FORM 10-K

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.406 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 ¨

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

As of June 30, 2012, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $259,443,000 based on the closing sale price as reported on the Nasdaq Global Market.

The number of shares outstanding of each of the issuer’s classes of common stock, as of February 27, 2013 was:

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

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Except as otherwise required by law, we disclaim any responsibility to update any of the forward-looking statements after the date of this annual report to conform such statements to actual results or to changes in our expectations.

Unless the context requires otherwise, references in this annual report to “Fisher,” “the Company,” “we,” “us,” or “our” refer to Fisher Communications, Inc. and its consolidated subsidiaries.

Fisher Communications, Inc. is an integrated media company that was founded in 1910 and has been in the broadcasting business since 1926. Fisher Communications, Inc. is incorporated in the State of Washington. We conduct our operations through our subsidiary, Fisher Broadcasting Company (“Fisher Broadcasting”). Our broadcasting operations consist of our television and radio businesses. Television provided approximately 88% and radio provided approximately 12% of our 2012 consolidated revenue from continuing operations. In 2011, 91% of consolidated revenue from continuing operations consisted of our broadcasting operations, with television accounting for 86% and radio accounting for 14% of 2011 broadcasting revenues. Our Fisher Plaza operations provided 9% of consolidated revenue from continuing operations prior to the sale of Fisher Plaza in December 2011. In 2010, 92% of consolidated revenue from continuing operations consisted of our broadcasting operations, with television accounting for 84% and radio accounting for 16% of 2010 broadcasting revenues. Our Fisher Plaza operations provided 8% of consolidated revenue continuing operations in 2010.

Fisher Broadcasting owns and operates 13 full power television stations (including a 50%-owned television station), seven low power television stations and three owned radio stations (in addition to one managed radio station) in the Western United States. We have long-standing network affiliations with ABC and CBS, and also operate FOX and Univision affiliates as part of duopolies in several of our markets. Our television stations are located in Washington, Oregon, California and Idaho and our radio stations are located in Washington. Our two largest television markets are located in Seattle, Washington and Portland, Oregon. We own ABC and Univision network affiliates in both Seattle and Portland, which are within the top 25 Designated Market Area (“DMA”) television markets as determined by Nielsen. Our television stations reach 4.5 million households (approximately 3.9% of U.S. television households) according to Nielsen. Our stations produce quality local programming and have received numerous awards for broadcasting excellence. We also own three radio stations in Seattle, the 13th largest radio market in the United States, ranked by population, as determined by Arbitron, Inc. (“Arbitron”).

As part of the ongoing development of our business, in recent years we completed the following transactions:

We report financial data for two reportable segments: television and radio. The television segment includes the operations of our 20 owned and/or operated television stations (including a 50%—owned television station) and our internet business. The radio segment includes the operations of our three radio stations and one managed radio station. Prior to 2012, we also included Fisher Plaza as a reportable segment which included the operations of a communications center located near downtown Seattle that serves as home for our Seattle-based television, radio and internet operations, our corporate offices, shared services and third-party tenants. In December 2011, we completed the sale of Fisher Plaza to Hines. See Note 14 to our consolidated financial statements for information about the financial results for our segments for the years ended December 31, 2012, 2011 and 2010.

We employed 776 full-time employees as of December 31, 2012. Approximately 17% of our workforce, located primarily at our KOMO TV, KATU TV, KBAK TV, KBFX CA and KBOI TV operations, is subject to collective bargaining agreements.

Our television segment includes our television operations, as well as our internet business. For information on our internet business, see “Internet Business” below.

The following table sets forth selected information about our television stations as of December 31, 2012:

Our television stations have been affiliated with ABC and CBS for more than 50 years, Univision since 2006, FOX since 2005 and The CW Plus since 2011.

KOMO-TV and KUNS-TV operate in the Seattle-Tacoma DMA, which has approximately 1.8 million television households and a population of approximately 4.9 million. According to Nielsen, in 2012, approximately 74% of the television households within the DMA subscribed to cable and 21% subscribed to alternative delivery systems (alternative delivery service includes program delivery via satellite, satellite master antenna systems or multipoint distribution systems). Major industries in the market include aerospace, information technology, manufacturing, biotechnology, forestry, transportation, retail and international trade. Major employers include Microsoft Corporation, The Boeing Company, Liberty Mutual Group, PACCAR Inc, Nordstrom, Inc., Costco Wholesale Company, Starbucks Corporation, the University of Washington, Amazon.com, Inc., T-Mobile-USA and Weyerhaeuser Company.

KOMO-TV began broadcasting in 1953. The station’s commitment to be the market leader in local news is manifested on multiple distribution platforms. KOMO-TV produces 42 hours of live local news per week. In 2012 the National Association of Television Arts and Sciences awarded 10 Emmys to the station for program and individual excellence. In addition, KOMO-TV received four Edward R. Murrow Awards and the National Promotion Marketing and Design Convention honored KOMO 4 with two national awards: Gold for Art Direction and Design for a News Promo and Silver for Writing.

KUNS-TV began serving as Seattle’s first Univision station in January 2007. According to Nielsen, the Seattle-Tacoma DMA has approximately 120,000 Hispanic households and ranks as the 26^th largest Hispanic market in the United States. KUNS-TV airs five hours of locally produced television news per week.

KATU (TV) and KUNP (TV) serve the Portland DMA, which has approximately 1.2 million television households and a population of approximately 3.2 million. According to Nielsen, around 56% of Portland’s television households subscribed to cable-television service in 2012, while approximately 33% of households are listed as subscribers to alternative delivery systems. The Portland metro area has a broad base of manufacturing, distribution, wholesale and retail trade, regional government and business services. Major employers in the Portland area include Oregon Health & Science University, Intel Corporation, Nike, Inc., Hewlett-Packard Company, Legacy Health System and Kaiser Permanente.

KATU (TV) currently broadcasts 40 1/2 hours of live local news weekly. The station produces and airs AM Northwest, one of the country’s longest running live Monday to Friday local talk/information programs.

In 2012, KATU (TV) was awarded four Emmys for Team Coverage, Morning/Daytime News, Informational/Instructional-Program/Special and Arts / Entertainment / Feature / Segment.

KUNP (TV) has been a Univision affiliate since before we acquired the station in 2006. According to Nielsen, the Portland DMA has approximately 96,000 Hispanic television households and is the 30^th largest Hispanic market in the United States. KUNP (TV) airs five hours of locally produced news per week.

KBOI-TV and KYUU-LP serve the Boise, Idaho DMA, which has approximately 259,000 television households and a total population of approximately 733,000. According to Nielsen, an estimated 24% of the television households in the Boise DMA subscribe to cable television with another 48% subscribing to an alternative delivery system. Boise is the state capital and regional center for business, government, education, health care and the arts. Major employers include Hewlett-Packard Company, Micron Technology, Inc., Boise State University, Albertson’s and Saint Alphonsus Regional Medical Center.

KBOI-TV currently broadcasts 22 hours per week of live local news programs. In 2012, KBOI-TV was honored by the Idaho State Broadcasters’ Association with five first place awards. The station also received ten awards from the Idaho Press Club. KYUU-LP became a CW affiliate in September 2011 and now features “CW Network” programming and broadcasts ten hours of local news programming every weekday.

KVAL-TV, KCBY-TV, and KPIC (TV) (collectively “KVAL+”) serve the Eugene DMA, which has approximately 236,000 television households and a population of approximately 610,000. According to Nielsen, around 51% of the Eugene DMA’s television households subscribed to cable-television service in 2012, while approximately 37% of households are listed as subscribers to alternative delivery systems. KVAL-TV’s broadcast studios are located in Eugene. KCBY-TV, in Coos Bay and KPIC (TV), in Roseburg, are KVAL-TV’s satellite stations which are defined as full-power terrestrial broadcast stations authorized to retransmit all or part of the programming of a parent station that is ordinarily commonly owned. The area’s economic base includes forest products, agriculture, high-tech manufacturing, regional hospital and medical services, packaging, tourism and fishing. Major employers include the state’s two major universities; University of Oregon in Eugene and Oregon State University in Corvallis, Hewlett-Packard Company, Symantec Corporation, Sacred Heart Medical Center, Monaco Coach Corporation, Levi Strauss & Company, Enterprise Car Rental, and Roseburg Forest Products.

KVAL+ broadcasts 33 hours of live local news per week. KVAL + has a long tradition of award-winning news, public affairs programming and information. In 2012, KVAL+ was honored by the Society of Professional Journalists with 11 awards for work done in 2011.

KBAK-TV (CBS) and KBFX-CA (Fox) serve the Bakersfield, California DMA, which has approximately 222,000 television households and a population of approximately 752,000. According to Nielsen, in 2012, approximately 48% of television households subscribed to cable, while approximately 39% of households are listed as subscribers to alternative delivery systems. The Bakersfield economy is based on agriculture, petroleum, and the defense and aerospace industries. The U.S. Department of Defense accounts for approximately 28% of total Kern County employment. The region continues to grow in the areas of manufacturing, distribution, health care, and agriculture-related business services. Major employers in the Bakersfield area include Occidental Petroleum Corporation, Chevron Corporation, Frito Lay North America, Nestle, and the University of California at Bakersfield.

KBAK-TV currently broadcasts 26 1/2 hours of live local news weekly, and KBFX-CA broadcasts 16 ¹/₂ hours of news weekly. KBAK-TV produces Health Alert, a locally produced program on health issues.

Major station community initiatives include cancer prevention, research, and treatment. In 2012, Eyewitness News received the Edward R. Murrow Award for Investigative Reporting, won three Mark Twain awards and six Golden Mike Awards.

KIMA-TV, KEPR-TV, KLEW-TV, KUNW-CA, KVVK-CA and KORX -CA, Yakima and Tri-Cities, Washington and Lewiston, Idaho

KIMA-TV serves the Yakima, Washington area while its satellite stations, KEPR-TV and KLEW-TV, serve Pasco-Richland-Kennewick, Washington (the “Tri-Cities”), and Lewiston, Idaho, respectively. Together, the Yakima and the Tri-Cities areas comprise the Yakima-Pasco-Richland-Kennewick DMA, which includes approximately 232,000 television households and a population of approximately 689,000. According to Nielsen, the market has a 37% cable penetration and a 47% alternate delivery system penetration. KLEW-TV is the only full power station licensed to Lewiston, Idaho, which is part of the Spokane, Washington DMA. KLEW-TV serves approximately 268,000 people in approximately 109,000 television households.

The area covered by KIMA-TV, KEPR-TV and KLEW-TV has an economic base that consists primarily of agriculture, nuclear technology, government, manufacturing and the wholesale food processing and tourism industries, as well as being the core of Washington wine country. Major employers include Battelle, Inc., Clearwater Paper, Con Agra Foods, Inc., Duratek, Inc., Tyson Foods, Inc., Energy Northwest, CH2M HILL Companies, Ltd., Fluor Corporation, Bechtel Corporation, Lockheed Martin Corporation, Siemens AG, Tree Top, Inc., Noel Corp., and Boise Cascade.

KIMA-TV and KEPR-TV each broadcast nearly 20 hours per week of live local news programs. In 2012, KIMA/KEPR won three awards from the Society of Professional Journalists, Region 10. KLEW was recognized by the Idaho State Broadcasters Association for “Best Sports Program”, “Best News Weather Segment” and “Best Commercial Photographer.”

KUNW–CA, KVVK-CA, and KORX-CA (together, “KUNW+”) are the Univision affiliates in the Yakima, Washington DMA. According to Nielsen, the Yakima market has approximately 54,000 Hispanic television households and is the 46^th largest Hispanic market in the United States. KUNW+ produces a local newscast each weekday and also broadcasts interviews with members of the Hispanic community throughout the day.

KIDK (TV) and KXPI-LP serve the Idaho Falls-Pocatello market, which has approximately 126,000 television households and a population of approximately 375,000. According to Nielsen, an estimated 32% of the television households subscribe to cable, with approximately 47% subscribing to an alternative delivery system. The Idaho Falls-Pocatello DMA consists of 14 counties located in Eastern Idaho and Western Wyoming. Idaho Falls and Pocatello, 50 miles apart, are the two largest cities in the DMA. Battelle Inc., the contractor for operation of the Idaho National Engineering & Environmental Laboratory, is the largest employer in the region. Other major employers include Melaluca, Inc., JR Simplot Company, American Microsystems, Idaho State University, Brigham Young University-Idaho, Eastern Idaho Regional Medical Center, Negra Modelo, Qwest, American Microsystems, Inc., Portneuf Medical Center, Convergys Corporation and Ballard Medical Products.

KIDK (TV) broadcasts seven hours per week of live local news programs. KXPI-LP is the FOX affiliate and airs syndicated programming, along with a live 9 p.m. newscast. KXPI-LP provides 3 1/2 hours of live news programming per week.

Effective January 1, 2011, we entered into a ten year Joint Sales Agreement (“JSA”) with NPG of Idaho, Inc., a subsidiary of News Press & Gazette Company (“NPG”), which owns and operates KIFI-TV an Idaho Falls, Idaho television station. Under the agreement, NPG provides certain services supporting the operation of our television stations in Idaho Falls, KIDK-TV and KXPI-LP, and sells substantially all of the commercial advertising on our stations. We pay NPG a non-material fixed fee pursuant to the agreement, and performance bonus based on stations’ results. Contemporaneously, with the JSA, we entered into an option agreement with NPG, whereby they have an option to acquire the stations until January 1, 2021.

The FCC grants licenses to build and operate broadcast television stations. Currently, a limited number of channels are available for television broadcasting in any one geographic area.

According to Nielsen, in 2012 there were approximately 114 million television households in the United States (household universe estimates), of which approximately 68 million are cable households, and a total of approximately 35 million receive television via an alternative delivery service. According to Nielsen, on average, overall household television viewing is 59 hours per week.

Television stations primarily receive revenue from the sale of local, regional and national advertising and, to a much lesser extent, from retransmission consent fees, tower rental and commercial production activities.

Broadcast television stations’ relatively high fixed costs of operation and heavy reliance on advertising revenue render the stations vulnerable to cyclical changes in the economy. The size of advertisers’ budgets, which are sensitive to broad economic trends, affects the broadcast industry in general and, specifically, the revenue of individual broadcast television stations. Broadcasters are dependent on advertising revenue, which can be influenced by events such as declines in the national, regional, or local economies (as has been the case in recent years), employment levels, network ratings, consumer confidence and the success of national time sales representatives. Political and advocacy advertising can constitute, and in the past has constituted, a significant revenue source in some years, particularly national election years. The amount of our revenue in election years depends on many factors, such as whether Washington, Oregon, California and/or Idaho have highly contested races for major state or federal offices and the extent of well-funded initiatives and/or ballot measures. See “Risk Factors – We depend on advertising revenues, which fluctuate as a result of a number of factors” below for additional information.

The Digital Television standard, or DTV, developed after years of research and approved by the FCC in December 1996, was the breakthrough that made possible the transmission of greater amounts of information in the same amount of radio spectrum (6 megahertz (“MHz”)) as the analog standard television system. All full-power television stations in the United States were required by law to discontinue analog service and to operate only in DTV no later than June 12, 2009. Stations that are not licensed as full-power television stations are permitted to continue to transmit in analog until September 1, 2015. The transition to DTV required consumers who relied on over-the-air reception of broadcast signals to purchase new television receivers capable of displaying DTV signals or set-top boxes that can receive digital signals and convert them to analog signals for display on existing receivers.

DTV brings with it major changes to the way viewers experience television. Specifically, DTV technology permits the distribution of high-definition television (“HDTV”) programming, which includes higher-quality sound and pictures with substantially higher resolution than analog television programming. DTV technology also allows broadcasters to provide multiple channels of programming on one 6 MHz channel, a practice known as “multicasting.”

Television station operators may use a portion of their DTV signals to provide ancillary services, such as transmission of data, interactive programming, e-commerce, paging services, audio signals, subscription video, or data transmission services. To the extent a station provides such ancillary services, it is subject to the same regulations as are applicable to other analogous services under the FCC’s rules and policies. A commercial television station is also required to pay the FCC a fee equal to 5% of the gross revenues derived from all ancillary services provided over such station’s DTV signal for which it received a fee in exchange for the service or received compensation from a third party in exchange for transmission of material from that third party, not including commercial advertisements used to support broadcasting. Because multicast programming, described above, is available to the public without charge, it is not subject to this fee.

Beginning in 2002, the FCC required all commercial television broadcasters to transmit programming in DTV format in addition to their existing analog service. The FCC allotted to each station a temporary DTV channel, in addition to its existing analog channel, for this purpose. During 2008, the FCC completed its proceeding to allot DTV channels to each full-power station for post-transition use. The FCC authorized most stations to operate on either their existing DTV channel or their existing analog channel after the DTV transition. A few stations were allotted a third channel for post-transition use.

Stations that switched to a channel other than their current DTV channel were with few exceptions, required to construct DTV transmission facilities specified by the FCC by June 12, 2009. In general, stations are able to serve approximately the same number of viewers using their post-transition facilities as they served using their analog facilities.

The following table sets forth the DTV capabilities for each of our television stations.

The FCC has adopted rules to limit the amount of interference that full-power DTV stations may cause to other stations. It also has acknowledged that the DTV transition may result in interference to existing low-power television stations and translators, particularly in major television markets. Although most low-power stations are required to accept interference from full-power television stations, certain low-power stations, known as “Class A” stations, have greater interference protection rights. Some low-power and translator stations were “displaced” by the FCC’s channel allotment process for full-power stations, and the FCC has allowed such stations to either apply for a “paired” digital channel on which they can operate simultaneously with their existing analog operations or to choose to convert directly from analog to digital transmissions in the future.

Competition within the media/communications industry, including the markets in which our stations compete, is considerable. This competition takes place on several levels: competition for audience, competition for programming (including news), competition for advertisers and competition for local staff, on-air talent and management. Additional factors material to a television station’s competitive position include signal coverage and assigned frequency. The television broadcasting industry faces continuing technological change and innovation, the possible rise in popularity of competing entertainment and communications media, changing business practices such as television “duopolies” (owning and operating two stations in the same market), use of LMAs and JSAs by which one entity agrees to provide administrative and other services to a station operated by another entity, and governmental restrictions or actions of federal regulatory bodies, including the FCC and the Federal Trade Commission. Any of these factors could change and materially harm the television broadcasting industry generally or our business in particular.

Audience. Stations compete for audience on the basis of program popularity, which has a direct effect on advertising rates. During periods of network programming, the stations are totally dependent on the performance of the network programs in attracting viewers. The competition between the networks is keen and the success of any network’s programming can vary significantly over time. During non-network time periods, each station

competes on the basis of the performance of its local and syndicated programming using a combination of self-produced news, public affairs and other entertainment or informational programming to attract viewers. The competition between stations in non-network time periods is intense, and here, too, success can vary over time.

Our stations compete for a share of television viewership against local network-affiliated and independent stations, as well as against programming provided by cable, direct broadcast satellite (“DBS”), and similar multichannel video programming services. These service providers can increase competition faced by a station by bringing into its market distant broadcasting signals not otherwise available to the station’s audience to the extent permitted by the FCC’s rules, and also by serving as a distribution system for non-broadcast programming originated on these systems. To the extent cable and other multichannel video distribution system operators and broadcasters increase the amount of local news programming, the heightened competition for local news audiences could have a material adverse effect on our advertising revenue.

Other sources of competition for Fisher’s television stations include home entertainment systems (including DVD and Blu-ray Disc players, digital video recorders, video on demand and television game devices), Internet websites, wireless cable, satellite master antenna television systems, and program downloads to handheld or other playback devices (including tablet devices and smart phones). Our television stations also face competition from DBS services, which transmit programming directly to homes equipped with special receiving antennas or to cable television systems for transmission to their subscribers, and Internet Protocol Television (“IPTV”). We compete with these sources of competition both on the basis of product performance (quality, variety, information and entertainment value of content) and price (the cost to utilize these systems).

Programming. Competition for syndicated programming involves negotiating with national program distributors, or producers. Our stations compete against in-market broadcast stations, as well as station groups, for exclusive access to syndicated programming. Operators of cable, DBS and similar systems (including video services offered by telephone companies such as AT&T and Verizon) generally do not compete with local stations for programming. However, various national non-broadcast programming networks acquire programs that might have otherwise been offered to local television stations.

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

Multicast Television. With digital television, broadcasters may transmit one high-definition picture and additional channels of standard-definition television, known as multicast channels, within the same 6 MHz of spectrum allotted to each station by the FCC. In different periods of the day, broadcasters may expand or contract the amount of spectrum they devote to each channel thus varying that channel’s video quality from standard definition and high definition. Like all other television stations, multicast channel competition takes place on several levels: competition for audience, competition for programming (including news) and competition for advertisers. Additional factors material to a multicast channel’s competitive position include signal coverage and assigned frequency. These channels compete for a share of television viewership against all television stations, as well as against cable programming and alternate methods of television program distribution, such as DBS

program services. Other sources of competition include home entertainment systems (including DVD and Blu-ray Disc players, digital video recorders and television game devices), Internet websites, wireless cable, satellite master antenna television systems, and program downloads to handheld or other playback devices (including tablet devices and smart phones) We compete with these sources of competition both on the basis of product performance (quality, variety, information and entertainment value of content) and price (the cost to utilize these systems). To the extent cable operators and broadcasters increase the amount of local news programming, the heightened competition for local news audiences could have a material adverse effect on our advertising revenue.

Our internet business is included in our television segment. Technology is impacting the distribution and consumption of traditional broadcast media. Developments in digital technology, the Internet and other interactive media have fundamentally changed the competitive landscape and have created an entirely new way for consumers to experience media. In April 2006, we formed the Fisher Interactive Network (www.fisherinteractive.com) to bring together our digital media assets. The following table sets forth selected information about our primary television and radio websites:

In addition to our primary station websites discussed above, we have over 115 hyperlocal websites, each focused on news, information and entertainment specific to an individual geographic neighborhood within the Seattle-Tacoma, Portland, Eugene, Bakersfield and Boise market areas. These sites provide local communities with added coverage of locally-focused news and stories that would not otherwise appeal to the broader audiences reached by our television and radio stations. The sites are an important part of our broadcast-to-broadband initiative to provide neighborhood information at a grassroots level while enabling local businesses to efficiently reach their customers. We are working with our technology and sales provider, DataSphere Technologies, Inc., in its distribution of the hyperlocal solution to other broadcast companies.

Our internet business also operates websites not directly affiliated with our television and radio stations. Two such sites, Seattle Pulp (www.seattlepulp.com) and Portland Pulp (www.portlandpulp.com), take a locally-focused, humorous approach to entertainment and lifestyle content.

Individuals as well as multi-national companies can easily establish an Internet presence and business with a limited amount of investment. Some organizations or individuals may have greater financial resources available

affording them better access to content, talent, revenue and audience. Competition over the Internet takes place on several levels: competition for audience, competition for advertisers, competition for content and competition for staff and management. Websites are in a state of constant technological advancement and innovation and there is no limit to the number of websites one company or individual can create or operate. While there are few governmental restrictions on websites, changes from regulatory bodies could have a material adverse effect on the business.

Audience. Our websites compete for audience on the basis of content, which has a direct effect on advertising rates. As a website’s audience grows the website operator is capable of charging a higher rate for advertising. New content and audience features are regularly created to target advertising vehicles and programming that are focused to appeal to a narrow segment of the population. Tactical and strategic plans are utilized to attract larger audiences through marketing campaigns and are designed to improve the site’s overall audience share.

Advertising. Internet advertising rates are based on the mix of media outlets in the geographic-targeting area, the page views and unique visitors of the website, the ability of the website to target various demographic and psychographic groups, the number of advertisers competing for available inventory, the availability of alternative advertising media in the geo-target area, the presence of aggressive and knowledgeable sales forces and the development of projects and features that tie advertisers’ messages to the content. Our websites compete for revenue with other websites and, to a lesser degree, with other advertising media such as television, radio, cable, newspapers, yellow page directories, direct mail, outdoor and transit advertising. Competition for advertising dollars occurs at the national and local level and is subject to changes in rates generally. While there are no geographic barriers to accessing websites, most news and information-based websites serving a local market compete for audience and revenue on a geo-targeted basis.

The following table sets forth certain information regarding our owned and operated radio stations.

Our radio stations broadcast to a six-county metropolitan population of approximately 3.5 million with news and entertainment radio services. KOMO (AM/FM) and KVI (AM) have been on the air since 1926 and KPLZ (FM) has been on the air since 1959. According to 2012 data provided by Arbitron, Seattle is the 13^th largest radio market in the United States. KOMO (AM/FM) is Seattle’s only all news formatted station. On September 4, 2012, KVI (AM) switched back to a “Conservative Talk” format from a“Smart Talk” format, with a mix of local and national programming. KPLZ (FM) programs “Hot Adult Contemporary” music.

See “Company Description” above for information on the May 2009 LMA with South Sound.

Only a limited number of frequencies are available for commercial radio broadcasting in any one geographic area. The FCC grants licenses to operate radio stations. Currently, two commercial radio broadcast bands provide free, over-the-air radio service, each of which employs different methods of delivering radio signals to radio receivers. The AM band (amplitude modulation) consists of frequencies from 530 kilohertz (“kHz”) to 1700 kHz. The FM (frequency modulation) band consists of frequencies from 88.1 MHz to 107.9 MHz.

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

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

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

The FCC has authorized Direct Audio Radio from Satellite (“DARS”) to broadcast over a separate frequency spectrum (the S-Band, between 2.31 and 2.36 gigahertz). Sirius XM Radio Inc. is currently offering programming via S-Band satellite channels. Sirius XM Radio offers numerous programming channels on a monthly fee basis. Some of its program channels contain commercial announcements, but they do not currently insert local commercials. Radios capable of receiving these digital signals are available as after-market equipment and in selected new vehicles. While DARS stations are not currently expected to significantly compete for local advertising revenue, they compete for listenership, and may dilute the overall radio audience.

Audience. The proliferation of radio stations and other companies streaming their programming over the Internet has created additional competition for local radio stations, as have “podcasts” which are programming compilations intended to be recorded or downloaded on personal audio devices and replayed later, and the use of personal audio systems like tablet devices, smart phones and MP3 players. These technologies and devices provide further choice for listeners, in addition to the existing over-the-air radio stations and the DARS stations and may dilute the overall radio audience.

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

Advertising. Radio advertising rates are based on the number and mix of media outlets, the audience size of the market in which a radio station operates, the total number of listeners the station attracts in a particular demographic group that an advertiser may be targeting, the number of advertisers competing for available time, the demographic make-up of the market served by the station, the availability of alternative advertising media in the market area, the presence of aggressive and knowledgeable sales forces and the development of projects, features and programs that tie advertisers’ messages to programming. Our radio stations compete for revenue

primarily with other radio stations and, to a lesser degree, with other advertising media such as television, cable, newspapers, yellow page directories, direct mail, Internet and outdoor and transit advertising. Competition for advertising dollars in the radio broadcasting industry occurs primarily within the individual markets on the basis of the above factors, as well as on the basis of advertising rates charged by competitors. Generally, a radio station in one market area does not compete with stations in other market areas.

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

The following discussion summarizes the federal statutes and regulations material to our operations, but does not purport to be a complete summary of all the provisions of the Communications Act or of other current or proposed statutes, regulations, and policies affecting our business. The summaries which follow should be read in conjunction with the text of applicable statutes, rules, regulations, orders, and decisions.

Programming and Operations. The Communications Act requires broadcasters to serve the “public interest.” Stations must periodically document their presentation of programming responsive to local community problems, needs, and interests. Complaints concerning programming may be considered by the FCC at any time.

The FCC has numerous regulations and policies relating to the operation of broadcast stations including, among other things, rules and policies concerning the maximum rates that stations may charge for certain political advertising, sponsorship identification disclosures, the advertisement of contests and lotteries, the quantity of educational and informational programming directed to children, the amount of commercial matter in and adjacent to certain children’s programming, closed captioning and video description, the emergency alert system, the provision of emergency information to individuals with hearing and visual disabilities, the advertising of cigarettes or smokeless tobacco, the provision of equal opportunities in broadcast employment, the volume level of commercials, broadcast technical operations, and the requirement to maintain extensive materials regarding station operations in on-line public inspection files as well as certain other information in local public inspection files. In addition, federal law and the FCC’s rules prohibit the broadcast of obscene material at any time, and the broadcast of indecent or profane material from 6 a.m. through 10 p.m. local time. In recent years, the FCC and its indecency prohibition have received much attention. The maximum monetary penalty for the broadcast of obscene, indecent, or profane material is $325,000 for each “violation,” with a cap of $3 million for any “single act.” The FCC’s indecency enforcement policy was reviewed by the U.S. Supreme Court in 2009 and again in 2012. In the 2012 case, which involved review of decisions from the Second Circuit, the Court vacated, as a violation of the Due Process clause, the FCC’s indecency sanctions against certain broadcasters involving particular instances of “fleeting expletives” and brief nudity. The Court’s decision left open the FCC’s authority to regulate broadcast indecency and declined to rule on the First Amendment issues that had been presented. Meanwhile, in another case, the Third Circuit in November 2011 held, as it had earlier, that the FCC’s sanction for a different instance of brief nudity was a departure from its own policies on actionable indecency. The Third Circuit decision was appealed to the U.S. Supreme Court, but the Court in June 2012, after its decision involving the cases from the Second Circuit, declined to take up the case.

New Licenses. The FCC licenses television and radio stations to particular communities. The FCC occasionally accepts applications for authority to construct new television and radio stations on unused channels. Auctions are held by the FCC if more than one party files an application for the same unused channel. A petition to deny a winning application must be resolved through FCC consideration of the applicant’s qualifications and the application’s compliance with FCC rules.

Assignments and Transfers. Assignment of a license or transfer of control of a broadcast licensee requires prior FCC consent. The FCC releases public notice of applications for such consent, and interested parties may petition to deny such applications. The FCC considers the qualifications of the assignee or transferee, the compliance of the proposed transaction with the FCC’s ownership rules, and other factors in order to determine whether the public interest would be served by such change in ownership or control.

Digital Broadcasting. The Communications Act and the FCC required full power television stations to transition from analog television service to digital television service in 2009. All of our full power television stations have completed the transition and are operating with digital facilities in compliance with FCC rules. Class A Television Stations, Low Power Television Stations, and Television Translator Stations are required to convert to digital television service no later than September 1, 2015. In connection with the low power digital transition, low power stations operating on “out-of-core” channels 52 through 69 were required to vacate operations (analog or digital) on those channels by December 31, 2011. Of our Class A Television Stations, Low Power Television Stations, and Television Translator Stations, the following are already providing digital service:

KBFX-CD, KUNW-CD, KUNP-LD, KVVK-CD, KXPI-LD, KUYY-LD, K07QC-D, K10AW-D, K11CP-D, K35LD-D, K11GH-D, K13HM-D, K26HO-D, K29KR-D, K18HH-D, K21LY-D, K21MB-D, K38GS-D, K39KR-D, and K43EJ-D.

The FCC’s rules permit, but do not require, FM and AM stations to broadcast digitally. Digital FM stations are permitted to operate with a power level up to ten percent of the station’s authorized analog power.

License Renewal. Under the Communications Act, the FCC generally may grant and renew broadcast licenses for eight-year terms (subject to short-term renewals in certain circumstances). The Communications Act requires the FCC to renew a broadcast license if the FCC finds that (i) the station has served the public interest, convenience, and necessity; (ii) there have been no serious violations of either the Communications Act or the FCC’s rules and regulations by the licensee; and (iii) there have been no other serious violations that taken together constitute a pattern of abuse. During the consideration of a license renewal application, interested parties may petition to deny the application. The FCC will grant the renewal application and dismiss any petitions to deny if it determines that the licensee meets the statutory renewal standards based on a review of the licensee’s performance during the preceding license term. Competing applications for the same frequency may not be filed until after the FCC has denied an incumbent’s application for license renewal and opened a filing window for an auction among new applications.

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

While the vast majority of licenses are renewed by the FCC, there can be no assurance that our licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If a station license is not renewed by the expiration date, the station’s authority to operate is automatically extended while a renewal application is on file and under review.

The non-renewal or revocation of one or more of our FCC licenses could harm our broadcasting operations.

Ownership Restrictions. The Communications Act and FCC rules limit the ability of individuals and entities to have ownership or other attributable interests in certain combinations of broadcast stations and other media.

Under the FCC’s attribution policies, the following relationships and interests generally are attributable for purposes of the FCC’s broadcast ownership restrictions:

If an attributable shareholder of the Company or other attributable party has or acquires an attributable interest in other broadcast stations or daily newspapers, depending on the location and nature of such stations or newspapers, such interest may violate the FCC’s multiple ownership rules and may impact our business or ability to acquire or sell media properties in the future.

The FCC’s currently effective ownership rules that are material to our operations are summarized below. Note that certain of these rules are subject to modification in a pending FCC rulemaking proceeding also described below.

The Communications Act, as amended in 2004, prohibits a single entity from holding attributable interests in television stations that have an aggregate national audience reach exceeding 39% of television households. For entities that have attributable interests in two stations in the same market, the FCC counts the audience reach of the stations in that market only once in computing the national ownership cap. Further, the FCC currently discounts the audience reach of a UHF station by 50% when computing the national television ownership cap due to the historically weaker signal coverage for stations operating in the UHF band (frequency channels above 13). In light of the completion of the national transition to digital television, the propriety of the UHF discount may be the subject of further administrative proceedings, but the discount currently remains in effect. At present, we comply with the FCC’s National Television Ownership Limits.

Detailed FCC rules regulate the extent to which a party may have an attributable interest in more than one full-power television station in the same area (the “Local Television Ownership Limits”). Common ownership of multiple television stations is permitted where the stations are in different Nielsen DMAs. Common ownership of two television stations in the same DMA is permitted where (i) there is no impermissible contour overlap among the stations; (ii) where at least one of the two stations is not ranked among the top four stations in the DMA and at least eight separately-owned full-power television stations will remain after the combination is created; or (iii) where certain waiver criteria are met for “failed” or “failing” stations. (In a pending FCC rulemaking, the FCC has proposed to eliminate the contour overlap provision of the rule.) In addition, stations designated by the FCC as “satellite” stations, which are full-power stations that typically rebroadcast the programming of a “parent” station, are exempt from the Local Television Ownership Limits. Class A Television Stations, Low Power Television Stations, and Television Translator Stations are not subject to the Local Television Ownership Limits. At present, we comply with the FCC’s Local Television Ownership Limits.

Similarly, FCC rules regulate the extent to which a party may have an attributable interest in more than one radio station in the same market, as defined by Arbitron and reported by BIA/Kelsey, or, in the case of stations within communities of license located outside of Arbitron-rated markets, certain overlapping or intersecting signal contours. Depending on the size of the market, a single entity may have attributable interests in two to eight commercial radio stations (with no more than five stations in the same service (AM or FM)). At present, we comply with the FCC’s Local Radio Ownership limits.

A party may have attributable interests in both television and radio stations in the same local market. The specific number of such stations is governed by FCC rules, depending on the number of independent media voices in the market. In large markets (markets with at least 20 independently owned media voices), a single entity can own up to one television station and seven radio stations or, if permissible under the Local Television Ownership Limits, two television stations and six radio stations. In a pending FCC rulemaking, the FCC has proposed to eliminate the radio/television cross-ownership rule. If adopted, the proposed rule would allow a single owner to hold the maximum number of each type facility (radio or television) that would otherwise be permitted under the Local Radio Ownership Limits or Local Television Ownership Limits.

The FCC’s rules prohibit the licensee of a radio or television station from directly or indirectly owning, operating, or controlling a daily newspaper if the station’s specified service contour encompasses the entire community where the newspaper is published (the “Broadcast-Newspaper Cross-Ownership Rule”). The FCC revised the Broadcast-Newspaper Cross-Ownership Rule in February 2008, but the Third Circuit in July 2011 vacated and remanded the revised rule.

In December 2011, various parties filed petitions seeking review of the Third Circuit decision by the U.S. Supreme Court, but the court declined to review the case in 2012. A pending FCC rulemaking initiated in December 2011 has proposed a new relaxed rule that, if adopted, would potentially allow, subject to the application of additional standards, newspaper/broadcast cross-ownership in the top 20 DMAs.

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

Local Marketing Agreements. LMAs, sometimes also referred to as “Time Brokerage Agreements” or “TBAs” typically permit a third party to provide the programming and sell the advertising time during a substantial portion of the broadcast day of a radio or television station, subject to the requirement that the station’s programming content and operations remain at all times under the independent control of the station licensee. At present, FCC rules permit LMAs, but the licensee of a broadcast station programming more than 15% of the time on another station in the same market is generally considered to have an attributable interest in the other station. In June 2012, we amended our LMA with South Sound pursuant to which we manage South Sound’s FM radio station licensed in Oakville, Washington to extend the LMA term for another five years, which permits us to provide programming for and sell the advertising time of KOMO-FM, Oakville, Washington. While the KOMO-FM LMA is attributable to us, such attribution does not cause us to exceed the FCC’s ownership limitations.

Joint Sales Agreements. JSAs typically involve the assignment, for a fee, of the right to sell substantially all the commercial advertising on a station. The typical JSA is distinct from an LMA in that a JSA (unlike an LMA) normally does not involve programming. Under the FCC’s attribution policies, the licensee of a radio station selling more than 15% of the advertising of another radio station in the same market is considered to have an attributable interest in the other station. In contrast, television station JSAs are not attributable under the FCC’s policies. An FCC proceeding to extend attribution to television JSAs was initiated in 2004 but remains pending. Additionally, in the pending 2010 Quadrennial Review the FCC is considering attribution of television JSAs. In January 2011, we entered into a ten-year JSA with NPG of Idaho, Inc., a subsidiary of News Press Gazette Company, which owns and operates KIFI-TV, Idaho Falls, Idaho. Under the JSA, NPG provides certain services supporting the operation of our television station in Idaho Falls, KIDK-TV, and sells substantially all of the commercial advertising on our station.

Quadrennial Regulatory Reviews. Section 202(h) of the Telecommunications Act of 1996 requires the FCC to review its ownership rules every four years to “determine whether any of such rules are necessary in the public interest as the result of competition.” Under Section 202(h), the FCC “shall repeal or modify any regulation it determines to be no longer in the public interest.” The FCC has commenced its 2010 Quadrennial Review of its media ownership rules, and it remains pending. As discussed above, in December 2011 the FCC opened a rulemaking proceeding as part of the 2010 Quadrennial Review and following the Third Circuit’s decision vacating and remanding previously adopted rules.

Network Affiliate Issues. FCC rules regulate the television network-affiliate relationship. Among other things, these rules require network affiliation agreements to (i) prohibit networks from requiring affiliates to clear time previously scheduled for other use, (ii) permit an affiliate to reject network programs it believes are unsuitable for its audience, and (iii) permit affiliates to substitute programs believed to be of greater local or national importance than network programming. In 2008, the FCC resolved a petition to review certain of these rules by clarifying its limitations on the extent to which the networks can exert control over the operations of their affiliates.

Cable and Satellite Carriage of Local Television Signals. Pursuant to the Cable Television Consumer Protection and Competition Act of 1992, as amended (“1992 Cable Act”) and the FCC’s “must carry” regulations, cable operators are generally required to carry the primary digital broadcast channel, but not multicast programming channels, of local commercial television stations electing mandatory carriage. Except for certain small cable systems, must-carry signals broadcast in high definition must be carried on cable systems in high definition. To ensure that all cable subscribers, including those with analog television sets, continue to be able to view all must-carry broadcast stations, for a period of three years after the June 12, 2009, national digital transition, cable operators must (with the exception of certain small cable systems) either (i) provide analog cable subscribers with must-carry digital television signals in an analog format or (ii) provide subscribers using analog television sets with the necessary equipment to view the must-carry digital signals. These “viewability” requirements expired (or “sunset”) on June 12, 2012, and are no longer in effect, while the rest of the must-carry regime remains intact. In 2009, the U.S. Court of Appeals for the Second Circuit affirmed the constitutionality of the cable must-carry rules. The U.S. Supreme Court declined to review the Second Circuit’s decision.

The 1992 Cable Act also prohibits cable operators and other multichannel video programming distributors from retransmitting a broadcast signal without obtaining the station’s consent. On a cable system-by-cable system basis, a local television broadcast station must make a choice once every three years whether to proceed under the “must carry” rules or to waive the right to mandatory, but uncompensated, carriage and, instead, to negotiate a grant of retransmission consent to permit the cable system to carry the station’s signal, in most cases in exchange for some form of consideration from the cable operator. The most recent carriage election deadline was October 1, 2011, for the period January 1, 2012, through December 31, 2014.

Under the “carry-one, carry-all” provision of the Satellite Home Viewer Improvement Act, as amended by the Satellite Home Viewer Extension and Reauthorization Act of 2004 (“SHVERA”) and the Satellite Television Extension and Localism Act of 2010 (“STELA”), a satellite carrier is generally required to retransmit the primary digital channel of all local television stations in a DMA if the satellite carrier chooses to retransmit the primary channel of any local television station in that DMA. Over a four-year period, ending February 17, 2013, satellite carriers were required to begin carrying such stations’ high definition signals without down-resolution. Television stations located in markets in which satellite carriage of local stations is offered may elect mandatory carriage or retransmission consent once every three years. The most recent carriage election deadline was October 1, 2011, for the period January 1, 2012, through December 31, 2014.

Under STELA, which extended some of the compulsory copyright license provisions of SHVERA for 5 years, satellite carriers are permitted in certain circumstances to retransmit distant broadcast network signals from stations outside the local television market to unserved households that cannot receive an over-the-air signal of a local network station. In November 2010, the FCC released Orders implementing certain provisions of STELA. Among other things, the FCC’s Orders interpreted STELA to allow satellite carriers to import a duplicating adjacent market “significantly viewed” network station in a variety of circumstances, including if the satellite carrier and local affiliate are at an impasse in retransmission consent negotiations.

In fall 2011, Crestview Cable Communications filed a Petition for Special Relief with the FCC seeking to modify the must-carry markets of certain Bend, Oregon, television stations, including ABC affiliate KOHD, to add the communities of Prineville (Crook County, Oregon) and Culver, Madras, and Metolius (Jefferson County, Oregon), each of which is located in the Portland DMA. Our station KATU (TV), Portland, Oregon, is an ABC-affiliated station located in the Portland DMA which could be negatively impacted if the FCC grants Crestview’s Petition. The Company timely filed an opposition to the petition in December 2011. This matter remains pending.

Non-FCC Regulation. A number of other federal regulations, as well as numerous state and local laws, can either directly or indirectly impact broadcast operations. Included in this category are:

For example, in January 2010, the United States Supreme Court struck down a portion of a federal statute and certain Federal Election Commission rules and held that corporations and labor unions may make unlimited expenditures to advocate the election or defeat of a federal candidate at any point in the election cycle. As a result of the Supreme Court’s decision, it is likely that the number of political advertisements aired on broadcast stations will increase during the weeks leading up to an election.

Proposed Legislation and Regulation and Court Litigation. Congress and the FCC may in the future adopt new laws, regulations, and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation and ownership of our broadcast properties. For example, legislation has been considered in Congress which could remove radio stations’ current exemption from payment of copyright royalties to record companies and performers for music broadcast on radio stations. In addition, in connection with the American Recovery and Reinvestment Act of 2009, the FCC has reviewed various spectrum bands and has recommended that 120 MHz of spectrum in the bands currently licensed to television broadcasters be repurposed for wireless broadband services, and Congress enacted legislation to authorize the FCC to conduct incentive auctions whereby broadcasters may voluntarily give up their spectrum in exchange for payment. The FCC in late 2012 initiated a proceeding to implement the spectrum auction proposals, including a voluntary reverse auction of broadcast spectrum, repacking of the television band, and a forward auction of spectrum for wireless use. This spectrum auction proceeding remains pending. Also, in December 2010, Congress passed legislation which relaxes the FCC’s interference protections afforded to full-service FM stations in order to make more frequencies available for low-power FM stations. In 2011, the FCC revised its policies and procedures relating to community of license changes for FM and AM stations which could make it more difficult for a radio station to move its community of license closer to a larger city; the FCC adopted rules pursuant to a statutory mandate which are now in effect and generally require television stations to acquire new equipment and ensure that the volume level of commercials match that of contiguous programming; the FCC adopted rules requiring certain video material to be closed captioned on websites if it first aired on television with closed captions; the FCC adopted rules requiring certain television stations to provide a certain amount of video described programming per calendar quarter; and the FCC adopted new rules that require stations to maintain extensive materials in on-line public inspection files.

In addition, legislation and regulations that directly or indirectly impact the operation of broadcast stations are now, or may become, the subject of court litigation. The National Association of Broadcasters (“NAB”) initiated litigation against the FCC related to certain aspects of its new on-line public file rules discussed above (particularly certain requirements related to political file records). In January 2013, the NAB asked the D.C. Circuit to hold this case in abeyance pending the FCC’s ruling on a petition for reconsideration of the on-line public file rules or for the FCC’s scheduled review the of the new rules to begin no later than July 2013. In addition, there are multiple copyright lawsuits pending related to certain internet video delivery services. Our Seattle television station, KOMO-TV, was being streamed without our consent, and currently we are a party to a lawsuit concerning such unauthorized streaming –WPIX Inc. et. al. v. ivi, Inc. and Todd Weaver. A federal district court enjoined ivi’s streaming in this case—a decision which was upheld by the Second Circuit in August 2012. On December 21, 2012, ivi filed a petition seeking review of this decision by the U.S. Supreme Court. The Court has not yet indicated if it will hear the appeal. Meanwhile, a federal district court in New York in July 2012 denied a request by the major broadcast networks for a preliminary injunction against the internet streaming

service Aereo, which was retransmitting signals without consent. Then, on December 27, 2012, a federal district court in California issued a preliminary injunction requested by the major broadcast networks against some aspects of the service Aereokiller, also the subject of copyright litigation. Needless to say, this is an active area of litigation with numerous pending cases. We cannot predict the outcome or the impact of these cases or any other matters that are now, or may become, the subject of court litigation.

Our results are subject to seasonal fluctuations, and as a result, second and fourth quarter advertising revenue is typically greater than first and third quarter advertising revenue. This seasonality is primarily attributable to increased consumer advertising in the spring and then increased retail advertising in anticipation of holiday season spending. Furthermore, revenue from political advertising is cyclical and varies based on the timing of federal, state, and local elections, as well as the presence of highly contested initiatives or ballot measures. Advertising revenue is generally higher during national election years due to spending by political candidates and advocacy groups. This political spending typically is heaviest during the fourth quarter.

Our website address is www.fsci.com. We make available on this website under “Investor Relations—SEC Filings,” free of charge, our code of ethics, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 forms and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (the “SEC”). In addition, our code of ethics and Board of Directors committee charters are available on the website under “Investor Relations—Corp. Governance.” Information on our website is not part of this report. In addition, the reports and materials that we file with the SEC are available at the SEC’s website (http://www.sec.gov) and at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC 20549. Interested parties may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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

Another downturn in economic conditions in the United States may adversely affect our results of operations, cash flows and financial condition.

The general economic recovery in the United States continued in 2012; however, factors such as high levels of unemployment, U.S. political gridlock and economic weakness and uncertainty in the Eurozone continued to create uncertainty about the strength and sustainability of the recovery. Any adverse change in economic conditions may again negatively affect our operating results and the broadcast industry in general by, among other things, reducing demand for local and national broadcast advertising and making it more difficult for customers to pay their accounts. In such an environment, we may experience downward pressure on our stock price and credit capacity without regard to our underlying financial strength. If high levels of market disruption and volatility return, our business, financial condition, results of operations and cash flows will likely be adversely affected, possibly materially. Because significant portions of our costs of services are fixed, we may be unable to materially reduce costs to offset any declines in our revenues. As a result, we could suffer net losses if economic conditions once again deteriorate. In particular, any renewed downturn in the national economy could result in decreased national advertising sales. If this happens, it could harm our results of operations because national advertising sales represent a significant portion of our television advertising net revenue. In addition, our ability to access the capital markets may be severely restricted which could reduce our flexibility to react to changing economic and business conditions. Any such disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Also, our cash balances, which are significantly lower as a result of the dividend we paid in October 2012, will not yield significant interest income in the current low-interest rate environment. Such conservation measures could include deferring capital expenditures and other discretionary uses of cash. Uncertainty about the sustainability of the current economic conditions could also add to the volatility of our stock price. We cannot predict the timing, magnitude or duration of any future economic downturn or any subsequent recovery.

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

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

In addition, our results are subject to seasonal fluctuations, and as a result, second and fourth quarter broadcasting revenue is typically greater than first and third quarter broadcasting revenue. This seasonality is primarily attributable to increased consumer advertising in the spring and then increased retail advertising in anticipation of holiday season spending. Furthermore, revenue from political advertising is cyclical, with political revenue typically higher in even-numbered years compared to odd-numbered years, and varies based on the timing and competitiveness of federal, state, and local elections, as well as the presence of highly contested initiatives or ballot measures.

Also, the occurrence of natural disasters or other circumstances beyond our control may cause us to lose our ability to operate our stations or, if we are able to broadcast under such circumstances, our broadcast operations may shift to around-the-clock news coverage, which would cause the loss of advertising revenues due to the suspension of advertising-supported commercial programming.

Our board of directors is exploring and evaluating strategic alternatives for our company and this process may have an adverse impact on our business.

On January 10, 2013, we announced the decision of our board of directors to commence a formal process to explore and evaluate strategic alternatives, including the engagement of Moelis & Company to act as our financial advisor, which could result in, among other things, a sale of the company, a merger, consolidation, business combination or a disposition of a substantial portion of our assets. In connection with this process, we expect to incur substantial expenses associated with identifying and evaluating potential strategic alternatives. The process of exploring strategic alternatives may be disruptive to our business operations and may not result in the consummation of any transaction. If we are unable to effectively manage the process, our business, financial condition and results of operations could be materially and adversely affected.

We do not intend to comment regarding the evaluation of strategic alternatives until such time as our board of directors has determined the outcome of the process or otherwise has deemed that disclosure is appropriate. As a consequence, perceived uncertainties related to the future of our company may result in the loss of potential business opportunities and may make it more difficult for us to attract and retain qualified personnel and business partners.

In recent years, we have incurred losses. We cannot assure you that we will be able to maintain profitability in the future.

While we had income from continuing operations before income taxes of $21 million and $54.4 million in 2012 and 2011, respectively, as recently as 2009 we had a loss from continuing operations before income taxes of $13.7 million. We cannot assure you that our initiatives to improve our operating performance will be successful or that we will be able to maintain profitability in the future, especially given the current uncertain state of the national and regional economies and its effect on advertising revenues.

Unfavorable resolution of tax returns 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 and the tax authorities have challenged, may in the future challenge certain of our tax positions as a result of

examinations. The U.S. federal statute of limitations remains open for the year 2008 and onward. In 2011, the IRS completed its field examination of our 2008 and 2009 U.S. tax returns and we agreed to a final settlement that required us to pay $168,000 plus $5,000 in interest expense. The IRS completed its field examination of our 2006 and 2007 U.S. tax returns in June 2009 and we paid $856,000 for the settlement of this examination, as well as $31,000 in interest expense. The State of California and Oregon conducted an audit of our 2007 and 2008 state tax returns. In October 2012, we received letters from the State of California, including a closing letter agreeing with our non-business income position subject to additional review, and an additional letter closing the 2007 examination. In November 2011, we received a Proposed Auditor’s Report from the State of Oregon seeking approximately $800,000 in unpaid taxes, interest and penalties in connection with our treatment of the proceeds from our 2007 and 2008 sales of Safeco Corporation stock and dividends received. We continue to oppose the State of Oregon’s position. The final disposition of the proposed audit adjustments could require us to make additional tax payments, which could materially affect our effective tax rate. An unfavorable outcome of a tax audit could result in higher tax costs and payments, thereby negatively impacting our results of operations and cash flows. If our tax positions reflected in our federal, state and local tax returns are challenged by the tax authorities, the final disposition of any such challenges by the tax authorities could require us to make additional tax payments and incur additional costs for tax legal and advisory services. Such a resolution could also materially affect our effective tax rate for future periods.

Difficulties in the automotive, retail and other key advertising categories could materially affect our results and the value of our common stock.

A significant portion of our revenue consists of advertising by companies in the retail and automotive sectors, two sectors that experienced extreme difficulties as recently as 2009. While both industries experienced continued improvement in 2012, renewed difficulties in these and other key industries could adversely affected total advertising expenditures in the United States. Reductions in spending by these and other industries over the course of 2013 could adversely affect our results of operations and cash flows, and the value of our common stock.

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

For our television stations that are affiliated with one of the four major television networks, such affiliation has a significant impact on the composition of the station’s programming, revenue, expenses and operations. In some instances, network affiliation agreements are not renewed, or in limited circumstances, may be cancelled by the network. For example, if a network acquires a television station in a market in which we own a station affiliated with that network, the network will likely decline to renew the affiliation agreement for our station in that market.

Our two largest television stations, KOMO-TV, which broadcasts in Seattle, Washington, and KATU, which broadcasts in Portland, Oregon, have affiliation agreements with ABC Network with current terms expiring in August 2014. The major network affiliations for our television stations other than KOMO-TV and KATU are with CBS or FOX. Our affiliation agreements with CBS generally expire in February 2016. Our FOX affiliation agreement at KBFX-CD in Bakersfield, California expires in June 2014 and our FOX agreement with KXPI in Idaho Falls, Idaho expires in June 2015. The non-renewal of any of our major network affiliation agreements could adversely affect our business and results. While we generally expect to renew our affiliation agreements prior to their expiration, there can be no assurances that we will do so, or on terms that are beneficial to us. Any modification, cancellation, or eventual non-renewal of any of these agreements could harm our operating results. Some of the networks with which our stations are affiliated may require as a condition to the renewal of affiliation agreements, among other things, increased cash payments to the network or other potential terms that could be detrimental to our business. Consequently, our affiliation agreements may not remain in place under existing terms and any of the networks may not continue to provide programming to our stations on the same basis as it currently provides programming. If this occurs, we would need to find alternative sources of programming, which may be less attractive and more expensive.

A change in or loss of network affiliation in a given television market may have many short-term and long-term consequences, depending upon the circumstances surrounding the change. Potential short-term consequences include the following:

Long-term consequences are more difficult to assess, due to the cyclical nature of each of the four major network’s audience share and the fact that national network audience ratings are not necessarily indicative of how a network’s programming is accepted in an individual market. There can be no assurances that any future affiliation agreement will be obtainable on favorable economic terms or other conditions, nor that any network will not change the type, quality, or quantity of programming provided to us in a way that could be detrimental to our operations.

Our operating results are dependent on the success of programming aired by our television and radio stations, which depends in part upon factors beyond our control.

Our advertising revenues are dependent on the success and popularity of our local, network and syndicated programming. We make significant commitments to acquire rights to television and radio programs under multi-year agreements. The success of such programs is dependent partly upon unpredictable factors such as audience preferences, competing programming, and the availability of other entertainment activities. If a particular program is not popular in relation to its costs, we may not be able to sell enough advertising to cover the costs of the program. In some instances, we may have to replace or cancel programs before their costs have been fully amortized, resulting in write-offs that increase operating costs. Our primary Seattle and Portland television stations, which accounted for approximately 62% of our television broadcasting revenue in 2012, are affiliated with the ABC Network. Twelve of our television stations are affiliated with one of the four major television networks, including ABC, six of our television stations are affiliated with Univision and one with MundoFox (both Spanish language), and the remainder are independent or subscribe to various programming services. Any performance decline by ABC, CBS, or other networks or network program suppliers, could harm our business and operating results. We rely on our stations’ ratings points when determining the advertising rates that we receive. The use of new ratings technologies and measurements could adversely impact our program ratings and reduce advertising pricing and spending.

The costs of television programming may increase, which could adversely affect our results of operations.

Programming is a significant operating cost for our television businesses. There can be no assurances that we will not be exposed to increases in costs under future programming arrangements, including, without limitation, for network and syndicated programming. Such increases could have an adverse effect on our results of operations. Acquisitions of program rights for syndicated programming are usually made two or three years in advance and may require multi-year commitments, with little or no guarantee for the programs performance. Any significant shortfall, now or in the future, in advertising revenue and/or a decline in the expected popularity of the programming for which we have acquired rights could lead to less than expected revenue which could result in programming write-offs. Additionally, in some instances, programs must be replaced before their costs have been fully amortized, resulting in write-offs. These write-offs increase station operating costs and decrease station

earnings. An increase in the cost of news programming and content or in the costs for on-air and creative talent may also increase our expenses, particularly during events requiring extended news coverage, and therefore adversely affect our business and operating results.

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

Syndication agreements are licenses to broadcast programs that are produced by production companies. Such programming can form a significant component of a station’s programming schedule. Syndication agreements are subject to cancellation, which may affect a station’s programming schedule, and we cannot assure you that we will continue to be able to acquire rights to syndicated programs once our current contracts for these programs end.

If we are unable to respond to changes in technology and evolving industry trends, our television and radio businesses may not be able to compete effectively.

New technologies could continue to adversely affect our television and radio stations. Information delivery and programming alternatives including cable, direct satellite-to-home services, video provided by telephone companies, satellite radio, pay-per-view, over-the-top video, the Internet (including video streaming services such as Netflix and Hulu), digital video recorders and home video and entertainment systems, portable audio and video entertainment systems, and mobile phones have fractionalized television and radio audiences and expanded the numbers and types of distribution channels for advertisers to access. Over the past decade, cable and satellite television programming services, Internet video streaming services and other emerging video distribution platforms have captured an increasing market share, while the aggregate viewership of the major television networks has declined. In addition, the expansion of cable and satellite television, Internet video streaming services and other technological changes including the usage of video-on-demand have increased, and may continue to increase, the competitive demand for programming. Such increased demand, together with rising production costs, may increase our programming costs or impair our ability to acquire desired programming. Technologies that enable users to view content of their own choosing, in their own time, and to fast-forward or skip advertisements, such as DVRs, portable digital devices, video-on-demand, and Internet video streaming services, may cause changes in consumer behavior that could affect the attractiveness of our offerings to advertisers. Other advances in technology, such as increasing use of local-cable advertising “interconnects,” which allow for easier insertion of advertising on local cable systems, have also increased competition for advertisers.

In addition, video compression techniques permit greater numbers of channels to be carried within existing bandwidth. These compression techniques as well as other technological developments are applicable to all video delivery systems, including over-the-air broadcasting and cable satellite systems, and have the potential to provide vastly expanded programming to highly targeted audiences. Reduction in the cost of creating additional channel capacity could lower entry barriers for new channels and encourage the development of increasingly specialized niche programming. This ability to reach very narrowly defined audiences may alter the competitive dynamics for advertising expenditures. We are unable to predict the effect that these and other technological changes will have on the television industry or the future results of our television businesses. If we do not effectively respond to these technological changes, we may be unable to effectively compete for advertising revenue and programming.

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

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

In addition to competing with other media outlets for audience share, we also compete for advertising revenue that comprises our primary source of revenue. Our stations compete for advertising revenue with other television and radio stations in their respective markets, as well as with other advertising media such as newspapers, the Internet, magazines, outdoor advertising, transit advertising, yellow page directories, direct mail and local cable systems. Cable companies and others have national advertising networks that increase the competition for national advertising. Our stations also compete against other local media outlets for exclusive local access to programming. Competition for non-network programming involves negotiating with national program distributors or syndicators that sell first-run and off-network packages of programming.

Our operating results are dependent in part upon the ability of each of our stations to compete successfully in its market, and there can be no assurance that any one of our stations will be able to maintain or increase its current audience share or revenue share. Our television stations compete for audiences and advertising revenues primarily on the basis of programming content and advertising rates. Advertising rates are set based upon a variety of factors, including a program’s popularity among the advertiser’s target audience, the number of advertisers competing for the available time, the demographic make-up of the market served and the availability of alternative advertising in the market. Our ability to maintain market share and competitive advertising rates depends in part on audience acceptance of our network, syndicated and local programming. To the extent that certain of our competitors have, or may in the future obtain, greater financial, marketing, programming and broadcasting resources, audience share or revenue share, our ability to compete successfully in our broadcasting markets may be impeded.

Recently, third parties have begun to stream broadcast programming over the Internet without permission from broadcast stations. This practice can dilute the value of our programming and adversely affect our stations’ results of operations. In at least one instance, programming from our Seattle television station, KOMO-TV, was being streamed without our consent, and currently we are a plaintiff in a lawsuit concerning such unauthorized streaming—WPIX Inc. et. al. v. ivi, Inc. and Todd Weaver. A federal district court enjoined ivi’s streaming—a decision which was upheld by the Second Circuit in August 2012. On December 21, 2012, ivi filed a petition seeking review of this decision by the U.S. Supreme Court. The Court has not yet indicated if it will hear the appeal. Litigation involving other video delivery services is also ongoing, as discussed above. We cannot predict the ultimate outcome of the litigation.

Changes by the national broadcast television networks in their respective business models and practices could adversely affect our business, financial condition and results of operations.

In recent years, the networks have streamed or allowed others to stream their programming on the Internet in very close proximity to said programming’s broadcast on local television stations, including those we own. Networks have also moved programming, including some premium programming, to non-broadcast distribution platforms like cable channels owned by the networks. These and other practices by the networks dilute the exclusivity and value of network programming originally broadcast by the local stations and could adversely affect the business, financial conditions and results of operations of our stations.

If we are unable to secure or maintain carriage of our television stations’ signals over cable and/or direct broadcast satellite systems, our television stations may not be able to compete effectively.

Pursuant to FCC rules, local television stations may elect every three years to either (1) require cable and/or direct broadcast satellite operators to carry the station’s primary programming stream or (2) enter into retransmission consent negotiations for carriage, which may include carriage of a station’s primary and multicast programming streams. Unless a retransmission consent agreement is reached, cable and satellite operators are not required to carry our multicast programming streams. At present, we have retransmission consent agreements with the major cable operators in our markets and both satellite providers, including carriage of certain of our multicast programming streams. If our retransmission consent agreements are terminated or not renewed, or if our broadcast signals are distributed on less favorable terms than those of our competitors, our ability to compete effectively may be adversely affected.

In recent years, there have been several high-profile disputes in retransmission consent negotiations between broadcasters and cable and satellite operators. In 2010, several cable and satellite operators filed a petition with the FCC seeking the agency’s intervention in the retransmission consent process, and in 2011, the FCC initiated a proceeding on the retransmission consent rules. It is uncertain what, if any, impact these FCC proceedings may have on our television stations’ ability to secure and maintain signal carriage over cable or satellite, and whether our ability to compete effectively may be adversely affected.

Pending initiatives to reallocate television spectrum could, if adopted, adversely affect our business, operation results, and stock price.

New mobile communications technologies are increasingly offering Internet broadband services using wireless spectrum. In connection with the FCC’s development of a National Broadband Plan—a plan the FCC was required to develop pursuant to the American Recovery and Reinvestment Act of 2009 to ensure widespread access to broadband capability throughout the United States—the FCC has expressed concern that the United States will not have spectrum sufficient to meet demand for wireless broadband services in the near future. The National Broadband Plan recommends that 120 MHz of spectrum in the bands currently allocated to television broadcasters be reallocated for wireless broadband services. Various scenarios are being considered, including voluntary reallocation of spectrum that broadcasters agree to surrender, which may be all or a portion of a particular station’s spectrum, and compensation to broadcasters from the proceeds from the auction of reallocated spectrum to other services (on February 22, 2012 the President signed into law legislation that authorizes the FCC to conduct such auctions). In December 2010, the FCC initiated a proceeding to begin its efforts to reallocate the television spectrum. This proceeding remains pending. One proposal in this proceeding is to establish a framework in which two or more television stations may share a single 6 MHz channel. In the meantime, the FCC in late 2012 initiated a proceeding to implement its spectrum auction proposals, including a voluntary reverse auction of broadcast spectrum, repacking the television band, and a forward auction of spectrum for wireless use. The spectrum auction proceeding remains pending. This repacking and reallocation could limit our ability to realize the full potential of digital television, including high definition, multicast programming, and mobile digital television. Related reductions in the quality or quantity of our services may impede our ability to compete for programming, diminish the size of our audience, or reduce our advertising revenues. We cannot predict the ultimate outcome of any proposals made in this or related proceedings; however, the reallocation of all or some portions of our television stations’ spectrum and increased competition from new mobile communications technologies could materially affect our operating results, financial condition, and stock price.

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

Section 202(h) of the Telecommunications Act of 1996 requires the FCC to review its ownership rules every four years to “determine whether any of such rules are necessary in the public interest as the result of competition.” Under Section 202(h), the FCC “shall repeal or modify any regulation it determines to be no longer

in the public interest.” The FCC’s 2002 and 2006 Quadrennial Reviews were both appealed to the U.S. Court of Appeals for the Third Circuit, and as a result, the FCC’s rules currently in effect are generally the same as they were prior to the FCC’s 2002 review.

In connection with the FCC’s 2010 Quadrennial Review, in late December 2011 the FCC proposed certain changes to its media ownership rules. In general, the FCC has proposed to liberalize its broadcast/newspaper cross-ownership rule and eliminate the radio/television cross-ownership rule. We cannot predict the outcome of this proceeding nor the effect that any particular outcome will have on our stations and business. In addition to potentially providing acquisition opportunities for us, any relaxation of ownership restrictions may provide a competitive advantage to those with greater financial and other resources than we possess.

Changes in laws and regulations of the broadcasting industry and changes in enforcement policies may have an adverse effect on our business.

The broadcasting industry is subject to extensive regulation by the FCC under the Communications Act. Compliance with and the effects of existing and future regulations could have a material adverse impact on us.

We are required to obtain licenses from the FCC to operate our radio and television stations. Issuance, renewal, assignment, and transfer of broadcast station operating licenses require FCC approval. Under the Communications Act, the FCC generally may grant and renew broadcast licenses for terms of eight years, though licenses may be renewed for a shorter period or denied under certain circumstances. FCC licenses for our various television and radio stations expire in 2014 or 2015. While the majority of licenses are renewed by the FCC, we cannot be assured that our licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If the FCC decides to include conditions or qualifications in any of our licenses, we may be limited in the manner in which we may operate the affected stations.

We must comply with extensive FCC ownership regulations and policies. In general, the FCC’s ownership rules limit the number of television and radio stations that we can own in a market and the number of television stations we can own nationwide. The FCC attributes interests held by, among others, a licensee entity’s officers, directors, certain stockholders, and in some circumstances, lenders, to that entity for purposes of applying these ownership limitations. The ownership rules may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in a swap transaction if the swap would cause the other company to violate these rules. We may further be prevented from implementing certain joint operations with competitors that might make the operation of our stations more efficient. The ownership rules may limit our ability to conduct our business in ways that we believe would be advantageous and may thereby affect our operating results.

Federal law and the FCC’s rules prohibit the broadcast of obscene material at any time, and the broadcast of indecent or profane material during the period from 6 a.m. through 10 p.m. In recent years, the FCC has been enforcing the law in a subjective and arbitrary fashion which creates uncertainty as to our ability to comply with the rules (in particular during live programming) and impacts our programming decisions. Violation of the indecency rules could lead to sanctions that may adversely affect our business and results of operations. The maximum monetary penalty for the broadcast of obscene, indecent, or profane language or images is $325,000 for each “violation,” with a cap of $3 million for any “single act.” As discussed above, the U.S. Supreme Court in 2012 vacated certain indecency enforcement order on Due Process grounds but left intact the FCC’s indecency enforcement authority. At this time, there are numerous pending indecency complaints awaiting action or dismissal at the FCC. We cannot predict the outcome of the FCC’s indecency enforcement activity or policies or their effect on our operations.

In recent years, the FCC has also vigorously enforced a number of other rules, typically in connection with license renewals. For example, the FCC has issued fines and sanctions for violations of its various rules concerning: equal employment opportunity, public inspection files, children’s programming, commercial time

limits, sponsorship identification, closed captioning, station-conducted contests, and emergency alert systems. We cannot predict the effect that the FCC’s recent vigorous enforcement approach will have on our operations.

Congress and the FCC may in the future adopt new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation and ownership of our broadcast properties. For example, legislation has been considered in Congress which could remove radio stations’ current exemption from payment of copyright royalties to record companies and performers for music broadcast on radio stations. As discussed above, the FCC has a proceeding underway to reallocate the television spectrum, and repack the television band and auction portions of the television spectrum. Also, in December 2010, Congress passed legislation which relaxes the FCC’s interference protections afforded to full-service FM stations in order to make more frequencies available for low-power FM stations. In 2011, the FCC revised its policies and procedures relating to community of license changes for FM and AM stations which could make it more difficult for a radio station to move its community of license closer to a larger city; the FCC adopted rules pursuant to a statutory mandate which generally require television stations to acquire new equipment and ensure that the volume level of commercials match that of contiguous programming; the FCC adopted rules requiring certain television stations to provide a certain amount of video described programming per calendar quarter; and the FCC adopted rules that require stations to maintain extensive materials in on-line public inspection files.

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

As part of our business strategy and subject to market conditions, we plan to continue to evaluate opportunities to sell or acquire television and radio stations. If we make acquisitions in the future, we may need to use more of our existing cash, incur more debt, or issue equity securities, and we may incur contingent liabilities and amortization and/or impairment expenses related to intangible assets. Further, we cannot provide assurance that we will find other attractive acquisition candidates or effectively manage the integration of acquired stations into our existing business. If the expected operating efficiencies from acquisitions do not materialize, if we fail to integrate new stations or recently acquired stations into our existing business, if the costs of such integration exceed expectations or if undertaking such sales or acquisitions diverts management’s attention from normal daily operations of the business, our operating results and financial condition could be harmed.

In addition, television and radio station acquisitions are subject to the approval of the FCC and, potentially, other regulatory authorities. The need for FCC and other regulatory approvals could restrict our ability to consummate future transactions and potentially require us to divest some television or radio stations if the FCC believes that a proposed acquisition would result in excessive concentration in a market, even if the proposed combinations may otherwise comply with FCC ownership limitations.

We have intangible assets and we have recorded substantial impairments of these assets in the past. Future write-downs of intangible assets would reduce net income or increase net loss, which could materially and adversely affect our results of operations and the value of our common stock.

We currently have approximately $53.4 million of goodwill and intangibles included in our total assets, which represents approximately 29% of our total assets. We test goodwill at the reporting unit level and intangible assets annually in October or whenever certain triggering events or circumstances occur, including, but not limited to changing business conditions and outlook, significant slowdown in the economic environment, and significant reduction in our market capitalization, indicating that goodwill or intangible assets might be impaired. For example, we recorded an impairment charge of $76.7 million during the fourth quarter of 2008. In recent years, declines in advertising revenues adversely affected investors’ outlooks on the market value of broadcasting companies including ours. Trends like this may be considered an indicator of impairment, and if they reemerge, they could require us to perform an impairment analysis in advance of our annual impairment testing. In addition,

any significant shortfall in advertising revenue could lead to a downward revision in the fair value of certain reporting segments. If impairment is indicated as a result of future evaluations, we would record a further impairment charge in accordance with accounting rules, which would reduce any reported net income or increase any reported net loss for the period in which the charge is taken, and which could adversely affect the value of our common stock. We may need to take additional impairments in the future, and historical trends may not be indicative of our future impairments. As a result, we could recognize further impairments in future quarters on the approximately $53.4 million goodwill and intangibles currently included in our total assets.

Our business is dependent on the performance of certain key employees, including executive officers and senior operational personnel. While we have entered into change of control agreements with some of our key executives, we do not enter into employment agreements with most of our key executive officers. We also employ several on-air personalities who have significant loyal audiences in their respective markets, with whom we have entered into employment agreements. We cannot assure you that all such key personnel or on-air personalities will remain with us or that our on-air personalities will renew their contracts, particularly in light of our current strategic alternatives process. The loss of any key personnel could harm our operations and financial results.

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

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

We may experience volatility in the market price of our common stock due to the lower trading volume and the concentrated ownership of our common stock.

The market price of our common stock has fluctuated significantly in the past and is likely to continue to be highly volatile. In particular, the volatility of our shares is influenced by lower trading volume and concentrated ownership relative to many of our publicly-held competitors, as well as the recent volatility in the stock market. For example, our closing stock price has ranged from a high of $37.60 per share to a low of $12.00 per share during the period between January 1, 2010 and February 15, 2013. Because several of our shareholders own significant portions of our outstanding shares, our stock is relatively less liquid and therefore more susceptible to large price fluctuations than many other companies’ shares. If these shareholders were to sell all or a portion of their holdings of our common stock, the market price of our common stock could be negatively impacted. The effect of such sales, or of significant portions of our stock being offered or made available for sale, could result in strong downward pressure on our stock price. Investors should be aware that they could experience significant short-term volatility in our stock if such shareholders decide to sell all or a portion of their holdings of our common stock at once or within a short period of time.

Our stock price may fluctuate in response to a number of events and factors, including without limitation, quarterly variations in operating results; the outcomes of our review of strategic alternatives; announcements by us or our competitors; announcements relating to strategic decisions or key personnel; industry developments; service disruptions; acts of war, terrorism, or national calamities; changes in financial estimates and recommendations by security analysts; the operating and stock price performance of other companies that investors may deem comparable to us; and news reports relating to trends in our markets or general economic conditions.

In addition, in recent years the stock market has experienced significant price and volume fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our common stock. When the market price of a company’s stock drops significantly, shareholders often institute securities class action litigation against that company. Any litigation against us could cause us to incur substantial costs, divert the time and attention of our management and other resources or otherwise harm our business.

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

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

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

Our corporate headquarters and the majority of our operations are located in the Pacific Northwest and we own two television stations in California. The Pacific Northwest and California have from time to time experienced earthquakes. We do not know the ultimate impact on our operations of being located near major earthquake faults, but an earthquake could harm our operating results. Our broadcasting towers may also be affected by other natural catastrophes, such as forest fires. Our insurance coverage may not be adequate to cover the losses and interruptions caused by earthquakes or other natural catastrophes.

Television Segment Properties. Our television stations other than KOMO TV and KUNS TV operate from offices and studios owned by our Fisher Broadcasting Company subsidiary in the markets listed in “Business – Television Segment”. KOMO TV and KUNS TV operate from the offices and studios in Fisher Plaza, a facility which we sold in December 2011 and in which we currently lease space. Television transmitting facilities and towers are also generally owned by Fisher Broadcasting in California, Idaho, Oregon and Washington. In each of Boise, Idaho and Portland, Oregon, our local television station is a member in a limited liability company with other broadcast companies. Each limited liability company was formed to construct and operate a joint use tower and transmitting site for the broadcast of radio and digital television signals. The land on which the towers reside is leased by the limited liability companies from another company or entity.

Radio Segment Properties. Our Seattle stations are located in Fisher Plaza, a facility which we sold in December 2011 and in which we currently lease space. Radio transmitting facilities and towers are owned by Fisher Broadcasting Company

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

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

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

We estimate that at December 31, 2012, there were approximately 2,600 holders of our common stock, including holders whose stock is in nominee or “street name” accounts through brokers and other institutions.

In September 2012, our Board of Directors declared a cash dividend of $10.00 per common share, or approximately $88.8 million, which was paid on October 19, 2012 to holders of record on September 28, 2012. On November 1, 2012, our Board of Directors declared a quarterly cash dividend of $0.15 per common share, or approximately $1.3 million, which was paid on December 17, 2012 to holders of record on November 30, 2012. We did not declare cash dividends in 2011, 2010 or 2009.

See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for discussion of the impact of our debt covenants on dividends.

Following are our monthly stock repurchases for the fourth quarter of 2012, all of which were purchased as part of publicly announced plans or programs:

The stock repurchases during the fourth quarter of 2012 were made pursuant to the plan publicly announced on December 16, 2011, to repurchase up to an aggregate of $25 million of our outstanding shares of common stock. This plan expired on December 31, 2012. However, on December 17, 2012, we announced that our Board of Directors had authorized the repurchase of up to $15 million of our outstanding common stock through a new repurchase program to be effective from January 1, 2013 through December 31, 2013.

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filing under the Securities Act of 1933, as amended or the Exchange Act.

The following graph compares the cumulative 5-year total return attained by shareholders on our common stock relative to the cumulative total returns of the S & P 500 Index, and a customized peer group of 12 companies listed in footnote 1 below. The graph tracks the performance of a $100 investment in our common stock, in the peer group, and the index (with the reinvestment of all dividends) from December 31, 2007 to December 31, 2012.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements, including the Notes to Consolidated Financial Statements contained in this Form 10-K. The selected financial data for the years ended December 31, 2009 and 2008 and the balance sheet data as of December 31, 2010, 2009 and 2008 are derived from historical consolidated financial statements not included herein. The selected consolidated financial data for 2008 does not reflect the reclassification of the six Great Falls, Montana radio stations as discontinued operations. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

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

This discussion is intended to provide an analysis of significant trends and material changes in our financial condition and operating results during the period from 2010 through 2012.

We are an integrated media company. We own and operate 13 full power (including a 50%-owned television station) and seven low-power television stations and three owned radio stations (in addition to one managed radio station). Our television stations are located in Washington, Oregon, Idaho and California, and our radio stations are located in Washington. We lease a significant amount of space at Fisher Plaza, a mixed-use facility in Seattle, Washington, that serves as the home for our corporate offices and our Seattle television, radio and internet operations. We had owned Fisher Plaza until its sale in December 2011. In connection with the sale, we leased-back our existing space for an initial 12-year term, as discussed in greater detail below.

Our broadcasting operations receive revenue from the sale of local, regional and national advertising and, to a much lesser extent, from retransmission consent fees, 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, particularly those affecting the Pacific Northwest 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.

Our television revenue is significantly affected by network affiliation and the success of programming offered by those networks. We have 13 television stations which are affiliated with one of the four major networks. Our two largest television stations, KOMO TV and KATU TV, accounted for approximately 62% percent of our television broadcasting revenue in 2012 and are affiliated with the ABC Television Network. Six of our television stations are affiliated with Univision (Spanish language) and the remainder of our television stations are independent or subscribe to various programming services. Our affiliation agreements with the ABC Television Network expire in August 2014. Our affiliation agreements with the CBS Television Network generally expire in February 2016. Our FOX affiliation agreement for KBFX-CA in Bakersfield, California and KXPI-LP in Idaho Falls, Idaho, expires in June 2014 and in June 2015, respectively. Our affiliation agreement with Univision expires in December 2014. The non-renewal of any of our major network affiliation agreements could adversely affect our business and results. 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.

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

The following significant developments affect the comparability of our consolidated financial statements for the years ended December 31, 2012, 2011 and 2010.

Special and Quarterly Cash Dividend. In September 2012, our Board of Directors declared a cash dividend of $10.00 per common share, or approximately $88.8 million, which was paid on October 19, 2012 to holders of record on September 28, 2012. Additionally, on November 1, 2012, our Board of Directors declared a quarterly cash dividend of $0.15 per common share, or approximately $1.3 million, which was paid on December 17, 2012 to holders of record on November 30, 2012.

Stock Repurchase Program. In December 2011, our Board of Directors approved a 2012 stock repurchase program authorizing the repurchase of up to an aggregate of $25.0 million of our outstanding shares of common stock. We repurchased and retired 100,852 shares for an aggregate cost of $2.5 million during the year ended December 31, 2012. The repurchase program expired at the end of 2012.

Local Marketing Agreement. In June 2012, we amended our 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 our KOMO News Radio AM programming to FM listeners in the Seattle – Tacoma radio market. This LMA and related option agreement supersedes and terminates a previous LMA and option agreement between us and South Sound. Under the terms of the previous option agreement, we were obligated to pay South Sound up to approximately $1.4 million if we did not exercise the option prior to its expiration. Pursuant to the amended LMA, the $1.4 million fee was eliminated and instead we 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 option agreement is non-refundable, but will be applied to the purchase price if we choose to exercise the option. The consideration for the option agreement is presented as other assets on consolidated balance sheet as of December 31, 2012. Advertising revenue earned under this LMA is recorded as operating revenue and LMA fees and programming expenses are recorded as operating costs.

Sale and Leaseback of Fisher Plaza. In December 2011, we completed the sale of Fisher Plaza to Hines Global REIT (“Hines”) for $160.0 million in cash. In connection with the sale of Fisher Plaza we entered into a Lease (the “Lease”) with Hines pursuant to which we leased 121,000 rentable square feet of Fisher Plaza. The Lease has an initial term that expires on December 31, 2023 and we have the right to extend the term for three successive five-year periods. Our corporate headquarters, shared services and Seattle television, radio and internet operations continue to be located at Fisher Plaza. Given our sale of Fisher Plaza in December 2011, our consolidated results in 2012 did not and in future years will not, include any revenue, operating expense or depreciation from Fisher Plaza, and will include rent expense, related to the Lease with Hines.

Sale of Great Falls, Montana Radio Stations. In October 2011, we completed the sale of our six Great Falls, Montana radio stations (the “Montana Stations”) to STARadio Corp. (“STARadio”) for $1.8 million, subject to certain adjustments. In accordance with authoritative guidance we have reported the results of operations of the Montana Stations as discontinued operations in the consolidated financial statements.

Sale of Real Estate. In June 2011, we completed the sale of two real estate parcels in Seattle, Washington not essential to current operations and received $4.2 million in net proceeds and recognized a pre-tax gain of $4.1 million.

Expiration of KING FM Agreement. In May 2011, our Joint Sales Agreement with the classical music station KING FM expired and was not renewed. As a result we no longer record advertising revenue and operating expenses related to KING FM subsequent to the expiration of the agreement.

Joint Sales Agreement. Effective January 1, 2011, we entered into a ten year Joint Sales Agreement (“JSA”) with NPG of Idaho, Inc., a subsidiary of News Press & Gazette Company (“NPG”), that owns and operates KIFI-TV an Idaho Falls, Idaho television station. Under the agreement, NPG provides certain services supporting the operation of our television stations in Idaho Falls, KIDK-TV and KXPI-LP, and sells substantially all of the commercial advertising on our station. We pay NPG a non-material fixed fee pursuant to the agreement, and a performance bonus based on the stations’ results. Contemporaneously, with the JSA, we entered into an option agreement with NPG, whereby they have an option to acquire the stations until January 1, 2021.

ACME Agreement. In March 2010, we entered into a three year consulting and license agreement with ACME Television, LLC (“ACME”) which was effective April 1, 2010. Under the terms of the agreement we provide consulting services to ACME’s The Daily Buzz television show and we also license certain assets of the program in order to produce unique content to be distributed on both traditional broadcast and newly created digital platforms. In conjunction with the agreement, we were granted an option to purchase the ownership rights to The Daily Buzz until September 30, 2012. We initially exercised the option to purchase the Daily Buzz show in the third quarter of 2012 and later revoked the option exercise in the fourth quarter of 2012 at no costs to us. This agreement does not meet the criteria for consolidation. Revenue earned under this agreement is recorded in revenue and programming and other expenses are recorded in operating costs.

Fisher Plaza Fire. On July 2, 2009, an electrical fire contained within a garage level equipment room of the east building of our Fisher Plaza facility disrupted city-supplied electrical service to that building. All of the final repairs and equipment replacement were completed as of December 31, 2009. We incurred approximately $6.8 million of expenditures related to the Fisher Plaza fire, including remediation expenses of $3.7 million and capital expenditures of $3.1 million. There were no further expenses and no reimbursements related to the Plaza fire for the year ended December 31, 2012. During the years ended December 31, 2011 and 2010, we received $223,000 and $3.4 million, respectively of insurance reimbursements.

Retransmission Agreements. In the fourth quarter of 2008 and during 2009 we executed retransmission consent agreements with substantially all of our satellite and cable distribution partners. In the fourth quarter of 2011 we began the process of renewing these contracts and in the second quarter of 2012, we finalized the renewal of a significant portion of our retransmission consent contracts for the 2012-2014 cycles. Retransmission revenue was $22.2 million, $13.4 million and $12.2 million in 2012, 2011 and 2010, respectively.

Repurchase of Senior Notes. In January 2012, we completed our redemption of $61.8 million aggregate principal amount (which represented the remaining outstanding balance) of our 8.625% senior notes due in 2014 (the “Senior Notes”) for a total consideration of $62.7 million in cash plus accrued interest of $1.8 million. A loss on extinguishment of debt was recorded, net of a charge for related unamortized debt issuance costs of $594,000, of approximately $1.5 million.

During 2011, we repurchased or redeemed $39.6 million aggregate principal amount of our Senior Notes for a total consideration of $40.6 million in cash plus accrued interest of $685,000. We recorded a loss on extinguishment of debt, net of a $466,000 charge for related unamortized debt issuance costs, of approximately $1.5 million for the year ended December 31, 2011.

During 2010, we repurchased $20.6 million aggregate principal amount of our Senior Notes for a total consideration of $20.5 million in cash plus accrued interest of $312,000. We recorded a loss on extinguishment of debt, net of a $317,000 charge for related unamortized debt issuance costs, of approximately $160,000 for the year ended December 31, 2010.

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, valuation allowances for deferred income taxes and 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 annual report. 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.

We have identified below our accounting policies that we consider critical to our business operations and the understanding of our results of operations. This is not a complete list of all of our accounting policies, and there may be other accounting policies that are significant to us. For a detailed discussion of the application of these and our other accounting policies, see Note 1 to the consolidated financial statements included in this annual report on Form 10-K.

We have discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and the Audit Committee has reviewed our disclosures relating to them, as presented in this annual report.

Goodwill and indefinite-lived intangible assets. Goodwill represents the excess of purchase price of certain media properties over the fair value of acquired tangible and identifiable intangible net assets. Indefinite-lived intangible assets consist of certain television licenses. In making estimates of fair values for the purposes of allocating the purchase price, we rely primarily on our extensive knowledge of the market and, if considered appropriate, obtain appraisals from appraisers. In estimating the fair value of the tangible and intangible assets acquired, we consider information obtained about each property as a result of pre-acquisition due diligence, including appraisals that may be obtained in connection with the acquisition or financing of the respective assets. We test for the potential impairment of goodwill and indefinite-lived intangible assets (broadcast licenses) at least annually, or whenever events indicate that an impairment may exist.

We evaluate qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance to determine whether it is necessary to perform the first step of the two-step goodwill and indefinite-lived intangible asset test. For its annual impairment test performed in the fourth quarter of 2012, we early adopted amended FASB guidance which permits us to choose to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If based on this assessment we determine it is not more likely than not that the indefinite-lived intangible asset is impaired, then performing the quantitative impairment test is unnecessary.

factors have a positive, neutral or negative impact on the fair value of each reporting unit or indefinite-lived intangible asset. After assessing those various factors, if it is determined that it is more likely than not that the fair value is less than its carrying amount, then the entity will need to proceed to the first step of the two-step impairment test.

The first step of the goodwill impairment test involves a comparison of the fair value of each of our reporting units with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying amount of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested.

The first step of the indefinite-lived intangible impairment test involves a comparison of the fair value with the net book value of the indefinite-lived intangible assets. If the net book value exceeds fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the net book value exceeds the implied fair value of the indefinite-lived intangible assets being tested.

Fair values for goodwill and indefinite-lived intangible assets are determined based on valuations that rely primarily on the discounted cash flow method and market multiples of current earnings, respectively. These methods use future projections of cash flows from each of our reporting units and include, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of our weighted average cost of capital.

We believe our estimate of the value of our goodwill and broadcasting licenses is a critical accounting estimate as the value is significant in relation to our total assets, and our estimate of the value uses assumptions that incorporate variables based on past experiences and judgments about future performance of our stations.

Long-lived assets. We evaluate the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We use our judgment when applying the impairment rules to determine when an impairment analysis is necessary. Factors we consider which could trigger an impairment analysis include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used or significant negative cash flows or industry trends.

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

Television broadcast rights. Television broadcast rights are recorded as assets when the license period begins and the programs are available for broadcast, at the gross amount of the related obligations (or, for non-sports first-run programming, at the amount of the annual obligation). Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast after one year are considered non-current. These programming costs are charged to operations over their estimated broadcast periods using the straight-line method. Program obligations are classified as current or non-current in accordance with the payment terms of the license agreement.

Revenue recognition. Television and radio revenue is recognized, net of advertising agency commissions, when the advertisement is broadcast, subject to meeting certain conditions such as persuasive evidence that an arrangement exists, the price is fixed or determinable and collection is reasonably assured. These criteria are generally met at the time an advertisement is broadcast, and the revenue is recorded net of advertising agency commission. We may trade certain advertising time for products or services, as well as barter advertising time for program material. Trade transactions are generally reported at the estimated fair value of the product or service received, while barter transactions are reported at management’s estimate of the value of the advertising time exchanged, which approximates the fair value of the program material received. Revenue is reported on trade and barter transactions when commercials are broadcast and expenses are reported when products or services are utilized or when programming airs. We receive consideration from certain satellite, cable and wireless providers in return for consent to the retransmission of the signals of our television stations. Revenues from retransmission consent and satellite transmission services are recognized when the service is performed and collection is considered probable. Revenue from production of broadcast media content is recognized when a contracted production is available for distribution. Website advertising revenue is recognized as services are delivered and collection is considered probable. Rentals from broadcast tower and real estate leases are recognized on a straight-line basis over the term of the lease.

Accrued retirement benefits. We maintain a noncontributory supplemental retirement program that was established for key management. No new participants have been admitted to this program since 2001 and the benefits of active participants were frozen in 2005. The program participants do not include any of our current executive officers. The program provides for vesting of benefits under certain circumstances. Funding is not required, but we have made investments in annuity contracts and maintain life insurance policies on the lives of the individual participants to assist in our payment of retirement benefits. We are the owner and beneficiary of the annuity contracts and life insurance policies. Accordingly, the cash value of the annuity contracts and the cash surrender value of the life insurance policies are reported in the consolidated balance sheet. The supplemental retirement program requires continued employment or disability through the date of expected retirement. The cost of the program is recognized over the participants’ average expected future lifetime.

The cost of this program is reported and accounted for in accordance with accounting rules that require significant assumptions regarding such factors as discount rates. We use an independent actuarial consulting firm to assist in estimating the supplemental retirement obligation and related periodic expenses. The discount rate used in determining the actuarial present value of the projected benefit obligation was 3.55% at December 31, 2012 and 4.48% at December 31, 2011. The rate of increase in future compensation was no longer applicable (due to freezing plan benefits for active participants). Although we believe that our estimates are reasonable for these key actuarial assumptions, future actual results could differ from our estimates. Changes in benefits provided by us may also affect future plan costs.

Income taxes. The preparation of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. In assessing whether, and to what extent, deferred tax assets can be realized, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

We assess the likelihood of the realizability of our deferred tax assets on a quarterly basis. As of December 31, 2012 and December 31, 2011, we had a valuation allowance of $411,000 and $480,000, respectively, on certain of our deferred tax assets. Due to the uncertainty of our ability to generate state taxable income, a full valuation allowance had been established on our deferred state tax assets in prior years; however, $1.8 million of our valuation allowance was released in 2011. The amount of net deferred tax assets considered realizable, however, could be reduced in the future if our projections of future taxable income are reduced or if we do not perform at the levels that we project. This could result in an increase in our valuation allowance for deferred tax assets. We have state net operating losses expiring in 2014 through 2031.

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.

The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are sometimes ambiguous. As such, we are required to make certain subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. Accordingly, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of operations.

We record interest and penalties related to income tax positions in interest expense. As of December 31, 2012 and 2011, we had $632,000 of unrecognized tax benefits, respectively, which includes the estimated usage of net operating losses from those years. No penalties or interest was accrued on the unrecognized tax benefit. If our unrecognized tax benefits were recognized $410,000 would impact our effective tax rate. No reserves for uncertain income tax positions were recorded for the year ended December 31, 2010.

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

Variable interest entities. We may enter into JSAs or LMAs with non-owned stations. Under the terms of these agreements, we make specific periodic payments to the station’s owner-operator in exchange for the right to provide programming and/or sell advertising on a portion of the station’s broadcast time. Nevertheless, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station. Generally, we continue to operate the station and sell advertising under the LMA agreement and sell advertising under the JSA agreement until the termination of such agreement. As a result of these agreements, we may determine that the station is a Variable Interest Entity (“VIE”) and that we are the primary beneficiary of the variable interest. We also may determine that a station is a VIE in connection with other types of local service agreements entered into with stations in markets in which we own and operate a station.

Stock-based compensation. We use the Black-Scholes option pricing model to estimate the fair value of stock option awards. Our estimation of the fair value of stock option awards on the date of grant using an option pricing model is affected by our stock price, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected life of the award, our expected stock price volatility over the term of the award, forfeitures and projected exercise behaviors. The Black-Scholes option pricing model requires the input of subjective assumptions and other reasonable assumptions could provide differing results.

Contingencies. In the ordinary course of business, we are involved in legal proceedings regarding contractual and employment relationships and a variety of other matters. We record contingent liabilities resulting from claims against us, including related legal costs, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing probability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about the potential actions of third party claimants and courts. Currently, we do not believe that any of our pending legal proceedings or claims will have a material impact on our consolidated financial position or results of operations.

In July 2012, the FASB issued an ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which simplifies the manner in which companies test indefinite-lived intangible assets for impairment. The accounting update provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity determines that this is the case, it is required to perform the currently prescribed two-step impairment test to identify potential impairment and measure the amount of impairment loss to be recognized for the indefinite-lived intangible asset (if any). This guidance is effective for our fiscal year beginning January 1, 2013, with early adoption permitted. We elected early adoption of the new guidance and determined that the effect of adopting this statement did not have an impact on our consolidated financial statements.

We report financial data for two reportable segments: television and radio. The television segment includes the operations of our 20 owned and/or operated television stations (including a 50%—owned television station) and our internet business. The radio segment includes the operations of our three radio stations and one managed radio station. Prior to 2012, we also included Fisher Plaza as a reportable segment which included the operations of a communications center located near downtown Seattle that serves as home for our Seattle-based television, radio and internet operations, our corporate offices, shared services and third-party tenants. In December 2011, we completed the sale of Fisher Plaza to Hines for $160.0 million in cash. Our corporate headquarters and Seattle-based television, radio and internet operations continue to be located at Fisher Plaza.

We disclose information about our reportable segments based on the measures we use in assessing the performance of those reportable segments. We use “segment income from continuing operations” to measure the operating performance of our segments which represents income from continuing operations before depreciation and amortization, gain on sale of real estate, net, gain on sale of Fisher Plaza, net, Plaza fire reimbursements, net, and gain on exchange of assets, net. Additionally, the performance metric for segment income from continuing operations excludes the allocation of certain corporate expenses and rent expense for our lease at Fisher Plaza as management does not review our reportable segments with those allocations.

The following information presents our results of operations for the years ended December 31, 2012, 2011 and 2010 and variances between periods. Percentage comparisons have been omitted within the following table where they are not considered meaningful.

The following table sets forth our main types of revenue by segment for the years ended December 31, 2012, 2011 and 2010;

Television. Television revenue for 2012 increased $18.8 million, or 15%, to $147.3 million from $128.5 million in 2011. The increase was primarily due to a $13.2 million, or 274%, increase in political advertising revenue based on the 2012 election year and an $8.8 million, or 66%, increase in retransmission revenue as a result of finalizing the renewal of substantially all of our retransmission consent contacts for the 2012-2014 cycles in the second quarter of 2012. These increases were offset primarily by a combined decrease in core advertising and internet revenues of $3.4 million.

Increases in our largest advertising categories, automotive (increased 6%) and retail (increased 5%) were offset by decreases in professional services (decreased 6%) and telecom (decreased 3%), combined with overall decreases in other general advertising categories.

Television revenue for 2011 decreased $7.8 million, or 6%, from $136.4 million in 2010 to $128.5 million. The decrease was primarily due to a $17.3 million expected decrease in political advertising revenue based on 2011 being an off-cycle political year, partially offset by increases in core advertising revenue of $6.7 million, or 7%, internet revenue of $2.1 million, or 59%, and retransmission revenue of $1.2 million, or 10%. Increases in core advertising revenue were driven by increases in our top categories: automotive (increased 11%), professional services (increased 15%) and retail (increased 2%).

Revenues from our ABC-affiliated stations and our CBS-affiliated stations increased 16% and 17%, respectively, in 2012 as compared to 2011, due primarily to increases in retransmission revenue and political advertising revenue.

Revenues from our ABC-affiliated stations and our CBS-affiliated stations decreased 10% and 6%, respectively, in 2011 as compared to 2010, due primarily to decreases in political advertising revenue.

Radio. Radio revenue in 2012 decreased $364,000, or 2%, from $21.3 million in 2011 to $20.9 million. The decrease was primarily due to a decline in core advertising revenue as a result of the general radio market decline. The decrease was offset by increases in political advertising revenue.

Radio revenue in 2011 decreased $2.4 million, or 10%, from $23.8 million in 2010 to $21.4 million. The decrease was primarily due to a decline in core advertising and political advertising revenue. The decreases in core advertising resulted primarily from the general radio market decline and further impacted by the conclusion of our ten year Joint Sales Agreement with KING FM, which was not renewed in the second quarter of 2011.

Fisher Plaza. Fisher Plaza revenue in 2011 decreased from 2010 primarily due to the shorter period resulting from the sale of Fisher Plaza on December 15, 2011. This decrease in revenue was partially offset by base rent and garage revenue increases.

Direct operating costs consist primarily of costs to produce and promote programming for our television and radio segments and, for periods prior to 2012, costs to operate Fisher Plaza, which we sold in December 2011. Many of these costs are relatively fixed in nature and do not necessarily vary on a proportional basis with revenue.

Television. Direct operating costs for the television segment in 2012 increased $1.8 million, or 3%, as compared with 2011. The increase resulted primarily from higher costs related to network programming fees.

Direct operating costs for the television segment in 2011 as compared to 2010 increased $74,000.

Radio. Direct operating costs for the radio segment in 2012 decreased $198,000, or 2% as compared with 2011. The decrease was primarily due to a reduction in advertising costs for our radio stations and a decrease in music rights expenses as a result of an industry-wide legal settlement.

Direct operating costs for the radio segment in 2011 decreased $256,000, or 3%, as compared with 2010. The decrease was primarily related to lower compensation costs as a result of the new format for one of our stations.

Fisher Plaza. Fisher Plaza is no longer a reportable segment in 2012. Fisher Plaza segment operating costs in 2011 decreased $234,000, or 4%, as compared with 2010 primarily due to the shorter period resulting from the sale of Fisher Plaza on December 15, 2011.

Corporate and other. Other non-segment direct operating costs consist primarily of the centralized network operating center and corporate engineering department. In 2012, non-segment direct operating costs increased $183,000 or 34% as compared to 2011 and increased $74,000, or 16%, in 2011 as compared to 2010.

Television. Selling, general and administrative expenses for the television segment in 2012 increased $1.7 million, or 5%, as compared to 2011 primarily due to a $1.4 million reduction in 2011 expenses resulting from vacation accrual savings related to our revised vacation policy, a $500,000 combined increase in audience survey and commissions costs, offset by a $600,000 decrease in bad debts expense.

Selling, general and administrative expenses for the television segment in 2011 decreased $2.1 million, or 6%, as compared to 2010 primarily due to $1.4 million credit related to a change in our vacation policy and a decrease of $900,000 as a result of a reduction in compensation and variable commission costs.

Radio. Selling, general and administrative expenses for the radio segment in 2012 decreased $762,000, or 11%, as compared to 2011 primarily due to continued cost savings as a result of the non-renewal of our ten year Joint Sales Agreement with KING FM.

Selling, general and administrative expenses for the radio segment in 2011 decreased $2.3 million, or 25%, as compared to 2010 primarily due to a decrease of $1.2 million in cost savings as a result of the non-renewal of our ten year Joint Sales Agreement with KING FM, a $291,000 decrease in commissions and a $254,000 credit related to a change in our vacation policy.

Corporate and other. Corporate and other non-segment selling, general and administrative expenses consist primarily of corporate costs and various centralized functions. In 2012, non-segment selling, general and administrative expense increased $1.3 million, or 8%, as compared to 2011 primarily due to $1.8 million in costs associated with various strategic initiatives and an $878,000 increase in stock compensation expense resulting primarily from $702,000 in incremental charges due to the modification of stock awards in connection with our cash dividend in October 2012. In addition, 2011 expenses were reduced by vacation accrual savings of $423,000 related to our revised vacation policy.

Increases in 2012 expenses were offset by proxy contest costs of $1.6 million incurred in 2011, which did not recur in 2012.

In 2011, non-segment selling, general and administrative expense increased $2.5 million, or 18%, as compared to 2010 primarily due to costs incurred as a result of the proxy contest in connection with our 2011 annual election of directors of $1.6 million and employer matching contributions to our defined contribution plan.

Fisher Plaza rent. In connection with the December 2011 sale of Fisher Plaza we entered into a lease with Hines pursuant to which we leased 121,000 rentable square feet of Fisher Plaza. Fisher Plaza rent expense in 2012 was $5.2 million as compared with $133,000 in 2011 and reflects the costs associated with leasing a portion of Fisher Plaza which serves as our corporate headquarters and the location of our Seattle-based television, radio and internet operations.

Television. Amortization of program rights for the television segment in 2012 decreased $1.0 million, or 9%, as compared with 2011. The decrease in 2012 is consistent with decreases in 2011 as compared with 2010, primarily due to reduced obligations as a result of renegotiated contracts.

Television. Depreciation expense for the television segment increased in 2012 as compared to 2011, due primarily to investments in our broadcasting equipment at KOMO and KATU. Depreciation for the television segment decreased in 2011 as compared to 2010, due to the change in fixed asset lives in 2011. Refer to Note 1 of our consolidated financial statements for further discussion of the change in fixed asset lives.

Radio. Depreciation for the radio segment increased in 2012 as compared to 2011, due to investments in our radio broadcasting technology. Depreciation for the radio segment decreased in 2011 as compared to 2010, due to the change in fixed asset lives.

Fisher Plaza. Depreciation for Fisher Plaza was eliminated in 2012 as a result of the sale of Fisher Plaza in December 2011. Depreciation expense for Fisher Plaza decreased in 2011 as compared to 2010, due to the assets being treated as held for sale and the cessation of depreciation during the fourth quarter when Fisher Plaza was sold on December 15, 2011.

In January 2012, we completed the sale of two real estate parcels not essential to current operations and received $570,000 in net proceeds. In June 2012, we completed the sale of a real estate parcel not essential to current operations and received $253,000 in net proceeds. We recognized a gain on sale of real estate, net of $164,000.

In June 2011, we completed the sale of two real estate parcels in Seattle, Washington not essential to our current operations resulting in net proceeds of $4.2 million. We recognized a gain on sale of real estate, net of $4.1 million.

In December 2011, we completed the sale of Fisher Plaza to Hines for $160.0 million in cash. We received net proceeds of $156.1 million and recognized a gain on sale of Fisher Plaza, net of $40.5 million. Given our sale of Fisher Plaza in December 2011, our consolidated results in 2012 and in future years did not include any revenue, operating expense or depreciation from Fisher Plaza and included rent and common area expenses related to the lease with Hines.

In 2012, there were no further expenses or reimbursements related to the 2009 Fisher Plaza fire. Plaza fire expenses (reimbursements), net for the year ended December 31, 2011 represent net insurance reimbursements of $223,000 related to the Fisher Plaza fire. Plaza fire expenses (reimbursements), net for the year ended December 31, 2010 represent net insurance reimbursements of $3.4 million related to the Fisher Plaza fire.

Gain on asset exchange in 2012 decreased $32,000, or 100%, to zero as we did not incur any transactions resulting in such gains. In 2011, we incurred a net gain of $32,000 as compared with $2.1 million in 2010. This amount represents the substitute equipment received from Sprint Nextel and the costs of installing the equipment. Upon installation and use of the equipment, the gain net of disposals was recorded. See Note 18 to our consolidated financial statements for additional information on the asset exchange with Sprint Nextel.

In 2012, we repurchased the remaining $61.8 million aggregate principal amount of our 8.625% Senior Notes due in 2014 (“Senior Notes”) for a total consideration of $62.7 million in cash plus accrued interest of $1.8 million. We recorded a loss on extinguishment of debt of $1.5 million, including a charge for related unamortized debt issuance costs of approximately $594,000. As a result of the redemption of the remaining outstanding Senior Notes, we are no longer required to report financial information for our subsidiary guarantors of the Senior Notes.

In 2011, we repurchased or redeemed $39.6 million aggregate principal amount of our Senior Notes for total consideration of $40.6 million in cash plus accrued interest of $685,000. A loss on extinguishment of debt was recorded, net of a charge for related unamortized debt issuance costs of $466,000, of approximately $1.5 million.

In 2010, we repurchased $20.6 million aggregate principal amount of our Senior Notes for total consideration of $20.5 million in cash plus accrued interest of $312,000. A loss on extinguishment of debt was recorded, net of a charge for related unamortized debt issuance costs of $317,000, of approximately $160,000.

Other income, net, typically consists of interest and other miscellaneous income received. In 2012 and 2011, this included interest income earned on our cash balances and other miscellaneous income.

Interest expense consists primarily of interest on our Senior Notes and amortization of loan fees. Interest expense in 2012 decreased $6.9 million, or 96%, as compared to 2011 primarily due to the repurchase or redemption of our remaining Senior Notes.

Interest expense in 2011 decreased $2.8 million, or 28%, as compared with 2010 primarily due to the repurchase or redemption of $39.6 million in aggregate principal amount of our Senior Notes during 2011.

Our effective tax rate in 2012 increased to 37.2% as compared to 34.0% in 2011 due to the release of $1.8 million of our valuation allowance during the fourth quarter of 2011, which benefited our 2011 effective tax rate. Our effective tax rate decreased to 34.0% in 2011, a rate lower than the statutory rate of 35%, as compared to 37.6% in 2010 due primarily to the release of $1.8 million of our valuation allowance during the fourth quarter of 2011.

Our liquidity is primarily dependent upon our cash and cash equivalents, short-term investments and net cash generated from operating activities. Our net cash generated from operating activities is sensitive to many factors, including changes in working capital 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 and the timing of cash receipts and payments.

We expect cash flows from operations 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 12 months. In November 2012, we obtained a $30.0 million senior secured revolving credit facility with JPMorgan Chase Bank, N.A. as Administrative Agent and Lender to fund potential future capital needs.

Cash on hand, the revolving credit facility together with operating cash flows are expected to provide the necessary funding of future capital needs related to our November 19, 2012, Asset Purchase Agreement (the “Purchase Agreement”) with Newport Television LLC and Newport Television License LLC to acquire, subject to prior approval from the FCC, operating assets of television station KMTR(TV), together with certain related satellite stations which serve the Eugene, Oregon Nielsen Designated Market Area, for a total purchase price of $8.5 million.

Cash and Cash Equivalents. Cash and cash equivalents were approximately $20.4 million as of December 31, 2012 compared to $143.0 million as of December 31, 2011. The net decrease in cash and cash equivalents of $122.6 million was primarily due to our redemption of the remaining $61.8 million of outstanding principal of our senior notes in January 2012, cash dividends paid of $90.4 million, investments made in property, plant and equipment and broadcast stations of approximately $11 million and the repurchase of common stock of $2.5 million. Such decreases were offset by net proceeds from the maturity and sale of debt security investments of $33.4 million and net cash provided by operating activities of $9.6 million, which includes income tax payments, net, of $21.7 million related to the gain on sale of Fisher Plaza.

Cash and cash equivalents were approximately $143.0 million as of December 31, 2011 compared to $52.9 million as of December 31, 2010. The increase in cash and cash equivalents of $90.1 million consisted primarily of the net proceeds we received from the sale of Fisher Plaza of $156.1 million, net cash provided by operating activities of $13.4 million, offset by the repurchase or redemption of our Senior Notes of $39.6 million and purchases of property, plant and equipment of $8.1 million.

We recorded approximately $3.1 million of current taxes payable as of December 31, 2012 based on our expected tax payment for 2012.

Net cash provided by operating activities in 2012 of $9.6 million consisted of our net income of $13.2 million, adjusted for non-cash charges of $21.3 million which consisted primarily of depreciation and amortization, amortization of broadcast rights, stock-based compensation, loss on disposal of fixed assets and gain on the sale of real estate, offset by a $15.1 million decrease in working capital, which includes income tax payments, net, of $21.7 million and $9.8 million of payments for broadcast rights.

Net cash provided by operating activities in 2011 of $13.4 million consisted of our net income of $36.4 million, adjusted by non-cash charges of $27.8 million which primarily consisted of depreciation and amortization, amortization of broadcast rights, stock-based compensation, loss on disposal of fixed assets, gain on exchange of assets, real estate and Fisher Plaza and the loss on extinguishment of Senior Notes and a $15.9 million increase in working capital, offset by $11.1 million of payments for broadcast rights.

Net cash provided by operating activities in 2010 of $39.7 million consisted of our net income of $9.7 million, adjusted by non-cash charges of $30.1 million which primarily consisted of depreciation and amortization, amortization of broadcast rights, stock-based compensation, loss on disposal of fixed assets, gain on exchange of assets and the loss on extinguishment of Senior Notes and an $11.9 million increase in working capital, offset by $12.0 million of payments for broadcast rights.

Debt Security Investments. During 2012, we purchased $82.7 million in debt security investments with the cash proceeds generated from the sale of Fisher Plaza. Corresponding with our Board of Directors’ August 2012 declaration of a $10.00 per common share cash dividend, we announced our intention to fund the dividends from existing cash and our debt security investments. As a result of these declarations, on September 30, 2012, we reclassified our entire portfolio of debt security investments classified as held-to-maturity, which consisted of U.S. treasury securities, to available for sale. During 2012, $116.1 million in debt security investments both matured and were sold to fund the special cash dividend. As of December 31, 2012, $3.5 million in debt security investments are reflected as restricted cash in our consolidated balance sheet.

Net cash provided by investing activities during 2012 was $23.0 million compared to net cash provided by investing activities during 2011 of $116.5 million. During 2012, cash flows related to investing activities consisted primarily of the purchase and subsequent maturity and sale of short-term debt securities, purchases of property, plant and equipment of $8.9 million and $2.2 million in deposits and options to acquire radio and television businesses.

Net cash provided by investing activities during 2011 was $116.5 million compared to net cash provided by investing activities during 2010 of $10.0 million. The increase was primarily related to the net proceeds received from the sale of Fisher Plaza offset by $33.5 million purchase of short-term investments and purchases of property, plant and equipment of $8.1 million.

Net cash used in investing activities during 2010 was $10.0 million compared to net cash provided by investing activities during 2009 of $46.9 million. During 2010, cash flows related to investing activities consisted primarily of purchases of property, plant and equipment of $10.0 million.

Net cash used in financing activities in 2012 was $155.2 million primarily due to the retirement of the remaining $61.8 million aggregate principal amount of our Senior Notes for total consideration of $62.7 million and the payment of $90.4 million in cash dividends and $2.5 million related to the repurchase of our common stock.

Net cash used in financing activities in 2011 was $39.9 million primarily due to the retirement of $39.6 million aggregate principal amount of our Senior Notes for total consideration of $40.6 million in cash.

Net cash used in financing activities in 2010 was $20.7 million primarily due to the retirement of $20.6 million aggregate principal amount of our Senior Notes for total consideration of $20.5 million in cash.

Credit facility. In November 2012, we entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as Administrative Agent and Lender, for a $30 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility will mature in 2017. In addition to the $30 million revolving credit facility, the Credit Agreement provides for a subfacility for the issuance of standby letters of credit in an amount to be determined by JPMorgan and us.

Borrowings under the Credit Facility will accrue interest at a variable rate. The interest rate will be calculated using either an Alternate Base Rate (“ABR”) or the Eurodollar Rate, plus, in each case, an applicable margin determined by our leverage ratio in accordance with the terms of the Credit Agreement. The ABR is equal to the highest of (i) the rate of interest publicly announced by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the “Prime Rate”), (ii) the federal funds effective rate from time to time plus 0.50% and (iii) the Eurodollar Rate applicable for an interest period of one month plus 1.00%.

Our obligations under the Credit Facility are guaranteed by each of our existing and future direct and indirect domestic subsidiaries, except for those that are prohibited by law, rule or regulation from guaranteeing the Credit Facility. Collateral for the Credit Facility includes substantially all of our tangible and intangible assets and the guarantors, but excludes rights in programming agreements, network affiliation agreements, permits, leases and licenses that preclude such pledge (whether by contract or applicable law), the percentage of ownership interest in foreign subsidiaries that could reasonably be expected to result in adverse tax consequences, and real property. We have also granted a negative pledge with respect to our real property.

The Credit Agreement contains customary affirmative and negative covenants for comparable financings, including but not limited to, limitations on liens, indebtedness, investments, mergers and other fundamental changes, sales and other dispositions and dividends and other distributions. The Credit Agreement also contains customary events of default and remedies in the event of an occurrence of an event of default, including the acceleration of any amounts outstanding under the Credit Agreement. Additionally, the Credit Agreement includes certain customary conditions that must be met for us to borrow under the Credit Facility.

Under the Credit Agreement, we are required to maintain certain financial ratios, including a leverage ratio and fixed charge coverage ratio. During the third and fourth quarter 2012, we incurred costs of approximately $246,000 directly related to obtaining the Credit Facility. These costs have been deferred on the balance sheet in “other assets” and are being amortized to interest expense over the life of the Credit Facility. As of December 31, 2012, we had no outstanding indebtedness under the Credit Facility.

The following table presents our contractual obligations as of December 31, 2012 (in thousands):

Commitments for broadcasting rights consist of future rights to broadcast television programming and future programming costs pursuant to network affiliate agreements. Other obligations represent rights to sell available advertising time on third party radio stations through 2013. This contractual obligation table does not include personal service contracts, as discussed below.

In the ordinary course of our broadcasting business, we enter into personal services contracts (the “PSCs”) with many of our station-level employees. Our aggregate contractual obligation under such existing PSCs as of December 31, 2012 is approximately $13.6 million and such PSCs have expirations ranging from 2013 through 2015.

We currently expect to fund these commitments primarily with operating cash flows generated in the normal course of business, as well as cash, cash equivalents and short-term investments. However, we may in the future be required to finance these commitments through the use of bank borrowings or the issuance of debt and/or equity securities.

We record interest and penalties related to income tax positions in interest expense. As of December 31, 2012 and 2011, we had $632,000 of uncertain tax positions and no penalties or interest was accrued. No reserves for uncertain income tax positions were recorded for the years ended December 31, 2010.

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

At December 31, 2012 we had no fixed interest rate debt. At December 31, 2011, all of our debt was at a fixed interest rate and totaled $61.8 million. The fair market value of long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The estimated fair value of our long-term debt at December 31, 2011 was approximately $62.9 million, which was approximately $1.1 million more than its carrying value. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10% change in interest rates and, as of December 31, 2011, amounted to approximately $1.3 million. Fair market values are determined based on estimates made by investment bankers based on the fair value of our fixed interest rate debt. For fixed-rate debt, interest rate changes do not impact financial position, operations or cash flows.

At December 31, 2012 and 2011, the reported fair value of our debt security investments was $3.5 million and $36.9 million, respectively. The primarily objective of these investments was to preserve principal and liquidity. A hypothetical 10% change in interest rates as of December 31, 2012 and 2011 would not have had a significant impact on the fair value of our investment portfolio as of that date.

Our consolidated financial statement and related schedules listed in the index set forth in Item 15 in this report are filed as part of this report and are incorporated herein by reference.

Quarterly financial information for 2012 and 2011 is included in Note 20 to our consolidated financial statements and is incorporated herein by reference.

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 year ended December 31, 2012. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of our fiscal year ended December 31, 2012, 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 fourth fiscal quarter of 2012 that 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.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. We assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment using those criteria, we determined that as of December 31, 2012, Fisher Communications, Inc.’s internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears elsewhere in this report.

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

The information required by this Item will be contained in the sections entitled “Information With Respect to Nominees and Directors Whose Terms Continue,” “Executive Officers of the Company,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Information Regarding the Board of Directors and its Committees—Committees of the Board of Directors—Audit Committee” of the definitive Proxy Statement for our 2013 Annual Meeting of Shareholders, and is incorporated herein by reference.

We have a Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer, Controller, general managers, station managers and business managers. The Code of Ethics is available on our website at www.fsci.com under the section heading “Investor Information—Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to or waivers of our Code of Ethics by posting such information at this location on our website.

The information required by this Item will be contained in the sections entitled “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Summary Compensation Table,” “2012 Grants of Plan-Based Awards Table,” “2012 Outstanding Equity Awards at Fiscal-Year End Table,” “2012 Option Exercises and Stock Vested Table,” “Potential Payments upon Termination of Employment or Change of Control,” “Estimated Potential Cash Payments and Value of Acceleration Under Equity Compensation Plans,” “2012 Non-Employee Director Compensation” and “Information Regarding the Board of Directors and its Committees—Compensation Committee Interlocks and Insider Participation” of the definitive Proxy Statement for our 2013 Annual Meeting of Shareholders, and is incorporated herein by reference.

The information required by this Item will be contained in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” of the definitive Proxy Statement for our 2013 Annual Meeting of Shareholders, and is incorporated herein by reference.

The Company maintains two incentive plans: (i) the Fisher Communications Incentive Plan of 2001 (the “2001 Plan”) and (ii) the Fisher Communications Amended and Restated 2008 Equity Incentive Plan (the “2008 Plan” together with the 2001 Plan, the “Plans”). The 2001 Plan provided that up to 600,000 shares of the Company’s common stock could be issued to eligible key management employees or directors pursuant to awards, options and rights through April 2008. As of December 31, 2012, awards, options and rights for 295,067 shares, net of forfeitures, had been issued under the 2001 Plan. No further options and rights will be issued pursuant to the 2001 Plan. The 2008 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to eligible key management employees or directors pursuant to awards, options and rights through 2018. As of December 31, 2012, awards, options and rights for 423,789 shares had been issued, net of forfeitures, from the 2008 Plan.

The information required by this Item will be contained in the sections entitled “Transactions with Related Persons,” “Review, Approval or Ratification of Transactions with Related Persons,” “Information With Respect to Nominees and Directors Whose Terms Continue,” “Director Independence” and “Information Regarding the Board of Directors and its Committees” of the definitive Proxy Statement for our 2013 Annual Meeting of Shareholders, and is incorporated herein by reference.

The information required by this Item will be contained in the sections entitled “Audit and Non-Audit Fees” and “Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor” of the definitive Proxy Statement for our 2013 Annual Meeting of Shareholders, and is incorporated herein by reference.

All other schedules have been omitted because of the absence of the conditions under which they are required or because the information required is included in the consolidated financial statements or notes thereto.

In our opinion, the consolidated financial statements listed in the accompanying index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Fisher Communications, Inc. and its subsidiaries at December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Controls over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

The principal operations of Fisher Communications, Inc. and subsidiaries (the “Company”) are television and radio broadcasting. Prior to its sale on December 15, 2011, the Company also owned and operated Fisher Plaza in Seattle, Washington, a mixed-use facility that houses a variety of office, retail, technology and other media and communications companies. The Company conducts its business in Washington, Oregon, Idaho and California. A summary of significant accounting policies is as follows:

Principles of consolidation. The consolidated financial statements are presented on an accrual basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Fisher Communications, Inc. and its wholly-owned subsidiaries. Television and radio broadcasting operations are conducted through Fisher Broadcasting Company. Fisher Media Services Company operated Fisher Plaza, which was sold on December 15, 2011. All material intercompany balances and transactions have been eliminated.

Estimates. The preparation of these consolidated financial statements requires management 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, the Company evaluates its estimates including, but not limited to, those affecting revenues, goodwill and intangibles impairment, the estimated useful lives of tangible and intangible assets, valuation allowances for receivables and broadcast rights, stock-based compensation expense, valuation allowances for deferred income taxes and accruals of liabilities and contingencies. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances, the results of which form its 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.

Television broadcast licenses. The Company’s broadcast operations are subject to the jurisdiction of the Federal Communications Commission (the “FCC”) under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act empowers the FCC to regulate many aspects of the broadcasting industry, including the granting and renewal of broadcast licenses. The cost of certain acquired indefinite-lived television licenses is included in intangible assets in the consolidated balance sheets.

Revenue recognition. Television and radio revenue is recognized, net of advertising agency commissions, when the advertisement is broadcast, subject to meeting certain conditions such as persuasive evidence that an arrangement exists, the price is fixed or determinable and collection is reasonably assured. These criteria are generally met at the time an advertisement is broadcast, and the revenue is recorded net of advertising agency commission. The Company may trade certain advertising time for products or services, as well as barter advertising time for program material. Trade transactions are generally reported at the estimated fair value of the product or service received, while barter transactions are reported at management’s estimate of the value of the advertising time exchanged, which approximates the fair value of the program material received. Revenue is reported on trade and barter transactions when commercials are broadcast and expenses are reported when products or services are utilized or when programming airs. The Company receives consideration from certain satellite, cable and wireless providers in return for consent to the retransmission of the signals of the Company’s television stations. Revenues from retransmission consent and satellite transmission services are recognized when the service is performed and collection is considered probable. Revenue from production of broadcast media content is recognized when a contracted production is available for distribution. Website advertising revenue is recognized as services are delivered and collection is considered probable. Rentals from broadcast tower and real estate leases are recognized on a straight-line basis over the term of the lease.

Termination of national advertising representation firms. Broadcasters may periodically terminate existing agreements with national advertising representation firms; under such circumstances, the successor firm generally satisfies the broadcaster’s contractual termination obligation to the predecessor firm with no cash payment made by the broadcaster. When the Company terminates national advertising representation agreements with contractual termination penalties, the Company recognizes a non-cash termination charge to selling, general and administrative expenses and amortizes the resulting liability as a reduction of expense over the term of the new agreement. In the second quarter of 2008, the Company recognized a net non-cash termination charge of $5.0 million and will recognize a non-cash benefit over the five year term of the new agreement which expires in April 2013.

Cash and cash equivalents. The Company considers all highly liquid investments that have maturities at the date of purchase of 90 days or less to be cash equivalents. The Company’s cash equivalents comprise primarily of United States Treasury obligations.

Short-term investments. The Company’s short-term debt security investments are comprised of investments in United States Treasury securities with original maturities of greater than 91 days but less than one year. Short-term investments classified as held-to-maturity are financial instruments that the Company has the intent and ability to hold to maturity and are reported at amortized cost and are not remeasured to fair value on a recurring basis. Investments are carried at amortized cost, and interest income is recorded using an effective interest rate with the associated discount or premium amortized to interest income, which is reported in “Other income, net” in the consolidated statements of operations.

Fair value for these investments are estimated using best available evidence including broker quotes, prices for similar investments, interest rates and credit risk. Investments are reviewed periodically to determine if a permanent decline in fair value has occurred that would require impairment of the investment carrying value. No impairments on the short-term investments have been recorded. See Note 3.

Restricted cash. The Company’s restricted cash is comprised of segregated funds pledged as collateral for a letter of credit as required by a lease agreement.

Concentration of credit risk. Financial instruments that potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, short-term investments and receivables. The Company maintains its cash and cash equivalents in accounts primarily with one major financial institution, in the form of demand deposits and other cash and cash equivalents. Additionally, the Company maintains all of its short-term investments in United States Treasury securities. Deposits in these institutions may exceed the amounts of federal insurance provided on such deposits. Concentration of credit risk with respect to receivables is limited due to the large number of customers in the Company’s customer base and their dispersion across different industries and geographic areas. The Company does not generally require collateral or other security for its receivables.

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

Investments. Investments in equity investees represent investments in entities for which the Company does not have controlling interest, but has significant influence. Such investments are accounted for using the equity method of accounting. Investments in which the Company does not have a controlling interest or significant influence are accounted for using the cost method of accounting. The Company’s investments in

equity and cost method investees are included in other assets on the consolidated balance sheets. The Company’s share of each equity method investment in equity investee’s earnings (losses) is included in other income, net on the consolidated statements of operations. An impairment on the investment in equity investee is recognized if the decline in value is other than temporary. As of December 31, 2012 and 2011, the carrying values of the Company’s equity method investments were $1.5 million and $1.6 million, respectively. As of December 31, 2012 and 2011 the carrying value of the Company’s cost method investments was $2.3 million and $1.5 million, respectively.

Goodwill and indefinite-lived intangible assets. Goodwill represents the excess of purchase price of certain media properties over the fair value of acquired tangible and identifiable intangible net assets. Indefinite-lived intangible assets consist of certain television licenses. In making estimates of fair values for the purposes of allocating the purchase price, the Company relies primarily on its extensive knowledge of the market and, if considered appropriate, obtains appraisals from appraisers. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of pre-acquisition due diligence, including appraisals that may be obtained in connection with the acquisition or financing of the respective assets. The Company tests for the potential impairment of goodwill and indefinite-lived intangible assets (broadcast licenses) at least annually, or whenever events indicate that an impairment may exist.

The Company evaluates qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance to determine whether it is necessary to perform the first step of the two-step goodwill and indefinite-lived intangible asset test. For its annual impairment test performed in the fourth quarter of 2012, the Company early adopted amended FASB guidance which permits the Company to choose to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If based on this assessment the Company determines it is not more likely than not that the indefinite-lived intangible asset is impaired, then performing the quantitative impairment test is unnecessary.

This step is referred to as “Step 0”. Step 0 involves, among other qualitative factors, weighing the relative impact of factors that are specific to the reporting unit or indefinite-lived intangible asset, as well as industry and macroeconomic factors. Reporting unit or indefinite-lived intangible asset specific factors are considered, including the results of the most recent impairment tests, as well as financial performance and changes to the reporting units’ or indefinite-lived intangible asset’s carrying amounts since the most recent impairment tests. The Company considers industry and macroeconomic factors, including growth projections from independent sources and significant developments or transactions within the industry, during the period of evaluation and assesses if the factors have a positive, neutral or negative impact on the fair value of each reporting unit. After assessing those various factors, if it is determined that it is more likely than not that the fair value of is less than its carrying amount, then the entity will need to proceed to the first step of the two-step impairment test. The first step of the goodwill impairment test involves a comparison of the fair value of each of the Company’s reporting units with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying amount of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested.

The first step of the indefinite-lived intangible impairment test involves a comparison of the fair value of each of the Company’s reporting units with the net book value of the intangible assets. If the net book value exceeds fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the net book value exceeds the implied fair value of the indefinite-lived intangible assets being tested.

projections of cash flows from each of the Company’s reporting units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of the Company’s weighted average cost of capital.

Property, plant and equipment, net. Property, plant and equipment are stated at historical cost, net of related accumulated depreciation. Gains or losses on dispositions of property, plant and equipment are included in income from continuing operations, or in discontinued operations, based on the nature of the disposition. Replacements and improvements are capitalized and repairs and maintenance are expensed as incurred.

Depreciation of property, plant and equipment is determined using the straight-line method over the estimated useful lives of the assets as follows:

In 2011, as part of its ongoing review of property, plant and equipment estimated asset lives the Company determined that the asset lives of certain of its machinery and equipment categories should be increased. The increase in the lives ranged from one to ten years depending on the category. A change in depreciation method is considered a change in accounting estimate. The Company adjusted the remaining lives of existing assets effective January 1, 2011. The impact of this change in estimate for the year ended December 31, 2011 increased pre-tax income from continuing operations by approximately $3.3 million, increased net income by approximately $2.2 million and increased diluted net income from continuing operations per share by $0.24.

The Company classifies the net carrying values of stations or other assets as held for sale when the stations or assets are actively marketed, their sale is considered probable within one year and various other criteria relating to their disposition are met. The Company discontinues depreciation of the stations or assets at that time, but continues to recognize operating revenues and expenses until the date of sale. The Company reports revenues and expenses of stations or assets classified as held for sale in discontinued operations for all periods presented if the Company will sell or has sold the stations or assets on terms where the Company has no continuing involvement with them after the sale. If active marketing ceases or the stations or assets no longer meet the criteria to be classified as held for sale, the Company reclassifies the stations or assets as held for use, resumes depreciation and recognizes the expense for the period that the Company classified the assets as held for sale. The Company evaluates the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company uses judgment when applying the impairment rules to determine when an impairment test is necessary. Factors considered which could trigger an impairment review include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used and significant negative cash flows or industry trends.

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

Fair value measurements. The Company’s cash and cash equivalents, short-term debt security investments, restricted cash, receivables, accounts payable and television broadcast rights asset and payable are

carried at amounts that reasonably approximate their fair value due to their short-term nature. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-tier hierarchy, which prioritizes the inputs used to measure fair value is as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

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; or the fair value is determined through the use of models or other valuation methodologies.

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. The inputs to determined fair value require significant management judgment or estimation.

Assets and liabilities measured at fair value on a recurring basis consist of marketable securities and debt security investments. As of December 31, 2012 and 2011, the reported fair value of marketable securities, using Level 1 inputs, was $600,000 and $1.0 million, respectively.

As of December 31, 2012 and 2011, the reported fair value of debt security investments, using Level 1 inputs, was $3.5 million and $36.9 million, respectively. Debt security investments are included in short term investments and restricted cash.

Restricted cash included $3.5 million of debt security investments at December 31, 2012 and December 31, 2011. The fair value of restricted cash is measured using Level 1 inputs.

Cash equivalents consisted of $5.0 million and $140.5 million at December 31, 2012 and 2011, respectively, for which the fair value is measured using Level 1 inputs.

As of December 31, 2012, the Company did not have any outstanding fixed interest rate debt. As of December 31, 2011, all of the Company’s debt was at a fixed interest rate and totaled $61.8 million. The fair market value of 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 the Company’s debt, using Level 2 inputs, at December 31, 2011 was $62.9 million. The fair value of debt is based on estimates made by investment bankers based on the fair value of the Company’s fixed interest rate debt. For fixed interest rate debt, interest rate changes do not impact financial position, operations or cash flows.

Deferred financing costs. The Company capitalizes costs associated with financing activities and amortizes such costs to interest expense using the effective interest method over the term of the underlying financing arrangements.

Deferred income. The Company has deferred income associated with cash and other assets received related to revenue and/or sale-leaseback transactions for which the income has not yet been recognized. The income is recognized as the revenue is earned, and income under the sale-leaseback transaction is recognized on a straight-line basis over the initial term of the related lease arrangement.

Variable interest entities. The Company has entered into Joint Sales Agreements (“JSAs”) or Local Marketing Agreements (“LMAs”) with non-owned stations. Under the terms of these agreements, the Company makes specific periodic payments to the station’s owner-operator in exchange for the right to provide programming and/or sell advertising on a portion of the station’s broadcast time. Nevertheless, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all

programming broadcast on the station. Generally, the Company continues to operate the station under the agreement until the termination of such agreement. As a result of these agreements, the Company may determine that the station is a variable interest entity (“VIE”) and that the Company is the primary beneficiary of the variable interest. The Company also may determine that a station is a VIE in connection with other types of local service agreements entered into with stations in markets in which the Company owns and operates a station.

As of December 31, 2012 and 2011, the Company had investments in stations that are considered VIEs. However, for the $750,000 investment in South Sound Broadcasting LLC (“South Sound”) in connection with the LMA, the Company does not participate in the management of the station including the day-to-day operating decisions or other decisions which would allow the Company to control the activities of the VIE. Therefore the Company is not considered the primary beneficiary of this VIE. The investment in South Sound is accounted for using the cost method of accounting as it represents a 7.5% ownership interest in the station. The Company’s maximum exposure to losses as of December 31, 2012 was $1.4 million.

As of December 31, 2012 and 2011, the Company had variable interests in two stations and that it was the primary beneficiary of these VIEs. The Company holds the power to direct activities that significantly impact the economic performance of the VIEs and can participate in returns that would be considered significant to the VIEs and therefore consolidates the assets and liabilities of these stations.

The carrying amount of the investments in the VIEs for which the Company is the primary beneficiary as of December 31, 2012 and 2011 is as follows (in thousands):

Advertising. The Company expenses advertising costs at the time the advertising first takes place. Advertising expense totaled approximately $1.4 million, $2.0 million and $2.4 million in 2012, 2011 and 2010, respectively.

Operating leases. The Company has operating leases for television and radio transmitting facilities, tower locations, corporate headquarters and certain other operational and administrative equipment. The television and radio transmitting facilities lease agreements are for periods up to 30 years, with certain renewal options. The tower locations lease agreements are for periods up to five years, with certain renewal options. The corporate headquarters lease agreement is for an initial period up to 12 years, with certain renewal options. The Company recognizes lease expense on a straight-line basis when cash payments fluctuate over the initial term of the lease.

Capital leases. For equipment under capital lease arrangements, an asset is recorded based on the net present value of the lease payments, which may not exceed the fair value of the underlying leased equipment, and a corresponding long-term liability is recorded. Lease payments are allocated between principal and interest on the lease obligation and the capital lease asset is depreciated over the term of the related lease.

Income taxes. Deferred income taxes are provided for temporary differences in reporting for financial reporting versus income tax reporting purposes. The Company evaluates both positive and negative evidence that it believes is relevant in assessing whether the Company will realize its deferred tax assets. The determination of the Company’s provision for income taxes and valuation allowance requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. In assessing whether deferred tax assets can be realized, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The Company recognizes income tax expense related to uncertain tax positions as part of its income tax provision and recognizes interest and penalties related to uncertain tax positions in interest expense. For tax positions meeting the more likely than not threshold, the tax amount recognized in the consolidated financial

statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are sometimes ambiguous. As such, the Company is required to make certain subjective assumptions and judgments regarding its income tax exposures. As such, changes in the Company’s subjective assumptions and judgments can materially affect amounts recognized in the consolidated financial statements. See Note 12.

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

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

The effect of options to purchase 131,923 shares of the Company’s common stock are excluded from the calculation of weighted average shares outstanding for the year ended December 31, 2012, because such options were anti-dilutive. The effect of 40 restricted stock rights and options to purchase 204,645 shares of the Company’s common stock are excluded from the calculation of weighted average shares outstanding for the year ended December 31, 2011 because such options and rights were anti-dilutive. The effect of 129,391 restricted stock rights and options to purchase 275,420 shares of the Company’s common stock are excluded from the calculation of weighted average shares outstanding for the year ended December 31, 2010 because such options and rights were anti-dilutive.

Stock-based compensation. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards. The Company’s estimation of the fair value of stock option awards on the date of grant is affected by the Company’s stock price, as well as assumptions regarding a number of variables. These variables include, but are not limited to, the expected term of the award, expected stock price volatility over the term of the award, forfeitures and projected exercise behaviors. The Company’s estimation of the fair value of stock option awards using the Black-Scholes option pricing model requires the input of subjective assumptions and other reasonable assumptions could yield differing results.

In July 2012, the FASB issued an ASU No. 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which simplifies the manner in which companies test indefinite-lived intangible assets for impairment. The accounting update provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity determines that this is the case, it is required to perform the currently prescribed two-step impairment test to identify potential impairment and measure the amount of impairment loss to be recognized for the indefinite-lived intangible asset (if any). This guidance is effective for the Company’s fiscal year beginning January 1, 2013, with early adoption permitted. The Company elected early adoption of the new guidance and determined the effect of adopting this statement did not have an impact on its consolidated financial statements.

In October 2011, the Company sold its six Great Falls, Montana radio stations (the “Montana Stations”) to STARadio Corp. (“STARadio”) for $1.8 million in cash, subject to certain adjustments. The Company recorded a pre-tax gain on sale of discontinued operations of $1.0 million.

In accordance with authoritative guidance, the Company has reported the results of operations of the Montana Stations as discontinued operations in the accompanying consolidated financial statements. For all previously reported periods, the Company reclassified the results of the Montana Stations from continuing operations to discontinued operations. The Montana Stations were previously included in the Company’s radio segment.

Operational data for the Montana Stations included in discontinued operations is summarized as follows (in thousands):

In connection with the Company’s Board of Directors’ August 2012 declaration of a $10.00 per common share special cash dividend and the institution of a quarterly dividend policy, the Company announced its intention to fund the dividends from existing cash and its debt security investments. As a result of these declarations, on September 30, 2012, the Company reclassified its entire portfolio of debt security investments classified as held-to-maturity, which consisted of $72.5 million in U.S. treasury securities, to available for sale. During 2012, the Company received proceeds from the sale of $66.3 million and maturity of $6.2 million in debt security investments classified as available for sale. Additionally during 2012, the Company received proceeds from the sale of $7.6 million and maturity of $35.9 million in debt security investments classified as held to maturity. The proceeds from the sale and maturity of such investments along with cash generated from current

year operations were used to pay out $90.4 million in cash dividends and $61.8 million in redemption of the remaining 8.625% senior notes due in 2014 (“Senior Notes”). At December 31, 2012, these remaining investments had a fair value and amortized cost of $3.5 million. The investments’ net unrealized appreciation, net of tax, increased the Company’s accumulated other comprehensive income and shareholders’ equity by $13,000 as of December 31, 2012.

The following table summarizes amortized cost, gross unrealized gains, gross unrealized losses and the fair value of debt security investments (in thousands):

The following table displays the gross unrealized losses and fair value of all available for sale debt security investments that were in a continuous unrealized loss position for the periods indicated. None of the debt security investments were outstanding for 12 months or more (in thousands):

Debt security investments are reviewed periodically to determine if a permanent decline in fair value has occurred that would require impairment of the carrying value. No impairments on the debt security investments have been recorded as of December 31, 2012 and December 31, 2011.

In January 2012, the Company completed the sale of two real estate parcels not essential to current operations and received $570,000 in pre-tax net proceeds. In June 2012, the Company completed the sale of another real estate parcel not essential to current operations and received $253,000 in net proceeds. The Company recognized a gain on sale of real estate, net of $164,000, which is presented as a gain on the sale of real estate, net on the Company’s consolidated statement of operations.

In June 2011, the Company completed the sale of two real estate parcels in Seattle, Washington not essential to current operations and received $4.2 million in pre-tax net proceeds. The Company recognized a gain of $4.1 million, which is presented as a gain on the sale of real estate, net on the Company’s consolidated statement of operations.

Trade transactions represent the exchange of commercial air time for products or services, while barter transactions represent the exchange of commercial air time for programming. Trade transactions are generally reported at the estimated fair value of the product or service received, while barter transactions are reported at management’s estimate of the value of the advertising time exchanged, which approximates the fair value of the program material received. Revenue is reported on trade and barter transactions when commercials are broadcast

and expenses are reported when products or services are utilized or when programming airs. Trade and barter revenue totaled approximately $5.1 million, $5.6 million and $5.6 million for the years ended December 31, 2012, 2011 and 2010, respectively. Trade and barter expense totaled approximately $5.1 million, $5.6 million and $5.7 million for the years ended December 31, 2012, 2011 and 2010, respectively.

When evaluating the adequacy of the allowance for doubtful accounts, the Company estimates the collectability of accounts receivable, by specifically analyzing accounts receivable and historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms. In addition to the identification of specific doubtful accounts receivable, the Company provides allowances calculated as a percentage of past due balances based on historical collection experience.

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

The following table presents the Company’s estimate of amortization expense for each of the next five years and thereafter for intangible assets subject to amortization recorded on its books as of December 31, 2012 (in thousands):

The change in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 was as follows (in thousands):

The change in the carrying amount of intangible assets for the years ended December 31, 2012 and 2011 was as follows (in thousands):

The Company is required to test goodwill and intangible assets for impairment at least annually, or whenever events indicate that impairment may exist. The Company performs its annual impairment measurement test on October 1^st. 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. Based on the impairment analyses the Company performed in 2012 and 2011, no impairment charges were recorded. See Note 1 for the discussion of the Company’s accounting policy for impairment of goodwill and indefinite-lived intangible assets.

In 2007, the Company completed a sale-leaseback transaction involving one of its news helicopters. The resulting lease qualifies and is accounted for as a capital lease (see Note 15). The gain on sale of $663,000 has been deferred and is being amortized as an offset to depreciation expense over the life of the lease. Machinery and equipment includes $1.3 million recorded under this capital lease, offset by deferred gain of $158,000 and $252,000 at December 31, 2012 and 2011, respectively. Accumulated depreciation associated with the capital lease asset totals $952,000 and $774,000 at December 31, 2012 and 2011, respectively.

As of December 31, 2011, the Company had approximately $3.2 million of accruals related to the purchase of property, plant and equipment. This amount was not included in the purchases of plant, property and equipment reported on the consolidated statements of cash flows for the year ended December 31, 2011. There were no significant accruals related to the purchase of property, plant and equipment for the year ended December 31, 2012.

In 2004, the Company issued $150.0 million of 8.625% senior notes due in 2014 (“Senior Notes”). The notes were fully and unconditionally guaranteed, subject to certain customary automatic release provisions, jointly and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes was payable semiannually in arrears on March 15 and September 15 of each year, commencing March 15, 2005.

In January 2012, the Company redeemed the remaining $61.8 million aggregate principal amount of the Senior Notes for a total consideration of $62.7 million in cash plus accrued interest of $1.8 million. The Company recorded a loss on extinguishment of debt of $1.5 million, including a charge for related unamortized debt issuance costs of approximately $594,000. As a result of the redemption of the remaining outstanding Senior Notes, the Company is no longer subject to provisions contained in the Senior Notes indenture, including various debt covenants and other restrictions, and the Company no longer is required to report financial information for its subsidiary guarantors of the Senior Notes.

During 2011, the Company repurchased or redeemed $39.6 million of aggregate principal amount of its Senior Notes for total consideration of $40.6 million in cash, plus accrued interest of $685,000. The Company

recorded a loss on extinguishment of debt, including a charge for related unamortized debt issuance costs of $466,000, resulting in a net loss of approximately $1.5 million on the extinguishment of Senior Notes for the year ended December 31, 2011.

During 2010, the Company repurchased $20.6 million of aggregate principal amount of its Senior Notes for total consideration of $20.5 million in cash, plus accrued interest of $312,000. The Company recorded a loss on extinguishment of debt, including a charge for related unamortized debt issuance costs of $317,000, resulting in a net loss of approximately $160,000 on the extinguishment of Senior Notes for the year ended December 31, 2010.

In November 2012, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as Administrative Agent and Lender, for a $30 million senior secured revolving credit facility (the “Credit Facility”). The Credit Facility will mature in 2017. In addition to the $30 million revolving credit facility, the Credit Agreement provides for a subfacility for the issuance of standby letters of credit in an amount to be determined by JPMorgan and the Company.

Borrowings under the Credit Facility will accrue interest at a variable rate. The interest rate will be calculated using either an Alternate Base Rate (“ABR”) or the Eurodollar Rate, plus, in each case, an applicable margin determined by the Company’s leverage ratio in accordance with the terms of the Credit Agreement. The ABR is equal to the highest of (i) the rate of interest publicly announced by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the “Prime Rate”), (ii) the federal funds effective rate from time to time plus 0.50% and (iii) the Eurodollar Rate applicable for an interest period of one month plus 1.00%.

The Company’s obligations under the Credit Facility are guaranteed by each of the Company’s existing and future direct and indirect domestic subsidiaries, except for those that are prohibited by law, rule or regulation from guaranteeing the Credit Facility. Collateral for the Credit Facility includes substantially all tangible and intangible assets of the Company and the guarantors, but excludes rights in programming agreements, network affiliation agreements, permits, leases and licenses that preclude such pledge (whether by contract or applicable law), the percentage of ownership interest in foreign subsidiaries that could reasonably be expected to result in adverse tax consequences to the Company, and real property. The Company has also granted a negative pledge with respect to its real property.

Under the Credit Agreement, the Company is required to maintain certain financial ratios, including a leverage ratio and fixed charge coverage ratio. During the third and fourth quarter 2012, the Company incurred costs of approximately $246,000 directly related to obtaining the Credit Facility. These costs have been deferred on the consolidated balance sheet in “other assets” and are being amortized to interest expense over the life of the Credit Facility. As of December 31, 2012, the Company had no outstanding indebtedness under the Credit Facility.

The Company acquires broadcast rights in the ordinary course of business. 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 revenues can change significantly and, accordingly, are reviewed periodically to determine whether impairment is expected over the life of the contract.

Broadcast rights acquired under contractual arrangements were $9.8 million, $10.8 million and $11.9 million in 2012, 2011 and 2010, respectively. At December 31, 2012, the Company had commitments under license agreements amounting to $18.3 million for future rights to broadcast television programs and network affiliate agreements through 2018. The Company also has the right to sell available advertising time for a third party radio station. Commitments for these rights were approximately $2.2 million through 2013.

The Company maintains two incentive plans: (i) the Fisher Communications Incentive Plan of 2001 (the “2001 Plan”) and (ii) the Fisher Communications Amended and Restated 2008 Equity Incentive Plan (the “2008 Plan” and together with the 2001 Plan, the “Plans”). The 2001 Plan provided that up to 600,000 shares of the Company’s common stock could be issued to eligible key management employees or directors pursuant to awards, options and rights through April 2008. As of December 31, 2012, awards, options and rights for 295,067 shares, net of forfeitures, had been issued under the 2001 Plan. No further options and rights will be issued pursuant to the 2001 Plan. The 2008 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to employees or directors pursuant to awards, options and rights through 2018. As of December 31, 2012, awards, options and rights for 423,789 shares had been issued, net of forfeitures, from the 2008 Plan.

Stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized over the requisite service period. The Company applied the alternative transition (shortcut) method in calculating its pool of excess tax benefits.

Stock-based compensation expense related to stock-based awards during the years ended December 31, 2012, 2011 and 2010 totaled approximately $2.5 million, $1.6 million, and $1.3 million , respectively, which is included in selling, general and administrative expenses in the Company’s consolidated statements of operations.

In October 2012, in connection with the announcement of a $10.00 cash dividend and the initiation of a quarterly dividend policy, the Board of Directors and the Compensation Committee (the “Committee”) approved changes to both the 2001 Plan and the 2008 Plan. The changes permit: (1) the adjustment of outstanding awards in the event of a distribution of cash or other assets to shareholders other than a normal cash dividend and (2) the amendment of outstanding awards so that such awards are credited with normal cash dividends or dividend equivalents.

Effective on October 22, 2012, all of the Company’s outstanding stock options and performance awards and the restricted stock units issued from the 2001 and 2008 Plans were adjusted by reducing the exercise price and/or increasing the number of shares to preserve the intrinsic value of such awards after the decline in the Company’s stock price directly resulting from the cash dividend. The award adjustments affected 17 employees and eight non-employee directors and resulted in $702,000 of incremental stock compensation expense for the year ended December 31, 2012.

Stock options. The Plans provide that eligible employees and directors may be granted options to purchase the Company’s common stock at the fair market value on the date the options are granted. The outstanding options generally vest over four or five years and generally expire ten years from the date of grant. Non-cash compensation expense of $875,000 ($550,000 after-tax), $387,000 ($252,000 after-tax) and $485,000 ($315,000 after-tax) related to the options was recorded during the years ended December 31, 2012, 2011 and 2010, respectively.

Restricted stock rights/units and performance awards. The Plans also provide that eligible key management employees may be granted restricted stock rights/units and performance awards which entitle such employees to receive a stated number of shares of the Company’s common stock upon vesting of the rights/units and awards. The outstanding rights/units generally vest over four or five years and expire upon termination of employment. Non-cash compensation expense of $1.4 million ($879,000 after tax), $1.0 million ($681,000 after-tax), and $690,000 ($448,000 after-tax) related to the rights/units was recorded during the years ended December 31, 2012, 2011 and 2010, respectively. In 2012, the Company granted restricted stock unit awards to key management that included performance targets. The Company estimated the performance based component of the awards as probable of achievement and recorded the related expense of $142,000 ($89,000 after-tax) as of December 31, 2012, representing the estimated performance target period of one year.

Non-employee director stock awards. The Company’s non-employee directors are permitted to elect to receive all or any portion of their annual retainers and meeting fees in the form of a fully vested stock award for the number of shares of the Company’s common stock determined by dividing the amount of cash compensation to be received in the form of a stock award by the fair market value of the Company’s common stock on the last trading date of each quarter. In addition, each non-employee director receives an annual restricted stock unit grant equal in market value to $45,000. Such restricted stock units generally vest after one year.

In 2012, 7,110 shares of common stock were issued to non-employee directors associated with compensation earned in 2012. In 2011, 7,517 shares of common stock were issued to non-employee directors associated with compensation earned in 2011. In 2010, 9,731 shares of common stock were issued to non-employee directors associated with compensation earned in 2010. Non-cash compensation expense of $82,000 ($51,000 after-tax), $145,000 ($94,000 after-tax), and $167,000 ($109,000 after-tax) related to the awards was recorded during the years ended December 31, 2012, 2011 and 2010, respectively.

Valuation and Expense Recognition. The Company estimates the fair value of stock option awards granted using the Black-Scholes option pricing model. The Company amortizes the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.

Expected Life. The expected life of awards granted represents the period of time that the awards are expected to be outstanding. The Company determines the expected life based primarily on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules, expected exercises and post-vesting forfeitures. Outstanding stock options granted by the Company generally vest 20% per year over five years or 25% per year over four years and have contractual lives of ten years.

Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock. The volatility factor the Company uses in the Black-Scholes option pricing model is based on its historical stock prices over the most recent period commensurate with the estimated expected life of the award.

Risk-Free Interest Rate. The risk-free interest rates used in the Black-Scholes option pricing model are obtained from the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

Expected Dividend Yield. The Company does not target a specific dividend yield for its dividend payments but is required to assume a dividend yield as an input to the Black-Scholes option pricing model. The dividend yield is based on the Company’s history and expectation of future dividend payouts and may be subject to change in the future.

Expected Forfeitures. The Company primarily uses historical data to estimate pre-vesting option forfeitures. The Company records stock-based compensation only for those awards that are expected to vest.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. A summary of the weighted average assumptions and results for options granted during the periods presented is as follows:

As of December 31, 2012 and 2011, the Company had approximately $3.6 million and $2.6 million, respectively, of total unrecognized compensation cost related to non-vested stock-based awards granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for any future changes in estimated forfeitures. The Company expects to recognize this cost over a weighted average period of approximately 1.9 years and 2.1 years for restricted stock rights and options, respectively.

A summary of stock options and restricted stock rights/units for the Plans is as follows:

Included in the 2012 stock award activity, 256,941 options were cancelled and 266,349 new options were issued to employees in connection with the October 2012 option and award adjustments made in connection with the cash dividend.

The aggregate intrinsic value of options outstanding at December 31, 2012 is calculated as the difference between the aggregate exercise price of the underlying options and the fair value of our common stock for those options that have an exercise price below the $26.99 closing market price of the Company’s common stock at December 31, 2012.

During 2012, 6,090 options were exercised with a total fair value of $162,000. During 2011, 3,588 options were exercised with a total fair value of $105,000. During 2012, 57,299 restricted stock rights/units vested with a total fair value of $1.7 million. During 2011, 44,255 restricted stock rights/units vested with a total fair value of $1.2 million.

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

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

A reconciliation of the change in the amount of gross unrecognized income tax benefits is as follows (in thousands):

As of December 31, 2012 and December 31, 2011, the Company had $632,000 of unrecognized tax benefits and no penalties or interest was accrued. If the unrecognized tax benefits were recognized, $410,000 would impact the effective tax rate. No reserves for uncertain income tax positions were recorded for the year ended December 31, 2010.

Although the timing and outcome of income tax audits is uncertain, it is possible that unrecognized tax benefits may be reduced as a result of the lapse of the applicable statues of limitations in federal and state jurisdictions within the next 12 months. Currently, the Company cannot reasonably estimate the amount of reductions, if any, during the next 12 months. Any such reduction could be impacted by other changes in unrecognized tax benefits and could result in changes to in the Company’s tax obligations.

The determination of the Company’s provision for income taxes and valuation allowance requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. In assessing whether and to what extent deferred income tax assets can be realized, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The Company assesses the likelihood of the realizability of its deferred tax assets on a quarterly basis. As of December 31, 2012 and December 31, 2011, the Company had a valuation allowance of $411,000 and $480,000, respectively, on certain of its deferred income tax assets. Due to the uncertainty of the Company’s ability to generate state taxable income, a full valuation allowance had been established on the Company’s deferred state income tax assets in prior years; however, $1.8 million of the Company’s valuation allowance was released in 2011. The amount of net deferred tax assets considered realizable, however, could be reduced in the future if the Company’s projections of future taxable income are reduced or if the Company does not perform at the levels that it is projecting. This could result in an increase in the Company’s valuation allowance for deferred tax assets. The Company has state net operating losses of $16.5 million expiring in 2014 through 2031 and federal net operating losses of $434,000 expiring in 2030 through 2031.

The State of California and the State of Oregon conducted an examination of the Company’s 2007 and 2008 state income tax returns. In October 2012, the Company received letters from the State of California, including a Closing Letter agreeing with the Company’s non-business income position subject to additional review, and an additional letter closing the 2007 examination. In connection with the State of Oregon audit, in November 2011, the Company received a Proposed Auditor’s Report from the State of Oregon seeking approximately $800,000 in unpaid taxes, interest and penalties in connection with the Company’s treatment of the proceeds from its 2007 and 2008 sales of Safeco Corporation stock and dividends received. The Company continues to oppose the State of Oregon’s position. The final disposition of the proposed audit adjustments could require the Company to make additional payments of taxes, interest and penalties, which could materially affect its effective tax rate.

The Company maintains a noncontributory supplemental retirement program that was established for key management. No new participants have been admitted to this program since 2001 and the benefits of active participants were frozen in 2005. The program participants do not include any of the Company’s current executive officers. The supplemental retirement program requires continued employment or disability through the date of expected retirement. The cost of the program is accrued over the average expected future lifetime of the participants. The program provides for vesting of benefits under certain circumstances. Funding is not required, but the Company has made investments in annuity contracts and maintains life insurance policies on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of the annuity contracts and life insurance policies; accordingly, the cash value of the annuity contracts and the cash surrender value of the life insurance policies are reported on the consolidated balance sheets and the appreciation is included in the consolidated statement of operations. The Company accounts for the cash surrender value of the approximately 70 annuity contracts and life insurance policies using the fair value method. The fair value method requires the Company to remeasure the policies at fair value at each reporting period and the changes are recorded in earnings. Any cash receipts and payments related to the policies are included in the consolidated statement of cash flows within the operating activities section. The carrying value of the annuity contracts and life insurance policies was $18.1 million and $17.3 million as of December 31, 2012 and 2011, respectively. The face value of the annuity contracts and life insurance policies was $25.5 million and $25.1 million as of December 31, 2012 and 2011, respectively.

In June 2005, the program was amended to freeze accrual of all benefits to active participants provided under the program. The Company continues to recognize periodic pension cost related to the program, but the amount is lower as a result of the curtailment.

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

At December 31, 2012 and 2011, the Company estimated its discount rate based on the Citigroup Pension Discount Curve, which is a well-established and credible source based upon a similar duration to the Company’s pension obligations. At December 31, 2010, the Company estimated its discount rate based on the Moody’s AA long-term corporate bond yield, which is a well-established and credible source based upon bonds of appropriate credit quality and a similar duration to the Company’s pension obligations.

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

The discount rate used to determine net periodic pension cost at December 31, 2012, 2011 and 2010 was 4.48%, 5.22% and 5.57%, respectively.

The accumulated benefit obligation of the Company’s supplemental retirement program was $23.7 million and $21.5 million as of December 31, 2012 and 2011, respectively. At December 31, 2012 and 2011, the accumulated benefit obligation of the Company’s supplemental retirement program exceeded plan assets.

Health insurance benefits are provided to certain employees who retire before age 65 and, in certain cases, spouses of retired employees. The Company has not accepted new participants into this benefit program since 2001and the program is set to expire in 2017. The accrued postretirement benefit cost was approximately $277,000 and $336,000 as of December 31, 2012 and 2011, respectively.

The Company estimates that benefits expected to be paid to participants under the supplemental retirement program and postretirement health insurance program are as follows (in thousands):

The Company has a defined contribution retirement plan which is qualified under Section 401(k) of the Internal Revenue Code. All U.S. employees are eligible to participate. The Company may make discretionary matching contributions. Employer contributions to the plan were $899,000, $788,000 and $0 for the years ended December 31, 2012, 2011 and 2010, respectively.

The Company reports financial data for two reportable segments: television and radio. The television reportable segment includes the operations of the Company’s 20 owned and operated network-affiliated television stations (including a 50%-owned station) and internet business. The radio reportable segment includes the operations of the Company’s three Seattle radio stations and one managed radio station. The Fisher Plaza reportable segment included the operations of a communications center located near downtown Seattle that serves as home of the Company’s Seattle television, radio and internet operations and its corporate headquarters and third-party tenants. In December 2011, the Company completed the sale of Fisher Plaza and its corporate headquarters and Seattle television, radio and internet operations continue to be located at Fisher Plaza, pursuant to a leaseback transaction.

The Company discloses information about its reportable segments based on measures it uses in assessing the performance of its reportable segments. The Company uses “segment income from continuing operations” to measure the operating performance of its segments which represents income from continuing operations before depreciation and amortization, gain on sale of real estate, net, gain on sale of Fisher Plaza, net, Plaza fire reimbursements, net, and gain on exchange of assets, net. Additionally, the performance metric for segment income from continuing operations excludes the allocation of certain corporate expenses and rent expense related to Fisher Plaza.

The non-segment expenses include corporate and administrative expenses that have not been allocated to the operations of the television or radio segments.

Intercompany revenue related primarily to sales between the Company’s television and radio stations.

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

A reconciliation of total segment income from continuing operations to consolidated income from continuing operations is as follows (dollars in thousands):

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):

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.

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.

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.

In December 2011, the Company’s Board of Directors approved a 2012 stock repurchase program authorizing the repurchase of up to an aggregate of $25.0 million of its outstanding shares of common stock. Under the program, share repurchases will be made from time-to-time, at the Company’s discretion, on the open market at prevailing market prices or in negotiated transactions off the market. The repurchase program expired at the end of 2012. The Company repurchased and retired 100,852 shares for an aggregate cost of $2.5 million during the year ended December 31, 2012, which reduced capital in excess of par by the excess cost over par value in the Company’s consolidated balance sheet at December 31, 2012. There were no unsettled share repurchases at December 31, 2012.

In December 2012, the Company’s Board of Directors approved a 2013 stock repurchase program authorizing the repurchase of up to an aggregate of $15.0 million of its outstanding shares of common stock. Under the program, share repurchases will be made from time-to-time, at the Company’s discretion, on the open market at prevailing market prices or in negotiated transactions off the market. The repurchase program expires at the end of 2013, subject to the periodic evaluation by the Board of Directors based on circumstances during the course of the year. As of December 31, 2012, no shares had been repurchased under the program.

During the third quarter of 2012, the Company’s Board of Directors declared a cash dividend of $10.00 per common share and paid $88.8 million on October 19, 2012 to holders of record on September 28, 2012.

In October 2012, the Company’s Board of Directors approved a dividend policy under which the Company will pay a quarterly cash dividend beginning in the fourth quarter of 2012. On November 1, 2012, the Board of Directors declared a cash dividend of $0.15 per common share and paid $1.3 million on December 17, 2012 to holders of record on November 30, 2012.

In 2004, the Federal Communications Commission (“FCC”) approved a spectrum allocation exchange between Sprint Nextel Corporation (“Nextel”) and public safety entities to eliminate interference caused to public safety radio licenses by Nextel’s operations.

In order to utilize this spectrum, Nextel is required to relocate broadcasters to new spectrum by replacing all analog equipment currently used by broadcasters with comparable digital equipment. The Company has agreed to accept the substitute equipment that Nextel will provide in all of its markets, and in turn must relinquish its existing equipment back to Nextel. All replacement equipment purchases will be paid for directly by Nextel. All other reasonable and necessary costs incurred by the Company in conjunction with the exchange, both internal and external, will be reimbursed by Nextel.

The Company has recognized a $32,000 and $2.1 million gain for the years ended December 31, 2011 and 2010, respectively, which represents the amount of the substitute equipment currently in use, including installation costs and net of assets disposed. This gain on asset exchange was not reported as a capital expenditure on the statement of cash flows as it was not a cash outflow.

The Company had approximately $53,000 of the substitute equipment as of December 31, 2012 and 2011 that had been received but not yet installed. The $53,000 was recorded as deferred gain in other current liabilities on the consolidated balance sheet. Once the equipment is fully installed and is in use, the deferred gain will be recorded as a gain in the Company’s consolidated statement of operations.

In July 2009, an electrical fire contained within a garage level equipment room of the east building of Fisher Plaza disrupted city-supplied electrical service to that building. The Company recorded the Plaza fire expenses as incurred and recorded insurance reimbursements within operating results in the period the reimbursements were considered certain. There were no further expenses and no reimbursements related to the Plaza fire for the year ended December 31, 2012. During the year ended December 31, 2011, the Company recorded net reimbursements of $223,000, which represented all remaining expected reimbursements. During the year ended December 31, 2010, the Company recorded net reimbursements of $3.4 million, which is included in Plaza fire expenses, net on the Company’s consolidated statements of operations. In total, the Company has incurred approximately $6.8 million in cash expenditures related to the Fisher Plaza fire, comprised of remediation expenses of $3.7 million and capital expenditures of $3.1 million.

Unaudited quarterly financial information for fiscal 2012 and 2011 is presented in the following table. Data may not add due to rounding (in thousands, except per share amounts). The Company separately reports as discontinued operations the historical operating results attributable to assets sold or held for sale and the applicable gain (loss) on disposition.

On February 28, 2013, the Company’s Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on March 29, 2013 to holders of record on March 19, 2013.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 4th day of March, 2013.


FISHER COMMUNICATIONS, INC. (Registrant)

By:		/S/ COLLEEN B. BROWN
		Colleen B. Brown President and Chief Executive Officer

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


Washington		91-0222175
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

140 4^th Avenue N., Suite 500 Seattle, Washington		98109
(Address of principal executive offices)		(Zip Code)


Title of Class		Number of Shares Outstanding
Common Stock, $1.25 Par Value		8,782,252


Document		Parts Into Which Incorporated
Proxy Statement for the 2013 Annual Meeting of Shareholders		Part III


Property	Market Area	Website URL
KOMO-TV	Seattle-Tacoma, WA	www.komonews.com
KOMO AM	Seattle-Tacoma, WA	www.komonews.com
KVI AM	Seattle-Tacoma, WA	www.kvi.com
KPLZ-FM	Seattle-Tacoma, WA	www.star1015.com
KUNS-TV	Seattle-Tacoma, WA	www.kunstv.com
KATU-TV	Portland, OR	www.katu.com
KUNP-TV	Portland, OR	www.kunptv.com
KVAL-TV	Eugene, OR	www.kval.com
KCBY-TV	Coos Bay, OR	www.kcby.com
KPIC-TV	Roseburg, OR	www.kpic.com
KIMA-TV	Yakima, WA	www.kimatv.com
KEPR-TV	Pasco/Richland/Kennewick, WA	www.keprtv.com
KLEW-TV	Spokane, WA	www.klewtv.com
KBOI-TV	Boise, ID	www.kboi2.com
KBAK-TV/KBFX-CA	Bakersfield, CA	www.bakersfieldnow.com


Market	Station	Dial Position	Power	Format
Seattle, WA	KOMO AM/FM	1000 kHz/97.7MHz	50 kW/63kW	News
Seattle, WA	KVI AM	570 kHz	5 kW	Conservative Talk
Seattle, WA	KPLZ FM	101.5 MHz	100 kW	Hot Adult Contemporary


Station	Market Area (1)	DMA Rank (2)		Network Affiliation	Expiration Date of Network Affiliation Agreement
KOMO-TV	Seattle-Tacoma, WA		12	ABC	August 31, 2014
KUNS-TV (3)	Seattle-Tacoma, WA		12	Univision	December 31, 2014
KATU (TV)	Portland, OR		22	ABC	August 31, 2014
KUNP (TV) (4)	LaGrande, OR		22	Univision	December 31, 2014
KUNP-LP (4)	Portland, OR		22	Univision	December 31, 2014
KBOI-TV	Boise, ID		111	CBS	February 29, 2016
KYUU-LP	Boise, ID		111	CW Plus	The end of the 2015-2016 broadcast year
KVAL-TV	Eugene, OR		121	CBS	February 29, 2016
KCBY-TV	Coos Bay, OR		121	CBS	February 29, 2016
KPIC (TV) (5)	Roseburg, OR		121	CBS	February 29, 2016
KIMA-TV	Yakima, WA		122	CBS	February 29, 2016
KEPR-TV	Pasco/Richland/Kennewick, WA		122	CBS	February 29, 2016
KUNW-CA (6)	Yakima, WA		122	Univision	December 31, 2014
KVVK-CA (6)	Pasco/Richland/Kennewick, WA		122	Univision	December 31, 2014
KORX-CA (6)	Walla-Walla, WA		122	Univision	December 31, 2014
KLEW-TV (7)	Spokane, WA		73	CBS	February 29, 2016
KBAK-TV	Bakersfield, CA		126	CBS	March 3, 2016
KBFX-TV	Bakersfield, CA		126	FOX	June 30, 2014
KIDK (TV)	Idaho Falls-Pocatello, ID		162	CBS	February 29, 2016
KXPI-LP	Pocatello, ID		162	FOX	June 30, 2015


Station	Market Area	Digital Channel		Currently Broadcasting in Digital Format
KOMO-TV	Seattle-Tacoma, WA		38	Yes
KUNS-TV	Seattle-Tacoma, WA		50	Yes
KATU (TV)	Portland, OR		43	Yes
KUNP (TV)	LaGrande, OR		16	Yes
KUNP LP	Portland, OR		47	Yes
KVAL-TV	Eugene, OR		13	Yes
KCBY-TV	Coos Bay, OR		11	Yes
KPIC (TV)	Roseburg, OR		19	Yes
KIMA-TV	Yakima, WA		33	Yes
KEPR-TV	Pasco/Richland/Kennewick, WA		18	Yes
KBAK-TV	Bakersfield, CA		33	Yes
KBFX-CA	Bakersfield, CA		29	Yes
KUNW-CA	Yakima, WA		30	Yes
KVVK-CA	Pasco/Richland/Kennewick, WA		15	Yes
KORX-CA	Walla-Walla, WA		16	No
KLEW-TV	Spokane, WA		32	Yes
KBOI-TV	Boise, ID		09	Yes
KYUU-LP	Boise, ID		28	Yes
KIDK (TV)	Idaho Falls-Pocatello, ID		36	Yes
KXPI-LP	Pocatello, ID		34	Yes


Station	Market Area	Expiration Date
KLEW-TV (and related translator stations)	Spokane, WA	October 1, 2014
KBOI-TV	Boise, ID	October 1, 2014
KYUU-LP	Boise, ID	October 1, 2014
KIDK (TV) (and related translator stations)	Idaho Falls-Pocatello, ID (Jackson, WY)	October 1, 2014
KXPI-LD	Idaho Falls-Pocatello, ID (Jackson, WY)	October 1, 2014
KBAK-TV	Bakersfield, CA	December 1, 2014
KBFX-CD	Bakersfield, CA	December 1, 2014
KOMO-TV	Seattle-Tacoma, WA	February 1, 2015
KUNS-TV	Seattle-Tacoma, WA	February 1, 2015
KATU (TV) (and related translator stations)	Portland, OR	February 1, 2015
KUNP (TV)	Portland, OR	February 1, 2015
KUNP-LD	Portland, OR	February 1, 2015
KVAL-TV (and related translator stations)	Eugene, OR	February 1, 2015
KCBY- TV (and related translator stations)	Eugene, OR	February 1, 2015
KPIC (TV) (and related translator stations)	Eugene, OR	February 1, 2015
KIMA-TV (and related translator stations)	Yakima-Pasco-Richland-Kennewick, WA	February 1, 2015
KEPR-TV (and related translator stations)	Yakima-Pasco-Richland-Kennewick, WA	February 1, 2015
KUNW-CD	Yakima-Pasco-Richland-Kennewick, WA	February 1, 2015
KVVK-CD	Yakima-Pasco-Richland-Kennewick, WA	February 1, 2015
KORX-CA	Yakima-Pasco-Richland-Kennewick, WA	February 1, 2015


	Quarterly Common Stock Price Ranges
	2012				2011
Quarter	High		Low		High		Low
1^st	$	31.56	$	28.10	$	31.37	$	22.15
2^nd	$	34.15	$	27.78	$	32.48	$	25.37
3^rd	$	37.44	$	28.52	$	30.38	$	21.93
4^th	$	37.43	$	22.76	$	31.00	$	21.90


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Dollar Value that May Yet Be Purchased Under the Programs (in thousands)
October 1 - October 31, 2012		—	$	—		—	$	24,914
November 1 - November 30, 2012		88,462	$	24.70		88,462	$	22,729
December 1 - December 31, 2012		9,400	$	24.88		9,400	$	22,495

Total		97,862				97,862


	Year Ended December 31,
	2012		2011		2010		2009			2008
	(In thousands, except per-share amounts)
Revenue	$	168,204	$	163,968	$	174,402	$	132,374		$	172,400

Net income (loss)
From continuing operations (2) (3) (4) (5) (6)	$	13,194	$	35,867	$	9,604	$	(9,230	)	$	46,746
From discontinued operations		—		568		142		(100	)		(1,248	)

Net income (loss)	$	13,194	$	36,435	$	9,746	$	(9,330	)	$	45,498

Per share data
Net income (loss) per share:
From continuing operations	$	1.49	$	4.06	$	1.09	$	(1.05	)	$	5.23
From discontinued operations		—		0.07		0.02		(0.01	)		(0.12	)

Net income (loss) per share	$	1.49	$	4.13	$	1.11	$	(1.06	)	$	5.11

Net income (loss) per share assuming dilution:
From continuing operations	$	1.47	$	4.03	$	1.09	$	(1.05	)	$	5.23
From discontinued operations		—		0.06		0.01		(0.01	)		(0.12	)

Net income (loss) per share	$	1.47	$	4.09	$	1.10	$	(1.06	)	$	5.11

Dividends declared per share	$	10.15	$	—	$	—	$	—		$	3.50

	December 31,
	2012		2011		2010		2009			2008
Working capital (1)	$	36,989	$	110,870	$	72,023	$	76,527		$	104,905
Total assets (1)	$	181,024	$	345,117	$	320,892	$	331,110		$	369,157
Total debt (1)	$	—	$	61,834	$	101,440	$	122,050		$	150,000
Stockholders’ equity (2) (3) (4) (5) (6)	$	123,135	$	202,045	$	165,226	$	155,472		$	162,608


	Year Ended December 31,						2012 - 2011 Variance						Year Ended December 31,			2011 - 2010 Variance
(dollars in thousands, unaudited)	2012			2011			$			%			2010			$			%
Revenue
Television	$	147,344		$	128,548		$	18,796			15	%	$	136,397		$	(7,849	)		(6	%)
Radio		20,993			21,356			(363	)		(2	%)		23,759			(2,403	)		(10	%)
Fisher Plaza		—			14,289			(14,289	)		(100	%)		14,400			(111	)		(1	%)

Total segment revenue		168,337			164,193			4,144			3	%		174,556			(10,363	)		(6	%)
Intercompany and other		(133	)		(225	)		92			41	%		(154	)		(71	)		(46	%)

Consolidated revenue		168,204			163,968			4,236			3	%		174,402			(10,434	)		(6	%)
Direct operating costs
Television		56,419			54,630			(1,789	)		(3	%)		54,556			(74	)		(0	%)
Radio		9,326			9,524			198			2	%		9,780			256			3	%
Fisher Plaza		—			5,582			5,582			100	%		5,816			234			4	%

Total segment direct operation costs		65,745			69,736			3,991			6	%		70,152			416			1	%
Corporate and other		721			538			(183	)		(34	%)		464			(74	)		(16	%)

Consolidated		66,466			70,274			3,808			5	%		70,616			342			0	%
Selling, general and administrative expenses
Television		33,286			31,612			(1,674	)		(5	%)		33,679			2,067			6	%
Radio		6,267			7,029			762			11	%		9,359			2,330			25	%
Fisher Plaza		—			439			439			100	%		656			217			33	%

Total segment selling general and admin. expenses		39,553			39,080			(473	)		(1	%)		43,694			4,614			11	%
Corporate and other		17,598			16,281			(1,317	)		(8	%)		13,946			(2,335	)		(17	%)
Fisher Plaza rent		5,160			133			(5,027	)		(3,780	%)		—			(133	)		n/a

Consolidated		62,311			55,494			(6,817	)		(12	%)		57,640			2,146			4	%
Amortization of broadcast rights
Television		9,835			10,808			973			9	%		11,877			1,069			9	%
Segment income from continuing operations
Television		47,804			31,498			16,306			52	%		36,285		$	(4,787	)		(13	%)
Radio		5,400			4,803			597			12	%		4,620			183			4	%
Fisher Plaza		—			8,268			(8,268	)		(100	%)		7,928			340			4	%

Total segment income from cont. operations		53,204			44,569			8,635			19	%		48,833			(4,264	)		(9	%)
Corporate and other		(18,452	)		(17,044	)		(1,408	)		(8	%)		(14,564	)		(2,480	)		(17	%)
Fisher Plaza rent		(5,160	)		(133	)		(5,027	)		(3,780	%)		—			(133	)		na

Sub-total		29,592			27,392			2,200			8	%		34,269			(6,877	)		(20	%)
Depreciation and amortization
Television		5,961			4,827			(1,134	)		(23	%)		7,666			2,839			37	%
Radio		120			94			(26	)		(28	%)		241			147			61	%
Fisher Plaza		—			3,611			3,611			100	%		4,947			1,336			27	%

Total segment depreciation and amortization		6,081			8,532			2,451			29	%		12,854			4,322			34	%
Corporate and other		909			1,032			123			12	%		1,538			506			33	%

Consolidated depreciation and amortization		6,990			9,564			2,574			27	%		14,392			4,828			34	%
Gain on sale of Real Estate		(164	)		(4,089	)		(3,925	)		(96	%)		—			4,089			na
Gain on sale of Fisher Plaza, net		—			(40,454	)		(40,454	)		(100	%)		—			40,454			na
Plaza fire expenses (reimbursements), net		—			(223	)		(223	)		(100	%)		(3,363	)		(3,140	)		(93	%)
Gain on asset exchange, net		—			(32	)		(32	)		(100	%)		(2,054	)		(2,022	)		(98	%)

Income from continuing operations		22,766			62,626			(39,860	)		(64	%)		25,294			37,332			148	%
Loss on extinguishment of senior notes, net		(1,482	)		(1,477	)		(5	)		(0	%)		(160	)		(1,317	)		(823	%)
Other income, net		25			420			(395	)		(94	%)		217			203			94	%
Interest expense		(309	)		(7,195	)		6,886			96	%		(9,954	)		2,759			28	%

Income from continuing operations before income taxes		21,000			54,374			(33,374	)		(61	%)		15,397			38,977			253	%
Provision (benefit) for income taxes		7,806			18,507			10,701			58	%		5,793			(12,714	)		(219	%)

Income (loss) from continuing operations, net of income taxes		13,194			35,867			(22,673	)		(63	%)		9,604			26,263			273	%
Income (loss) from discontinued operations, net of income taxes		—			568			(568	)		(100	%)		142			426			300	%

Net income	$	13,194		$	36,435		$	(23,241	)		(64	%)	$	9,746		$	26,689			274	%


(in thousands)	Year Ended December 31,
(in thousands)	2012			% change		% total revenue		2011			% change		% total revenue		2010			% total revenue
Core advertising (local and national)	$	94,138			-3%		56%	$	96,940			7%		59%	$	90,227			52%
Political		17,986			274%		11%		4,809			-78%		3%		22,109			13%
Internet		4,929			-12%		3%		5,574			59%		3%		3,496			2%
Retransmission		22,207			66%		13%		13,404			10%		8%		12,194			7%
Trade, barter and other		8,084			3%		5%		7,821			-7%		5%		8,371			5%

TV		147,344			15%		88%		128,548			-6%		78%		136,397			78%
Core advertising (local and national)		19,434			-2%		12%		19,879			-8%		12%		21,500			12%
Political		540			19%		0%		453			-60%		0%		1,140			1%
Trade, barter and other		1,019			0%		1%		1,024			-8%		1%		1,119			1%

Radio		20,993			-2%		12%		21,356			-10%		13%		23,759			14%
Fisher Plaza		—			-100%		0%		14,289			-1%		9%		14,400			8%
Intercompany		(133	)		-41%		0%		(225	)		46%		0%		(154	)		0%

Total Revenue	$	168,204			3%		100%	$	163,968			-6%		100%	$	174,402			100%


	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Broadcast Rights	$	18,270	$	5,584	$	10,820	$	1,593	$	273
Capital Lease Obligations		1,620		1,012		608		—		—
Operating Lease Obligations		46,526		4,536		8,170		7,911		25,909
Other Obligations		3,708		500		1,000		708		1,500

	$	70,124	$	11,632	$	20,598	$	10,212	$	27,682


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders		417,083	(1)	$	12.86	(2)		138,595	(3)(4)
Equity compensation plans not approved by security holders		—			—			—

Total		417,083	(1)	$	12.86	(2)		138,595	(3)(4)


	Year Ended December 31,
*(in thousands, except per-share amounts)*	2012			2011			2010
Revenue	$	168,204		$	163,968		$	174,402

Operating expenses
Direct operating costs (exclusive of depreciation and amortization and amortization of broadcast rights)		66,466			70,274			70,616
Selling, general and administrative expenses		62,311			55,494			57,640
Amortization of broadcast rights		9,835			10,808			11,877
Depreciation and amortization		6,990			9,564			14,392
Gain on sale of real estate, net		(164	)		(4,089	)		—
Gain on sale of Fisher Plaza, net		—			(40,454	)		—
Plaza fire reimbursements, net		—			(223	)		(3,363	)
Gain on asset exchange, net		—			(32	)		(2,054	)

Total operating expenses		145,438			101,342			149,108

Income from continuing operations		22,766			62,626			25,294
Loss on extinguishment of senior notes, net		(1,482	)		(1,477	)		(160	)
Other income, net		25			420			217
Interest expense		(309	)		(7,195	)		(9,954	)

Income from continuing operations before income taxes		21,000			54,374			15,397
Provision for income taxes		7,806			18,507			5,793

Income from continuing operations, net of income taxes		13,194			35,867			9,604
Income from discontinued operations, net of income taxes		—			568			142

Net income	$	13,194		$	36,435		$	9,746

Net income per share:
From continuing operations	$	1.49		$	4.06		$	1.09
From discontinued operations		—			0.07			0.02

Net income per share	$	1.49		$	4.13		$	1.11

Net income per share assuming dilution:
From continuing operations	$	1.47		$	4.03		$	1.09
From discontinued operations		—			0.06			0.01

Net income per share	$	1.47		$	4.09		$	1.10

Weighted average shares outstanding		8,860			8,829			8,796

Weighted average shares outstanding assuming dilution		8,948			8,904			8,843

Dividends declared per share	$	10.15		$	—		$	—


*(in thousands)*	Year Ended December 31,
*(in thousands)*	2012			2011			2010
Net income	$	13,194		$	36,435		$	9,746

Other comprehensive income (loss):
Accumulated loss		(2,245	)		(1,756	)		(1,001	)
Effect of income taxes		831			644			350
Prior service cost		60			60			60
Effect of income taxes		(22	)		(22	)		(21	)
Unrealized gains on available for sale securities		13			—			—
Effect of income taxes		(5	)		—			—

Other comprehensive loss		(1,368	)		(1,074	)		(612	)

Comprehensive income	$	11,826		$	35,361		$	9,134


	December 31,
*(in thousands, except share and per-share amounts)*	2012			2011
ASSETS
Current Assets
Cash and cash equivalents	$	20,403		$	143,017
Short-term investments		—			33,481
Receivables, net		28,243			32,402
Income taxes receivable		834			117
Deferred income taxes, net		1,062			1,825
Prepaid expenses and other		3,629			3,062
Broadcast rights		6,690			6,789

Total current assets		60,861			220,693
Restricted cash		3,624			3,594
Cash surrender value of life insurance and annuity contracts		18,100			17,278
Goodwill, net		13,293			13,293
Intangible assets, net		40,072			40,307
Other assets		5,208			5,006
Deferred income taxes, net		711			3,367
Assets held for sale		—			658
Property, plant and equipment, net		39,155			40,921

Total Assets	$	181,024		$	345,117

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term debt	$	—		$	61,834
Accounts payable		1,496			3,754
Accrued payroll and related benefits		4,200			4,660
Interest payable		—			1,556
Broadcast rights payable		6,488			6,541
Income taxes payable		3,060			21,468
Current portion of accrued retirement benefits		1,368			1,302
Other current liabilities		7,260			8,708

Total current liabilities		23,872			109,823
Deferred income		8,338			10,036
Accrued retirement benefits		22,574			20,525
Other liabilities		3,105			2,688

Total liabilities		57,889			143,072


Commitments and Contingencies (Note 15)

Stockholders’ Equity
Common stock, shares authorized 12,000,000, $1.25 par value; 8,782,174 and 8,832,177 issued and outstanding at December 31, 2012 and 2011, respectively		10,978			11,040
Capital in excess of par		14,444			14,679
Accumulated other comprehensive income (loss), net of income taxes:
Accumulated loss		(4,702	)		(3,288	)
Prior service cost		(24	)		(62	)
Unrealized gains on available for sale securities		8			—
Retained earnings		102,431			179,676

Total Stockholders’ Equity		123,135			202,045

Total Liabilities and Stockholders’ Equity	$	181,024		$	345,117


	Common Stock						Capital in Excess of Par			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
*(in thousands, except share amounts)*	Shares			Amount			Capital in Excess of Par			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
Balances, December 31, 2009		8,762,383		$	10,953		$	12,086		$	(1,664	)	$	134,097		$	155,472
Cumulative adjustment due to consolidation of equity investee, net of taxes		—			—			—			—			(602	)		(602	)
Net income		—			—			—			—			9,746			9,746
Other comprehensive loss		—			—			—			(612	)		—			(612	)
Stock-based compensation		—			—			1,342			—			—			1,342
Issuance of common stock under awards, rights and options and related tax benefit		28,016			35			(155	)		—			—			(120	)

Balances, December 31, 2010		8,790,399			10,988			13,273			(2,276	)		143,241			165,226
Net income		—			—			—			—			36,435			36,435
Other comprehensive loss		—			—			—			(1,074	)		—			(1,074	)
Stock-based compensation		—			—			1,580			—			—			1,580
Issuance of common stock under awards, rights and options and related tax benefit		41,778			52			(174	)		—			—			(122	)

Balances, December 31, 2011		8,832,177		$	11,040		$	14,679		$	(3,350	)	$	179,676		$	202,045
Net income		—			—			—			—			13,194			13,194
Cash dividends declared		—			—			—			—			(90,439	)		(90,439	)
Repurchase of common stock		(100,852	)		(126	)		(2,384	)		—			—			(2,510	)
Other comprehensive loss		—			—			—			(1,368	)		—			(1,368	)
Stock-based compensation		—			—			2,458			—			—			2,458
Issuance of common stock under awards, rights and options and related tax benefit		50,849			64			(309	)		—			—			(245	)

Balances, December 31, 2012		8,782,174		$	10,978		$	14,444		$	(4,718	)	$	102,431		$	123,135


Buildings and improvements			10–55 years
Machinery and equipment			3–25 years
Land improvements			10–30 years


	2012		2011
Investments	$	2,225	$	3,093
Maximum exposure to losses		2,225		3,093


	December 31, 2012								December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	3,486	$	13	$	—	$	3,499	$	36,950	$	—	$	(6)	$	36,944


	Less than 12 months
	Fair value		Unrealized gains (losses)
December 31, 2012
U.S. Treasury securities	$	3,499	$	13


	December 31, 2012							December 31, 2011
	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		(1,203	)		2,357		3,560		(968	)		2,592

Total intangible assets	$	41,275	$	(1,203	)	$	40,072	$	41,275	$	(968	)	$	40,307


Year ending December 31,
2013	$	236
2014		236
2015		236
2016		236
2017		236
Thereafter		1,177

	$	2,357


	Stock Options									Restricted Stock Rights
	Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value		Number of Shares			Weighted Average Grant- Date Fair Value
Outstanding at December 31, 2010		275,420			33.76		6.01		577,352		142,703			14.96

Options and stock rights granted		23,202			26.32						64,121			26.46
Options exercised/stock rights vested		(3,588	)		23.21						(44,255	)		26.73
Options expired		(36,885	)		48.17						—			—
Options and stock rights forfeited		(4,422	)		25.54						(6,221	)		23.96

Outstanding at December 31, 2011		253,727			31.27		5.95		1,058,206		156,348			18.97

Options and stock rights granted		285,510			22.28						72,038			27.97
Options exercised/stock rights vested		(6,090	)		13.68						(57,299	)		29.97
Options expired		(202,868	)		34.45						—			—
Options and stock rights forfeited		(76,963	)		24.19						(7,320	)		23.03

Outstanding at December 31, 2012		253,316		$	21.17		5.57	$	2,140,466		163,767		$	22.99

Exercisable at December 31, 2012		177,274		$	23.85		4.77	$	1,223,205		—		$	—


	2012			2011
Assets
Accrued employee benefits	$	8,860		$	8,002
Goodwill and intangible assets		—			2,196
Allowance for doubtful accounts		170			476
Net operating loss carryforwards		758			987
Contract termination charge		180			714
Stock-based compensation		1,631			1,298
Deferred income		3,944			4,273
Deferred rent		372			196
Helicopter sale-leaseback		134			204
Acquisition costs		93			—
Other		119			120

		16,261			18,466

Liabilities
Goodwill and intangible assets		(1,649	)		—
Appreciation on annuity contracts		(2,081	)		(1,933	)
Extinguishment of senior notes		(1,047	)		(1,047	)
Property, plant and equipment		(8,771	)		(9,408	)
Prepaid insurance		(452	)		(344	)
Other		(77	)		(62	)

		(14,077	)		(12,794	)

Valuation allowance		(411	)		(480	)

Deferred income tax asset, net	$	1,773		$	5,192

Current asset, net		1,062			1,825
Noncurrent asset, net		711			3,367

	$	1,773		$	5,192


	Supplemental Retirement Program		Postretirement Health Insurance Program
2013	$	1,308	$	60
2014		1,319		64
2015		1,455		69
2016		1,564		52
2017		1,524		56
Next 5 years		7,229		—

	$	14,399	$	301


	Year Ended December 31,
(dollars in thousands)	2012			2011			2010
Revenue
Television	$	147,344		$	128,548		$	136,397
Radio		20,993			21,356			23,759
Fisher Plaza		—			14,289			14,400

Total segment revenue		168,337			164,193			174,556
Intercompany and other		(133	)		(225	)		(154	)

	$	168,204		$	163,968		$	174,402

Segment income from continuing operations
Television	$	47,804		$	31,498		$	36,285
Radio		5,400			4,803			4,620
Fisher Plaza		—			8,268			7,928

Total segment income from continuing operations		53,204			44,569			48,833
Corporate and other		(18,452	)		(17,044	)		(14,564	)
Fisher Plaza rent		(5,160	)		(133	)		—

	$	29,592		$	27,392		$	34,269

Depreciation and amortization
Television	$	5,961		$	4,827		$	7,666
Radio		120			94			241
Fisher Plaza		—			3,611			4,947

Total segment depreciation and amortization		6,081			8,532			12,854
Corporate and other		909			1,032			1,538

	$	6,990		$	9,564		$	14,392

Total assets
Television	$	113,998		$	122,357
Radio		15,016			13,435
Fisher Plaza		—			377

Total segment assets		129,014			136,169
Corporate and other		52,010			208,948

	$	181,024		$	345,117

Goodwill, net
Television	$	5,077		$	5,077
Radio		8,216			8,216

	$	13,293		$	13,293

Capital expenditures
Television	$	6,927		$	5,818		$	6,923
Radio		935			166			128
Fisher Plaza		—			148			2,217

Total segment capital expenditures		7,862			6,132			9,268
Corporate and other		1,041			2,003			722

	$	8,903		$	8,135		$	9,990


	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


	Three Months Ended										Year Ended
	March 31,			June 30,		September 30,			December 31,		December 31,
Revenue
2012	$	33,932		$	42,270	$	39,895		$	52,107	$	168,204
2011	$	37,552		$	40,350	$	39,700		$	46,366	$	163,968
Income (loss) from continuing operations, net of income taxes
2012	$	(1,864	)	$	4,282	$	2,200		$	8,576	$	13,194
2011	$	(1,719	)	$	3,542	$	1,519		$	32,525	$	35,867
Income (loss) from discontinued operations, net of income taxes
2012	$	—		$	—	$	—		$	—	$	—
2011	$	(8	)	$	74	$	(75	)	$	577	$	568
Net income (loss)
2012	$	(1,864	)	$	4,282	$	2,200		$	8,576	$	13,194
2011	$	(1,727	)	$	3,616	$	1,444		$	33,102	$	36,435
Income (loss) per share—basic:
From continuing operations
2012	$	(0.21	)	$	0.48	$	0.25		$	0.97	$	1.49
2011	$	(0.20	)	$	0.40	$	0.17		$	3.68	$	4.06
From discontinued operations
2012	$	—		$	—	$	—		$	—	$	—
2011	$	—		$	0.01	$	(0.01	)	$	0.07	$	0.07
Net income (loss)
2012	$	(0.21	)	$	0.48	$	0.25		$	0.97	$	1.49
2011	$	(0.20	)	$	0.41	$	0.16		$	3.75	$	4.13
Income (loss) per share, assuming dilution:
From continuing operations
2012	$	(0.21	)	$	0.48	$	0.25		$	0.96	$	1.47
2011	$	(0.20	)	$	0.40	$	0.17		$	3.65	$	4.03
From discontinued operations
2012	$	—		$	—	$	—		$	—	$	—
2011	$	—		$	0.01	$	(0.01	)	$	0.06	$	0.06
Net income (loss)
2012	$	(0.21	)	$	0.48	$	0.25		$	0.96	$	1.47
2011	$	(0.20	)	$	0.41	$	0.16		$	3.71	$	4.09


Signatures	Title	Date

/S/ COLLEEN B. BROWN Colleen B. Brown	President, Chief Executive Officer and Director (Principal Executive Officer)	March 4, 2013

/S/ HASSAN N. NATHA Hassan N. Natha	Senior Vice President, Chief Financial Officer (Principal Financial Officer)	March 4, 2013

/S/ PAUL A. BIBLE Paul A. Bible	Director	March 4, 2013

/S/ DONALD G. GRAHAM, III Donald G. Graham, III	Director	March 4, 2013

/S/ RICHARD L. HAWLEY Richard L. Hawley	Director	March 4, 2013

/S/ BRIAN P. MCANDREWS Brian P. McAndrews	Director	March 4, 2013

/S/ FRANK P. WILEY Frank Wiley	Director	March 4, 2013

/S/ MATTHEW GOLDFARB Matthew Goldfarb	Director	March 4, 2013

/S/ JOSEPH J. TROY Joseph J. Troy	Director	March 4, 2013


Exhibit No.		Description
3.1*		Articles of Incorporation, as amended to date (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (File No. 000-22439)).

3.2*		Amended Bylaws as of May 11, 2011(filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 000-22439)).

4.1*		Form of Common Stock Certificate (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (File No. 000-22439)).

10.1*+		Amended and Restated Fisher Communications Incentive Plan of 2001 (filed as Appendix A to the Company’s definitive proxy statement on Schedule 14A filed on March 21, 2007 (File No. 000-22439)).

10.2*+		Form of Non-Qualified Stock Option Contract for grants made pursuant to the Amended and Restated Fisher Communications Incentive Plan of 2001 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 13, 2005 (File No. 000-22439)).

10.3*+		Form of Restricted Stock Rights Agreement for grants made pursuant to the Amended and Restated Fisher Communications Incentive Plan of 2001 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 13, 2005 (File No. 000-22439)).

10.4*+		Offer Letter to Colleen B. Brown, dated October 3, 2005 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 7, 2005 (File No. 000-22439)).

10.5*+		Form of Stock Option Grant Notice and Agreement for grants made pursuant to the Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (File No. 000-22439)).

10.6*+		Offer Letter to Hassan N. Natha, dated November 6, 2008 (filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on December 16, 2008 (File No. 000-22439)).

10.7*+		Amended and Restated Change of Control Agreement, dated August 24, 2009, by and between Fisher Communications, Inc. and Colleen B. Brown (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 28, 2009 (File No. 000-22439)).

10.8*+		Form of Change of Control Agreement by and between Fisher Communications, Inc. and Company Executives (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 28, 2009 (File No. 000-22439)).

10.9*+		Summary of Non-Employee Directors Cash Compensation Fees (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (File No. 000-22439)).

10.10*+		Fisher Communications, Inc. 2012 Management Short-Term Incentive Plan, (filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No.000-22439)).

10.11*+		Summary of Non-Employee Director Equity Compensation Program (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (File No. 000-22439)).

10.12*+		Fisher Communications, Inc. Amended and Restated 2008 Equity Incentive Plan (filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 12, 2011 (File No. 000-22439)).


Exhibit No.		Description

10.13*		Primary Television Affiliation Agreement, executed on July 28, 2011, by and between American Broadcasting Companies and Fisher Broadcasting-Seattle TV, LLC (with certain confidential information deleted therefrom) (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 3, 2011 (File No. 000-22439)).

10.14*		Primary Television Affiliation Agreement, executed on July 28, 2011, by and between American Broadcasting Companies and Fisher Broadcasting-Portland TV, LLC (with certain confidential information deleted therefrom) (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 3, 2011 (File No. 000-22439)).

10.15+		Fisher Communications, Inc. Amended Performance Award Program (filed herewith).

10.16*		Lease, by and between Fisher Communications, Inc. and Hines Global REIT 100/140 Fourth Ave LLC, dated December 15, 2011 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on December 21, 2011 (File No. 000-22439)).

10.17*		Form of Director and Executive Officer Indemnification Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on December 21, 2011 (File No 000-22439)).

10.18+		Fisher Communications, Inc. 2013 Management Short-Term Incentive Plan (filed herewith).

10.19*		Credit Agreement dated November 19, 2012, between Fisher Communications, Inc., and JPMorgan Chase Bank, N.A., as Administrative Agent and Lender (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 26, 2012 (File No. 000-22439)).

10.20*		Security Agreement dated November 19, 2012, between Fisher Communications, Inc. and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 26, 2012 (File No. 000-22439)).

10.21+		Form of Restricted Stock Unit Award Agreement for grants made pursuant to the Amended and Restated 2008 Equity Incentive Plan (filed herewith).

10.22+		Form of Restricted Stock Unit Award Agreement for grants made to non-employee directors pursuant to the Amended and Restated 2008 Equity Incentive Plan (filed herewith).

10.23		Amendment to Lease by and between Fisher Communications, Inc. and Hines Global REIT 100/140 Fourth Ave LLC, dated •, 2013 (filed herewith).

10.24*		Agreement between the Company and FrontFour Capital Group, LLC (and affiliates), dated March 14, 2012 (filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed on March 14, 2012 (File No. 000-22439)).

10.25*+		Amendment and restatement of Sections 4.1 and 18 of the Amended and Restated Fisher Communications Incentive Plan of 2001(filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on October 9, 2012 (File No. 000-22439)).

10.26*+		Amendment and restatement of Sections 4.1, 4.2(d), 6.4, 15.1, and 16.3 of the Fisher Communications Amended and Restated 2008 Equity Incentive Plan (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on October 9, 2012 (File No. 000-22439)).

21.1		Subsidiaries of the Registrant.

23.1		Consent of Independent Registered Public Accounting Firm

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.



32.1		Section 1350 Certification of Chief Financial Officer.

101		The following financial information from Fisher Communications, Inc.‘s Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010, (ii) Consolidated Balance Sheets at December 31, 2012, and December 31, 2011, (iii) Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010, and (iv) the Notes to Consolidated Financial Statements.