Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

NOTE 15

Commitments and Contingencies

Operating and Capital Leases

In December 2011, the Company completed the sale of Fisher Plaza, its 300,000 square foot mixed-use facility in Seattle, Washington to Hines Global REIT (“Hines”) for $160.0 million in cash. In connection with the sale of Fisher Plaza, the Company entered into a Lease Agreement (the “Lease”) with Hines pursuant to which the Company leased 121,000 rentable square feet of Fisher Plaza for use for the Company’s corporate headquarters and its Seattle television, radio and internet operations. The Lease has an initial term that expires on December 31, 2023 and the Company has the right to extend the term for three successive five-year periods.

The Lease also allows the Company to reduce the amount of its leased space by up to 20%, subject to certain limitations. Further, the Company entered into a Reimbursement Agreement with Hines whereby the Company may be required to reimburse Hines up to $1.5 million if the power and/or chiller consumption by certain existing Plaza tenants, including the Company, exceeds specified levels and Hines is required to install additional power and/or chiller facilities. This Reimbursement Agreement expires on the expiration of the Lease’s initial term.

Minimum future payments for all non-cancelable capital equipment and operating leases as of December 31, 2012 are as follows (in thousands):

	Capital			Operating
Year	Leases			Leases
2013	$	1,012		$	4,536
2014		608			4,169
2015		—			4,001
2016		—			3,943
2017		—			3,968
Thereafter		—			25,909
		1,620		$	46,526
Less executory costs		(1,234	)
Net minimum lease payments		386
Less amounts representing interest		(25	)
Present value of net minimum lease payments		361
Less current portion of obligations under capital leases		(211	)
Long-term portion of obligations under capital leases	$	150

Rent expense totaled approximately $6.3 million, $1.1 million and $1.1 million during the years ended December 31, 2012, 2011 and 2010, respectively. Amortization of assets recorded under capital leases was included in depreciation expense. The current portion of obligations under capital lease is included in other current liabilities in the consolidated balance sheets at December 31, 2012, while the long-term portion is included in other liabilities.

In connection with the sale of Fisher Plaza to Hines in 2011, the Company recorded a pre-tax net gain on the sale of Fisher Plaza of $40.5 million in the consolidated statement of operations. The pre-tax net gain on sale of Fisher Plaza did not include $10.6 million of the gain which was deferred and is recorded on the consolidated balance sheet in “other current liabilities” and “deferred income”. As the Lease is considered to be an operating agreement and represents more than a minor portion of the usage of the facility, $9.1 million of the deferral related to the sale leaseback is amortized on a straight-line basis as an offset to the rent expense over the initial term of the Lease. As of December 31, 2012 the deferral related to the sale leaseback on the consolidated balance sheets was $8.3 million. The remaining $1.5 million has also been deferred as a long term obligation relating to the Reimbursement Agreement. This obligation will remain as a long-term obligation until the earlier of the expiration of the initial term of the Lease or until Hines requests reimbursement for the purchase of additional power and/or chiller facilities according to the terms of the Reimbursement Agreement.

Local Marketing Agreement

In June 2012, the Company amended its Local Marketing Agreement (“LMA”) with South Sound Broadcasting LLC (“South Sound”) to manage South Sound’s FM radio station licensed in Oakville, Washington for another five years. The station broadcasts the Company’s KOMO AM NewsRadio programming to FM listeners in the Seattle – Tacoma radio market. Contemporaneously with the LMA, the Company entered into an option agreement with South Sound, whereby the Company has the right to acquire the station until January 2017. This amended LMA and related option agreement supersedes and terminates a previous LMA and option agreement between the Company and South Sound. Under the terms of the previous option agreement, the Company was obligated to pay South Sound up to approximately $1.4 million, if the Company did not exercise the option prior to its expiration. Pursuant to the amended LMA, the $1.4 million fee was eliminated and instead the Company paid South Sound $750,000 for a 7.5% ownership interest in South Sound and $615,000 for a new option agreement, pursuant to which we have the right to acquire the station until January 2017. The consideration for the option agreement is non-refundable, but will be applied to the purchase price if the Company chooses to exercise the option. The consideration for the option agreement and the investment in South Sound are presented within other assets on the Company’s consolidated balance sheet. Due to the term of the LMA and the uncertainties associated with the exercise of the option agreement, South Sound does not meet the criteria for consolidation. Advertising revenues earned under this LMA are recorded as revenue and LMA fees and programming expenses are recorded as operating costs.

Asset Purchase Agreement

On November 19, 2012, Fisher Broadcasting – Oregon TV, L.L.C. (“Fisher Broadcasting”), a wholly-owned subsidiary of Fisher Communications, Inc. entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Newport Television LLC and Newport Television License LLC to acquire, subject to prior approval from the Federal Communications Commission (the “FCC”), operating assets of television station KMTR(TV), together with certain related satellite stations (collectively, the “Station”), which serve the Eugene, Oregon Nielsen Designated Market Area, for a total purchase price of $8.5 million. Concurrently, Fisher Broadcasting assigned to Roberts Media, LLC, an unrelated third party (“Roberts Media”), its rights under the Purchase Agreement to acquire the FCC licenses with respect to the Station together with certain other of the Station’s operating and programming assets. Pursuant to the Purchase Agreement, the Company paid the Station a deposit of 10% of the total purchase price, or $850,000.

Also concurrently with the Purchase Agreement, Fisher Broadcasting and Roberts Media entered into a Shared Services Agreement pursuant to which Fisher Broadcasting would, following the acquisition of certain Station assets by Roberts Media, provide for a fee technical, engineering and certain other services to support Roberts Media’s operation of the Station. In addition, pursuant to the Shared Services Agreement, Fisher Broadcasting, following the closing under the Purchase Agreement, would have the right to provide up to 15% of the Station’s weekly programming and sell all of the local advertising on the Station on a commissioned basis. The Shared Services Agreement will be effective upon the closing of the Station acquisition, which is expected to occur in the first half of 2013.

In connection with the Purchase Agreement and the Shared Services Agreement, Roberts Media has also granted Fisher Broadcasting an option to subsequently acquire the Station assets held by Roberts Media subject to certain conditions. It is expected that Roberts Media will obtain third-party financing for its acquisition under the Purchase Agreement and that Fisher Broadcasting will guarantee the indebtedness to be incurred by Roberts Media to finance its portion of the acquisition. The transaction is subject to approval by the FCC, other regulatory approvals and customary closing conditions.

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