shall have the power to impose such other restrictions on Awards subject to this Section 16 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m) of the Code, or any successor provision thereto.

SECTION 17. AMENDMENT AND TERMINATION

17.1 Amendment, Suspension or Termination

The Board or the Compensation Committee may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall deem advisable; provided, however, that, to the extent required by applicable law, regulation or stock exchange rule, shareholder approval shall be required for any amendment to the Plan; and provided, further, that any amendment that requires shareholder approval may be made only by the Board. Subject to Section 17.3, the Committee may amend the terms of any outstanding Award, prospectively or retroactively.

17.2 Term of the Plan

Unless sooner terminated as provided herein, the Plan shall terminate ten years from the Effective Date. After the Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten years after the later of (a) the Effective Date and (b) the approval by the shareholders of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code.

17.3 Consent of Participant

The amendment, suspension or termination of the Plan or a portion thereof or the amendment of an outstanding Award shall not, without the Participant’s consent, materially adversely affect any rights under any Award theretofore granted to the Participant under the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 15 shall not be subject to these restrictions.

SECTION 18. GENERAL

18.1 No Individual Rights

No individual or Participant shall have any claim to be granted any Award under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan.

Furthermore, nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant’s employment or other relationship at any time, with or without cause.

18.2 Issuance of Shares

Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company’s counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act or the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity.

The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made.

As a condition to the exercise of an Option or any other receipt of Common Stock pursuant to an Award under the Plan, the Company may require (a) the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received only for the Participant’s own account and without any present intention to sell or distribute such shares and (b) such other action or agreement by the Participant as may from time to time be necessary to comply with the federal, state and foreign securities laws. At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock certificates to ensure exemption from registration. The Committee may also require the Participant to execute and deliver to the Company a purchase agreement or such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable to the shares.

To the extent the Plan or any instrument evidencing an Award provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

18.3 Indemnification

Each person who is or shall have been a member of the Board, or a committee appointed by the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof, with the Company’s approval, or paid by such person in satisfaction of any judgment in any such claim, action, suit or proceeding against such person; provided, however, that such person shall give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s own behalf, unless such loss, cost, liability or expense is a result of such person’s own willful misconduct or except as expressly provided by statute.

The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled under the Company’s articles of incorporation or bylaws, as a matter of law, or otherwise, or of any power that the Company may have to indemnify or hold harmless.

18.4 No Rights as a Shareholder

Unless otherwise provided by the Committee or in the instrument evidencing the Award or in a written employment, services or other agreement, no Award, other than a Stock Award, shall entitle the Participant to any cash dividend, voting or other right of a shareholder unless and until the date of issuance under the Plan of the shares that are the subject of such Award.

18.5 Compliance with Laws and Regulations

In interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the Code.

Any Award granted pursuant to the Plan is intended to comply with the requirements of Section 409A of the Code, including any applicable regulations and guidance issued thereunder, and including transition guidance, to the extent Section 409A of the Code is applicable thereto, and the terms of the Plan and any Award granted under the Plan shall be interpreted, operated and administered in a manner consistent with this intention to the extent

the Committee deems necessary or advisable to comply with Section 409A of the Code and any official guidance issued thereunder. Any payment or distribution that is to be made under the Plan (or pursuant to an Award under the Plan) to a Participant who is a “specified employee” of the Company within the meaning of that term under Section 409A of the Code and as determined by the Committee, on account of a “separation from service” within the meaning of that term under Section 409A of the Code, may not be made before the date which is six months after the date of such “separation from service,” unless the payment or distribution is exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. Notwithstanding any other provision in the Plan, the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify the Plan and any Award granted under the Plan so that the Award qualifies for exemption from or complies with Section 409A of the Code; provided, however, that the Committee makes no representations that Awards granted under the Plan shall be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to Awards granted under the Plan.

18.6 No Trust or Fund

The Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.

18.7 Successors

All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all the business and/or assets of the Company.

18.8 Severability

If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Committee’s determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

18.9  Choice of Law and Venue

The Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Washington without giving effect to principles of conflicts of law. Participants irrevocably consent to the nonexclusive jurisdiction and venue of the state and federal courts located in the State of Washington.

18.10  Legal Requirements

The granting of Awards and the issuance of shares of Common Stock under the Plan are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.

SECTION 19. EFFECTIVE DATE

The effective date (the “Effective Date”) is the date on which the Plan is approved by the shareholders of the Company. If the shareholders of the Company do not approve the Plan within 12 months after the Board’s adoption of the Plan, any Incentive Stock Options granted under the Plan will be treated as Nonqualified Stock Options.

APPENDIX A

DEFINITIONS

As used in the Plan,

“Acquired Entity” means any entity acquired by the Company or a Related Company or with which the Company or a Related Company merges or combines.

“Award” means any Option, Stock Appreciation Right, Stock Award, Restricted Stock, Stock Unit, Performance Share, Performance Unit, cash-based award or other incentive payable in cash or in shares of Common Stock as may be designated by the Committee from time to time.

“Board” means the Board of Directors of the Company.

“Cause,” unless otherwise defined in the instrument evidencing an Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means dishonesty, fraud, serious or willful misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conduct prohibited by law (except minor violations), in each case as determined by the Company’s chief human resources officer or other person performing that function or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding.

“Change in Control,” unless the Committee determines otherwise with respect to an Award at the time the Award is granted or unless otherwise defined for purposes of an Award in a written employment, services or other agreement between the Participant and the Company or a Related Company, means the occurrence of any of the following events:

(a) an acquisition by any Entity of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not acquired directly from the Company by the party exercising the conversion privilege, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company, or (iv) an acquisition by any Entity pursuant to a transaction that meets the conditions of clauses (i), (ii) and (iii) set forth in the definition of Company Transaction or (v) any acquisition approved by the Board;

(b) a change in the composition of the Board during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of the two-year period, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be considered a member of the Incumbent Board; or

(c) consummation of a Company Transaction.

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

“Committee” has the meaning set forth in Section 3.2.

“Common Stock” means the common stock, par value $1.25 per share, of the Company.

“Company” means Fisher Communications, Inc., a Washington corporation.

“Company Transaction,” unless the Committee determines otherwise with respect to an Award at the time the Award is granted or unless otherwise defined for purposes of an Award in a written employment, services or other agreement between the Participant and the Company or a Related Company, means consummation of:

(a) a merger or consolidation of the Company with or into any other company;

(b) a statutory share exchange pursuant to which the Company’s outstanding shares are acquired or a sale in one transaction or a series of transactions undertaken with a common purpose of at least a majority of the Company’s outstanding voting securities; or

(c) a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of all or substantially all of the Company’s assets, excluding, however, in each case, a transaction pursuant to which

(i) the Entities who are the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company Transaction will beneficially own, directly or indirectly, at least a majority of the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the Successor Company in substantially the same proportions as their ownership, immediately prior to such Company Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities;

(ii) no Entity (other than the Company, any employee benefit plan (or related trust) of the Company, a Related Company or a Successor Company) will beneficially own, directly or indirectly, 40% or more of, respectively, the outstanding shares of common stock of the Successor Company or the combined voting power of the outstanding voting securities of the Successor Company entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Company Transaction; and

(iii) individuals who were members of the Incumbent Board will immediately after the consummation of the Company Transaction constitute at least a majority of the members of the board of directors of the Successor Company.

Where a series of transactions undertaken with a common purpose is deemed to be a Company Transaction, the date of such Company Transaction shall be the date on which the last of such transactions is consummated.

“Compensation Committee” means the Compensation Committee of the Board.

“Covered Employee” means a “covered employee” as that term is defined for purposes of Section 162(m)(3) of the Code or any successor provision.

“Disability” unless otherwise defined by the Committee for purposes of the Plan in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means a mental or physical impairment of the Participant that is expected to result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes the Participant to be unable to perform his or her material duties for the Company or a Related Company and to be engaged in any substantial gainful activity, in each case as determined by the Company’s chief human resources officer or other person performing that function or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding.

“Effective Date” has the meaning set forth in Section 19.

“Eligible Person” means any person eligible to receive an Award as set forth in Section 5.

“Entity” means any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

“Fair Market Value” means the closing price for the Common Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee using such methods or procedures as it may establish.

“Good Reason,” unless the Committee determines otherwise with respect to an Award at the time the Award is granted or unless otherwise defined for purposes of an Award in a written employment, services or other agreement between the Participant and the Company or a Related Company, means the occurrence of any of the following events or conditions after a Company Transaction and without the consent of the Participant, the notification of the existence of such event or condition by the Participant to the Successor Company within 90 days of its initial existence, and the failure of the Successor Company to cure such event or condition within 30 days after receipt of such written notice from the Participant:

(a) a material diminution in the Participant’s base compensation;

(b) a material diminution in the Participant’s authority, duties or responsibilities; or

(c) the Successor Company’s requiring the Participant to be based at any place outside a 50-mile radius of his or her place of employment prior to the Company Transaction, except for reasonably required travel on the Successor Company’s business that is not materially greater than such travel requirements prior to the Company Transaction.

“Grant Date” means the later of (a) the date on which the Committee completes the corporate action authorizing the grant of an Award or such later date specified by the Committee and (b) the date on which all conditions precedent to an Award have been satisfied, provided that conditions to the exercisability or vesting of Awards shall not defer the Grant Date.

“Incentive Stock Option” means an Option granted with the intention that it qualify as an “incentive stock option” as that term is defined for purposes of Section 422 of the Code or any successor provision.

“Nonqualified Stock Option” means an Option other than an Incentive Stock Option.

“Option” means a right to purchase Common Stock granted under Section 7.

“Option Expiration Date” means the last day of the maximum term of the Option.

“Outstanding Company Common Stock” has the meaning set forth in the definition of “Change in Control.”

“Outstanding Company Voting Securities” has the meaning set forth in the definition of “Change in Control.”

“Parent Company” means a company or other entity which as a result of a Company Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries.

“Participant” means any Eligible Person to whom an Award is granted.

“Performance Award” means an Award of Performance Shares or Performance Units granted under Section 11.

“Performance Criteria” has the meaning set forth in Section 16.1.

“Performance Share” means an Award of units denominated in shares of Common Stock granted under Section 11.1.

“Performance Unit” means an Award of units denominated in cash granted under Section 11.2.

“Plan” means the Fisher Communications, Inc. 2008 Equity Incentive Plan.

“Related Company” means any entity that is directly or indirectly controlled by, in control of or under common control with the Company.

“Restricted Stock” means an Award of shares of Common Stock granted under Section 10, the rights of ownership of which are subject to restrictions prescribed by the Committee.

“Retirement,” unless otherwise defined in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means “Retirement” as defined for purposes of the Plan by the Committee or the Company’s chief human resources officer or other person performing that function or, if not so defined, means Termination of Service on or after the date the Participant reaches “normal retirement age,” as that term is defined in Section 411(a)(8) of the Code.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Stock Appreciation Right” or “SAR” means a right granted under Section 9.1 to receive the excess of the Fair Market Value of a specified number of shares of Common Stock over the grant price.

“Stock Award” means an Award of shares of Common Stock granted under Section 10, the rights of ownership of which are not subject to restrictions prescribed by the Committee.

“Stock Unit” means an Award denominated in units of Common Stock granted under Section 10.

“Substitute Awards” means Awards granted or shares of Common Stock issued by the Company in substitution or exchange for awards previously granted by an Acquired Entity.

“Successor Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Company Transaction.

“Termination of Service” means a termination of employment or service relationship with the Company or a Related Company for any reason, whether voluntary or involuntary, including by reason of death, Disability or Retirement. Any question as to whether and when there has been a Termination of Service for the purposes of an Award and the cause of such Termination of Service shall be determined by the Company’s chief human resources officer or other person performing that function or, with respect to directors and executive officers, by the Compensation Committee, whose determination shall be conclusive and binding. Transfer of a Participant’s employment or service relationship between the Company and any Related Company shall not be considered a Termination of Service for purposes of an Award. Unless the Compensation Committee determines otherwise, a Termination of Service shall be deemed to occur if the Participant’s employment or service relationship is with an entity that has ceased to be a Related Company. A Participant’s change in status from an employee of the Company or a Related Company to a consultant, advisor, independent contractor or non-employee director of the Company or a Related Company shall be considered a Termination of Service for purposes of an Award, and a change in status from a non-employee director of the Company or a Related Company to an employee of the Company or a Related Company shall not be considered a Termination of Service for purposes of an Award.

“Vesting Commencement Date” means the Grant Date or such other date selected by the Committee as the date from which an Award begins to vest.

PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS

SUMMARY PAGE

Date of Board Action	Action	Section/Effect of Amendment	Date of Shareholder Approval
March 12, 2008	Initial Plan Adoption		April 30, 2008
April 30, 2008	Amendment and Restatement	Revise §4.1 to reduce number of shares authorized for issuance from 1,060,000 shares to 300,000 shares	N/A
March 10, 2009	Amendment and Restatement	Add §3.2 Delegation and revise various other sections to use correct term of “Compensation Committee” as a result of addition of §3.2	N/A

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Colleen B. Brown, certify that:

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

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2009

/s/ Colleen B. Brown

Colleen B. Brown

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Joseph L. Lovejoy, certify that:

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

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2009

/s/ Joseph L. Lovejoy

Joseph L. Lovejoy

Senior Vice President and

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fisher Communications, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Colleen B. Brown, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-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.

Date: May 11, 2009

/s/ Colleen B. Brown

Colleen B. Brown

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Fisher Communications, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Joseph L. Lovejoy, 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.

Date: May 11, 2009

/s/ Joseph L. Lovejoy

Joseph L. Lovejoy

Senior Vice President and

Chief Financial Officer