10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2012

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

For the transition period from             to            

Commission file number: 000-17287

Outdoor Channel Holdings, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	33-0074499
(State or other Jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

43445 Business Park Drive, Suite 103

Temecula, California 92590

(Address and zip code of principal executive offices)

(951) 699-6991

(Issuer’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

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

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    x  No

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

Class	Number of Shares Outstanding at May 7, 2012
Common Stock, $0.001 par value	25,776,040

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

For the Period Ended March 31, 2012

Table of Contents

	Part I. Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2012 (unaudited) and December  31, 2011	3
	Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31,  2012 and 2011	4
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March  31, 2012 and 2011	5
	Unaudited Condensed Consolidated Statement of Equity for the Three Months Ended March 31, 2012	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31,  2012 and 2011	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
	Part II. Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		29

* * *

2

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

	March 31, 2012			December 31, 2011
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	20,933		$	19,498
Investments in available-for-sale securities		38,167			40,049
Accounts receivable, net of allowance for doubtful accounts of $950 and $949		9,998			13,657
Income taxes		1,099			3
Deferred tax assets, net		2,168			2,168
Programming and production costs		7,560			6,020
Subscriber acquisition fees, current portion		1,156			1,523
Other current assets		2,865			4,352
Total current assets		83,946			87,270
Property, plant and equipment, net		11,578			11,875
Amortizable intangible assets, net		323			378
Goodwill		43,160			43,160
Investments in auction-rate securities		4,954			4,940
Deferred tax assets, net		754			754
Subscriber acquisition fees, net of current portion		316			421
Deposits and other assets		344			388
Totals	$	145,375		$	149,186
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	10,573		$	12,424
Deferred revenue		1,172			634
Deferred obligations, current portion		49			49
Unfavorable lease, current portion		167			163
Income taxes payable		—			1,685
Total current liabilities		11,961			14,955
Deferred obligations		285			224
Unfavorable lease		639			682
Total liabilities		12,885			15,861
Commitments and contingencies
Equity:
Preferred stock, $0.001 par value; 25,000 shares authorized; none issued		—			—
Common stock, $0.001 par value; 75,000 shares authorized; 25,784 and 25,461 shares issued and outstanding		26			25
Additional paid-in capital		169,836			169,540
Accumulated other comprehensive loss		(261	)		(287	)
Accumulated deficit		(37,111	)		(35,953	)
Total stockholders’ equity		132,490			133,325
Noncontrolling interest		—			—
Totals	$	145,375		$	149,186

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended March 31,
	2012			2011
Revenues:
Advertising	$	7,435		$	7,585
Subscriber fees		5,176			4,747
Production services		1,710			2,480
Total revenues		14,321			14,812
Cost of services:
Programming		1,798			1,630
Satellite transmission fees		429			399
Production and operations		4,141			4,553
Other direct costs		11			92
Total cost of services		6,379			6,674
Other expenses:
Advertising		648			305
Selling, general and administrative		8,553			8,283
Depreciation and amortization		732			746
Total other expenses		9,933			9,334
Loss from operations		(1,991	)		(1,196	)
Interest and other income, net		19			9
Loss from operations before income taxes		(1,972	)		(1,187	)
Income tax benefit		(814	)		(357	)
Net loss		(1,158	)		(830	)
Net loss attributable to noncontrolling interest		—			—
Net loss attributable to controlling interest	$	(1,158	)	$	(830	)
Loss per common share data:
Basic	$	(0.05	)	$	(0.03	)
Diluted	$	(0.05	)	$	(0.03	)
Weighted average common shares outstanding:
Basic		25,021			24,605
Diluted		25,021			24,605

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

	Three Months Ended March 31,
	2012			2011
Net loss	$	(1,158	)	$	(830	)
Other comprehensive income, net of tax:
Unrealized gain on available-for-sale and auction-rate securities		26			11
Comprehensive loss	$	(1,132	)	$	(819	)

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Equity

For the Three Months Ended March 31, 2012

(In thousands)

	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’			Non- controlling		Total
	Shares			Amount		Capital			Income (Loss)			Deficit			Equity			Interest		Equity
Balance, December 31, 2011		25,461		$	25	$	169,540		$	(287	)	$	(35,953	)	$	133,325		$	—	$	133,325
Net loss		—			—		—			—			(1,158	)		(1,158	)		—		(1,158	)
Unrealized gain on avaliable-for-sale and auction-rate securities		—			—		—			26			—			26			—		26
Issuance of restricted stock to employees for services to be rendered, net of forfeited shares		396			1		(1	)		—			—			—			—		—
Share-based employee and non-employee compensation expense		—			—		844			—			—			844			—		844
Purchase and retirement of common stock related to employee and non-employee share-based compensation activity		(73	)		—		(547	)		—			—			(547	)		—		(547	)
Cash contribution of noncontrolling interest		—			—		—			—			—			—			—		—
Balance, March 31, 2012		25,784		$	26	$	169,836		$	(261	)	$	(37,111	)	$	132,490		$	—	$	132,490

See Notes to Unaudited Condensed Consolidated Financial Statements.

6

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Three Months Ended March 31,
	2012			2011
Operating activities:
Net loss	$	(1,158	)	$	(830	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		732			746
Amortization of subscriber acquisition fees		472			408
Loss on sale of equipment		10			2
Provision for doubtful accounts		15			79
Share-based employee and non-employee compensation		844			787
Deferred tax benefit, net		—			(391	)
Changes in operating assets and liabilities:
Accounts receivable		3,644			6,598
Income tax receivable and payable, net		(2,781	)		(2,567	)
Programming and production costs		(1,540	)		(1,060	)
Other current assets		1,487			487
Deposits and other assets		34			47
Subscriber acquisition fees		—			(191	)
Accounts payable and accrued expenses		(1,672	)		(4,049	)
Deferred revenue		538			319
Deferred obligations		61			23
Unfavorable lease obligations		(39	)		(37	)
Net cash provided by operating activities		647			371
Investing activities:
Purchases of property, plant and equipment		(646	)		(338	)
Purchase of intangibles		—			(75	)
Proceeds from sale of equipment		87			—
Purchases of available-for-sale securities		(24,143	)		(27,992	)
Proceeds from sale of available-for-sale and auction-rate securities		26,037			27,000
Net cash provided by (used in) investing activities		1,335			(1,405	)
Financing activities:
Purchase of common stock		(547	)		(471	)
Net cash used in financing activities		(547	)		(471	)
Net increase (decrease) in cash and cash equivalents		1,435			(1,505	)
Cash and cash equivalents, beginning of period		19,498			32,578
Cash and cash equivalents, end of period	$	20,933		$	31,073
Supplemental disclosure of cash flow information:
Income taxes paid	$	1,960		$	2,542
Supplemental disclosures of non-cash investing and financing activities:
Effect of net increase in fair value of available-for-sale and auction-rate securities	$	26		$	11
Property, plant and equipment costs incurred but not paid	$	178		$	5

See Notes to Unaudited Condensed Consolidated Financial Statements.

7

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share data)

NOTE 1—ORGANIZATION AND BUSINESS

Description of Operations

Outdoor Channel Holdings, Inc. (“Outdoor Channel Holdings”) is incorporated under the laws of the State of Delaware. Collectively, with its subsidiaries and consolidated affiliate, the terms “we,” “us,” “our” and the “Company” refer to Outdoor Channel Holdings, Inc. as a consolidated entity, except where noted or where the context makes clear the reference is only to Outdoor Channel Holdings, Inc. or one of our subsidiaries. Outdoor Channel Holdings, Inc. wholly owns OC Corporation which in turn wholly owns The Outdoor Channel, Inc. (“TOC”). Outdoor Channel Holdings is also the sole member of 43455 BPD, LLC, which is the entity that owns the building that houses our broadcast facility. TOC operates Outdoor Channel, which is a national television network devoted to traditional outdoor activities, such as hunting, fishing and shooting sports, as well as off-road motor sports and other related lifestyle programming. Outdoor Channel Holdings also wholly owns Winnercomm, Inc., which is referred to as “Production Services”. The Production Services business relates to the production, development and marketing of sports programming. Winnercomm, Inc. wholly owns CableCam, LLC and SkyCam, LLC which comprise our Aerial Camera business. The Aerial Camera business is engaged in providing aerial camera services for customer owned telecasts.

In August 2011, the Company entered into an agreement with Professional Bass Tour (“PBT”) to establish Major League Fishing LLC (“MLF”), a joint venture created to produce a new style of professional competitive bass fishing tournaments to air exclusively on the Outdoor Channel. The Company is a 50% owner in MLF, controls the venture’s board of managers and will fund 100% of the costs of the venture via preferred capital contributions bearing a priority return which must be redeemed before MLF can make profit distributions. Accordingly, the Company is deemed the primary beneficiary and MLF is being treated as a variable interest entity, as defined by ASC 810, and MLF has been consolidated in our accompanying financial statements. Profits shall be allocated pro rata in proportion to the number of membership interests of MLF and losses shall be allocated in a similar proportionate manner but only while a member’s capital account is positive. Losses in excess of member’s capital are not allocated to members but will be only allocated to the Company. As of March 31, 2012, the Company has contributed approximately $1.4 million to MLF, and no cash amounts have been contributed by PBT. MLF recorded a loss for the three months ended March 31, 2012.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2012 and its results of operations and cash flows for the three months ended March 31, 2012 and 2011. Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on March 9, 2012 (the “2011 Annual Report”).

Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities as of the dates of the condensed consolidated balance sheets and reported amounts of revenues and expenses for the periods presented. Accordingly, actual results could materially differ from those estimates.

Our revenues include advertising fees from advertisements aired on Outdoor Channel, including fees paid by outside producers to purchase advertising time in connection with the airing of their programs on Outdoor Channel and subscriber fees paid by cable, telephone companies and satellite service providers that air Outdoor Channel. Production services revenue includes revenue from advertising fees, revenue from production services for customer-owned telecasts, revenue from camera services for customer-owned telecasts and revenue from website design, management, marketing and hosting services.

8

NOTE 2—STOCK INCENTIVE PLANS

The measurement and recognition of compensation expense is recognized in the financial statements over the service period for the fair value of all awards granted after January 1, 2006. Our stock incentive plans provide for the granting of qualified and nonqualified options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights (“SARs”) and performance units to our officers, directors and employees. We satisfy the exercise of options and awards of restricted stock by issuing previously unissued common shares. Currently we have not awarded any SARs but have awarded options, performance units, restricted stock and RSUs.

We have two stock incentive plans: our 2004 Long-Term Incentive Plan (“LTIP Plan”) and our Non-Employee Director Stock Option Plan (“NEDSOP”). No more options will be issued under the NEDSOP Plan. All awards issued under our plans are subject to terms and conditions as determined by our Board of Directors.

Our Board of Directors has discretion to allow our employees and directors to forego shares in lieu of paying requisite withholding taxes on vested restricted shares. In turn, we remit to the appropriate taxing authorities the U.S. Federal and state withholding taxes on the total compensation the employees have realized as a result of the vesting of these shares. During the three months ended March 31, 2012 and 2011, approximately 73,000 and 61,000 shares were repurchased with a market value of approximately $547 and $471, respectively.

2004 Long-Term Incentive Plan (“LTIP Plan”). During 2005 through March 31, 2012, all options to purchase common stock, restricted stock awards, restricted stock units and performance units to our employees, service providers, and Board of Directors were issued under the LTIP Plan. Options granted under the LTIP Plan expire five years from the date of grant and typically vest equally over four years. Restricted stock awards granted under the LTIP Plan do not expire, but are surrendered upon termination of employment to the extent unvested. These awards generally vest quarterly over two to four years, however, some awards vest annually. RSUs vest over one year and, upon satisfaction of the service vesting requirement, the holder is entitled to the issuance of the underlying shares provided the holder has not elected to defer settlement, and will have compensation income equal to that value. Performance units vest based upon criteria established at the time of grant. Options or awards that are surrendered or cease to be exercisable continue to be available for future grant under the LTIP Plan. There are 4,050,000 shares of common stock reserved for issuance under the LTIP Plan. As of March 31, 2012, there were 716,550 restricted shares and 122,758 RSUs outstanding and there were no performance unit shares or options to purchase shares of common stock outstanding. There were 1,228,703 shares of common stock available for future grant as of March 31, 2012.

Non-Employee Director Stock Option Plan (“NEDSOP”). Under the NEDSOP, nonqualified stock options to purchase common stock were granted to two of our current non-employee directors. Options granted under the NEDSOP expire 10 years from the date of grant. These grants are generally exercisable 40% after the first 3 months of service and 20% on the first anniversary of appointment and each anniversary thereafter until 100% vested. The NEDSOP has 1,000,000 shares of common stock reserved for issuance. As of March 31, 2012, options to purchase 250,000 shares of common stock were outstanding and no further option grants can be issued under this plan.

The fair value of the shares and options, adjusted for a forfeiture assumption, at the respective dates of grant (which represents deferred compensation not required to be recorded initially in the consolidated balance sheet) is amortized to share-based compensation expense as the rights to the restricted stock and options vest with an equivalent amount added to additional paid-in capital. Changes to forfeiture assumptions are based on actual experience and are recorded in accordance with the rules related to accounting for changes in estimates. The fair value of nonvested shares for grants is determined based on the closing trading price of our shares on the grant date.

The following tables summarize share-based compensation expense for the three months ended March 31, 2012 and 2011:

	Three Months Ended March  31,
	2012		2011
Nature of Award:
Restricted stock	$	695	$	639
RSUs		149		148
Total share-based compensation expense	$	844	$	787

9

	Three Months Ended March  31,
	2012		2011
Classification of Compensation Expense:
Cost of services:
Production and operations	$	55	$	57
Other expenses:
Selling, general and administrative		789		730
Total share-based compensation expense	$	844	$	787

Stock Options

A summary of the status of the options granted under our stock incentive plans as of March 31, 2012 and the changes in options outstanding during the three months then ended is as follows:

Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Yrs.)		Aggregate Intrinsic Value
	(in thousands)						(in thousands)
Outstanding at beginning of period		250	$	12.65
Granted		—		—
Exercised		—		—
Forfeited		—		—
Expired		—		—
Outstanding at end of period		250	$	12.65		1.76	$	—
Vested or expected to vest at end of period		250	$	12.65		1.76	$	—
Exercisable at end of period		250	$	12.65		1.76	$	—

Additional information regarding options outstanding for all plans as of March 31, 2012 is as follows:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Term (Yrs.)		Price		Exercisable		Price
	(in thousands)						(in thousands)
$12.50 — $12.50		125		1.72	$	12.50		125	$	12.50
$12.80 — $12.80		125		1.80		12.80		125		12.80
Total		250		1.76	$	12.65		250	$	12.65

There were no options granted during the three months ended March 31, 2012 or 2011.

10

Restricted Stock

A summary of the status of our nonvested restricted shares as of March 31, 2012 and the changes in restricted shares outstanding during the three months then ended is as follows:

	Three Months Ended March 31, 2012
	Shares			Weighted Average Grant-Date Fair Value
	(in thousands)
Nonvested at beginning of period		521		$	6.88
Granted		412			7.34
Vested		(200	)		7.33
Forfeited		(16	)		6.21
Nonvested at end of period		717		$	7.04

During the three months ended March 31, 2012 and 2011, we issued 412,000 and 143,000 shares, respectively, of restricted stock to employees while 16,000 and 2,000 shares, respectively, of restricted stock were forfeited due to employee turnover.

Restricted Stock Units

A summary of the status of our RSUs as of March 31, 2012 and the changes in RSUs outstanding during the three months then ended is as follows:

	Three Months Ended March 31, 2012
	Number of Restricted Stock Units		Weighted Average Grant-Date Fair Value
	(in thousands)
RSUs outstanding at beginning of period		123	$	5.70
Granted		—		—
Vested		—		—
Forfeited		—		—
Nonvested at end of period		123	$	5.70

As of March 31, 2012, the vesting and settlement of one grant totaling 16,750 RSUs was deferred at the election of its holder.

Expense to be Recognized

Expense associated with our share-based compensation plans yet to be recognized as compensation expense over the employees’ remaining requisite service periods as of March 31, 2012 are as follows:

	March 31, 2012
	Expense Yet to be Recognized		Weighted Average Remaining Requisite Service Periods
Restricted stock	$	4,133		1.9 years
RSUs		89		0.2 year
Total	$	4,222		1.9 years

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NOTE 3—EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock. Diluted earnings (loss) per common share reflects the potential dilution of securities by including common stock equivalents, such as unvested restricted stock and stock units in the weighted average number of common shares outstanding for a period, if dilutive.

The following table sets forth a reconciliation of the basic and diluted number of weighted average shares outstanding used in the calculation of loss per share for the three months ended March 31 (in thousands):

	2012		2011
Weighted average shares used to calculate basic loss per share		25,021		24,605
Dilutive effect of potentially issuable common shares upon exercise of dilutive stock options, performance units, unvested restricted stock and stock units		—		—
Weighted average shares used to calculate diluted loss per share		25,021		24,605

For the three months ended March 31, 2012 and 2011, outstanding options and performance units to purchase a total of approximately 250,000 and 1,000,000 shares of common stock, respectively, were not included in the calculation of diluted loss per share because their effect was antidilutive.

NOTE 4—INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES

Assets recorded at fair value in the balance sheet as of March 31, 2012 are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and are as follows:

Level 1 –	Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
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 directly or indirectly observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 –	Unobservable inputs developed using estimates and assumptions developed by management, which reflect those that a market participant would use.

We measure the following financial assets at fair value on a recurring basis. The fair value of these financial assets was determined using the following inputs at March 31, 2012:

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents (1)	$	20,933	$	14,934	$	5,999	$	—
Investments in available-for-sale securities (2)		38,167		9,997		28,170		—
Non-current investments in auction-rate securities (3)		4,954		—		—		4,954
Total	$	64,054	$	24,931	$	34,169	$	4,954

⁽¹⁾ Cash and cash equivalents consist primarily of treasury bills, commercial paper and money market funds with original maturity dates of three months or less. For treasury bills and money market funds, we determine fair value through publicly available quoted market prices. For commercial paper, we determine fair value through third-party pricing sources using proprietary valuation models and other techniques that utilize market observable inputs.

⁽²⁾ Investments in available-for-sale securities consist of treasury bills, commercial paper and tax-exempt government securities with original maturity dates in excess of three months, for which we determine fair value through quoted market prices (Level 1) or through observable inputs, such as quoted prices for similar assets in markets that are not active or other inputs that are directly or indirectly observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For commercial paper with original maturity dates in excess of three months, we determine fair value through third-party pricing sources using proprietary valuation models and other techniques that utilize market observable inputs.

⁽³⁾ Investments in auction-rate securities consist of one auction-rate municipal security and one closed-end perpetual preferred auction-rate security. We use a discounted cash flow analysis to more accurately measure possible liquidity discounts.

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The Company’s tax-exempt government securities which totaled $5,181 at March 31, 2012, are valued by outside professionals using proprietary valuation models and analytical tools in which all significant inputs related to similar instruments are observable or can be derived from or corroborated by publicly available observable market data for substantially the full term of the asset, and are therefore classified as Level 2 investments. Management is responsible for estimating the fair value of these investments, and in doing so, considers valuations provided by a large, independent pricing firm who maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. This information is used to structure yield curves for various types of securities and arrive at the daily valuations.

As of March 31, 2012, our investments in auction-rate securities (“ARS”) consisted of one auction-rate municipal security collateralized by federally backed student loans and one closed-end perpetual preferred security which has redemption features which call for redemption at 100% of par value and both have maintained at least A3 credit rating despite the failure of the auction process. To date, we have collected all interest due on all of our ARS in accordance with their stated terms. Historically, the carrying value (par value) of the ARS approximated fair market value due to the frequent resetting of variable interest rates. Beginning in February 2008, however, the auctions for ARS began to fail and were largely unsuccessful, requiring us to hold them beyond their typical auction reset dates. As a result, the interest rates on these investments reset to the maximum based on formulas contained in the securities. The rates are generally equal to or higher than the current market for similar securities. The par value of the ARS associated with these failed auctions will not be available to us until a successful auction occurs, a buyer is found outside of the auction process, the securities are called or the underlying securities have matured. Due to these liquidity issues, we performed a discounted cash flow analysis to determine the estimated fair value of these investments. The assumptions used in preparing the models include, but are not limited to, interest rate yield curves for similar securities, market rates of returns, and the expected term of each security. In making assumptions of required rates of return, we considered risk-free interest rates and credit spreads for investments of similar credit quality. Based on these models, we recorded an unrealized gain on our ARS of $14 in the three months ended March 31, 2012. As a result of the lack of liquidity in the ARS market, we have an accumulated unrealized loss on our ARS of $273, which is included in accumulated other comprehensive loss on our consolidated balance sheet as of March 31, 2012. We deemed the loss to be temporary because we do not plan to sell any of the ARS prior to maturity at an amount below the original purchase value and, at this time, do not deem it probable that we will receive less than 100% of the principal and accrued interest. We are not certain how long we may be required to hold each security, but based on our combined cash and cash equivalents balance and investments in available-for-sale securities of $59,100 and our expected operating cash flows, we do not believe a lack of liquidity associated with our ARS will adversely affect our ability to conduct business, and believe we have the ability to hold the securities throughout the currently estimated recovery period. We will continue to evaluate any changes in the market value of the failed ARS that have not been liquidated subsequent to year-end and in the future, depending upon existing market conditions, we may be required to record additional other-than-temporary declines in market value. However, given our current cash and cash equivalent position, short-term investments in available-for-sale securities, and cash flow from operations, we believe we have the ability and we intend to hold the failed ARS as long-term investments until the market stabilizes.

All of our assets measured at fair value on a recurring basis using significant Level 3 inputs as of March 31, 2012 were auction-rate securities. The one closed-end perpetual preferred auction-rate security totaling $2,919 had an interest rate of 1.49% and an auction reset of 28 days. The municipal security totaling $2,035 had an interest rate of 0.76%, an auction reset of 28 days and a maturity date of December 1, 2045. As of March 31, 2012 the next auction reset date for both securities was April 10, 2012. The following table summarizes our fair value measurements using significant Level 3 inputs, and changes therein, for the three month period ended March 31, 2012:

	Three Months Ended March 31, 2012
Auction-Rate Securities:
Balance at beginning of period	$	4,940
Unrealized gain included in accumulated other comprehensive loss		14
Balance as of March 31, 2012	$	4,954

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We consider the yields we recognize from auction-rate securities and from cash held in our treasury bills, commercial paper, tax-exempt government securities and money market accounts to be interest income which are recorded in interest and other income, net for the three months ended March 31, 2012 and 2011 as follows:

	Three Months Ended March  31,
	2012			2011
Interest income	$	38		$	31
Interest expense		(19	)		(22	)
Total interest and other income, net	$	19		$	9

NOTE 5—GOODWILL AND INTANGIBLE ASSETS

We currently have three reporting units, TOC, Production Services and Aerial Cameras. The Production Services reporting unit consists solely of our Winnercomm business and the Aerial Cameras reporting unit consists of our CableCam and SkyCam businesses which were acquired on January 12, 2009. All of our goodwill is attributed to our TOC reporting unit.

We review goodwill for impairment on an annual basis during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We typically perform a two-step impairment test on goodwill. In the first step, we compare the fair value of our reporting unit with goodwill to its carrying value. If the fair value of our reporting unit exceeds the carrying values of the net assets assigned to that unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to our reporting unit exceeds the fair value, then we must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we must record an impairment loss equal to the difference.

We historically have determined the implied fair value of its goodwill utilizing the discounted cash flow method under the income approach. Under the income approach, we derived the enterprise fair value based on the present value of estimated future cash flows, which were based on historical data and assumptions pertaining to the market. In performing the 2011 goodwill impairment test, we assessed the relevant qualitative factors and concluded that it is more likely than not that the fair value of our goodwill is greater than the carrying amount. After reaching this conclusion, no further testing was performed. The qualitative factors we considered included, but were not limited to, general economic conditions, the industry outlook, our recent and forecasted financial performance and the price of our common stock.

Intangible assets that are subject to amortization consist of the following as of March 31, 2012:

	March 31, 2012
	Gross		Accumulated Amortization		Net
Trademark	$	219	$	216	$	3
Internet domain names		172		141		31
Customer relationships		980		720		260
Patents		90		61		29
Total amortizable intangible assets	$	1,461	$	1,138	$	323

As of March 31, 2012, the weighted average amortization period for the above intangibles is 1.7 years. Based on our most recent analysis, we believe that no impairment exists at March 31, 2012 with respect to our goodwill and other intangible assets. For the three months ended March 31, 2012 and 2011, we recognized amortization expense related to the intangible assets of $55 and $52, respectively.

Estimated future amortization expense related to intangible assets at March 31, 2012 is as follows:

Years Ending December 31,	Amount
2012 (remaining 9 months)	$	153
2013		165
2014		5
Total	$	323

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NOTE 6—LINES OF CREDIT

On August 10, 2010, the Board of Directors approved the renewal of the revolving line of credit agreement (the “Revolver”) with U.S. Bank N.A., extending the maturity date to September 5, 2012 and renewing the total amount which can be drawn upon under the Revolver to $10,000. The Revolver provides that the interest rate per annum as selected by us shall be prime rate (3.25% and 3.25% as of March 31, 2012 and 2011, respectively) plus 0.25% or LIBOR (0.25% and 0.25% as of March 31, 2012 and 2011, respectively) plus 2.25%. The Revolver is unsecured. This credit facility contains customary financial and other covenants and restrictions, as amended, including a change of control provision and minimum liquidity metrics. As of March 31, 2012, we did not have any amounts outstanding under this credit facility. This Revolver is guaranteed by TOC and as of March 31, 2012, we were in full compliance with all the covenants of the Revolver.

NOTE 7—ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of March 31, 2012 and December 31, 2011 consist of the following:

	March 31, 2012		December 31, 2011
Trade accounts payable	$	879	$	1,951
Accrued payroll and related expenses		2,843		3,627
Estimated make-good accrual		1,514		1,575
Estimated most-favored nation accrual		2,003		2,003
Accrued launch support commitment		488		488
Accrued expenses		2,846		2,780
Total	$	10,573	$	12,424

NOTE 8—INCOME TAX PROVISION

The income tax provision reflected in the accompanying unaudited condensed consolidated statement of operations for the three months ended March 31, 2012 and 2011 is different than that computed based on the applicable statutory Federal income tax rate of 34% primarily due to state taxes and the limitations on the deductibility of executive compensation as provided for in Internal Revenue Code Section 162(m).

We file income tax returns in the United States and various state and local tax jurisdictions. We have state net operating losses and credit carryforwards that will be subject to examination beyond the year in which they are ultimately utilized. Our policy is to record interest and penalties on uncertain tax positions as income tax expense.

NOTE 9—RELATED PARTY TRANSACTIONS

We lease our administrative facilities from Musk Ox Properties, LP, which in turn is owned by Messrs. Perry T. Massie, Co-Chairman of the Board and Thomas H. Massie, both of whom are principal stockholders and directors of the Company. The lease agreement had a five-year term and expired on December 31, 2010. Since January 2011, we have entered into a number of agreements with Musk Ox Properties, LP to extend our lease which now expires on September 30, 2012. Monthly rent payments for the extended lease term are approximately $19. We paid Musk Ox Properties, LP approximately $57 and $57 in the three months ended March 31, 2012 and 2011, respectively. We recognized rent expense related to this lease of $57 both in the three months ended March 31, 2012 and 2011.

We continue to lease our former SkyCam facility from Case and Associates Properties, Inc., which in turn is partially owned by James E. Wilburn, Chairman of Winnercomm. The lease agreement has a ten year term expiring in May 2016. Monthly rent payments under this lease agreement were $43. We paid Case and Associates Properties, Inc., approximately $125 and $123 in the three months ended March 31, 2012 and 2011, respectively. We recognized rent expense related to this lease of $62 and $66 in the three months ended March 31, 2012 and 2011, respectively. We no longer occupy this facility and have sub-leased this facility in April 2012.

In October 2010 we engaged WATV, LLC to produce one off-road motorsport series for a total contract value of $390. Roger L. Werner, our former Chief Executive Officer and current Co-chairman of the board of directors, is a partner in WATV. During the first quarter of 2012, we paid WATV $9 related to the production of this series.

We license a program on a barter basis that is produced by Gold Prospectors Association of America, LLC (“Gold Prospectors”), an entity owned by Thomas H. Massie, who is a principal stockholder and director of the Company. The program airs during off-peak hours and the license period is from March 2009 through March 2012. In March 2012, we

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extended the license period of this show and agreed to pay $25 per quarter in exchange for increased commercial air time to be sold and retained by the Company. The value of this barter arrangement is not considered material to our consolidated financial statements.

In December 2011 we entered into a license agreement to air another program produced by Gold Prospectors. Under the agreement we will contribute $80 towards the production of 18 licensed episodes which will be jointly owned by the Company and Gold Prospectors. The agreement terminates in December 2012 and no amounts were paid during the current quarter of 2012.

NOTE 10—COMMITMENTS AND CONTINGENCIES

From time to time we are involved in litigation as both plaintiff and defendant arising in the ordinary course of business. In the opinion of management, the results of any pending litigation should not have a material adverse effect on our consolidated financial position or operating results.

We lease facilities and equipment, including access to satellites for television transmission, under non-cancelable operating leases that expire at various dates through 2022. Generally, the most significant lease is our satellite lease.

Rental expenses, including satellite and transponder expense, equipment and facilities rent expense, aggregated to approximately $703 and $756 for the three months ended March 31, 2012 and 2011, respectively.

We also have operating leases for general office and production facilities in Tulsa, OK, New York City, Chicago, IL, Fort Worth, TX and Greenwich, CT with varying expiration dates through March 2022.

NOTE 11—SEGMENT INFORMATION

We report segment information in the same format as reviewed by our chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer. In 2011, based on changes in how we monitor and measure our various businesses, we separated our aerial camera units, SkyCam and CableCam, into a separate segment. Previously, our aerial camera units were included in our Production Services segment. Accordingly, we now operate in three reporting segments: TOC, Production Services (which is comprised solely of Winnercomm) and our Aerial Cameras segment. TOC is a separate business activity that broadcasts television programming on the Outdoor Channel twenty-four hours a day, seven days a week. TOC generates revenue primarily from advertising fees (which include fees paid by outside producers to purchase advertising time in connection with the airing of their programs on Outdoor Channel) and subscriber fees. Production Services is a separate business activity that relates to the production, development and marketing of sports programming and providing website services. Production Services generates revenue from advertising fees, production services for customer-owned telecasts, and from website design, management, marketing and hosting services. Aerial Cameras generates revenue from aerial camera services for customer-owned telecasts and events.

Intersegment revenues were generated by Production Services of approximately $412 and $584 respectively, for the three months ended March 31, 2012 and 2011, and intersegment cost of services were generated by Production Services of approximately $382 and $500, respectively, for the three months ended March 31, 2012 and 2011. Our Aerial Cameras segment had no intersegment revenues or intersegment cost of services for the three months ended March 31, 2012 and 2011.

Information with respect to these reportable segments as of and for the three months ended March 31, 2012 and 2011 is as follows:

Revenues	Three Months Ended March 31,
	2012			2011
TOC	$	12,611		$	12,332
Production Services		1,017			1,829
Aerial Cameras		1,105			1,235
Eliminations		(412	)		(584	)
Total revenues	$	14,321		$	14,812

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Income (Loss) from Operations	Three Months Ended March 31,
	2012			2011
TOC*	$	(931	)	$	277
Production Services*		(381	)		(645	)
Aerial Cameras*		(649	)		(744	)
Eliminations		(30	)		(84	)
Total loss from operations	$	(1,991	)	$	(1,196	)
Total Assets	March 31, 2012			December 31, 2011
TOC	$	76,232		$	77,771
Production Services		6,285			7,063
Aerial Cameras		6,706			7,954
Corporate assets*		56,480			56,696
Eliminations		(328	)		(298	)
Total assets	$	145,375		$	149,186
Depreciation and Amortization	Three Months Ended March 31,
	2012			2011
TOC	$	363		$	390
Production Services		132			135
Aerial Cameras		237			221
Total depreciation and amortization	$	732		$	746

* Corporate overhead expenses consist primarily of executive, legal and administrative functions not associated directly with TOC, Production Services or Aerial Cameras. We allocate a portion of these expenses to our Production Services and Aerial Cameras segment, but the majority is captured in our TOC segment. Corporate assets consist primarily of cash not held in our operating accounts and available-for-sale securities.

NOTE 12—RECENT ACCOUNTING PRONOUNCEMENTS

In June and December 2011, the Financial Accounting Standards Board (FASB) issued guidance on the presentation of comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity and also requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. We adopted this guidance beginning after January 1, 2012, with the exception of the requirement to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements, which has been deferred pending further deliberation by the FASB. The adoption did not have a material effect on our financial condition or results of operations, and only resulted in a change to financial statement presentation.

On May 12, 2011 the FASB issued Accounting Standards Update (ASU) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). This update amends Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurement and Disclosure.” ASU 2011-04 clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 is effective for annual and interim reporting periods beginning on or after December 15, 2011. The adoption of this guidance did not a material effect our financial condition and results of operations.

NOTE 13—SUBSEQUENT EVENTS

The Company has completed an evaluation of all subsequent events through the date the consolidated financial statements were issued and concluded no subsequent events occurred that required recognition or disclosure.

* * *

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

Safe Harbor Statement

The information contained in this report may include forward-looking statements. Our actual results could differ materially from those discussed in any forward-looking statements. The statements contained in this report that are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements, without limitation, regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provisions contained in those sections. Such forward-looking statements relate to, among other things: (1) expected revenue and earnings growth and changes in mix; (2) anticipated expenses including advertising, programming, personnel, integration costs and others; (3) Nielsen Media Research, which we refer to as “Nielsen”, estimates regarding total households and cable and satellite homes subscribing to and viewers (ratings) of Outdoor Channel; and (4) other matters. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

These statements involve significant risks and uncertainties and are qualified by important factors that could cause our actual results to differ materially from those reflected by the forward-looking statements. Such factors include, but are not limited to, risks and uncertainties which are included in “Item 1A. Risk Factors” of our latest Form 10-K and other risks and uncertainties discussed elsewhere in this report. In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and in our other filings with the Securities and Exchange Commission. For these
forward-looking statements, we claim the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act and Section 21E of the Exchange Act.

Management’s discussion and analysis of result of operations and financial condition is provided as a supplement to and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes to enhance the understanding of our results of operations, financial condition and cash flows. Additional context can also be found in our 2011 Annual Report.

Significant components of management’s discussion and analysis of results of operations and financial condition include:

• Overview and Strategy. The overview section provides a summary of our business.

• Consolidated Results of Operations. The consolidated results of operations section provides an analysis of our results on a consolidated basis for the quarter ended March 31, 2012 compared to the quarter ended March 31, 2011.

• Segment Results of Operations. The segment results of operations section provides an analysis of our results on a reportable operating segment basis for the quarter ended March 31, 2012 compared to the quarter ended March 31, 2011.

• Liquidity and Capital Resources. The liquidity and capital resources section provides a discussion of our cash flows for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

OVERVIEW AND STRATEGY

We operate in three reporting segments: TOC, Production Services and Aerial Cameras. Each of these operating segments has unique characteristics and faces different opportunities and challenges. An overview of our three operating segments follows.

Our core business, TOC, is engaged in the development, production and broadcast of traditional outdoor programming such as hunting, fishing, shooting and off-road motor sports. With hunting season being predominantly in the second half of the calendar year, the success of our hunting programming during this same time has been the main driver of our stronger financial performance in the second half of the year. We continue to broaden our programming offerings in the first half of the year in an attempt to improve our financial performance during that same period. As such, we expanded our fishing programming in 2011 with notable fishing programs like Bassmasters, Madfin Shark Series, Spanish Fly and Zona. In addition, we announced a joint venture, Major League Fishing, with 24 of the top anglers in the United States to provide us with opportunities to bolster this type of programming which began airing in late March 2012. Overall, in addition to increasing revenue opportunities in the first half of the year, we believe this strategy will generate growth in our revenue from improving our program viewership ratings and increasing our distribution.

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Our Production Services segment, which is made up entirely of our Winnercomm production entity, is closely aligned with our core focus on outdoor programming, but also produces scripted and live event sports television and provides website services to other third parties.

Our Aerial Cameras segment, which we acquired along with the purchase of Winnercomm in 2009, is the U.S. leader in overhead aerial camera production, and we believe it is a unique asset which has meaningful growth opportunities and is increasing in value. However, because it will likely require significant capital investments to accelerate its growth, we may explore a strategic partnership or other alternatives for this business in the future.

Additional information regarding each segment follows.

Outdoor Channel

Outdoor Channel is a national television network devoted primarily to traditional outdoor activities, such as hunting, fishing and shooting sports, as well as off-road motor sports and other outdoor related lifestyle programming. TOC revenues consist primarily of advertising fees, including those from advertisements aired on Outdoor Channel and fees paid by third-party producers to purchase advertising time in connection with the airing of their programs on Outdoor Channel, and subscriber fees paid by cable, satellite and telephone company service providers that air Outdoor Channel.

Our advertising revenue for TOC consists of advertising bought on our cable network and advertising revenue related to ads placed on our website, outdoorchannel.com. Advertising revenues are generally driven by audience delivery, which in turn are determined by our subscriber base and the ratings our programs achieve in those homes. A portion of TOC’s advertising contracts, primarily those with national non-endemic advertisers, typically guarantee the advertiser a minimum audience for its advertisements over the term of the contracts. This requires us to make estimates of the audience size that will be delivered throughout the terms of the contracts at the time we enter into such contracts. We base our estimate of audience size on our Nielsen ratings from prior years. If after running the advertising we determine we did not deliver the guaranteed audience, an accrual for “make-good” advertisements is recorded as a reduction of revenue, and we then provide the advertiser with additional advertising time to reach the aggregate minimum audience that we guaranteed and then recognize such revenue at that time. Any estimated make-good accrual is adjusted throughout the terms of the advertising contracts. The continued growth of our advertising revenues will, to a certain extent, be dependent on the growth of our audience viewing and subscriber base, as well as the general health of the advertising marketplace.

For March 2012, Nielsen estimated that Outdoor Channel had 37.1 million subscriber homes compared to 34.5 million for the same period a year ago, an 8% year-over-year increase. Nielsen revises its estimate of the number of subscribers to our channel each month and there is usually a lag of 2-3 months before Nielsen captures any new launches or tier migrations. For May 2012 Nielsen’s estimate increased to 37.8 million subscribers, which we believe relates to the lag in their picking up new Outdoor Channel subscribers in their estimates. Nielsen is the leading provider of television audience measurement and advertising information services worldwide, and its estimates and methodology are generally accepted and used in the advertising industry. Our May 2012 Nielsen estimate of 37.8 million subscribers is the highest Outdoor Channel has ever achieved. The estimate regarding Outdoor Channel’s subscriber base is made by Nielsen and is theirs alone, and does not represent our opinions, forecasts or predictions. It should not be implied that we endorse nor necessarily concur with such information, simply due to our reference to or distribution of their estimate. There can be no assurances that there will be any correlation between the actual growth or decline in our paying subscribers compared to Nielsen’s estimate of such growth or decline.

We continue to pursue subscriber growth by utilizing various incentives, including offering lower per-subscriber fees for broader distribution, payment of subscriber acquisition or launch support fees and TOC marketing dollars among other tactics. Any subscriber acquisition or launch support fees are capitalized and amortized over the period that the pay television distributor is required to carry the newly acquired TOC subscriber. To the extent revenue is associated with the incremental subscribers, the amortization is charged to offset the related revenue. Any excess of launch support amortization over the related subscriber fee revenue is charged to expense as other direct costs.

While we are 100% programmed in high-definition format (“HD”), our HD signal is only carried on a subset of our overall subscriber base. We currently have approximately 11.8 million HD subscriber homes, all of which are on cable or telephone systems. We are continuing our efforts to increase the carriage of our HD signal as we deem this to be an important competitive feature.

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We increased our programming expenditures in 2011 and expect to continue to see increases in programming costs as we believe we need to invest in our programming brand given the increased viewing alternatives, including competitors with similar outdoor themed programming. While our advertising and marketing expense declined slightly in 2011 compared to 2010, we increased these expenses during the first quarter of 2012 and expect to increase our expenses in this area for the rest of 2012 and beyond to support our increased programming investment and our recent and expected continued growth in subscribers. While we believe these investments in programming and marketing will help assure our long term growth, they are likely to have a dampening effect on TOC’s operating income in the near term.

During the first quarter of 2012, our prime time viewership by key demographics (as measured by Nielsen) increased from last year although our aggregate viewership during the total day declined slightly. This decrease in aggregate daily viewership affected our ability to grow our national advertising revenue during the first quarter of 2012. We believe that our renewed investment in programming and marketing will have a positive effect on our ratings, although it may take some time before seeing these results, and this will then result in increased advertising revenue over time.

We also have invested significant resources to build our outdoorchannel.com website and expect that we will continue to make investments in this area to support material revenue potential for our online operations.

Production Services

Production Services is comprised solely of our wholly owned subsidiary, Winnercomm, Inc., which is involved in the production, development and marketing of sports programming. Production Services revenues include revenues from sponsorship, sales representation fees on television advertising sold on behalf of client advertisers, revenues from production services for
customer-owned telecasts, and revenue from website design, management, marketing and hosting fees.

Since our acquisition of Winnercomm in January 2009, we have been focused on eliminating Winnercomm’s low margin production and non-strategic business and returning the segment to profitability. This has resulted in a material reduction of the segment’s
third-party revenues and gross profits, which we believe will begin to level in 2012. Our Winnercomm unit is increasingly being used to produce high quality programming for TOC.

Aerial Cameras

Our Aerial Cameras segment is comprised of our SkyCam and CableCam entities, which were acquired in connection with our Winnercomm acquisition in January 2009. These entities are engaged in providing aerial camera services for customer owned telecasts. Most of the segment’s revenues relate to professional and college football, but we also provide services, although to a much lesser extent, for other sports such as baseball, soccer and hockey and for special events such as concerts. We also hope to expand our business to other areas outside of football and sports in general, and in April 2012 we signed our first ever contract related to a U.S. government project, which we hope will become a new and growing customer group for us.

During 2011 our Aerial Cameras segment received a favorable jury verdict on our legal actions against ActionCam and its founder, a competitor to our aerial camera business which we initiated suit against in 2009 for misappropriation of trade secrets, breach of separation agreement and unfair competition. While we will likely incur additional costs pursuing final judgment in that case, our legal expense going forward will be significantly less than in the past two years.

Seasonality

All of our segments generate a higher proportion of their revenue and operating income in the second half of our fiscal year due to higher viewed hunting programming which coincides with the fall hunting season at TOC, hunting and sports related programming at our Production Services segment and to football driven revenues at our Aerial Cameras segment.

Succession Changes

Effective February 1, 2012, our former president and chief executive officer, Roger L. Werner, retired from his executive role with the Company and became Co-Chairman of our Board of Directors and entered into a transition agreement for the balance of 2012. Tom Hornish, our Executive Vice President and Chief Operating Officer, was appointed the Company’s president and chief executive officer effective that same date. Mr. Werner’s retirement from his executive role was planned for some time and the transition was expected and smooth. Additional executive appointments were made effective February 1, 2012 and two former executives departed the Company shortly after Mr. Hornish’s appointment. These succession changes had an adverse financial effect during the first quarter of 2012 but should reduce costs for the balance of the year and thereafter.

Critical Accounting Policies and Estimates

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

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For further information regarding our critical accounting policies, judgments and estimates, please see “Critical Accounting Policies and Estimates” in Item 7 of our 2011 Annual Report.

CONSOLIDATED RESULTS OF OPERATIONS

Our consolidated results of operations are presented below for the quarter ended March 31, 2012 and 2011.

Comparison of Consolidated Operating Results for the Three Months Ended March 31, 2012 and March 31, 2011

The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change, percentage change and as a percent of total revenue (all dollar amounts are in thousands):

							Change						% of Total Revenue
	2012			2011			$			%			2012			2011
Revenues:
Advertising	$	7,435		$	7,585		$	(150	)		(2	)%		52	%		51	%
Subscriber fees		5,176			4,747			429			9			36			32
Production services		1,710			2,480			(770	)		(31	)		12			17
Total revenues		14,321			14,812			(491	)		(3	)		100			100
Cost of services:
Programming		1,798			1,630			168			10			13			11
Satellite transmission fees		429			399			30			8			3			3
Production and operations		4,141			4,553			(412	)		(9	)		29			31
Other direct costs		11			92			(81	)		(88	)		—			1
Total cost of services		6,379			6,674			(295	)		(4	)		45			45
Other expenses:
Advertising		648			305			343			113			5			2
Selling, general and administrative		8,553			8,283			270			3			60			56
Depreciation and amortization		732			746			(14	)		(2	)		5			5
Total other expenses		9,933			9,334			599			6			69			63
Loss from operations		(1,991	)		(1,196	)		(795	)		67			(14	)		(8	)
Interest and other income, net		19			9			10			111			—			—
Loss from operations before income taxes		(1,972	)		(1,187	)		(785	)		66			(14	)		(8	)
Income tax benefit		(814	)		(357	)		(457	)		128			(6	)		(2	)
Net loss	$	(1,158	)	$	(830	)	$	(328	)		40	%		(8	)%		(6	)%

(percentages may not add due to rounding)

Revenues

Total revenues for the three months ended March 31, 2012 were $14.3 million, a decrease of $491,000, or 3%, compared to revenues of $14.8 million for the three months ended March 31, 2011. The decrease was due primarily to lower revenue at our Production Services and Aerial Cameras units and reductions in our advertising revenue, partially offset by increases in our subscriber fee revenue, all as discussed further in our segment results of operations below.

Cost of Services

Total cost of services for the three months ended March 31, 2012 were $6.4 million, a decrease of $295,000, or 4%, compared to cost of services of $6.7 million for the three months ended March 31, 2011. The decrease was primarily driven by lower production costs at our Production Services and Aerial Cameras units, net of increases in programming and operational expenses at our Outdoor Channel unit, as further discussed in the segment results of operations below.

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Other Expenses

Advertising expenses for the three months ended March 31, 2012 were $648,000, a 113% increase compared to $305,000 for the three months ended March 31, 2011, and were primarily due to increased cross channel advertising and promotional campaigns at TOC to support recent new subscriber and program launches.

Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2012 were $8.6 million, a 3% increase compared to SG&A expenses of $8.3 million for the three months ended March 31, 2011. The increase in SG&A was primarily due to succession related expenses, including severance, at our TOC unit, offset by reduced personnel related expenses at our Production Services unit and reduced legal fees at our Aerial Camera unit as further discussed in the segment results of operations below.

Depreciation and amortization expense for the three months ended March 31, 2012 was $732,000, a 2% decrease compared to depreciation and amortization expense of $746,000 for the three months ended March 31, 2011. The decrease primarily relates to more assets having become fully depreciated over the past year than depreciation on fixed assets acquired in that same period.

Loss from Operations

Loss from operations for the three months ended March 31, 2012 was $2.0 million, an increase of $795,000 compared to an operating loss of $1.2 million for the three months ended March 31, 2011. As discussed below in our segment results of operations, the decrease in income from operations was driven primarily by a decline in operating profits at TOC caused primarily by increases in programming, advertising and SG&A expenses, net of decreased Aerial Camera and Winnercomm losses.

Interest and Other Income, Net

Interest and other income, net for the three months ended March 31, 2012 was income of $19,000, an increase of $10,000 compared to income of $9,000 for the three months ended March 31, 2011. The increase was primarily due to an increase in our investments in available-for-sale securities balance which earns higher interest.

Loss from Operations Before Income Taxes

Loss from operations before income taxes as a percentage of revenues was 14% for the three months ended March 31, 2012 compared to 8% for the three months ended March 31, 2011 due primarily to TOC’s higher programming, advertising and SG&A expenses for the quarter, offset by a lower proportion of our overall revenue being contributed by our lower margin Production Services unit.

Income Tax Benefit

Income tax benefit for the three months ended March 31, 2012 was $814,000 compared to $357,000 for the three months ended March 31, 2011. The income tax benefit reflected in the accompanying unaudited condensed consolidated statements of operations for the three months ended March 31, 2012 and 2011 is different than that computed based on the applicable statutory Federal income tax rate of 34% primarily due to state taxes and the limitations on the deductibility of executive compensation as provided for in Internal Revenue Code Section 162(m).

The income tax benefit for the three months ended March 31, 2011 included a discrete tax expense related to option tax deductions upon exercise or lapse of restrictions on restricted stock that is less than the book compensation previously recorded of $74,000. There was no similar discrete tax expense for the three months ended March 31, 2012.

Net Loss

Net loss for the three months ended March 31, 2012 was $1.2 million, an increase of $328,000 compared to a net loss of $830,000 for the three months ended March 31, 2011.

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SEGMENT RESULTS OF OPERATIONS

Transactions between reportable segments are accounted for as third-party arrangements for the purposes of presenting reporting segment results of operations below. Typical intersegment transactions include the purchase by our TOC segment of programs to air on Outdoor Channel and website design, management and maintenance services from our Production Services segment. Our Aerial Cameras segment has no intersegment transactions between our TOC or Production Services segments.

TOC

Comparison of Operating Results for the Three Months Ended March 31, 2012 and March 31, 2011

The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change and percentage change (all dollar amounts are in thousands):

	Three Months Ended March 31,
						Change
	2012			2011		$			%
Revenues:
Advertising	$	7,435		$	7,585	$	(150	)		(2	)%
Subscriber fees		5,176			4,747		429			9
Total revenues		12,611			12,332		279			2
Cost of services:
Programming		1,872			1,757		115			7
Satellite transmission fees		429			399		30			8
Production and operations		2,501			2,167		334			15
Other direct costs		11			92		(81	)		(88	)
Total cost of services		4,813			4,415		398			9
Other expenses:
Advertising		648			305		343			113
Selling, general and administrative		7,718			6,945		773			11
Depreciation and amortization		363			390		(27	)		(7	)
Total other expenses		8,729			7,640		1,089			14
Income (loss) from operations	$	(931	)	$	277	$	(1,208	)		(436	)%

(percentages may not add due to rounding)

Revenues

Advertising revenue for the three months ended March 31, 2012 was $7.4 million, a decrease of $150,000, or 2%, compared to $7.6 million for the three months ended March 31, 2011. The decrease in advertising revenue was due primarily to a ratings driven decrease in short-form advertising.

Subscriber fees for the three months ended March 31, 2012 were $5.2 million, an increase of $429,000, or 9%, compared to $4.7 million for the three months ended March 31, 2011. This increase in subscriber fees was primarily due to our annual increase in subscriber rates and to a decrease in our estimated potential most-favored nation liabilities related to our distributors in the current year period as compared to the same prior year period.

Cost of Services

Programming expenses for the three months ended March 31, 2012 were $1.9 million, an increase of $115,000, or 7%, compared to $1.8 million for the three months ended March 31, 2011. The increase was due primarily to new, more expensive programs airing during the current year period compared to the prior year period.

Satellite transmission fees for the three months ended March 31, 2012 were $429,000, an increase of $30,000, or 8%, compared to $399,000 for the three months ended March 31, 2011. The increase was primarily due to an upgrade in backup transponder services.

Production and operations costs for the three months ended March 31, 2012 were $2.5 million, an increase of $334,000, or 15%, compared to $2.2 million for the three months ended March 31, 2011. The increase in costs was driven primarily by succession related severance expense, partially offset by lower online consulting services.

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Other direct costs for the three months ended March 31, 2012 were $11,000, a decrease of $81,000, or 88%, compared to $92,000 for the three months ended March 31, 2011. This decrease was due primarily to a decrease in subscriber acquisition fees amortization.

Other Expenses

Advertising expenses for the three months ended March 31, 2012 were $648,000, an increase of $343,000, or 113%, compared to $305,000 for the three months ended March 31, 2011 due primarily to increased cross channel advertising and promotional campaigns to support recent new subscriber and program launches.

SG&A expenses for the three months ended March 31, 2012 were $7.7 million, an increase of $773,000, or 11%, compared to $6.9 million for the three months ended March 31, 2011. The increase relates primarily to succession-related compensation expense, including severance and related compensation expense associated with the departure of one of our senior sales executives, and to increased marketing research fees, partially offset by a reduction in our reserve for doubtful accounts.

Depreciation and amortization for the three months ended March 31, 2012 was $363,000, a decrease of $27,000, or 7%, compared to $390,000 for the three months ended March 31, 2011. The decrease in depreciation and amortization primarily relates to more fixed assets becoming fully depreciated over the past year than depreciation on fixed asset additions in that same period.

Income (Loss) from Operations

Our resulting loss from operations for the three months ended March 31, 2012 was $931,000 compared to income of $277,000 million for the three months ended March 31, 2011. As discussed above, the decline in our income from operations was driven primarily by increased online service costs, increased programming, advertising and SG&A expenses, partially offset by increased subscriber fee revenue.

Production Services

Comparison of Operating Results for the Three Months Ended March 31, 2012 and March 31, 2011

The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change and percentage change (all dollar amounts are in thousands):

	Three Months Ended March 31,
							Change
	2012			2011			$			%
Revenues:
Production services	$	1,017		$	1,829		$	(812	)		(44	)%
Total revenues		1,017			1,829			(812	)		(44	)
Cost of services:
Production and operations		967			1,669			(702	)		(42	)
Total cost of services		967			1,669			(702	)		(42	)
Other expenses:
Selling, general and administrative		299			670			(371	)		(55	)
Depreciation and amortization		132			135			(3	)		(2	)
Total other expenses		431			805			(374	)		(47	)
Loss from operations	$	(381	)	$	(645	)	$	264			(41	)%

(percentages may not add due to rounding)

Revenues

Production services revenue for the three months ended March 31, 2012 was $1.0 million, a decrease of $812,000, or 44%, as compared to $1.8 million for the three months ended March 31, 2011. The decrease in revenue was due primarily to an expected reduction in the number of third-party production contracts that were renewed at Winnercomm in the current year period. Revenues for the remainder of 2012 will continue to decline on a year-over-year basis reflecting the business we cancelled or that was non-renewed in 2012, although to a lesser degree.

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Cost of Services

Production and operations costs for the three months ended March 31, 2012 were $967,000, a decrease of $702,000, or 42%, compared to $1.7 million for the three months ended March 31, 2011. The decrease in costs relates primarily to decreased production costs caused by fewer Winnercomm production contracts being renewed in the current year. Cost of sales for the remainder of 2012 will continue to decline on a year-over-year basis reflecting the business we cancelled or was non-renewed in 2011, although to a lesser degree.

Other Expenses

SG&A expenses for the three months ended March 31, 2012 were $299,000, a decrease of $371,000, or 55%, compared to $670,000 for the three months ended March 31, 2011. The decrease relates primarily to reduced payroll and related compensation costs associated with terminations in 2011 and to the allocation and reassignment of personnel in the current quarter as compared to the prior year quarter, and to reduced rent and related expenses resulting from the relocation of our Winnercomm business to a new facility.

Depreciation and amortization for the three months ended March 31, 2012 was $132,000, a decrease of $3,000, or 2%, compared to $135,000 for the three months ended March 31, 2011. The decrease in depreciation and amortization primarily relates to more fixed assets becoming fully depreciated over the past year than depreciation on assets acquired in that same period.

Loss from Operations

Loss from operations for the three months ended March 31, 2012 was $381,000, a decrease of $264,000 compared to an operating loss of $645,000 for the three months ended March 31, 2011. As discussed above, the decrease in loss from operations was due primarily to lower SG&A expenses.

Aerial Cameras

Comparison of Operating Results for the Three Months Ended March 31, 2012 and March 31, 2011

The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change and percentage change (all dollar amounts are in thousands):

	Three Months Ended March 31,
							Change
	2012			2011			$			%
Revenues:
Production services	$	1,105		$	1,235		$	(130	)		(11	)%
Total revenues		1,105			1,235			(130	)		(11	)
Cost of services:
Production and operations		981			1,090			(109	)		(10	)
Total cost of services		981			1,090			(109	)		(10	)
Other expenses:
Selling, general and administrative		536			668			(132	)		(20	)
Depreciation and amortization		237			221			16			7
Total other expenses		773			889			(116	)		(13	)
Loss from operations	$	(649	)	$	(744	)	$	95			(13	)%

(percentages may not add due to rounding)

Revenues

Production services revenue from our aerial camera unit for the three months ended March 31, 2012 was $1.1 million, a decrease of $130,000, or 11%, as compared to $1.2 million for the three months ended March 31, 2011. The decrease was due primarily to a slight reduction in the number of professional and collegiate sporting and other production events.

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Cost of Services

Production and operations costs for the three months ended March 31, 2012 were $981,000, a decrease of $109,000, or 10%, compared to $1.1 million for the three months ended March 31, 2011. The decrease in costs relates primarily to reduced aerial camera production events, lower facility costs resulting from our 2011 relocations and also to a favorable revision during the current quarter of $50,000 to the previously recorded lease abandonment charge to reflect the actual terms of our recent sublease agreement for our former Tulsa facility.

Other Expenses

SG&A expenses for the three months ended March 31, 2012 were $536,000, a decrease of $132,000, or 20%, compared to $668,000 for the three months ended March 31, 2011. This decrease relates primarily to decreased legal fees related to the ActionCam litigation partially offset by continued move related expenses incurred in connection with last year’s relocation of our aerial camera units to a new combined facility.

Depreciation and amortization for the three months ended March 31, 2012 was $237,000, an increase of $16,000, or 7%, compared to $221,000 for the three months ended March 31, 2011. The increase in depreciation and amortization primarily relates to increased depreciation of new assets including leasehold improvements at our new location in Ft. Worth, Texas.

Loss from Operations

Loss from operations for the three months ended March 31, 2012 was $649,000, a decrease of $95,000 compared to an operating loss of $744,000 for the three months ended March 31, 2011. As discussed above, the decrease in loss from operations was due primarily to reductions in SG&A expense.

LIQUIDITY AND CAPITAL RESOURCES

We generated $647,000 of cash in our operating activities in the three months ended March 31, 2012, an increase of $276,000 compared to cash generated from operating activities of $371,000 in the three months ended March 31, 2011. The increase was due primarily to lower payments of subscriber acquisition payments and lower income tax payments during the current year period.

Net cash provided by investing activities was $1.3 million in the three months ended March 31, 2012 compared to cash used in investing activities of $1.4 million for the three months ended March 31, 2011. The increase in cash provided by investing activities related principally to net proceeds (sales, net of purchases) of short-term available-for-sale securities in the current quarter of $1.9 million compared to net purchases (purchases, net of sales) of $1.0 million, partially offset by an increase in capital expenditures for fixed assets.

Cash used by financing activities was $547,000 in the three months ended March 31, 2012 compared to cash used of $471,000 in the three months ended March 31, 2011. The increase was related to the increase in cash used for the purchase and retirement of common stock as recipients of stock awards used stock to satisfy withholding taxes related to vesting of restricted shares.

On August 10, 2010, the Board of Directors approved the renewal of the revolving line of credit agreement (the “Revolver”) with U.S. Bank N.A., extending the maturity date to September 5, 2012 and renewing the total amount which can be drawn upon under the Revolver to $10.0 million. The Revolver provides that the interest rate per annum as selected by us shall be prime rate (3.25% and 3.25% as of March 31, 2012 and 2011, respectively) plus 0.25% or LIBOR (0.25% and 0.25% as of March 31, 2012 and 2011, respectively) plus 2.25%. The Revolver is unsecured. This credit facility contains customary financial and other covenants and restrictions, as amended, including a change of control provision and minimum liquidity metrics. As of March 31, 2012, we did not have any amounts outstanding under this credit facility. This Revolver is guaranteed by TOC and as of March 31, 2012, we were in full compliance with all the covenants of the Revolver.

Our combined cash and cash equivalent and investment in available-for-sale securities balance was $59.1 million at March 31, 2012, a decrease of $0.4 million from the combined balance of $59.5 million at December 31, 2011. Net working capital decreased to $72.0 million at March 31, 2012, compared to $72.3 million at December 31, 2011. We believe that our combined cash and available-for-sale securities and our expected cash flow from operations will meet our short-term cash flow requirements and be sufficient to fund our operations at current levels and anticipated capital requirements through at least the next twelve months. To the extent that such amounts are insufficient to finance our working capital requirements or we desire to expand operations beyond current levels, we could draw on our Revolver or seek additional financing. There can be no assurance that equity or debt financing will be available if needed or, if available, will be on terms favorable to us.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

At March 31, 2012 and December 31, 2011, our non-current investment portfolio consists of two auction-rate securities with
long-term maturities for both periods totaling approximately $4.9 million. Although these securities have rate reset features, they are subject to interest rate risk and will decline in value if interest rates increase. However, due to the amount of our investment portfolio, an immediate 10% change in interest rates would have no material impact on our financial condition, operating results or cash flows.

We currently do not have significant transactions denominated in currencies other than U.S. dollars and as a result we currently have little to no foreign currency exchange rate risk. The effect of an immediate 10% change in foreign exchange rates would have no material impact on our financial condition, operating results or cash flows.

As of March 31, 2012 and as of the date of this report, we did not have any outstanding borrowings. The rate of interest on our
line-of-credit is variable, but we currently have no outstanding balance under this credit facility. Because of these reasons, an immediate 10% change in interest rates would have no material, immediate impact on our financial condition, operating results or cash flows.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the regulations of the Securities and Exchange Commission. Disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, include controls and procedures designed to ensure the information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that our system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2012, the end of the period covered by this report. Based on this evaluation, we have concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, completely and accurately, within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings.

“Item 3. Legal Proceedings” of our Form 10-K includes a discussion of our legal proceedings. Except as described below, there have been no material changes from the legal proceedings described in our 2011 Annual Report.

On July 27, 2011, a complaint was filed in the U.S. District Court, Northern District of Texas, by Ewell E. Parker, Jr. against Outdoor Channel Holdings, Inc., The Outdoor Channel, Inc. and a third party production company known as Reel In The Outdoors, Ltd. The complaint alleges contributory copyright infringement against Outdoor Channel Holdings, Inc. and The Outdoor Channel, Inc. This complaint seeks aggregate general damages in excess of $75,000 plus other indeterminable amounts, fees and expenses.

We received a favorable jury verdict on September 2, 2011 regarding our previously disclosed litigation by SkyCam, LLC against ActionCam, LLC and a former employee of SkyCam, LLC, seeking damages for unfair competition, false designation of origin, copyright infringement, misappropriation of trade secrets, breach of written contract and unfair competition. The jury found that the former employee of SkyCam breached his separation agreement and that he, along with ActionCam, misappropriated SkyCam’s trade secrets and engaged in unfair competition. The jury also determined that by clear and

27

convincing evidence, both the former employee and ActionCam were willful and malicious and acted with a reckless disregard of the rights of others. Actual and punitive damages were awarded to SkyCam by the jury, although a final judgment and order has not yet been entered in this case. On September 13, 2011, ActionCam, LLC withdrew its counterclaim with prejudice against SkyCam LLC and its third-party complaints against Outdoor Channel Holdings, Inc. and Winnercomm, Inc. On December 22 and 23, 2011, the court scheduled a bifurcated bench trial related to SkyCam, LLC’s claims against ActionCam, LLC for patent assignment rights and injunctive relief. The judge has not yet issued his ruling with respect to the bifurcated trial.

ITEM 1A. Risk Factors.

“Item 1A. Risk Factors” of our Form 10-K includes a discussion of our risk factors. There have been no material changes from the risk factors described in our 2011 Annual Report.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Mine Safety Disclosures.

None.

ITEM 5. Other Information.

None.

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ITEM 6. Exhibits.

Exhibit Number	Description
3.1	Certificate of Incorporation of Outdoor Channel Holdings, Inc, a Delaware corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 20, 2004 and incorporated herein by reference)
3.2	By-Laws of Outdoor Channel Holdings, Inc., a Delaware corporation (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on September 20, 2004 and incorporated herein by reference)
4.1	Instruments defining the rights of security holders, including debentures (see Exhibits 3.1 and 3.2 above and Exhibit 4.1 to the Company’s Form 10-Q for the period ended June 30, 2005)
10.34	Amendment dated April 10, 2012 to the Amended and Restated Employment Agreement with Thomas E. Hornish effective as of February 1, 2012 (filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on April 11, 2012 and incorporated herein by reference)
31.1	Certification by Chief Executive Officer
31.2	Certification by Chief Financial Officer
32.1 *	Section 1350 Certification by Chief Executive Officer
32.2 *	Section 1350 Certification by Chief Financial Officer
101 **	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011; (ii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011; (iii) Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2012 and 2011; (iv) Unaudited Condensed Consolidated Statement of Equity for the three months ended March 31, 2012; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text.

* Pursuant to Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

** Users of this data are advised that pursuant to Rule 406T of Regulation S-T, this XBRL information is being furnished and not filed herewith for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and Sections 11 or 12 of the Securities Act of 1933, as amended, and is not to be incorporated by reference into any filing, or part of any registration statement or prospectus, of Outdoor Channel Holdings, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

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

OUTDOOR CHANNEL HOLDINGS, INC.

/s/ Thomas D. Allen

Thomas D. Allen

Authorized Officer, Chief Financial Officer and

Principal Accounting Officer

Date: May 9, 2012

29

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Thomas E. Hornish, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Outdoor Channel Holdings, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: May 9, 2012	/s/ Thomas E. Hornish
	Thomas E. Hornish, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas D. Allen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Outdoor Channel Holdings, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: May 9, 2012	/s/ Thomas D. Allen
	Thomas D. Allen, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Outdoor Channel Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas E. Hornish, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

/s/ Thomas E. Hornish

Thomas E. Hornish

Chief Executive Officer

May 9, 2012

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

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Outdoor Channel Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas D. Allen, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

/s/ Thomas D. Allen

Thomas D. Allen

Chief Financial Officer

May 9, 2012

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

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Stock Incentive Plans

3 Months Ended

Mar. 31, 2012

Stock Incentive Plans [Abstract]

STOCK INCENTIVE PLANS

NOTE 2—STOCK INCENTIVE PLANS

The measurement and recognition of compensation expense is recognized in the financial statements over the service period for the fair value of all awards granted after January 1, 2006. Our stock incentive plans provide for the granting of qualified and nonqualified options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights (“SARs”) and performance units to our officers, directors and employees. We satisfy the exercise of options and awards of restricted stock by issuing previously unissued common shares. Currently we have not awarded any SARs but have awarded options, performance units, restricted stock and RSUs.

We have two stock incentive plans: our 2004 Long-Term Incentive Plan (“LTIP Plan”) and our Non-Employee Director Stock Option Plan (“NEDSOP”). No more options will be issued under the NEDSOP Plan. All awards issued under our plans are subject to terms and conditions as determined by our Board of Directors.

Our Board of Directors has discretion to allow our employees and directors to forego shares in lieu of paying requisite withholding taxes on vested restricted shares. In turn, we remit to the appropriate taxing authorities the U.S. Federal and state withholding taxes on the total compensation the employees have realized as a result of the vesting of these shares. During the three months ended March 31, 2012 and 2011, approximately 73,000 and 61,000 shares were repurchased with a market value of approximately $547 and $471, respectively.

2004 Long-Term Incentive Plan (“LTIP Plan”). During 2005 through March 31, 2012, all options to purchase common stock, restricted stock awards, restricted stock units and performance units to our employees, service providers, and Board of Directors were issued under the LTIP Plan. Options granted under the LTIP Plan expire five years from the date of grant and typically vest equally over four years. Restricted stock awards granted under the LTIP Plan do not expire, but are surrendered upon termination of employment to the extent unvested. These awards generally vest quarterly over two to four years, however, some awards vest annually. RSUs vest over one year and, upon satisfaction of the service vesting requirement, the holder is entitled to the issuance of the underlying shares provided the holder has not elected to defer settlement, and will have compensation income equal to that value. Performance units vest based upon criteria established at the time of grant. Options or awards that are surrendered or cease to be exercisable continue to be available for future grant under the LTIP Plan. There are 4,050,000 shares of common stock reserved for issuance under the LTIP Plan. As of March 31, 2012, there were 716,550 restricted shares and 122,758 RSUs outstanding and there were no performance unit shares or options to purchase shares of common stock outstanding. There were 1,228,703 shares of common stock available for future grant as of March 31, 2012.

Non-Employee Director Stock Option Plan (“NEDSOP”). Under the NEDSOP, nonqualified stock options to purchase common stock were granted to two of our current non-employee directors. Options granted under the NEDSOP expire 10 years from the date of grant. These grants are generally exercisable 40% after the first 3 months of service and 20% on the first anniversary of appointment and each anniversary thereafter until 100% vested. The NEDSOP has 1,000,000 shares of common stock reserved for issuance. As of March 31, 2012, options to purchase 250,000 shares of common stock were outstanding and no further option grants can be issued under this plan.

The fair value of the shares and options, adjusted for a forfeiture assumption, at the respective dates of grant (which represents deferred compensation not required to be recorded initially in the consolidated balance sheet) is amortized to share-based compensation expense as the rights to the restricted stock and options vest with an equivalent amount added to additional paid-in capital. Changes to forfeiture assumptions are based on actual experience and are recorded in accordance with the rules related to accounting for changes in estimates. The fair value of nonvested shares for grants is determined based on the closing trading price of our shares on the grant date.

The following tables summarize share-based compensation expense for the three months ended March 31, 2012 and 2011:

	Three Months Ended March  31,
	2012		2011
Nature of Award:
Restricted stock	$	695	$	639
RSUs		149		148
Total share-based compensation expense	$	844	$	787

	Three Months Ended March  31,
	2012		2011
Classification of Compensation Expense:
Cost of services:
Production and operations	$	55	$	57
Other expenses:
Selling, general and administrative		789		730
Total share-based compensation expense	$	844	$	787

Stock Options

A summary of the status of the options granted under our stock incentive plans as of March 31, 2012 and the changes in options outstanding during the three months then ended is as follows:

Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Yrs.)		Aggregate Intrinsic Value
	(in thousands)						(in thousands)
Outstanding at beginning of period		250	$	12.65
Granted		—		—
Exercised		—		—
Forfeited		—		—
Expired		—		—
Outstanding at end of period		250	$	12.65		1.76	$	—
Vested or expected to vest at end of period		250	$	12.65		1.76	$	—
Exercisable at end of period		250	$	12.65		1.76	$	—

Additional information regarding options outstanding for all plans as of March 31, 2012 is as follows:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Term (Yrs.)		Price		Exercisable		Price
	(in thousands)						(in thousands)
$12.50 — $12.50		125		1.72	$	12.50		125	$	12.50
$12.80 — $12.80		125		1.80		12.80		125		12.80
Total		250		1.76	$	12.65		250	$	12.65

There were no options granted during the three months ended March 31, 2012 or 2011.

Restricted Stock

A summary of the status of our nonvested restricted shares as of March 31, 2012 and the changes in restricted shares outstanding during the three months then ended is as follows:

	Three Months Ended March 31, 2012
	Shares			Weighted Average Grant-Date Fair Value
	(in thousands)
Nonvested at beginning of period		521		$	6.88
Granted		412			7.34
Vested		(200	)		7.33
Forfeited		(16	)		6.21
Nonvested at end of period		717		$	7.04

During the three months ended March 31, 2012 and 2011, we issued 412,000 and 143,000 shares, respectively, of restricted stock to employees while 16,000 and 2,000 shares, respectively, of restricted stock were forfeited due to employee turnover.

Restricted Stock Units

A summary of the status of our RSUs as of March 31, 2012 and the changes in RSUs outstanding during the three months then ended is as follows:

	Three Months Ended March 31, 2012
	Number of Restricted Stock Units		Weighted Average Grant-Date Fair Value
	(in thousands)
RSUs outstanding at beginning of period		123	$	5.70
Granted		—		—
Vested		—		—
Forfeited		—		—
Nonvested at end of period		123	$	5.70

As of March 31, 2012, the vesting and settlement of one grant totaling 16,750 RSUs was deferred at the election of its holder.

Expense to be Recognized

Expense associated with our share-based compensation plans yet to be recognized as compensation expense over the employees’ remaining requisite service periods as of March 31, 2012 are as follows:

	March 31, 2012
	Expense Yet to be Recognized		Weighted Average Remaining Requisite Service Periods
Restricted stock	$	4,133		1.9 years
RSUs		89		0.2 year
Total	$	4,222		1.9 years

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Organization and Business

3 Months Ended

Mar. 31, 2012

Organization and Business [Abstract]

ORGANIZATION AND BUSINESS

NOTE 1—ORGANIZATION AND BUSINESS

Description of Operations

Outdoor Channel Holdings, Inc. (“Outdoor Channel Holdings”) is incorporated under the laws of the State of Delaware. Collectively, with its subsidiaries and consolidated affiliate, the terms “we,” “us,” “our” and the “Company” refer to Outdoor Channel Holdings, Inc. as a consolidated entity, except where noted or where the context makes clear the reference is only to Outdoor Channel Holdings, Inc. or one of our subsidiaries. Outdoor Channel Holdings, Inc. wholly owns OC Corporation which in turn wholly owns The Outdoor Channel, Inc. (“TOC”). Outdoor Channel Holdings is also the sole member of 43455 BPD, LLC, which is the entity that owns the building that houses our broadcast facility. TOC operates Outdoor Channel, which is a national television network devoted to traditional outdoor activities, such as hunting, fishing and shooting sports, as well as off-road motor sports and other related lifestyle programming. Outdoor Channel Holdings also wholly owns Winnercomm, Inc., which is referred to as “Production Services”. The Production Services business relates to the production, development and marketing of sports programming. Winnercomm, Inc. wholly owns CableCam, LLC and SkyCam, LLC which comprise our Aerial Camera business. The Aerial Camera business is engaged in providing aerial camera services for customer owned telecasts.

In August 2011, the Company entered into an agreement with Professional Bass Tour (“PBT”) to establish Major League Fishing LLC (“MLF”), a joint venture created to produce a new style of professional competitive bass fishing tournaments to air exclusively on the Outdoor Channel. The Company is a 50% owner in MLF, controls the venture’s board of managers and will fund 100% of the costs of the venture via preferred capital contributions bearing a priority return which must be redeemed before MLF can make profit distributions. Accordingly, the Company is deemed the primary beneficiary and MLF is being treated as a variable interest entity, as defined by ASC 810, and MLF has been consolidated in our accompanying financial statements. Profits shall be allocated pro rata in proportion to the number of membership interests of MLF and losses shall be allocated in a similar proportionate manner but only while a member’s capital account is positive. Losses in excess of member’s capital are not allocated to members but will be only allocated to the Company. As of March 31, 2012, the Company has contributed approximately $1.4 million to MLF, and no cash amounts have been contributed by PBT. MLF recorded a loss for the three months ended March 31, 2012.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2012 and its results of operations and cash flows for the three months ended March 31, 2012 and 2011. Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on March 9, 2012 (the “2011 Annual Report”).

Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities as of the dates of the condensed consolidated balance sheets and reported amounts of revenues and expenses for the periods presented. Accordingly, actual results could materially differ from those estimates.

Our revenues include advertising fees from advertisements aired on Outdoor Channel, including fees paid by outside producers to purchase advertising time in connection with the airing of their programs on Outdoor Channel and subscriber fees paid by cable, telephone companies and satellite service providers that air Outdoor Channel. Production services revenue includes revenue from advertising fees, revenue from production services for customer-owned telecasts, revenue from camera services for customer-owned telecasts and revenue from website design, management, marketing and hosting services.

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 20,933	$ 19,498
Investments in available-for-sale securities	38,167	40,049
Accounts receivable, net of allowance for doubtful accounts of $950 and $949	9,998	13,657
Income taxes	1,099	3
Deferred tax assets, net	2,168	2,168
Programming and production costs	7,560	6,020
Subscriber acquisition fees, current portion	1,156	1,523
Other current assets	2,865	4,352
Total current assets	83,946	87,270
Property, plant and equipment, net	11,578	11,875
Amortizable intangible assets, net	323	378
Goodwill	43,160	43,160
Investments in auction-rate securities	4,954	4,940
Deferred tax assets, net	754	754
Subscriber acquisition fees, net of current portion	316	421
Deposits and other assets	344	388
Totals	145,375	149,186
Current liabilities:
Accounts payable and accrued expenses	10,573	12,424
Deferred revenue	1,172	634
Deferred obligations, current portion	49	49
Unfavorable lease, current portion	167	163
Income taxes payable	0	1,685
Total current liabilities	11,961	14,955
Deferred obligations	285	224
Unfavorable lease	639	682
Total liabilities	12,885	15,861
Commitments and contingencies
Equity:
Preferred stock, $0.001 par value; 25,000 shares authorized; none issued
Common stock, $0.001 par value; 75,000 shares authorized; 25,784 and 25,461 shares issued and outstanding	26	25
Additional paid-in capital	169,836	169,540
Accumulated other comprehensive loss	(261)	(287)
Accumulated deficit	(37,111)	(35,953)
Total stockholders' equity	132,490	133,325
Noncontrolling interest
Totals	$ 145,375	$ 149,186

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Condensed Consolidated Statements of Equity (Unaudited) (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total Stockholders' Equity	Non- controlling Interest
Beginning balance at Dec. 31, 2011	$ 133,325	$ 25	$ 169,540	$ (287)	$ (35,953)	$ 133,325	$ 0
Beginning balance, shares at Dec. 31, 2011		25,461
Net loss	(1,158)				(1,158)	(1,158)
Unrealized gain on avaliable-for-sale and auction-rate securities	26			26		26
Issuance of restricted stock to employees for services to be rendered, net of forfeited shares, shares		396
Issuance of restricted stock to employees for services to be rendered, net of forfeited shares		1	(1)
Share-based employee and non-employee compensation expense	844		844			844
Purchase and retirement of common stock related to employee and non-employee share-based compensation activity, shares		(73)
Purchase and retirement of common stock related to employee and non-employee share-based compensation activity	(547)		(547)			(547)
Cash contribution of noncontrolling interest
Ending balance at Mar. 31, 2012	$ 132,490	$ 26	$ 169,836	$ (261)	$ (37,111)	$ 132,490	$ 0
Ending balance, shares at Mar. 31, 2012		25,784

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operating activities:
Net loss	$ (1,158)	$ (830)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	732	746
Amortization of subscriber acquisition fees	472	408
Loss on sale of equipment	10	2
Provision for doubtful accounts	15	79
Share-based employee and non-employee compensation	844	787
Deferred tax benefit, net		(391)
Changes in operating assets and liabilities:
Accounts receivable	3,644	6,598
Income tax receivable and payable, net	(2,781)	(2,567)
Programming and production costs	(1,540)	(1,060)
Other current assets	1,487	487
Deposits and other assets	34	47
Subscriber acquisition fees		(191)
Accounts payable and accrued expenses	(1,672)	(4,049)
Deferred revenue	538	319
Deferred obligations	61	23
Unfavorable lease obligations	(39)	(37)
Net cash provided by operating activities	647	371
Investing activities:
Purchases of property, plant and equipment	(646)	(338)
Purchase of intangibles		(75)
Proceeds from sale of equipment	87
Purchases of available-for-sale securities	(24,143)	(27,992)
Proceeds from sale of available-for-sale and auction-rate securities	26,037	27,000
Net cash provided by (used in) investing activities	1,335	(1,405)
Financing activities:
Purchase of common stock	(547)	(471)
Net cash used in financing activities	(547)	(471)
Net increase (decrease) in cash and cash equivalents	1,435	(1,505)
Cash and cash equivalents, beginning of period	19,498	32,578
Cash and cash equivalents, end of period	20,933	31,073
Supplemental disclosure of cash flow information:
Income taxes paid	1,960	2,542
Supplemental disclosures of non-cash investing and financing activities:
Effect of net increase in fair value of available-for-sale and auction-rate securities	26	11
Property, plant and equipment costs incurred but not paid	$ 178	$ 5

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 950	$ 949
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	25,000	25,000
Preferred stock, shares issued
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000	75,000
Common stock, shares issued	25,784	25,461
Common stock, shares outstanding	25,784	25,461

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 10—COMMITMENTS AND CONTINGENCIES

From time to time we are involved in litigation as both plaintiff and defendant arising in the ordinary course of business. In the opinion of management, the results of any pending litigation should not have a material adverse effect on our consolidated financial position or operating results.

We lease facilities and equipment, including access to satellites for television transmission, under non-cancelable operating leases that expire at various dates through 2022. Generally, the most significant lease is our satellite lease.

Rental expenses, including satellite and transponder expense, equipment and facilities rent expense, aggregated to approximately $703 and $756 for the three months ended March 31, 2012 and 2011, respectively.

We also have operating leases for general office and production facilities in Tulsa, OK, New York City, Chicago, IL, Fort Worth, TX and Greenwich, CT with varying expiration dates through March 2022.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	May 07, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	OUTDOOR CHANNEL HOLDINGS INC
Entity Central Index Key	0000760326
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		25,776,040

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Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 11—SEGMENT INFORMATION

We report segment information in the same format as reviewed by our chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer. In 2011, based on changes in how we monitor and measure our various businesses, we separated our aerial camera units, SkyCam and CableCam, into a separate segment. Previously, our aerial camera units were included in our Production Services segment. Accordingly, we now operate in three reporting segments: TOC, Production Services (which is comprised solely of Winnercomm) and our Aerial Cameras segment. TOC is a separate business activity that broadcasts television programming on the Outdoor Channel twenty-four hours a day, seven days a week. TOC generates revenue primarily from advertising fees (which include fees paid by outside producers to purchase advertising time in connection with the airing of their programs on Outdoor Channel) and subscriber fees. Production Services is a separate business activity that relates to the production, development and marketing of sports programming and providing website services. Production Services generates revenue from advertising fees, production services for customer-owned telecasts, and from website design, management, marketing and hosting services. Aerial Cameras generates revenue from aerial camera services for customer-owned telecasts and events.

Intersegment revenues were generated by Production Services of approximately $412 and $584 respectively, for the three months ended March 31, 2012 and 2011, and intersegment cost of services were generated by Production Services of approximately $382 and $500, respectively, for the three months ended March 31, 2012 and 2011. Our Aerial Cameras segment had no intersegment revenues or intersegment cost of services for the three months ended March 31, 2012 and 2011.

Information with respect to these reportable segments as of and for the three months ended March 31, 2012 and 2011 is as follows:

Revenues	Three Months Ended March 31,
	2012			2011
TOC	$	12,611		$	12,332
Production Services		1,017			1,829
Aerial Cameras		1,105			1,235
Eliminations		(412	)		(584	)
Total revenues	$	14,321		$	14,812

Income (Loss) from Operations	Three Months Ended March 31,
	2012			2011
TOC*	$	(931	)	$	277
Production Services*		(381	)		(645	)
Aerial Cameras*		(649	)		(744	)
Eliminations		(30	)		(84	)
Total loss from operations	$	(1,991	)	$	(1,196	)
Total Assets	March 31, 2012			December 31, 2011
TOC	$	76,232		$	77,771
Production Services		6,285			7,063
Aerial Cameras		6,706			7,954
Corporate assets*		56,480			56,696
Eliminations		(328	)		(298	)
Total assets	$	145,375		$	149,186
Depreciation and Amortization	Three Months Ended March 31,
	2012			2011
TOC	$	363		$	390
Production Services		132			135
Aerial Cameras		237			221
Total depreciation and amortization	$	732		$	746

* Corporate overhead expenses consist primarily of executive, legal and administrative functions not associated directly with TOC, Production Services or Aerial Cameras. We allocate a portion of these expenses to our Production Services and Aerial Cameras segment, but the majority is captured in our TOC segment. Corporate assets consist primarily of cash not held in our operating accounts and available-for-sale securities.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenues:
Advertising	$ 7,435	$ 7,585
Subscriber fees	5,176	4,747
Production services	1,710	2,480
Total revenues	14,321	14,812
Cost of services:
Programming	1,798	1,630
Satellite transmission fees	429	399
Production and operations	4,141	4,553
Other direct costs	11	92
Total cost of services	6,379	6,674
Other expenses:
Advertising	648	305
Selling, general and administrative	8,553	8,283
Depreciation and amortization	732	746
Total other expenses	9,933	9,334
Loss from operations	(1,991)	(1,196)
Interest and other income, net	19	9
Loss from operations before income taxes	(1,972)	(1,187)
Income tax benefit	(814)	(357)
Net loss	(1,158)	(830)
Net loss attributable to noncontrolling interest
Net loss attributable to controlling interest	$ (1,158)	$ (830)
Loss per common share data:
Basic	$ (0.05)	$ (0.03)
Diluted	$ (0.05)	$ (0.03)
Weighted average common shares outstanding:
Basic	25,021	24,605
Diluted	25,021	24,605

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets [Abstract]

GOODWILL AND INTANGIBLE ASSETS

NOTE 5—GOODWILL AND INTANGIBLE ASSETS

We currently have three reporting units, TOC, Production Services and Aerial Cameras. The Production Services reporting unit consists solely of our Winnercomm business and the Aerial Cameras reporting unit consists of our CableCam and SkyCam businesses which were acquired on January 12, 2009. All of our goodwill is attributed to our TOC reporting unit.

We review goodwill for impairment on an annual basis during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We typically perform a two-step impairment test on goodwill. In the first step, we compare the fair value of our reporting unit with goodwill to its carrying value. If the fair value of our reporting unit exceeds the carrying values of the net assets assigned to that unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to our reporting unit exceeds the fair value, then we must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we must record an impairment loss equal to the difference.

We historically have determined the implied fair value of its goodwill utilizing the discounted cash flow method under the income approach. Under the income approach, we derived the enterprise fair value based on the present value of estimated future cash flows, which were based on historical data and assumptions pertaining to the market. In performing the 2011 goodwill impairment test, we assessed the relevant qualitative factors and concluded that it is more likely than not that the fair value of our goodwill is greater than the carrying amount. After reaching this conclusion, no further testing was performed. The qualitative factors we considered included, but were not limited to, general economic conditions, the industry outlook, our recent and forecasted financial performance and the price of our common stock.

Intangible assets that are subject to amortization consist of the following as of March 31, 2012:

	March 31, 2012
	Gross		Accumulated Amortization		Net
Trademark	$	219	$	216	$	3
Internet domain names		172		141		31
Customer relationships		980		720		260
Patents		90		61		29
Total amortizable intangible assets	$	1,461	$	1,138	$	323

As of March 31, 2012, the weighted average amortization period for the above intangibles is 1.7 years. Based on our most recent analysis, we believe that no impairment exists at March 31, 2012 with respect to our goodwill and other intangible assets. For the three months ended March 31, 2012 and 2011, we recognized amortization expense related to the intangible assets of $55 and $52, respectively.

Estimated future amortization expense related to intangible assets at March 31, 2012 is as follows:

Years Ending December 31,	Amount
2012 (remaining 9 months)	$	153
2013		165
2014		5
Total	$	323

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Investments In Available-For-Sale-Securities

3 Months Ended

Mar. 31, 2012

Investments In Available-For-Sale-Securities [Abstract]

INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES

NOTE 4—INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES

Assets recorded at fair value in the balance sheet as of March 31, 2012 are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and are as follows:

Level 1 –	Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
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 directly or indirectly observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 –	Unobservable inputs developed using estimates and assumptions developed by management, which reflect those that a market participant would use.

We measure the following financial assets at fair value on a recurring basis. The fair value of these financial assets was determined using the following inputs at March 31, 2012:

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents (1)	$	20,933	$	14,934	$	5,999	$	—
Investments in available-for-sale securities (2)		38,167		9,997		28,170		—
Non-current investments in auction-rate securities (3)		4,954		—		—		4,954
Total	$	64,054	$	24,931	$	34,169	$	4,954

⁽¹⁾ Cash and cash equivalents consist primarily of treasury bills, commercial paper and money market funds with original maturity dates of three months or less. For treasury bills and money market funds, we determine fair value through publicly available quoted market prices. For commercial paper, we determine fair value through third-party pricing sources using proprietary valuation models and other techniques that utilize market observable inputs.

⁽²⁾ Investments in available-for-sale securities consist of treasury bills, commercial paper and tax-exempt government securities with original maturity dates in excess of three months, for which we determine fair value through quoted market prices (Level 1) or through observable inputs, such as quoted prices for similar assets in markets that are not active or other inputs that are directly or indirectly observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For commercial paper with original maturity dates in excess of three months, we determine fair value through third-party pricing sources using proprietary valuation models and other techniques that utilize market observable inputs.

⁽³⁾ Investments in auction-rate securities consist of one auction-rate municipal security and one closed-end perpetual preferred auction-rate security. We use a discounted cash flow analysis to more accurately measure possible liquidity discounts.

The Company’s tax-exempt government securities which totaled $5,181 at March 31, 2012, are valued by outside professionals using proprietary valuation models and analytical tools in which all significant inputs related to similar instruments are observable or can be derived from or corroborated by publicly available observable market data for substantially the full term of the asset, and are therefore classified as Level 2 investments. Management is responsible for estimating the fair value of these investments, and in doing so, considers valuations provided by a large, independent pricing firm who maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. This information is used to structure yield curves for various types of securities and arrive at the daily valuations.

As of March 31, 2012, our investments in auction-rate securities (“ARS”) consisted of one auction-rate municipal security collateralized by federally backed student loans and one closed-end perpetual preferred security which has redemption features which call for redemption at 100% of par value and both have maintained at least A3 credit rating despite the failure of the auction process. To date, we have collected all interest due on all of our ARS in accordance with their stated terms. Historically, the carrying value (par value) of the ARS approximated fair market value due to the frequent resetting of variable interest rates. Beginning in February 2008, however, the auctions for ARS began to fail and were largely unsuccessful, requiring us to hold them beyond their typical auction reset dates. As a result, the interest rates on these investments reset to the maximum based on formulas contained in the securities. The rates are generally equal to or higher than the current market for similar securities. The par value of the ARS associated with these failed auctions will not be available to us until a successful auction occurs, a buyer is found outside of the auction process, the securities are called or the underlying securities have matured. Due to these liquidity issues, we performed a discounted cash flow analysis to determine the estimated fair value of these investments. The assumptions used in preparing the models include, but are not limited to, interest rate yield curves for similar securities, market rates of returns, and the expected term of each security. In making assumptions of required rates of return, we considered risk-free interest rates and credit spreads for investments of similar credit quality. Based on these models, we recorded an unrealized gain on our ARS of $14 in the three months ended March 31, 2012. As a result of the lack of liquidity in the ARS market, we have an accumulated unrealized loss on our ARS of $273, which is included in accumulated other comprehensive loss on our consolidated balance sheet as of March 31, 2012. We deemed the loss to be temporary because we do not plan to sell any of the ARS prior to maturity at an amount below the original purchase value and, at this time, do not deem it probable that we will receive less than 100% of the principal and accrued interest. We are not certain how long we may be required to hold each security, but based on our combined cash and cash equivalents balance and investments in available-for-sale securities of $59,100 and our expected operating cash flows, we do not believe a lack of liquidity associated with our ARS will adversely affect our ability to conduct business, and believe we have the ability to hold the securities throughout the currently estimated recovery period. We will continue to evaluate any changes in the market value of the failed ARS that have not been liquidated subsequent to year-end and in the future, depending upon existing market conditions, we may be required to record additional other-than-temporary declines in market value. However, given our current cash and cash equivalent position, short-term investments in available-for-sale securities, and cash flow from operations, we believe we have the ability and we intend to hold the failed ARS as long-term investments until the market stabilizes.

All of our assets measured at fair value on a recurring basis using significant Level 3 inputs as of March 31, 2012 were auction-rate securities. The one closed-end perpetual preferred auction-rate security totaling $2,919 had an interest rate of 1.49% and an auction reset of 28 days. The municipal security totaling $2,035 had an interest rate of 0.76%, an auction reset of 28 days and a maturity date of December 1, 2045. As of March 31, 2012 the next auction reset date for both securities was April 10, 2012. The following table summarizes our fair value measurements using significant Level 3 inputs, and changes therein, for the three month period ended March 31, 2012:

	Three Months Ended March 31, 2012
Auction-Rate Securities:
Balance at beginning of period	$	4,940
Unrealized gain included in accumulated other comprehensive loss		14
Balance as of March 31, 2012	$	4,954

We consider the yields we recognize from auction-rate securities and from cash held in our treasury bills, commercial paper, tax-exempt government securities and money market accounts to be interest income which are recorded in interest and other income, net for the three months ended March 31, 2012 and 2011 as follows:

	Three Months Ended March  31,
	2012			2011
Interest income	$	38		$	31
Interest expense		(19	)		(22	)
Total interest and other income, net	$	19		$	9

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2012

Recent Accounting Pronouncements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 12—RECENT ACCOUNTING PRONOUNCEMENTS

In June and December 2011, the Financial Accounting Standards Board (FASB) issued guidance on the presentation of comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity and also requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. We adopted this guidance beginning after January 1, 2012, with the exception of the requirement to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements, which has been deferred pending further deliberation by the FASB. The adoption did not have a material effect on our financial condition or results of operations, and only resulted in a change to financial statement presentation.

On May 12, 2011 the FASB issued Accounting Standards Update (ASU) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). This update amends Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurement and Disclosure.” ASU 2011-04 clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 is effective for annual and interim reporting periods beginning on or after December 15, 2011. The adoption of this guidance did not a material effect our financial condition and results of operations.

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Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 8—INCOME TAX PROVISION

The income tax provision reflected in the accompanying unaudited condensed consolidated statement of operations for the three months ended March 31, 2012 and 2011 is different than that computed based on the applicable statutory Federal income tax rate of 34% primarily due to state taxes and the limitations on the deductibility of executive compensation as provided for in Internal Revenue Code Section 162(m).

We file income tax returns in the United States and various state and local tax jurisdictions. We have state net operating losses and credit carryforwards that will be subject to examination beyond the year in which they are ultimately utilized. Our policy is to record interest and penalties on uncertain tax positions as income tax expense.

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Lines of Credit

3 Months Ended

Mar. 31, 2012

Lines of Credit [Abstract]

LINES OF CREDIT

NOTE 6—LINES OF CREDIT

On August 10, 2010, the Board of Directors approved the renewal of the revolving line of credit agreement (the “Revolver”) with U.S. Bank N.A., extending the maturity date to September 5, 2012 and renewing the total amount which can be drawn upon under the Revolver to $10,000. The Revolver provides that the interest rate per annum as selected by us shall be prime rate (3.25% and 3.25% as of March 31, 2012 and 2011, respectively) plus 0.25% or LIBOR (0.25% and 0.25% as of March 31, 2012 and 2011, respectively) plus 2.25%. The Revolver is unsecured. This credit facility contains customary financial and other covenants and restrictions, as amended, including a change of control provision and minimum liquidity metrics. As of March 31, 2012, we did not have any amounts outstanding under this credit facility. This Revolver is guaranteed by TOC and as of March 31, 2012, we were in full compliance with all the covenants of the Revolver.

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Accounts Payable and Accrued Expenses

3 Months Ended

Mar. 31, 2012

Accounts Payable and Accrued Expenses [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

NOTE 7—ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of March 31, 2012 and December 31, 2011 consist of the following:

	March 31, 2012		December 31, 2011
Trade accounts payable	$	879	$	1,951
Accrued payroll and related expenses		2,843		3,627
Estimated make-good accrual		1,514		1,575
Estimated most-favored nation accrual		2,003		2,003
Accrued launch support commitment		488		488
Accrued expenses		2,846		2,780
Total	$	10,573	$	12,424

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Related Party Transactions

3 Months Ended

Mar. 31, 2012

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9—RELATED PARTY TRANSACTIONS

We lease our administrative facilities from Musk Ox Properties, LP, which in turn is owned by Messrs. Perry T. Massie, Co-Chairman of the Board and Thomas H. Massie, both of whom are principal stockholders and directors of the Company. The lease agreement had a five-year term and expired on December 31, 2010. Since January 2011, we have entered into a number of agreements with Musk Ox Properties, LP to extend our lease which now expires on September 30, 2012. Monthly rent payments for the extended lease term are approximately $19. We paid Musk Ox Properties, LP approximately $57 and $57 in the three months ended March 31, 2012 and 2011, respectively. We recognized rent expense related to this lease of $57 both in the three months ended March 31, 2012 and 2011.

We continue to lease our former SkyCam facility from Case and Associates Properties, Inc., which in turn is partially owned by James E. Wilburn, Chairman of Winnercomm. The lease agreement has a ten year term expiring in May 2016. Monthly rent payments under this lease agreement were $43. We paid Case and Associates Properties, Inc., approximately $125 and $123 in the three months ended March 31, 2012 and 2011, respectively. We recognized rent expense related to this lease of $62 and $66 in the three months ended March 31, 2012 and 2011, respectively. We no longer occupy this facility and have sub-leased this facility in April 2012.

In October 2010 we engaged WATV, LLC to produce one off-road motorsport series for a total contract value of $390. Roger L. Werner, our former Chief Executive Officer and current Co-chairman of the board of directors, is a partner in WATV. During the first quarter of 2012, we paid WATV $9 related to the production of this series.

We license a program on a barter basis that is produced by Gold Prospectors Association of America, LLC (“Gold Prospectors”), an entity owned by Thomas H. Massie, who is a principal stockholder and director of the Company. The program airs during off-peak hours and the license period is from March 2009 through March 2012. In March 2012, we extended the license period of this show and agreed to pay $25 per quarter in exchange for increased commercial air time to be sold and retained by the Company. The value of this barter arrangement is not considered material to our consolidated financial statements.

In December 2011 we entered into a license agreement to air another program produced by Gold Prospectors. Under the agreement we will contribute $80 towards the production of 18 licensed episodes which will be jointly owned by the Company and Gold Prospectors. The agreement terminates in December 2012 and no amounts were paid during the current quarter of 2012.

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Condensed Consolidated Statements of Comprehensive Loss [Abstract]
Net loss	$ (1,158)	$ (830)
Other comprehensive income, net of tax:
Unrealized gain on available-for-sale and auction-rate securities	26	11
Comprehensive loss	$ (1,132)	$ (819)

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Earnings (Loss) Per Common Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER COMMON SHARE

NOTE 3—EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock. Diluted earnings (loss) per common share reflects the potential dilution of securities by including common stock equivalents, such as unvested restricted stock and stock units in the weighted average number of common shares outstanding for a period, if dilutive.

The following table sets forth a reconciliation of the basic and diluted number of weighted average shares outstanding used in the calculation of loss per share for the three months ended March 31 (in thousands):

	2012		2011
Weighted average shares used to calculate basic loss per share		25,021		24,605
Dilutive effect of potentially issuable common shares upon exercise of dilutive stock options, performance units, unvested restricted stock and stock units		—		—
Weighted average shares used to calculate diluted loss per share		25,021		24,605

For the three months ended March 31, 2012 and 2011, outstanding options and performance units to purchase a total of approximately 250,000 and 1,000,000 shares of common stock, respectively, were not included in the calculation of diluted loss per share because their effect was antidilutive.

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Subsequent Events

3 Months Ended

Mar. 31, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13—SUBSEQUENT EVENTS

The Company has completed an evaluation of all subsequent events through the date the consolidated financial statements were issued and concluded no subsequent events occurred that required recognition or disclosure.

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