10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2006
OR
o	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 000-22439

FISHER COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Washington (State of Incorporation)	91-0222175 (IRS Employer Identification No.)
100 4th Avenue N., Suite 510 Seattle, Washington (Address of principal executive offices)	98109 (Zip Code)

(206) 404-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $1.25 par value	Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act:
None

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

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

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

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

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.

Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o

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

As of June 30, 2006, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $293,270,000 based on the closing sale price as reported on the Nasdaq Global Market.

The number of shares outstanding of each of the issuer’s classes of common stock, as of March 1, 2007 was:

Title of Class	Number of Shares Outstanding
Common Stock, $1.25 Par Value	8,720,091

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2007	Part III

TABLE OF CONTENTS

EXHIBIT 3.4

EXHIBIT 10.22

EXHIBIT 21.1

EXHIBIT 23.1

EXHIBIT 31.1

EXHIBIT 31.2

EXHIBIT 32.1

EXHIBIT 32.2

PART I

ITEM 1.   BUSINESS

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

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this annual report to conform such statements to actual results or to changes in our expectations.

Company Description

Fisher Communications, Inc. is an integrated media company that has been in the broadcasting business since 1926. We own or operate eleven full power and seven low power network-affiliated television stations and nine radio stations. We also own a 50% interest in a company that owns a 19th television station. We have long-standing network affiliations with ABC and CBS and entered into affiliation agreements with Univision during 2006. Our television and radio stations are located in Washington, Oregon, Idaho and Montana. Seattle and Portland are our two largest markets for both television and radio. We own two ABC and three Univision network affiliates in Seattle and Portland, which are within the top 25 Designated Market Area (“DMA”) television markets as determined by Nielsen Media Research. We also own three radio stations in Seattle, the 14th largest radio market, ranked by population, as determined by the Arbitron Company. Our television stations reach 3.7 million households (approximately 3.4% of U.S. television households) according to Nielsen Media Research. Our stations produce quality local programming and have received numerous awards for broadcasting excellence.

We conduct our operations through two subsidiaries, Fisher Broadcasting Company and Fisher Media Services Company. Our broadcasting operations provided approximately 94% of consolidated revenue from continuing operations in 2006, with television broadcasting accounting for approximately 75% and radio broadcasting accounting for approximately 25% of our 2006 broadcasting revenue.

In November 2006, we completed the purchase of two Univision-affiliated Oregon television stations for $19 million. This transaction was initially announced in December 2005 and included the purchase of two Telefutura-affiliated Idaho TV stations which were finalized in May for $1 million.

In October 2006, we sold eighteen of our twenty-four small-market radio stations located in Montana and Eastern Washington for $26 million. This transaction was structured as a Like Kind Exchange, for tax purposes, and we used a portion of the proceeds, $19 million, to purchase the two Oregon stations in November. The remaining six small-market radio stations were excluded from the original sale of which five continue to be held for sale and the sixth is awaiting approval from the Federal Communications Commission (“FCC”) to complete its sale transaction.

In September 2006, we completed the stock purchase of African-American Broadcasting of Bellevue for $16 million. We purchased 25% of the equity in June 2006 for $4 million and completed the purchase of the remaining 75% equity for $12 million.

In July 2006, we entered into a local marketing agreement to manage four low-power television stations located in Eastern Washington and an option agreement whereby we have the right to acquire the stations until June 30, 2007. The stations provide programming to the Yakima-Pasco-Richland-Kennewick television market in

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Washington through an affiliation with Univision. On February 15, 2007 we exercised our option to purchase these television stations for $5.0 million, pending FCC approval and other closing conditions.

The second operating subsidiary, Fisher Media Services Company, owns and operates Fisher Plaza, a facility located near downtown Seattle that is designed to enable companies to distribute analog and digital media content through numerous distribution channels, including broadcast, satellite, cable, Internet and broadband, as well as other wired and wireless communication systems. Fisher Plaza serves as the home of our corporate offices and our Seattle television and radio stations. Fisher Plaza also houses a variety of companies, including media and communications companies. Fisher Plaza was completed in the summer of 2003 and had a net book value of $118 million as of December 31, 2006.

We also own approximately 3.0 million shares of the common stock of Safeco Corporation, a publicly traded insurance and financial services corporation. We have been a stockholder of Safeco Corporation since 1923. The market value of our investment in Safeco Corporation common stock as of December 31, 2006 was approximately $188 million.

Fisher Communications, Inc. was founded in 1910, and is incorporated in the state of Washington. We employed 812 full-time employees as of December 31, 2006. Approximately 14% of our workforce, located primarily at our KOMO TV, KATU TV, and KBCI TV operations, is subject to collective bargaining agreements. We believe we have good working relations with our employees. Note 13 to the Consolidated Financial Statements contains information regarding our segments for 2006, 2005, and 2004. We report financial data for three reportable segments: television, radio and Fisher Plaza.

Television Broadcasting

The following table sets forth selected information about our television stations:

Number of

Average

Commercial

DMA(1)

Network

Audience

Stations

Rank in

Expiration Date of

Station

Market Area

Rank

Affiliation

Share(2)

in DMA

Market(2)

Affiliation Agreement

KOMO

Seattle-Tacoma, WA

14

ABC

9

%

14

2

August 31, 2009

KUNS

Seattle-Tacoma, WA

14

Univision

NA

14

unranked

September 12, 2011

KATU

Portland, OR

23

ABC

9

%

10

3

August 31, 2009

KUNP

Portland, OR

23

Univision

NA

10

unranked

September 12, 2011

KUNP LP

Portland, OR

23

Univision

NA

10

unranked

September 12, 2011

KVAL

Eugene, OR

120

CBS

17

%

9

1

February 29, 2016

KCBY

Coos Bay, OR

120

CBS

17

%

9

1

February 29, 2016

KPIC(3)

Roseburg, OR

120

CBS

17

%

9

1

February 29, 2016

KIMA(4)

Yakima, WA

125

CBS

11

%

5

1

February 29, 2016

KEPR(4)

Pasco/Richland/Kennewick, WA

125

CBS

11

%

8

2

February 29, 2016

KLEW(5)

Lewiston, ID

NA

CBS

NA

1

NA

February 29, 2016

KBCI

Boise, ID

118

CBS

10

%

5

2

February 29, 2016

KUNB LP

Boise, ID

118

Telefutura

NA

5

unranked

May 12, 2011

KIDK

Idaho Falls-Pocatello, ID

163

CBS

13

%

5

2

February 29, 2016

KPPP LP

Pocatello, ID

NA

Telefutura

NA

5

unranked

May 12, 2011

(1)	DMA represents an exclusive geographic area of counties in which the home market stations are estimated to have the largest quarter-hour audience share. DMA Rank represents the DMA ranking by size of the market area in which our station is located. DMA Rank is based on January 2007 estimates published by Nielsen Media Research. “NA” refers to Not Available.
(2)	Except for the Eugene, Oregon market, average audience share and rank in market are based on Nielsen Media Research data for the February, May, July and November 2006 rating periods, Sunday to Saturday, 6 a.m. to 2 a.m. With respect to the Eugene, Oregon market, average audience share and rank in market are based on

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	BIA Financial Network, Inc. data for the February and May 2006 rating periods, Sunday to Saturday, 9 a.m. to midnight. “NA” refers to Not Available.
(3)	Fisher Broadcasting owns a 50% interest in South West Oregon Television Broadcasting Corporation, licensee of KPIC.
(4)	Station ranking is for two-station group designated as KIMA+ by Nielsen Media Research.
(5)	Although included as part of the Spokane, Washington DMA, KLEW primarily serves the Lewiston, Idaho, Clarkston, Washington audience that is only a small portion of the Spokane DMA.

We have been affiliated with ABC since 1958, CBS since 1999, Univision since 2006, and Telefutura since 2006. In July 2006, we entered into a local marketing agreement to manage four low-power television stations located in Eastern Washington and an option agreement whereby we have the right to acquire the stations until June 30, 2007. The stations provide programming to the Yakima-Pasco-Richland-Kennewick television market in Washington through an affiliation with Univision. On February 15, 2007 we exercised our option to purchase these television stations for $5.0 million, pending FCC approval and other closing conditions.

Television Markets and Stations

KOMO TV and KUNS TV, Seattle-Tacoma, Washington

Market Overview.  KOMO TV operates in the Seattle-Tacoma market, which has approximately 1.7 million television households and a population of approximately 4.3 million. This station has been operating since 1953. In 2006, approximately 71% of the population subscribed to cable and 16% subscribed to alternative delivery systems (alternative delivery service includes program delivery via satellite, satellite master antenna systems or multipoint distribution systems) (Nielsen Media Research). The 2006 television revenue for the Seattle-Tacoma DMA was estimated to be $312.0 million, as reported by Miller Kaplan. Of that number, approximately $20.2 million was attributable to political advertising. Major industries in the market include aerospace, information technology, manufacturing, biotechnology, forestry, transportation, retail and international trade. Major employers include Microsoft, Boeing, Safeco, Paccar, Nordstrom, Costco, Starbucks, the University of Washington, Amazon.com, Washington Mutual, Inc. and Weyerhaeuser.

KOMO TV Station Performance.  KOMO TV’s commitment to be the market leader in local news is manifested on multiple distribution platforms. KOMO TV produces 39.5 hours of live local television news per week on its analog and digital channels. KOMO TV produces the Emmy-winning Northwest Afternoon, a Monday-Friday, 60-minute talk program, which premiered in 1984 and is the longest running locally produced talk show in the Northwest region. The Radio and Television News Directors Association (“RTNDA”) honored KOMO TV News with three Edward R. Murrow national awards — News Series, Hard Feature and Soft Feature in 2006. The National Association of Television Arts and Sciences awarded 15 Emmys to the station for program and individual excellence in 2006.

KUNS TV Station Performance.  KUNS TV went live as Seattle’s first Univision station in January 2007. The Seattle-Tacoma market has approximately 81,000 Hispanic television households with a population of approximately 278,000. The market is the 28^th largest Hispanic market in the United States. KUNS broadcasts 167 hours of Univision programming per week on its analog and digital channels.

KATU TV and KUNP TV, Portland, Oregon

Market Overview.  KATU serves the Portland market, which has approximately 1.1 million television households and a population of approximately 3.0 million. Approximately 53% of Portland’s population subscribed to cable in 2006, while approximately 25% of households are listed as subscribers to alternative delivery systems (Nielsen Media Research). The 2006 television revenue for the Portland DMA was estimated to be $179 million, as reported by Miller Kaplan. Of that number, approximately $14.6 million was attributable to political advertising. The Portland metro area has a broad base of manufacturing, distribution, wholesale and retail trade, regional government and business services. Major employers in the Portland area include Intel, Nike, Hewlett Packard Development Company, Legacy Health System and Kaiser Permanente.

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KATU Station Performance.  KATU currently broadcasts 32.5 hours of live local news weekly. Since 1980, KATU has provided local program production for the Portland market. Central to this commitment, the station produces and airs AM Northwest, one of the country’s longest running live Monday-Friday local talk/information programs. In 2006, KATU won 14 Associated Press awards, including four first place awards for Best Hard News Reporting, Best Feature Reporting, Best Weathercast and Best Investigative Reporting. In addition, KATU News received 18 Emmy nominations, winning three, and was honored with 6 awards from The Society of Professional Journalists, including 2 First Place Awards.

KUNP Station Performance.  KUNP currently broadcasts Univision programming. The Portland market has approximately 73,000 Hispanic television households with a population of approximately 280,000. The market is the 31st largest Hispanic market in the United States.

KVAL TV, KCBY TV, KPIC TV, Eugene, Coos Bay and Roseburg, Oregon

Market Overview.  The KVAL TV broadcast studios are located in Eugene, Oregon. KCBY TV, in Coos Bay and KPIC TV, in Roseburg, are KVAL’s satellite stations which are defined as full-power terrestrial broadcast stations authorized to retransmit all or part of the programming of a parent station that is ordinarily commonly owned. The population of the Eugene/Springfield, Roseburg and Coos Bay/North Bend area is approximately 551,000. The area’s economic base includes forest products, agriculture, high-tech manufacturing, regional hospital and medical services, packaging, tourism and fishing. Major employers include the state’s two major universities — University of Oregon in Eugene and Oregon State University in Corvallis, as well as Hynix Semiconductor, Hewlett-Packard Development Company, Symantec Software, Sacred Heart Medical Center, Monaco Motor Coach, Levi Strauss Company, The Dell Computer Call Center and Roseburg Forest Products.

Station Performance.  KVAL holds the local broadcast rights to the top nationally syndicated programs including Live with Regis and Kelly, Dr. Phil, The Oprah Winfrey Show, Wheel of Fortune and Jeopardy, as well as the longest tenured local newscast in the market. KVAL subscribes to Nielsen Media Research data as well as qualitative data from The Media Audit. KVAL broadcasts 17 hours of live local news per week and rebroadcasts its 6 PM newscast at 6:30 PM on cable Channel 12 on the Eugene/Springfield Comcast Cable System, and simulcasts its 11 p.m. newscast on KEVU TV throughout the DMA. KVAL TV produces a local news window on CNN Headline News 17 times per day, every day. KVAL has a long tradition of award-winning news, public affairs programming and information. KVAL, KCBY and KPIC are unique in their broadcast community in that they can broadcast news, information, weather and commercials regionally. In addition to broadcasting its signal throughout the DMA, KVAL has the ability to distribute unique local content to each of the Eugene, Roseburg, Coos Bay, and Florence areas.

KIMA TV, KEPR TV, KLEW TV, Yakima and Tri-Cities, Washington and Lewiston, Idaho.

Market Overview.  KEPR TV and KLEW TV are KIMA TV’s satellite stations. KIMA TV serves the Yakima, Washington area and KEPR TV serves the Pasco-Richland-Kennewick (the “Tri-Cities”), Washington area. Yakima and the Tri-Cities areas comprise the Yakima DMA, which serves approximately 596,000 people in approximately 214,000 TV households and has a 46% cable penetration and 37% alternate delivery subscribers. At KLEW, 54% subscribe to cable and 36.5% to alternate delivery systems. KLEW TV is the exclusive local station in Lewiston, Idaho and is part of the Spokane, Washington DMA. Lewiston’s KLEW TV serves approximately 165,000 people in approximately 65,000 TV households.

The area covered by KIMA, KEPR and KLEW has an economic base that consists primarily of agriculture, nuclear technology, government, manufacturing and the wholesale food processing, retail service, health care and tourism industries, as well as being the core of “Washington Wine Country.” Major employers include Battelle, Con Agra, Duratek, Tyson, Energy NW, CH2M Hill, Fluor Hanford, Bechtel, Lockheed Martin, Potlatch, Siemens Power Corporation, Shields Bag and Printing, Tree Top, Noel Corp., ATK Mfg., and Boise Corp.

Station Performance.  KIMA and KEPR each broadcast 15 hours per week of scheduled live local news programs. KIMA is a leader in its market. According to Nielsen Media Research, KIMA/KEPR reaches 47% of all of the local news audience at 6 PM against both ABC and NBC local news, and KIMA TV alone has double the

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households of the other two news stations combined. KLEW TV broadcasts 12 hours of scheduled local news per week.

Local Marketing Agreement for Spanish Language Broadcasts, In July 2006, we entered into a local marketing agreement to manage four low-power television stations located in Eastern Washington and an option agreement whereby we have the right to acquire the stations until June 30, 2007. The stations provide programming to the Yakima-Pasco-Richland-Kennewick television market in Washington through an affiliation with Univision. On February 15, 2007 we exercised our option to purchase these television stations for $5.0 million, pending FCC approval and other closing conditions.

KBCI TV and KUNB TV, Boise, Idaho

Market Overview.  KBCI serves the Boise, Idaho DMA, which has a total population of approximately 627,000 and approximately 239,000 TV households. An estimated 36% of the television households in the Boise DMA subscribe to cable television with another 34% subscribing to an alternative delivery system (Nielsen Media Research). Boise is the state capital and regional center for business, government, education, health care and the arts. Major employers include high-tech companies such as Micron Technology, Inc. and its subsidiaries, Hewlett-Packard Company, Boise State University, Albertson’s, Saint Alphonsus Regional Medical Center, St. Luke’s Regional Medical Center, DirecTV, U.S. Bank, J.R. Simplot Company, Idaho Power Company, Boise Cascade (formerly Boise/Office Max), Sears Boise Regional Credit Card Operations Center, Washington Group International (formerly Morrison Knudson), Mountain Home Air Force Base, and the Idaho State government. Boise was recognized by Forbes Magazine in 2005 as the Best Place in the United States for business and careers and as the seventh best area in the nation to do business. It was ranked as the second best city in the United States to do business by INC. Magazine in 2005.

KBCI Station Performance.  KBCI currently broadcasts 12 hours per week of live local news programs. In May 2006, KBCI was given two First place, three Second place and two Third place awards by the Idaho Press Club. Paul Fredericks was recognized as “Best News Photographer” and Andrew Marden was recognized for the “Best Sports Segment” by the Idaho State Broadcasters Association in 2006.

KUNB Station Performance.  KUNB currently broadcasts Telefutura programming. The Boise market has approximately 19,000 Hispanic television households with a population of approximately 69,000. The market is the 70^th largest Hispanic market in the United States.

KIDK TV and KPPP TV, Idaho Falls-Pocatello, Idaho

Market Overview.  KIDK serves the Idaho Falls-Pocatello market, which has approximately 116,560 TV households and a population of approximately 343,000. In 2006, an estimated 35% of the television households subscribed to cable, with another 47% subscribing to an alternative delivery system (Nielsen Media Research). The Idaho Falls-Pocatello DMA consists of 14 counties located in Eastern Idaho and Western Wyoming. Idaho Falls and Pocatello, 50 miles apart, are the two largest cities in the DMA. Battelle Inc., the contractor for operation of the Idaho National Engineering & Environmental Laboratory, is the largest employer in the region. Other major employers include Melaluca, Inc., JR Simplot Company, American Microsystems, Idaho State University, BYU-Idaho, EIRMC, Negra Modelo, Qwest, American Microsystems, Portneuf Medical Center, Converges Corporation and Ballard Medical Products.

KIDK Station Performance.  KIDK broadcasts 17 hours per week of live local news programs. KIDK operates from its main studio in Idaho Falls. It also shares a site in Pocatello with a full service news and sales bureau in Pocatello. Effective January 2006, KIDK became the only station in the market with a designated Upper Valley reporter.

KPPP Station Performance.  KPPP broadcasts Telefutura programming over a low power station in Pocatello serving 6.2% Hispanic households in the city and 6.6% Hispanic Households in the Metro area. The Idaho Falls-Pocatello market has approximately 7,240 Hispanic television households with a population of approximately 27,000. The market is the 117^th largest Hispanic market in the United States.

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Television Broadcasting Industry

Commercial television broadcasting began in the United States on a regular basis in the 1940s. The FCC grants licenses to build and operate broadcast television stations, and currently, a limited number of channels are available for television broadcasting in any one geographic area. Television stations that broadcast over the VHF band generally have some competitive advantage over those that broadcast over the UHF band (channels above 13) because VHF channels usually have better signal coverage and operate at a lower transmission cost. However, the improvement of UHF transmitters and receivers, the complete elimination from the marketplace of VHF-only television receivers and the expansion of cable and satellite television systems have reduced the competitive advantage of stations broadcasting over the VHF band. In addition, as television stations are required to broadcast digital signals, the historical competitive advantage of VHF signals is further diminished.

There are approximately 111 million television households in the United States (household universe estimates), of which approximately 68 million are cable households, and a total of approximately 96 million receive television via cable or an alternative delivery service. Overall household television viewing is 57.6 hours per week, on average (Nielsen Media Research).

Television stations primarily receive revenue from the sale of local, regional and national advertising and, to a much lesser extent, from network compensation, tower rental and commercial production activities. Broadcast television stations’ relatively high fixed costs of operation and heavy reliance on advertising revenue render the stations vulnerable to cyclical changes in the economy. The size of advertisers’ budgets, which are sensitive to broad economic trends, affects the broadcast industry in general and, specifically, the revenue of individual broadcast television stations. We are dependent on advertising revenue, which can be influenced by events such as declines in the national, regional, or local economies, employment levels, network ratings, consumer confidence and the success of national time sales representatives. Political and advocacy advertising can constitute, and in the past has constituted, a significant revenue source in some years, particularly national election years. The amount of our revenue in election years depends on many factors, such as whether Washington, Oregon, and Idaho are contested states in a presidential election and the extent of local and regional ballot initiatives.

Television Broadcasting Competition

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

Audience.  Stations compete for audience on the basis of program popularity, which has a direct effect on advertising rates. During periods of network programming, the stations are totally dependent on the performance of the network programs in attracting viewers. The competition between the networks is keen and the success of any network’s programming can vary significantly over time. During non-network time periods, each station competes on the basis of the performance of its local and syndicated programming using a combination of self-produced news, public affairs and other entertainment or informational programming to attract viewers. The competition between stations in non-network time periods is intense, and here, too, success can vary over time.

Our stations compete for television viewership share against local network-affiliated and independent stations, as well as against cable programming and alternate methods of television program distribution, such as direct broadcast satellite program services. These other transmission methods can increase competition for a station by bringing into its market distant broadcasting signals not otherwise available to the station’s audience, and also by serving as a distribution system for nonbroadcast programming originated on the cable system. To the extent cable

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operators and broadcasters increase the amount of local news programming, the heightened competition for local news audiences could have a material adverse effect on our advertising revenue.

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

Programming.  Competition for syndicated programming involves negotiating with national program distributors, or producers. Our stations compete against in-market broadcast stations, as well as station groups, for exclusive access to syndicated programming. Cable system operators generally do not compete with local stations for programming; however, various national cable networks acquire programs that might have otherwise been offered to local television stations.

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

Radio Markets and Stations

Seattle Radio

The following table sets forth certain information regarding our radio stations located in Seattle, Washington.

National

Audience Listening

Market

Rank in

Station

Market

Station

Dial Position

Power

Rank(1)

Market(2)

Share(2)

Format

Seattle, WA

14

KOMO AM

1000 kHz

50 kW

4T

4.0

%

News

KVI AM

570 kHz

5 kW

17

2.6

%

Talk

KPLZ FM

101.5 MHz

100 kW

20

2.2

%

Hot Adult Contemporary

(1)

National Market Rank for Seattle, WA is based on 2006 data from the Arbitron Company.

(2)

Rank and station information in the above chart refers to average quarter-hour share of listenership to commercial stations among total persons, age 12+, Monday through Sunday, 6 a.m. to midnight, and is subject to the qualifications listed in each report. Source: Seattle, Washington: Arbitron Radio market Report four-book average — Winter 2006 — Fall 2006. There are 56 radio stations in the Seattle market according to BIA Financial Network, Inc. “T” refers to tie.

Our Seattle radio stations broadcast to a six-county metropolitan population of approximately 3,700,000 with news and entertainment radio services. The 2006 radio revenue for the Seattle-Tacoma Metropolitan Statistical

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Area (“MSA”) was estimated to be $208 million, as reported by Miller Kaplan. KOMO (AM), KVI (AM) and KPLZ (FM) have been in operation since 1926, 1926 and 1959, respectively. Since November 2002, KOMO (AM), which utilizes an all news format, has been the flagship station for Seattle Mariners baseball serving 40 network affiliated radio stations in five states. KVI (AM) is the market’s Fox News and Talk radio station with a mix of local and national issue-oriented programming. KPLZ (FM) programs “Hot Adult Contemporary” music with veteran morning personalities Kent Phillips and Alan Budwill.

Effective March 1, 2002, Fisher Broadcasting Seattle Radio LLC entered into a Joint Sales Agreement with classical music station KING FM. Pursuant to the agreement, the licensee of the station, Classic Radio, Inc., retains all operating accountability, while we pay KING FM a flat fee, subject to annual adjustment, and a share of the net revenue generated by the sale of advertising time for the right to sell substantially all the commercial advertising on the station. This agreement was amended during 2006 and the term was extended through June 30, 2011.

Fisher Radio Regional Group

In October 2006, we sold eighteen of our twenty-four small-market radio stations known as Fisher Radio Regional Group with stations located in Montana and Eastern Washington for $26 million. The remaining six small-market radio stations, located in Great Falls, Montana were excluded from this sale of which five continue to be held for sale and the sixth is awaiting FCC approval to complete its sale transaction.

Radio Broadcasting Industry

Commercial radio broadcasting began in the United States in the early 1920s. Only a limited number of frequencies are available for broadcasting in any one geographic area. The FCC grants the license to operate a radio station. Currently, two commercial radio broadcast bands provide free, over-the-air radio service, each of which employs different methods of delivering the radio signal to radio receivers. The AM band (amplitude modulation) consists of frequencies from 530 kHz to 1700 kHz. The FM (frequency modulation) band consists of frequencies from 88.1 MHz to 107.9 MHz.

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

Radio Broadcasting Competition

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

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

The FCC has authorized Direct Audio Radio from Satellite (“DARS”) to broadcast over a separate frequency spectrum (the S-Band, between 2.31 and 2.36 GHz). Two companies, XM Satellite Radio, Inc. and Sirius Satellite Radio Inc., are currently offering programming via S-Band satellite channels. Each company offers numerous programming channels on a monthly fee basis. Some of their program channels contain commercial announcements, but they do not currently insert local commercials. Radios capable of receiving these digital signals are available as after-market equipment and in selected new vehicles. While DARS stations are not currently expected to significantly compete for local advertising revenue, they will compete for listenership, and may dilute the overall radio audience. XM currently provides traffic and weather reports into select local markets, including Seattle. XM also rebroadcasts the terrestrial radio broadcasts of Major League Baseball teams, including the Seattle

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Mariners. We own the terrestrial radio broadcast rights to the Seattle Mariners and XM Satellite Radio transmits the KOMO-AM fully produced broadcast. Such a rebroadcast may cause decreased listenership for our stations, the loss of regional sales growth opportunities and the loss of local advertisers that may not want their advertisements broadcast on a national scale.

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

The proliferation of radio stations and other companies streaming their programming over the Internet has created additional competition for local radio stations, as have “podcasts” which contain programming compilations intended to be recorded on personal audio devices and replayed later. These Internet channels provide further choice for listeners, in addition to the existing over-the-air radio stations and the DARS stations.

Advertising.  Radio advertising rates are based on the number and mix of media outlets, the audience size of the market in which a radio station operates, the total number of listeners the station attracts in a particular demographic group that an advertiser may be targeting, the number of advertisers competing for available time, the demographic make-up of the market served by the station, the availability of alternative advertising media in the market area, the presence of aggressive and knowledgeable sales forces and the development of projects, features and programs that tie advertisers’ messages to programming. Our radio stations compete for revenue primarily with other radio stations and, to a lesser degree, with other advertising media such as television, cable, newspapers, yellow page directories, direct mail, Internet and outdoor and transit advertising. Competition for advertising dollars in the radio broadcasting industry occurs primarily within the individual markets on the basis of the above factors, as well as on the basis of advertising rates charged by competitors. Generally, a radio station in one market area does not compete with stations in other market areas.

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Internet and Digital Television

Internet

Technology is impacting the distribution and consumption of traditional broadcast mediums. Developments in digital technology, the Internet, and other interactive media have fundamentally changed the competitive landscape and have created an entirely new way for consumers to experience media. In April 2006, Fisher formed the Fisher Interactive Network to bring together the digital media assets of the company. The following table sets forth selected information about our websites:

Station	Market Area	Website URL
KOMO TV	Seattle-Tacoma, WA	www.komotv.com
KOMO AM	Seattle-Tacoma, WA	www.komoradio.com
KVI AM	Seattle-Tacoma, WA	www.570kvi.com
KPLZ FM	Seattle-Tacoma, WA	www.star1015.com
KATU	Portland, OR	www.katu.com
KVAL	Eugene, OR	www.kval.com
KCBY	Coos Bay, OR	www.kcby.com
KPIC	Roseburg, OR	www.kpic.com
KIMA	Yakima, WA	www.kimatv.com
KEPR	Pasco/Richland/Kennewick, WA	www.keprtv.com
KLEW	Lewiston, ID	www.klewtv.com
KBCI	Boise, ID	www.2news.tv
KIDK	Idaho Falls-Pocatello, ID	www.kidk.com

Competition.  There is no limit to the number of websites that can be created. Individuals as well as multi-national companies can easily enter the Internet business with a limited amount of investment. Some organizations or individuals may have greater financial resources available affording them better access to content, talent, revenue and audience. Competition in the Internet industry, takes place on several levels: competition for audience, competition for advertisers, competition for content and competition for staff and management. Websites are in a state of constant technological advancement and innovation and there is no limit to the number of websites one company or individual can operate. While there are few governmental restrictions on websites, changes from regulatory bodies could have a material adverse effect on the business.

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

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

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Digital Television

In the United States, legislation setting the mandatory switch-off of all analog terrestrial TV broadcasts was signed into law in early 2006 and set the final deadline as February 17, 2009. Currently, most U.S. broadcasters are beaming their signals in both analog and digital formats; a few are digital-only.

Competition.  With digital television, broadcasters are not restricted to sending one high-definition picture, but rather a standard-definition picture and multi-cast multiple channels of standard-definition television. Some broadcasters are planning to multi-cast many choices of programming during the day and reduce the number of channels in the evening in order to feed a high-definition signal for prime-time. Digital TV is going to offer more choices, and it is going to make our viewing experience more interactive. Like traditional television channels, competition in digital television will likely take place on several levels: competition for audience, competition for programming (including news), competition for advertisers and competition for local staff and management. Additional factors material to a television station’s competitive position include signal coverage and assigned frequency. Our stations compete for television viewership share against traditional television stations, as well as against cable programming and alternate methods of television program distribution, such as direct broadcast satellite program services. These other transmission methods can increase competition for a station by bringing into its market distant broadcasting signals not otherwise available to the station’s audience, and also by serving as a distribution system for nonbroadcast programming originated on the cable system. To the extent cable operators and broadcasters increase the amount of local news programming, the heightened competition for local news audiences could have a material adverse effect on our advertising revenue. Other sources of competition for Fisher’s digital television stations include home entertainment systems (including video cassette recorder and playback systems, DVD players, digital video recorders and television game devices), Internet websites, wireless cable, satellite master antenna television systems, and program downloads to handheld or other playback devices. Our multicast stations also face competition from direct broadcast satellite services, which transmit programming directly to homes equipped with special receiving antennas or to cable television systems for transmission to their subscribers. We compete with these sources of competition both on the basis of product performance (quality, variety, information and entertainment value of content) and price (the cost to utilize these systems).

Audience.  Digital multicast stations compete for audience on the basis of program popularity, which has a direct effect on advertising rates. Many new multicast networks are forming and during periods of network programming, the stations are totally dependent on the performance of the network programs in attracting viewers.

Programming.  Competition for programming has yet to materialize for multicast stations. Many broadcasters are still looking to quantify the value these multicast signal offer. However, these stations will compete against other multicast stations and traditional broadcast stations, as well as station groups, for exclusive access to programming. Cable system operators generally do not compete with local stations for programming; however, various national cable networks acquire programs that might have otherwise been offered to local television stations.

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

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Federal Regulation

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

Programming and Operation.  The Communications Act requires broadcasters to serve the “public interest.” Stations must periodically document their presentation of programming responsive to local community problems, needs and interests. Complaints concerning programming may be considered by the FCC at any time. Stations also must follow various laws and rules that regulate, among other things, political advertising, sponsorship identification, the advertisement of contests and lotteries, the quantity of educational and informational programming directed to children, the amount of content of commercials in and adjacent to children’s programming, the advertising of cigarettes or smokeless tobacco, obscene and indecent broadcasts and technical operations.

New Licenses.  TV and FM channels are allotted to particular communities. The FCC may change such allotments from time to time. The FCC periodically accepts applications for authority to construct new TV and FM stations on unused allotted channels. New AM stations are approved based upon a sophisticated engineering demonstrating compliance with the complex technical rules designed to limit interference with existing stations. Auctions are held by the FCC if more than one party files an application for the same unused FM or TV allotment and for any new AM facility. A petition to deny a winning application must be resolved through FCC consideration of the applicant’s qualifications and the application’s compliance with FCC rules.

Assignments and Transfers.  Assignment of a license or transfer of control of a broadcast licensee requires prior FCC consent. An application seeking such consent must be filed with the FCC. Public notice of such filings is provided, and interested parties may petition to deny such applications. The FCC considers the qualifications of the purchaser, the compliance of the transaction with rules, and other factors in order to determine whether the public interest would be served by such change in ownership. An evidentiary hearing may be conducted if there are unresolved substantial and material questions of fact.

License Renewal.  Broadcast licenses initially are issued for a period specified in the license. Broadcast licenses are normally renewed for an eight-year term (subject to short-term renewals in certain circumstances). Licensees seeking renewal must file an application containing certain required information. During the consideration of that application, interested parties may petition to deny the renewal application. The FCC will grant the renewal application and dismiss any petitions to deny if it determines that the licensee meets statutory renewal standards based on a review of the preceding license term. Competing applications for the frequency licensed to the renewal applicant may not be filed unless and until the FCC has determined that the incumbent is not qualified to hold the license.

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

While the vast majority of such licenses are renewed by the FCC, there can be no assurance that our licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If a station license is not renewed by the expiration date, the licensee may continue to operate such station until final action is taken on the station’s renewal application.

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The expiration date for the licenses of our television stations are as follows:

Station	Market Area	Expiration Date
KOMO	Seattle-Tacoma, WA	February 1, 2007(1)
KUNS	Seattle-Tacoma, WA	February 1, 2015
KATU	Portland, OR	February 1, 2007(2)
KUNP	Portland, OR	February 1, 2015
KUNP LP	Portland, OR	February 1, 2015
KVAL	Eugene, OR	February 1, 2007(1)
KCBY	Eugene, OR	February 1, 2015
KPIC	Roseburg, OR	February 1, 2015
KIMA	Yakima, WA	February 1, 2015
KEPR	Pasco/Richland/Kennewick, WA	February 1, 2015
KLEW	Lewiston, ID	October 1, 2014
KBCI	Boise, ID	October 1, 2006(1)
KUNB LP	Boise, ID	October 1, 2014
KIDK	Idaho Falls-Pocatello, ID	October 1, 2006(1)
KPPP LP	Idaho Falls-Pocatello, ID	October 1, 2014

(1)

Action on many television license renewal applications, including those of KOMO-TV, KVAL, KIDK-TV and KBCI, has been delayed because of the pendency of complaints that network programming aired by the stations’ networks contained indecent material. Pursuant to FCC rules, we continue to operate these stations pending final action on their license renewal applications. We cannot predict when or how the FCC will address these complaints or act on the renewal applications.

(2)

On December 22, 2006, a petition to deny was filed by Oregon Alliance to Reform Media (“OARM”) against KATU and seven other television stations licensed to serve the Portland, Oregon market. OARM argues that the stations each failed to present adequate programming relating to state and local elections during the 2004 election campaign in their news and public affairs programming. Pursuant to FCC rules, we continue to operate KATU pending final action on the KATU license renewal application. We cannot predict when or how the FCC will address this petition or act on the KATU renewal application.

The license terms for all of our Montana radio stations expire on April 1, 2013. The license terms of our radio stations in Washington expire February 1, 2014. The non-renewal or revocation of one or more of our FCC licenses could harm our radio broadcasting operations.

Ownership Restrictions.  Complex FCC regulations limit the “cognizable interest” (also called “attributable interest”) that may be held by a single party. In general, officers, directors, general partners and parties with the power to vote or control the vote of 5% or more of the outstanding voting power of a corporate licensee are considered to hold an “attributable interest” in that entity, although certain passive investors must have a 20% or greater voting interest to be considered to have an “attributable interest.” Also, any party that holds a financial interest (whether equity or debt) in excess of 33% of a licensee’s total capital is “attributable” if such party is either a significant program supplier to the licensee or has another media interest in the same market. In addition, a licensee that provides more than 15% of the programming of another station in the local market is considered to have an attributable interest in that station.

National Television Ownership Limits

FCC rules prohibit a single entity from holding an attributable interest in TV stations that have an aggregate national audience reach exceeding 39% of television households (the “National Television Ownership Limits”). The FCC counts the television households in each Nielsen DMA in which a party has an attributable interest in a television station as a percentage of the total television households in the DMAs. Only 50% of the television households in a DMA are counted toward the 39% national restriction if the owned station is a UHF station.

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Local Television Ownership Limits

Detailed FCC rules regulate the extent to which a party may have an attributable interest in more than one full-power TV station in the same area (the “Local Television Ownership Limits”). Common ownership of multiple TV stations is permitted where the stations are in different Nielsen DMAs. Common ownership of two TV stations in the same DMA is permitted where there is no Grade B contour overlap among the stations, where a specified number of separately-owned full-power TV stations will remain after the combination is created, or where certain waiver criteria are met. A party may have attributable interests in both TV and radio stations in the same local market. The specific number of such stations is governed by FCC rules, depending primarily on the number of independent media voices in the market. Low Power Television Stations (LPTVs) are not subject to such limits.

Local Radio Ownership Limits

Similarly, FCC rules regulate the extent to which a party may have an attributable interest in more than one radio station in the same market, as defined by Arbitron, or, in the case of communities outside of Arbitron-rated markets, certain overlapping or intersecting signal contours (the “Local Radio Ownership Limits”). Depending on the size of market, a single entity may have an attributable interest in from two to eight commercial radio stations.

Cross-Ownership Restrictions

A party may have attributable interests in both TV and radio stations in the same local market. The specific number of such stations is governed by FCC rules, depending on the number of independent media voices in the market (the Television-Radio Cross-Ownership Rule”). Depending on the number of independent competitive media outlets in the market, a single entity may own attributable interests from as few as one TV and one radio station in the market to as many as two TV and six radio stations (or one TV and seven radio stations). LPTVs are not considered in determining compliance with such restrictions.

The FCC’s current rules effectively prohibit a radio or television broadcast station to be licensed to an entity that, directly or indirectly, owns, operates or controls a daily English-language newspaper that is published in a community within certain defined signal strength contours of the broadcast station (the “Broadcast-Newspaper Cross-Ownership Rule”). FCC rules limit the ability of an entity to own an attributable interest in broadcast and daily English-language newspapers in the same market.

If an attributable stockholder of the Company has or acquires an attributable interest in other television or radio stations, or in daily newspapers, depending on the size and location of such stations or newspapers, or if a proposed acquisition by us would cause a violation of the FCC’s multiple ownership rules or cross-ownership restrictions, we may be unable to obtain from the FCC one or more authorizations needed to conduct our business and may be unable to obtain FCC consents for certain future acquisitions.

Local Marketing Agreements.  A number of television and radio stations have entered into local marketing agreements (“LMAs”). Such agreements typically permit a third party to provide the programming and sell the advertising time during a substantial portion of the broadcast day of a station, subject to the requirement that the station’s programming content and operations remain at all times under the independent control of the station licensee. At present, FCC rules permit LMAs, but the licensee of a broadcast station brokering more than 15% of the time on another station in the same market is generally considered to have an attributable interest in the brokered station. When the FCC decided to attribute LMAs for ownership purposes, it grandfathered LMAs that were executed prior to November 5, 1996, permitting the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCC’s 2004 biennial review. The FCC stated that at the conclusion of the 2004 biennial review it would conduct a case-by-case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering period. To date, the FCC has not commenced that review. We cannot predict when or whether the FCC will begin its review of those LMAs.

Joint Sales Agreements.  Some television and radio stations have entered into cooperative arrangements commonly known as joint sales agreements (“JSAs”). Typically these involve the assignment, for a fee, of the right to sell substantially all the commercial advertising on a station. The typical JSA is distinct from an LMA in that a JSA (unlike an LMA) normally does not involve programming. Currently, radio station JSAs involving more than

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15% of the advertising of a radio station in the same market are deemed by the FCC to give the broker an attributable interest in the brokered station. We currently broker the sale for advertising time on an FM station in Seattle pursuant to a JSA. While that will result in Fisher being considered to have an attributable interest in that station, such attribution will not cause us to exceed the FCC’s local radio ownership or cross-ownership limitations. In contrast, television stations for which a licensee sells time under a JSA are not deemed by the FCC to be attributable interests of that licensee at this time. An FCC proceeding to extend attribution to television JSAs was initiated in 2004 but remains unresolved.

Biennial Regulatory Reviews.  The FCC concluded its Biennial Regulatory Review of Broadcast Ownership Rules in June, 2003, by adoption of a decision which modified a number of its media ownership limits. Those rules set forth a new radio market definition for the markets measured by Arbitron, based upon geographic areas, rather than signal contours. That decision significantly modified the multiple ownership rules related to television. It modified the National Television Ownership Limits to permit an entity to have a 45% national aggregate audience reach. The new rules modified the Local Television Ownership Rules to permit a single party to have an attributable interest in up to three television stations in certain very large DMAs; and reduced the number of separately-owned full-power TV stations that must exist in a DMA to justify a party holding an attributable interest in two TV stations in the same DMA. The FCC also eased the Television-Radio Cross-Ownership Rules relating to the ownership of interests in both radio and TV stations in the same market, and modified the Broadcast-Newspaper Cross-Ownership Rule to permit common ownership of television stations and newspapers in many markets. The FCC decision adopted rules relating to radio JSAs under which stations for which a licensee sells time would be deemed to be attributable interests of that licensee, and the FCC has undertaken a proceeding whether to establish a similar standard for television JSAs. Legislation adopted in January 2004 lowered the National Television Ownership Limits to 39% national aggregate audience reach. In June 2004, the U.S. Court of Appeals issued a decision upholding portions of the FCC decision, but concluded that the decision failed to adequately support numerous aspects of those rules, including the specific numeric ownership limits adopted by the FCC. The court remanded the matter to the FCC for revision or further justification of the rules, retained jurisdiction over the matter, and maintained its existing stay of the effectiveness of those rules. It subsequently allowed those portions of the new rules relating to radio ownership to go into effect. The U.S. Supreme Court has declined to review the matter. The matter is currently awaiting action at the FCC. This has resulted in a request for and the filing of further comments, and may result in the issuance of a revised order, which will then be subject to further review on appeal. We cannot predict, whether, how or when the new rules will be modified, ultimately implemented as modified or repealed in their entirety.

Omnibus Appropriations Act.  In January 2004, the Fiscal Year 2004 Omnibus Appropriations Act became effective. That law overrides the existing FCC rules and the FCC’s June 2003 decision to modify the National Television Ownership Limits by creating a statutory 39% cap on the national aggregate audience reach by any television licensee.

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

Network Affiliate Issues.  FCC rules affect the network-affiliate relationship. Among other things, these rules require network affiliation agreements to (i) prohibit networks from requiring affiliates to clear time previously scheduled for other use, (ii) permit an affiliate to preempt network programs it believes are unsuitable for its audience, and (iii) permit affiliates to substitute programs believed to be of greater local or national importance than network programming. An FCC proceeding to review certain of these rules remains outstanding.

Other Matters.  The FCC has numerous other regulations and policies that affect its licensees, including rules requiring close-captioning to assist television viewing by the physically handicapped, requirements for visual display of emergency information, minimum amounts of television intended for viewing by children, limitations on the amount of advertising within children’s television programming, and equal employment opportunities (“EEO”) rules requiring broadcast licensees to provide equal opportunity in employment to all qualified job applicants and prohibiting discrimination against any person by broadcast stations based on race, color, religion, national origin or gender. The EEO rules also require each station to (i) widely disseminate information concerning its full-time job

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vacancies, with limited exceptions, (ii) provide notice of each full-time vacancy to certain recruitment organizations and (iii) periodically complete a certain number of recruitment initiatives. Licensees are also required to collect, submit to the FCC and/or maintain for public inspection extensive documentation regarding a number of aspects of its station operations, including its EEO performance. Other FCC rules prohibit the broadcast of indecent or profane material from 6 a.m. through 10 p.m., local time, and the willful or repeated violation of these rules could result in fines of up to $325,000 per violation, renewal of a station license for less than the normal term, loss of a station’s license to operate, or even criminal penalties.

Cable and satellite carriage of broadcast television signals is also affected by FCC rules. An election is made by TV stations every third year specifying, on a system-by-system basis, whether cable systems “must-carry” their signal on a specific channel, subject to certain limitations set forth in the rules, or whether the system must contract for “retransmission consent” in order to carry their signal. Under the Satellite Home Improvement Act, as amended by the Satellite Home Viewer Extension and Reauthorization Act, satellite carriers are permitted to retransmit a local television station’s signal into its local market with the consent of the local television station. If a satellite carrier elects to carry one local station in a market, the satellite carrier must carry the signals of all local television stations that also request carriage. “Unserved households” which cannot receive the over-the-air signal of a network station with a specified signal strength may be eligible to receive by satellite a “distant signal” of that network which originates outside the local television market.

Proposed Legislation and Regulation.  Congress and the FCC may in the future adopt new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation and ownership of our broadcast properties. Such matters include, for example, equal employment opportunities regulations, spectrum use fees, political advertising rates, standardized and enhanced public interest disclosure requirements and potential restrictions on the advertising of certain products. Other matters that could affect our broadcast properties include assignment by the FCC of channels for additional broadcast stations or wireless cable systems, as well as technological innovations and developments generally affecting competition in the mass communications industry.

Digital/High Definition Television (“HDTV”)

The Digital Television, or DTV standard, developed after years of research, and approved by the FCC in December 1996, was the breakthrough that made possible the transmission of vast amounts of information in the same size channel (6 MHz) as the current analog standard television system.

DTV brings with it four major changes to the way viewers experience television. First, DTV sets display pictures using a rectangular, wide-screen format, as opposed to the nearly square screens used by current analog TV sets. Because of this screen shape, watching programs on digital TV sets can be similar to watching a movie at the theater, giving more lifelike images and allowing the viewer to feel more involved in the action on screen. Second, DTV can deliver six channels of CD-quality, digital surround sound using the same Dolby Digital technology heard in many movie theaters. Third, DTV can deliver high definition pictures with crisp, photographic quality, and greatly enhanced detail. Fourth, DTV can provide multiple channels that can transmit data and/or “standard definition” pictures equivalent or better than the quality delivered by existing analog transmissions.

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The FCC required all commercial television broadcasters to begin transmitting in DTV format by May 1, 2002. The following table sets forth the DTV capabilities for each of our television stations.

		Digital		Currently
		Channel		Broadcasting in
Station	Market Area	Allocation		Digital Format(1)
KOMO	Seattle-Tacoma, WA		38	Yes (HDTV)
KUNS	Seattle-Tacoma, WA		50	Yes
KATU	Portland, OR		43	Yes (HDTV)
KUNP	Portland, OR			No
KUNP LP	Portland, OR			No
KVAL	Eugene, OR		25	Yes (HDTV)
KCBY	Coos Bay, OR		21	Yes
KPIC	Roseburg, OR		19	Yes
KIMA	Yakima, WA		33	Yes (HDTV)
KEPR	Pasco/Richland/Kennewick		18	Yes (HDTV)
KLEW	Lewiston, ID		32	Yes (HDTV)
KBCI	Boise, ID		28	Yes (HDTV)
KUNB LP	Boise, ID			No
KIDK	Idaho Falls-Pocatello, ID		36	Yes
KPPP LP	Idaho Falls-Pocatello, ID			No

(1) The FCC set May 1, 2002 as the deadline for initial DTV operations by all full power commercial TV stations. We met that date with respect to each of our stations. We have constructed and commenced operation of stations KOMO-DT, Seattle, KUNS-DT, Bellevue, KATU-DT, Portland, KVAL-DT, Eugene, KCBY-DT, Coos Bay, KPIC-DT, Roseburg, KEPR-DT, Pasco, KBCI-DT, Boise and KIDK-DT, Idaho Falls with digital facilities in compliance with the FCC’s rules pursuant to authorizations issued by the FCC. KIMA-DT, Yakima and KLEW-DT, Lewiston have commenced DTV operations with reduced facilities pursuant to special temporary authority (“STA”) granted by the FCC. KUNP, La Grande was not originally granted a paired DTV channel. None of our low power television stations have been granted a digital companion channel. Pursuant to the FCC’s rules, we were required to have filed either a license application for digital facilities or a request for waiver of the deadline for each of our full power stations by July 7, 2006, or the station would lose interference protection in areas beyond that served on that date. We timely filed waiver requests for KIMA-DT and KLEW-DT, which requests remain pending. Congress recently passed legislation setting a “hard” analog to digital transition date of February 17, 2009. On that date, all analog television stations must cease analog transmissions and operate only using digital technology, and all stations that were given a “paired” channel must cease operation on one channel so that the spectrum may be made available for other use.

The FCC has acknowledged that DTV channel allotment may involve displacement of existing low-power TV stations and translators, particularly in major television markets. Accordingly, translators that rebroadcast our television station signals may be materially adversely affected. Applications were received during the period from June 19-30, 2006, seeking authority to construct paired digital facilities for such low-power television and translator stations; stations which do not receive a paired channel will be permitted to convert directly from analog to digital transmissions in the future

In addition, it is not yet clear when and to what extent DTV will become available through the various media; whether and how TV broadcast stations will be able to avail themselves of or profit by the transition to DTV, the extent of any potential interference, whether viewing audiences will make choices among services upon the basis of such differences, whether and how quickly the viewing public will embrace the new digital TV sets, and to what extent the DTV standard will be compatible with the digital standards adopted by cable and other multi-channel video programming services. On February 10, 2005, the FCC adopted an Order in which it ruled that cable operators are not required to simultaneously carry a television station’s analog and digital signals and that cable operators are

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not required to carry more than one digital programming stream from any particular station. We cannot predict whether that Order will be appealed or reconsidered, or whether Congress will adopt legislation on the subject.

The foregoing does not purport to be a complete summary of all of the provisions of the Communications Act, or of the regulations and policies of the FCC thereunder. Proposals for additional or revised regulations and requirements are pending before, and are considered by, Congress and federal regulatory agencies from time to time. We are unable at this time to predict the outcome of any of the pending FCC rulemaking proceedings, the outcome of any reconsideration or appellate proceedings concerning any changes in FCC rules or policies, the possible outcome of any proposed or pending Congressional legislation, or the impact of any of those changes on our broadcast operations.

Excluding revenue derived from seasonal sports rights, the advertising revenue of our stations is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring, and retail advertising in the period leading up to and including the holiday season. In addition, advertising revenue is generally higher during national election years due to spending by political candidates and advocacy groups. This political spending typically is heaviest during the fourth quarter.

Fisher Plaza

Through Fisher Media Services Company, we own and manage Fisher Plaza, a full-block, mixed-use facility located in downtown Seattle that serves as the home of our corporate offices and our Seattle television and radio stations. Fisher Plaza also houses a variety of technology and other media and communications companies as well as office and retail tenants. Fisher Plaza is designed to support the production and distribution of media content through numerous channels, including broadcast, satellite, cable, internet and broadband, as well as other wired and wireless communication systems. Fisher Plaza also houses many companies with complementary needs for the mission critical infrastructure provided at the facility. Major non-Fisher occupants include data center facilities for Internap Network Services, Verizon, Swedish Health Services, Princess Cruise Lines, and Adhost. Fisher provides colocation facilities for InfoSpace, Pacific Software Publishing, Intelius, three banks, a medical technology company and a large Seattle law firm. Office tenants include BioNueronics, Guestware and Rustic Canyon Partners. A total of ten telecommunications providers are resident within the facility. Fisher Plaza’s retail occupants provide a diverse mix of services and include Sport Restaurant, Ironstone Bank, Elaine’s Bridal, Jura Physicians and a variety of food establishments. Fisher Plaza was completed in the summer of 2003 and had a net book value of $118 million at December 31, 2006. We seek to produce a return on our total investment in Fisher Plaza by offering and leasing technology space to companies that complement the vision and capabilities of the facility, as well as using the facility for our Seattle-based operations.

Available Information

Our website address is www.fsci.com. We make available on this website under “Investor Relations — SEC Filings,” free of charge, our code of ethics, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (the “SEC”).

ITEM 1A.   RISK FACTORS

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

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

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

•  the health of the national economy, and particularly the economy of the Northwest region and Seattle, Washington and Portland, Oregon;

•  the popularity of our programming;

•  changes in the makeup of the population in the areas where our stations are located;

•  pricing fluctuations in local and national advertising;

•  the activities of our competitors, including increased competition from other forms of advertising-based mediums, particularly network, cable television, direct satellite television and radio, and the Internet;

•  the use of new services and devices which allow viewers to minimize commercial advertisements, such as satellite radio and personal digital video recorders; and

•  other factors that may be beyond our control.

A decrease in advertising revenue from an adverse change in any of the above factors could negatively affect our operating results and financial condition.

In addition, our results are subject to seasonal fluctuations. Excluding revenue from our Seattle Radio agreement to broadcast Seattle Mariners baseball games during the regular baseball season, seasonal fluctuations typically result in second and fourth quarter broadcasting revenue being greater than first and third quarter broadcasting revenue. This seasonality is primarily attributable to increased consumer advertising in the spring and then increased retail advertising in anticipation of holiday season spending. Furthermore, revenue from political advertising is typically higher in election years. Revenue from broadcasting Seattle Mariners baseball games is greatest in the second and third quarters of each calendar year.

We have incurred losses in the past. We cannot assure you that we will be able to maintain profitability.

We had income from continuing operations before income taxes of $8.9 million in 2006. In 2005, we had a loss from continuing operations before income taxes of $15.7 million, and in 2004 we had a loss from continuing operations before income taxes of $21.3 million. We cannot assure you that our recent improvement in performance or our plans to improve operating performance will be successful or that we will be able to achieve profitability in the future.

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

Our television advertising revenues are dependent on the success of our news, network and syndicated programming. We make significant commitments to acquire rights to television and radio programs under multi-year agreements. The success of such programs is dependent partly upon unpredictable factors such as audience preferences, competing programming, and the availability of other entertainment activities. If a particular program is not popular in relation to its costs, we may not be able to sell enough advertising to cover the costs of the program. In some instances, we may have to replace or cancel programs before their costs have been fully amortized, resulting in write-offs that increase operating costs. Our Seattle and Portland television stations, which account for approximately three-fourths of our television broadcasting revenue, are affiliated with the ABC Television Network, eight of our television stations are affiliated with the CBS Television Network (including a 50%-owned television station), and the remainder of our television stations are affiliated with Univision or Telefutura, a division of Univision. Weak performance by ABC, a decline in performance by CBS, or a change in performance by other networks or network program suppliers, could harm our business and results of operations.

In May 2002, we acquired the radio broadcast rights for the Seattle Mariners baseball team for a term of six years, beginning with the 2003 baseball season. The success of this programming is dependent on some factors

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beyond our control, such as the competitiveness of the Seattle Mariners and the successful marketing of the team by the team’s owners. If the Seattle Mariners fail to maintain a significant fan base, the number of listeners to our radio broadcasts may decrease, which would harm our ability to generate anticipated advertising dollars.

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

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

•  local network affiliates and independent stations;

•  cable, direct broadcast satellite and alternative methods of broadcasting brought about by technological advances and innovations, such as pay-per-view and home video and entertainment systems; and

•  other sources of news, information and entertainment, such as streaming video broadcasts over the Internet, podcasting, newspapers, movie theaters and live sporting events.

In addition to competing with other media outlets for audience share, we also compete for advertising revenue that comprises our primary source of revenue. Our stations compete for such advertising revenue with other television and radio stations in their respective markets, as well as with other advertising media such as newspapers, the Internet, magazines, outdoor advertising, transit advertising, yellow page directory, direct mail and local cable systems.

The results of our operations will be dependent upon the ability of each station to compete successfully in its market, and there can be no assurance that any one of our stations will be able to maintain or increase its current audience share or revenue share. To the extent that certain of our competitors have, or may in the future obtain, greater resources, our ability to compete successfully in our broadcasting markets may be impeded.

Because significant portions of our cost of services are relatively fixed, downturns in the economy harm our operations, revenue, cash flow and earnings.

Our operations are concentrated in the Northwest. The Seattle, Washington and Portland, Oregon markets are particularly important for our financial well-being. Operating results over the past several years were adversely impacted by a soft regional economy, and any weak economic conditions in these markets would harm our operations and financial condition. Because significant portions of our costs of services are relatively fixed, we may be unable to materially reduce costs if our revenues decline. If our revenues do not increase or if they decline, we could continue to suffer net losses, or such net losses could increase. In addition, downturns in the national economy or downturns in significant categories of national advertising segments have historically resulted (and may in the future result) in decreased national advertising sales. This could harm our results of operations because national advertising sales represent a significant portion of our television advertising net revenue.

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

As part of our business strategy, we plan to continue to evaluate opportunities to sell or acquire television and radio stations. During 2006, we completed the acquisitions of a full power television station serving the Seattle-Tacoma, Washington television market, a full power television and a low power television station serving the Portland, Oregon market and two Idaho low power television stations. The combined purchase price of $36.3 million was paid through the use of existing cash, borrowing on our $20.0 million revolving line of credit, and proceeds from the sale of 18 small-market radio stations for $26.1 million. If we make acquisitions in the future, we may need to incur more debt or issue more equity securities, and we may incur contingent liabilities and amortization and/or impairment expenses related to intangible assets. Further, we cannot provide assurance that we will find other attractive acquisition candidates or effectively manage the integration of acquired stations into our existing business. If the expected operating efficiencies from acquisitions do not materialize, if we fail to integrate new stations or recently acquired stations into our existing business, if the costs of such integration exceed expectations or if undertaking such sales or acquisitions diverts management’s attention from normal daily

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operations of the business, our operating results and financial condition could be harmed. Any of these occurrences could harm our operating results and financial condition.

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

Syndication agreements are licenses to broadcast programs that are produced by production companies. Such programming can form a significant component of a station’s programming schedule. Syndication agreements are subject to cancellation, and such cancellations may affect a station’s programming schedule. We cannot assure you that we will continue to be able to acquire rights to syndicated programs once our current contracts for these programs expire. We may enter into syndication agreements for programs that prove unsuccessful, and our payment commitment may extend until or if the syndicator cancels the program.

Our indebtedness could materially and adversely affect our business and prevent us from fulfilling our obligations under our 8.625% senior notes due 2014

We currently have a substantial amount of debt. Our indebtedness could have a material adverse effect on our business. For example, it could:

•  increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

•  reduce the availability of our cash flow to fund working capital, capital expenditures and other general business purposes;

•  reduce the funds available to purchase the rights to television and radio programs;

•  limit our flexibility in planning for, or reacting to, changes in our industries, making us more vulnerable to economic downturns;

•  place us at a competitive disadvantage compared to our competitors that have less debt; and

•  limit our ability to make certain asset dispositions.

If our indebtedness affects our operations in these ways, our business, financial condition, cash flow and results of operations could suffer, making it more difficult for us to satisfy our obligations under the notes. Furthermore, the indenture governing our 8.625% senior notes due 2014 and our senior credit facility may permit us to incur additional debt only if we meet certain financial and other covenants.

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

Each of our television stations’ affiliation with one of the major television networks has a significant impact on the composition of the station’s programming, revenue, expenses and operations. Our two largest television stations, KOMO, which broadcasts in Seattle, Washington, and KATU, which broadcasts in Portland, Oregon, have affiliation agreements with ABC into August 2009. In 2006, approximately three-fourths of our television broadcasting revenues (and nearly half of our total revenues) were derived from our ABC affiliated stations. During May 2005, we renewed our affiliation agreements with ABC Television Network, the terms of which included reduced network compensation from ABC. In January 2006, we renewed our affiliation agreements with CBS into February 2016. The terms of our agreements with CBS likewise include reduced network compensation. During November of 2006, we entered into affiliation agreements with Univision for five of our Spanish-language television stations for terms extending into 2011.

If a network acquires a television station in a market in which we own a station affiliated with that network, the network will likely decline to renew the affiliation agreement for our station in that market. The non-renewal or modification of any of the network affiliation agreements could harm our operating results.

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

In June 2003, the FCC amended its multiple ownership rules, including, among other things, its local television ownership limitations, its prohibition on common ownership of newspapers and broadcast stations in the same market, as well as its local radio ownership limitations. Under the amended rules, a single entity would be permitted to own up to three television stations in a single market, to own more than one television station in markets with fewer independently owned stations, and the rules would allow consolidated newspaper and broadcast ownership and operation in several of our markets. The new radio multiple ownership rules could limit our ability to acquire additional radio stations in existing markets that we serve. The effectiveness of these new rules was stayed pending appeal. In June 2004, a federal court of appeals issued a decision which upheld portions of the FCC decision adopting the rules, but concluded that the order failed to adequately support numerous aspects of those rules, including the specific numeric ownership limits adopted by the FCC. The court remanded the matter to the FCC for revision or further justification of the rules, retaining jurisdiction over the matter. The court has partially maintained its stay of the effectiveness of those rules, particularly as they relate to television. The rules are now largely in effect as they relate to radio. The Supreme Court has declined to review the matter at this time, and the FCC must review the matter and issue a revised order. We cannot predict whether, how or when the new rules will be modified, ultimately implemented as modified, or repealed in their entirety.

Legislation went into effect in January 2004 that permits a single entity to own television stations serving up to 39% of U.S. television households, an increase over the previous 35% cap. Large broadcast groups may take advantage of this law to expand further their ownership interests on a national basis.

We expect that the consolidation of ownership of broadcasting and newspapers in the hands of a smaller number of competitors would intensify the competition in our markets.

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

The broadcasting industry is subject to extensive regulation by the FCC under the Communications Act of 1934, as amended. Compliance with and the effects of existing and future regulations could have a material adverse impact on us. Issuance, renewal or transfer of broadcast station operating licenses requires FCC approval, and we cannot operate our stations without FCC licenses. Some of our television FCC licenses expired in 2006 and 2007, and we continue to operate those stations while license renewal applications for these stations remain pending; others will expire in 2014 and 2015. Our radio station FCC licenses expire in 2013 and 2014. Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly egregious violations, the denial of a license renewal application or revocation of a license. While the majority of such licenses are renewed by the FCC, we cannot assure you that our licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. If the FCC decides to include conditions or qualifications in any of our licenses, we may be limited in the manner in which we may operate the affected stations.

On December 22, 2006, a petition to deny was filed by Oregon Alliance to Reform Media (“OARM”) against KATU and seven other television stations licensed to serve the Portland, Oregon market. OARM argues that the stations each failed to present adequate programming relating to state and local elections during the 2004 election campaign in their news and public affairs programming. In conformity with FCC rules, we continue to operate KATU pending final action on the KATU license renewal application. We cannot predict when or how the FCC will address this petition or act on the KATU renewal application.

Action on many television license renewal applications, including those of KOMO-TV, KVAL, KIDK-TV and KBCI, has been delayed because of the pendency of complaints that network programming aired by the stations’ networks contained indecent material. In conformity with FCC rules, we continue to operate these stations pending final action on their license renewal applications. We cannot predict when or how the FCC will address these complaints or act on the renewal applications.

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The Communications Act and FCC rules impose specific limits on the number of stations and other media outlets an entity can own in a single market. The FCC attributes interests held by, among others, such entity’s officers, directors, certain stockholders, and in some circumstances, lenders, to that entity for purposes of applying these ownership limitations. The ownership rules may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in a swap transaction if the swap would cause the other company to violate these rules. We may also be prevented from implementing certain joint operations with competitors which might make the operation of our stations more efficient. Federal legislation and FCC rules have changed significantly in recent years and can be expected to continue to change. These changes may limit our ability to conduct our business in ways that we believe would be advantageous and may thereby affect our operating results.

We will be required to make additional investments in HDTV technology, which could harm our ability to fund other operations or repay debt.

Although most of our full power television stations currently comply with FCC rules requiring such stations to broadcast in high definition television (“HDTV”), our Yakima and Lewiston stations do not, because they are operating pursuant to special temporary authorizations issued by the FCC to utilize low power digital facilities. In addition, KUNP is not broadcasting in digital because it was not granted a digital channel by the FCC. The FCC’s rules require that full power television licensees that have been granted digital channels have constructed and filed license applications for their digital facilities or have requested a waiver of the deadline by July 7, 2006, or they will lose interference protection for their digital channel. Moreover, it is possible that some of our stations will be required or will elect to operate with increased power at the end of the digital transition. These additional digital broadcasting investments by some of our stations could result in less cash being available to fund other aspects of our business. The FCC has adopted a multi-step channel election and repacking process through which broadcast licenses and permittees will select their ultimate DTV channel. The process is currently underway, and we have been granted permanent digital channels for each of our stations except KUNP, for which our channel request remains pending. We are unable to predict at this time whether our channel request for KUNP will be granted or which DTV channel we will be able to obtain through this process.

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

By October 1, 2005, each of our television stations sent notices to cable systems in their market electing must-carry or retransmission consent status for the period from January 1, 2006 through December 31, 2008. Stations electing must-carry may require carriage of their signal on certain channels on cable systems within their market, whereas cable companies are prohibited from carrying the signals of stations electing retransmission consent unless an agreement between the station and the cable provider has been negotiated. We have elected must-carry for some stations in certain markets for the election period ending December 31, 2008. We have elected retransmission consent status with respect to a number of key cable systems.

Some of our television stations are located in markets in which direct-to-home satellite operators are distributing local television signals to their subscribers (“local into local”). Television stations in such markets had the opportunity to elect must-carry status by sending written elections to such satellite operators by October 1, 2005. Stations not sending such elections automatically elect retransmission consent status, in which case the satellite operator may not retransmit that station’s signal without the permission of the station after January 1, 2006. Our stations in “local into local” markets are presently being carried by both major direct-to-home satellite operators pursuant to existing retransmission consent agreements, one of which will expire December 17, 2008, and the other on May 31, 2009. Failure to reach agreement with the relevant satellite operators prior to the expiration of the existing contracts may harm our business. There is no assurance that we will be able to agree on terms acceptable to us prior to contract expiration dates.

Dependence on key personnel may expose us to additional risks.

Our business is dependent on the performance of certain key employees, including executive officers and senior operational personnel. We do not enter into employment agreements with all of our key executive officers and senior operational personnel. We also employ several on-air personalities who have significant loyal audiences

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in their respective markets, with whom we have entered into employment agreements. We cannot assure you that all such key personnel or on-air personalities will remain with us or that our on-air personalities will renew their contracts. The loss of any key personnel could harm our operations and financial results.

A reduction on the periodic dividend on the common stock of Safeco Corporation may adversely affect our other income, cash flow and earnings. A reduction in the share price of Safeco Corporation may adversely affect our total assets and stockholders’ equity.

We own approximately 3.0 million shares of the common stock of Safeco Corporation, which, at December 31, 2006, represented 38% of our assets and approximately 51% of our stockholders’ equity (the appreciation in Safeco stock is presented, after estimated taxes, as “unrealized gain on marketable securities” within stockholders’ equity). Our investment in Safeco Corporation provided $3.3 million in dividend income in 2006, $2.8 million in 2005, and $2.3 million in 2004. If Safeco Corporation reduces its periodic dividends, it will negatively affect our cash flow and earnings.

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

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

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

Revenue and operating income from, and the value of, Fisher Plaza may be adversely affected by the general economic climate, the Seattle economic climate and real estate conditions, including prospective tenants’ perceptions of attractiveness of the property and the availability of space in other competing properties. In addition, the economic conditions in the telecommunications and high-tech sectors may significantly affect our ability to attract tenants to Fisher Plaza, since space at Fisher Plaza is marketed in significant part to organizations from these sectors. Other risks relating to the operation of Fisher Plaza include the potential inability to provide adequate management, maintenance and insurance, and the potential inability to collect rent, due to bankruptcy or insolvency of tenants or otherwise. Real estate income and values may also be adversely affected by such factors as applicable laws and regulations, including tax and environmental laws, interest rate levels and the availability of financing. We carry comprehensive liability, fire, extended coverage and rent loss insurance with respect to Fisher Plaza. There are, however, certain losses that may be either uninsurable, not economically insurable, or in excess of our current insurance coverage limits. If an uninsured loss occurs with respect to Fisher Plaza, it could harm our operating results.

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

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and related SEC rules, we are required to furnish a report of management’s assessment of the effectiveness of our internal control over financial reporting as part of our Annual Report on Form 10-K. Our independent registered public accountants are required to audit and report on management’s assessment, as well as provide a separate opinion on their evaluation of our internal controls over financial reporting. To issue our report, we document our internal control design and the testing processes that support our evaluation and conclusion, and then we test and evaluate the results. There can be no assurance, however, that we will be able to remediate material weaknesses, if any, that may be identified in future periods, or

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maintain all of the controls necessary for continued compliance. We have in the past discovered, and may in the future discover, areas of our internal control over financial reporting that need improvement. If we or our independent registered public accountants discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. We may not be able to effectively and timely implement necessary control changes and employee training to ensure continued compliance with Section 404 of the Sarbanes-Oxley Act and other regulatory and reporting requirements. There likewise can be no assurance that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

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

Our corporate headquarters and all of our operations are located in the Northwest. The Northwest has from time to time experienced earthquakes and experienced a significant earthquake on February 28, 2001. We do not know the ultimate impact on our operations of being located near major earthquake faults, but an earthquake could harm our operating results. Our broadcasting towers may also be affected by other natural catastrophes, such as forest fires. Our insurance coverage may not be adequate to cover the losses and interruptions caused by earthquakes or other natural catastrophes.

A write-down of goodwill or intangible assets would harm our operating results.

Approximately $74 million, or 15% of our total assets as of December 31, 2006, consists of goodwill and intangible assets. Goodwill and intangible assets are tested at the reporting unit level annually or whenever events or circumstances occur indicating that goodwill or intangible assets might be impaired. If impairment is indicated as a result of future evaluations, we would record an impairment charge in accordance with accounting rules.

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

Terrorist attacks and foreign hostilities cause regularly scheduled programming to be pre-empted by commercial-free network news coverage of these events, which would result in lost advertising revenue. In the future, we may experience a loss of advertising revenue and incur additional broadcasting expenses in the event that there is a terrorist attack against the United States or if the United States engages in foreign hostilities. As a result, advertising may not be aired, and the revenue for the advertising on such days would be lost, adversely affecting our results of operations for the period in which this occurs. In addition, there can be no assurance that advertisers will agree to run such advertising in future time periods or that space will be available for such advertising. We cannot predict the duration of such pre-emption of local programming if it occurs. In addition, our broadcasting stations may incur additional expenses as a result of expanded local news coverage of the local impact of a war or terrorist attack. The loss of revenue and increased expenses could harm our results of operations.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None

ITEM 2.   DESCRIPTION OF PROPERTIES

Our television stations operate from offices and studios owned by our Fisher Broadcasting subsidiary, other than KOMO TV, which operates from offices and studios in Fisher Plaza. Television transmitting facilities and towers are also generally owned by Fisher Broadcasting, although some towers are sited on leased land. Our Spanish-language television stations are being broadcast out of our Vashon Island, Washington satellite uplink facility. KATU Television in Portland, Oregon is a participant with three other broadcast companies in the Sylvan Tower LLC, formed to construct and operate a joint use tower and transmitting site for the broadcast of radio and digital television signals. The land on which this facility is sited is leased by the LLC from one of the participants under the terms of a 30-year lease with two options to extend the term for an additional five years. KBCI Television in Boise, Idaho is a participant with four other broadcast companies in the Deer Point Tower Venture LLC, formed to construct and operate a joint use tower and transmitting site for the broadcast of radio and digital television signals. The lease agreement is for a period

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of 15 years, expiring in December 2016. Radio studios, except for the Seattle stations, are generally located in leased space. Our corporate offices and the offices and studios of KOMO TV and the Seattle radio stations are located in Fisher Plaza, which is owned by Fisher Media Services Company. Radio transmitting facilities and towers are owned by Fisher Broadcasting, except KPLZ FM and some of the stations operated by Fisher Radio Regional Group, where such facilities are situated on leased land.

Fisher Media Services Company owns and manages Fisher Plaza, a facility located near downtown Seattle that serves as the home of our corporate offices and our Seattle television and radio stations. Fisher Plaza also houses a variety of companies, including communications and media companies. See the section entitled “Business — Fisher Plaza” for a description of Fisher Plaza.

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

ITEM 3.   LEGAL PROCEEDINGS

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

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

No matters were submitted to a vote of securities holders in the fourth quarter of 2006.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

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

	Quarterly Common Stock Price Ranges
	2006				2005
Quarter	High		Low		High		Low
1st	$	44.75	$	41.43	$	52.60	$	46.46
2nd		44.94		41.51		51.90		46.91
3rd		44.36		38.89		49.28		42.56
4th		45.73		39.91		49.89		41.43

The Company estimates that at March 1, 2007, there were approximately 1,700 holders of the Company’s common stock, as estimated by the number of record holders, including holders represented by brokers and other institutions.

Dividends

On July 3, 2002, the board of directors suspended quarterly dividends. It is not known whether payment of quarterly dividends will resume.

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Stock Performance Graph

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

The following graph compares the cumulative 5-year total return attained by shareholders on Fisher Communications’ common stock relative to the cumulative total returns of the S & P 500 index, and a customized peer group of twenty companies listed in footnote 1 below. The graph tracks the performance of a $100 investment in our common stock, in the peer group, and the index (with the reinvestment of all dividends) from 12/31/2001 to 12/31/2006.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Fisher Communications, Inc., The S & P 500 Index
And A Peer Group

*  $100 invested on 12/31/01 in stock or index-including reinvestment of dividends. Fiscal year ending December 31.

Copyright^© 2007, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved.

www.researchdatagroup.com/S&P.htm

	12/01		12/02		12/03		12/04		12/05		12/06
Fisher Communications, Inc.		100.00		121.27		116.19		112.44		95.30		101.70
S & P 500		100.00		77.90		100.24		111.15		116.61		135.03
Peer Group		100.00		81.05		98.56		73.88		66.61		69.42

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

(1) There are twenty companies included in the customized peer group which are: Acme Communication Inc., Beasley Broadcast Group Inc., Belo Corp., Clear Channel Communications Inc., Cox Radio Inc., Cumulus Media Inc., Emmis Communications Corp., Entercom Communications Corp., Granite Broadcasting Corp., Gray Television Inc., Hearst-Argyle Television Inc., Ion Media Networks Inc., LIN TV Corp., Radio One Inc., Regent Communications Inc., Saga Communications Inc., Salem Communications Corp., Sinclair Broadcast Group Inc., Westwood One Inc. and Young Broadcasting Inc.

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ITEM 6.   SELECTED FINANCIAL DATA

The following financial data of the Company are derived from the Company’s historical audited financial statements and related footnotes. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related footnotes contained elsewhere in this Form 10-K.

	Year Ended December 31,
	2006		2005			2004			2003			2002
			(In thousands, except per-share amounts)
Revenue	$	154,699	$	137,086		$	141,731		$	127,083		$	116,272
Income (loss)
From continuing operations	$	6,256	$	(6,131	)	$	(13,039	)	$	(15,834	)	$	(8,524	)
From discontinued operations		10,580		1,059			1,086			24,062			6,151
Cumulative effect of change in accounting principle													(64,373	)
Net income (loss)	$	16,836	$	(5,072	)	$	(11,953	)	$	8,228		$	(66,746	)
Per share data
Income (loss) per share — basic
From continuing operations	$	0.72	$	(0.70	)	$	(1.51	)	$	(1.84	)	$	(0.99	)
From discontinued operations		1.21		0.12			0.12			2.80			0.72
Cumulative effect of change in accounting principle													(7.50	)
Net income (loss)	$	1.93	$	(0.58	)	$	(1.39	)	$	0.96		$	(7.77	)
Income (loss) per share assuming dilution
From continuing operations	$	0.72	$	(0.70	)	$	(1.51	)	$	(1.84	)	$	(0.99	)
From discontinued operations		1.21		0.12			0.12			2.80			0.72
Cumulative effect of change in accounting principle													(7.50	)
Net income (loss)	$	1.93	$	(0.58	)	$	(1.39	)	$	0.96		$	(7.77	)
Cash dividends declared	$	—	$	—		$	—		$	—		$	0.52

	December 31,
	2006		2005		2004		2003		2002
Working capital(1)	$	31,014	$	35,562	$	33,181	$	23,219	$	60,437
Total assets(1)		497,577		440,393		435,872		396,685		545,991
Total debt(1)		150,000		150,000		150,053		128,857		292,607
Stockholders’ equity		239,565		209,621		202,453		187,804		172,735

(1) Includes discontinued operations and held for sale assets.

Certain prior-year balances have been reclassified to conform to the 2006 presentation. For all reported periods, the Company reclassified to discontinued operations the results of stations that the Company intended to sell or had sold as of December 31, 2006. See Note 1 to the Consolidated Financial Statements regarding the Company’s reclassifications impacting the Consolidated Statements of Operations.

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

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

This discussion is intended to provide an analysis of significant trends and material changes in our financial position and operating results during the period 2004 through 2006.

Overview

We are an integrated media company. We own or operate eleven full power and seven low power network-affiliated television stations and nine radio stations. We also own a 50% interest in a company that owns a 19^th television station. Our television and radio stations are located in Washington, Oregon, Idaho and Montana. We also own and operate Fisher Plaza, a communications facility located near downtown Seattle that serves as the home for our corporate offices and our Seattle television and radio stations, and also houses a variety of companies, including media and communications companies. We also own approximately 3.0 million shares of common stock of Safeco Corporation, a publicly traded insurance company.

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

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

On November 1, 2006, the Company finalized the purchase of two Oregon television stations for $19.3 million. This transaction was initially announced in December 2005 and included the purchase of two Idaho TV stations, which was finalized in May 2006. A second amendment to this purchase agreement in September 2006 included a one-year option to purchase one to three additional television stations in the Northwest.

On October 31, 2006, the Company completed the sale of 18 of 24 small-market radio stations located in Montana and Eastern Washington for $26.1 million. The closing on the sale of one additional Montana station to the same buyer is currently pending FCC approval. The remaining five stations were excluded from this agreement in order to secure FCC approval, but continue to be held for sale. The 24 station group is treated as discontinued operations in the accompanying financial data.

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In September 2006, the Company completed a stock purchase of African-American Broadcasting of Bellevue, Inc. (“AABB”), with its owner Christopher J. Racine. Under this agreement, the Company acquired 100 percent equity interest in AABB for $16.0 million, which was consolidated as of September 26, 2006.

In July 2006, the Company entered into a Local Marketing Agreement (“LMA”) with WatchTV, Inc. to manage four of their television stations located in Eastern Washington. The stations currently provide Spanish-language programming to the Yakima-Pasco-Richland-Kennewick television market through an affiliation with Univision. Contemporaneously with the LMA, the Company entered into an option agreement with WatchTV, whereby the Company has the right to acquire the stations until June 30, 2007. On February 15, 2007 we exercised our option to purchase these television stations for $5.0 million, pending FCC approval and other closing conditions.

In May 2002, we entered into a radio rights agreement (the “Rights Agreement”) to broadcast Seattle Mariners baseball games on KOMO AM for the 2003 through 2008 baseball seasons. The impact of the Rights Agreement is greater during periods that include the broadcast of Mariners baseball games; therefore, the impact on the first and fourth quarters of each calendar year is less than what is expected for the second and third quarters of the calendar year. We also changed to an all-news format for KOMO AM in September 2002. These changes have led to improved ratings for KOMO AM in the Seattle market over the past few years. Nevertheless, the success of this programming is dependent, in part, on factors beyond our control, such as the competitiveness of the Seattle Mariners and the successful marketing of the team.

In addition to our broadcasting operations, we own and operate Fisher Plaza, and we lease space to other companies that are attracted by the property location and the infrastructure provided at this facility. Fisher Plaza was first opened for occupancy in May 2000, and the second phase of the project was opened for occupancy in the summer of 2003. As of December 31, 2006, approximately 93% of Fisher Plaza was occupied or committed for occupancy (42% was occupied by Fisher entities), compared to 91% occupied or committed for occupancy at December 31, 2005. Revenue and operating income from Fisher Plaza are dependent upon the general economic climate, the Seattle economic climate, the outlook of the telecommunications and technology sectors and real estate conditions, including the availability of space in other competing properties.

On September 20, 2004 we completed an offering of $150.0 million of 8.625% senior notes due 2014 and used the net cash proceeds to retire our previous debt facilities and terminate the forward sales contract covering shares of our investment in Safeco Corporation. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year.

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

Critical Accounting Policies

The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies below. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results. For a detailed discussion on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements. We have discussed the development and selection of these critical accounting estimates with the Audit Committee of our board of directors and the Audit Committee has reviewed our disclosures relating to them, as presented in this report.

Goodwill and indefinite-lived intangible assets.  Goodwill represents the excess of purchase price of certain broadcast properties over the fair value of tangible and identifiable intangible net assets acquired and is accounted for under the provisions of Statement of Financial Accounting Standards No. 142 (“SFAS 142”), which we adopted

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as of January 1, 2002. Under SFAS 142, goodwill and intangible assets with indefinite useful lives are tested for impairment at least on an annual basis.

The goodwill impairment test involves a comparison of the fair value of each of our reporting units with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying amount of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested. Fair values are determined based on valuations that rely primarily on the discounted cash flow method. This method uses future projections of cash flows from each of our reporting units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of our weighted average cost of capital. To the extent they have been separately identified, our indefinite-lived assets (broadcast licenses), which are not subject to amortization, are tested for impairment at least on an annual basis by applying a fair-value-based test as required by SFAS 142. Our evaluations of fair values include analyses based on the estimated future cash flows generated by the underlying assets, estimated trends, and other relevant determinants of fair value for these assets. If the fair value of the asset is less than its carrying amount, a loss is recognized for the difference between the fair value and its carrying value. Changes in any of these estimates, projections and assumptions could have a material effect on the fair value of these assets in future measurement periods and result in an impairment of goodwill or indefinite-lived intangibles which could materially affect our results of operations.

Tangible long-lived assets.  We evaluate the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable as required by SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” We use our judgment when applying the impairment rules to determine when an impairment test is necessary. Factors we consider which could trigger an impairment review include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant negative cash flows or industry trends.

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

Derivative instruments.  We had no derivative instruments outstanding during 2006 or 2005; however, derivative instruments had a significant impact on our operating results in previous years. We utilized an interest rate swap in the management of our variable rate exposure and as was required under one of our prior borrowing agreements. The interest rate swap was held at fair value, with the change in fair value being recorded in the Consolidated Statement of Operations. The interest rate swap expired in the first quarter of 2004.

In 2002, we entered into a variable forward sales transaction with a financial institution. Our obligations under the forward transaction were collateralized by up to 3.0 million shares of Safeco Corporation common stock owned by us. A portion of the forward transaction was considered a derivative and, as such, we periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the Consolidated Statements of Operations. The variable forward sales transaction was terminated in November 2004.

We determined the fair value of derivative instruments based on external-party valuations, which relied on significant assumptions. The value of the interest rate swap changed based primarily on changes in market interest rates. The value of the variable forward sales transaction fluctuated based primarily on changes in the value of Safeco Corporation common stock, changes in underlying assumptions concerning the volatility of Safeco common stock, and changes in interest rates.

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Television and radio broadcast rights.  Television and radio broadcast rights are recorded as assets when the license period begins and the programs are available for broadcast, at the gross amount of the related obligations (or, for non-sports first-run programming, at the amount of the annual obligation). Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast after one year are considered non-current. These programming costs are charged to operations over their estimated broadcast periods using either the straight-line method or in proportion to estimated revenue of the related program. Program obligations are classified as current or non-current in accordance with the payment terms of the license agreement. We periodically assess net realizable value for our capitalized broadcast rights, in which we compare estimated future revenues on a program-by-program basis to the carrying value of the related asset; impairments, if any, are charged to programming expenses in the period of the impairment.

Pensions.  We maintain a noncontributory supplemental retirement program that was established for key management. No new participants have been admitted to this program since 2001, and the benefits of active participants were frozen in 2005. The program provides for vesting of benefits under certain circumstances. Funding is not required, but generally the Company has acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of such policies; accordingly, the cash values of the policies as well as the accrued liability are reported in the financial statements. The program requires continued employment or disability through the date of expected retirement. The cost of the program is recognized over the participants’ average expected future lifetime.

The cost of this program is reported and accounted for in accordance with accounting rules that require significant assumptions regarding such factors as discount rates. We use actuarial consulting services to assist in estimating the supplemental retirement obligation and related periodic expenses. The discount rate used in determining the actuarial present value of the projected benefit obligation was 5.80% at December 31, 2006, and 5.48% at December 31, 2005. The rate of increase in future compensation was no longer applicable at December 31, 2006 or 2005 (due to freezing plan benefits for active participants). Although we believe that our estimates are reasonable for these key actuarial assumptions, future actual results could differ from our estimates. Changes in benefits provided by the Company may also affect future plan costs.

Tax accruals.  Our federal and state income tax returns are subject to periodic examination, and the tax authorities may challenge certain of our tax positions as a result of examinations. We believe our tax positions comply with applicable tax law, and we would vigorously defend these positions if challenged. The final disposition of any positions challenged by the tax authorities could require us to make additional tax payments. Valuation allowances are established when we determine that there exists significant uncertainty that we will realize our deferred tax assets.

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

Variable Interest Entities.  We may enter into Joint Sales Agreements (“JSAs”) or Local Marketing Agreements (“LMAs”) with non-owned stations. Under the terms of these agreements, we make specific periodic payments to the station’s owner-operator in exchange for the right to provide programming and/or sell advertising on a portion of the station’s broadcast time. Nevertheless, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station. Generally, we continue to operate the station under the agreement until the termination of such agreement. As a result of these agreements, we may determine that the station is a Variable Interest Entity (“VIE”) as defined by the Financial Accounting Standards Board (“FASB”) Interpretation No. (“FIN”) 46R, Consolidation of Variable Interest Entities, and that we are the primary beneficiary of the variable interest. This typically occurs if we also have an agreement to acquire a station and the conditions to close are considered to be perfunctory. We also may determine that a station is a VIE in connection with other types of local service agreements entered into with stations in markets in which we own and operate a station.

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Stock-based compensation.  On January 1, 2006, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised), “Share-Based Payment,” (“SFAS 123(R)”) which requires the measurement and recognition of compensation for all stock-based awards made to employees, including stock options and restricted stock rights, based on estimated fair values. SFAS 123(R) supersedes previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (“APB 25”) for periods beginning in 2006.

We adopted SFAS 123(R) using the modified prospective transition method, which requires the application of the accounting standard as of January 1, 2006. In accordance with the modified prospective transition method, our consolidated financial statements for periods prior to 2006 have not been restated to reflect this change. Stock-based compensation recognized under the new standard is based on the value of the portion of the stock-based award that vests during the period, adjusted for expected forfeitures. Stock-based compensation recognized in our consolidated financial statements for 2006 includes compensation cost for stock-based awards granted prior to, but not fully vested as of, December 31, 2005, and stock-based awards granted subsequent to December 31, 2005.

The compensation cost for awards granted prior to December 31, 2005 is based on the grant-date fair value estimated in accordance with the pro forma provisions of SFAS 123, while awards granted after December 31, 2005 follow the provisions of SFAS 123(R). Compensation cost for awards granted prior to December 31, 2005 is recognized on a straight-line basis over the requisite service period for each separately remaining vesting portion of the award, while compensation cost for awards granted after December 31, 2005 is recognized on a straight-line basis over the requisite service period for the entire award.

Upon adoption of SFAS 123(R), we continued to use the Black-Scholes option pricing model as our method of valuation for stock option awards. Our determination of the fair value of stock option awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected life of the award, the Company’s expected stock price volatility over the term of the award, forfeitures, and projected exercise behaviors. Although the fair value of stock option awards is determined in accordance with SFAS 123(R), the Black-Scholes option pricing model requires the input of subjective assumptions, and other reasonable assumptions could provide differing results.

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

Consolidated Results of Operations

We report financial data for three reportable segments: television, radio and Fisher Plaza. The television reportable segment includes the operations of the Company’s owned or operated 18 network-affiliated television stations, and a 50% interest in a company that owns a 19th television station. The radio reportable segment includes the operations of the Company’s three Seattle radio stations, while operations of the Company’s small-market radio stations are reported as discontinued operations. Corporate expenses of the broadcasting business unit are allocated to the television and radio reportable segments based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment consists of the operations of Fisher Plaza. Fisher-owned entities that reside at Fisher Plaza do not pay rent; however, these entities do pay common-area maintenance expenses. The segmental data includes additional allocation of depreciation and certain operating expenses from Fisher Plaza to the Seattle-based television and radio operations.

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

	Year Ended						2006 - 2005						Year Ended			2005 - 2004
	December 31,						Variance						December 31,			Variance
	2006			2005			$			%			2004			$			%
	(Dollars in thousands)
Revenue
Television	$	107,457		$	93,083		$	14,374			15.4	%	$	101,190		$	(8,107	)		(8.0	)%
Radio		37,615			36,101			1,514			4.2	%		36,118			(17	)		0.0	%
Fisher Plaza		9,406			8,061			1,345			16.7	%		4,555			3,506			77.0	%
Corporate and eliminations		221			(159	)		380						(132	)		(27	)
Consolidated		154,699			137,086			17,613			12.8	%		141,731			(4,645	)		(3.3	)%
Direct operating costs
Television		38,149			36,334			1,815			5.0	%		34,144			2,190			6.4	%
Radio		9,746			10,498			(752	)		(7.2	)%		9,989			509			5.1	%
Fisher Plaza		3,242			2,751			491			17.8	%		1,657			1,094			66.0	%
Corporate and eliminations		1,656			1,562			94			6.0	%		1,606			(44	)		(2.7	)%
Consolidated		52,793			51,145			1,648			3.2	%		47,396			3,749			7.9	%
Selling, general and administrative expenses
Television		31,255			34,173			(2,918	)		(8.5	)%		29,105			5,068			17.4	%
Radio		15,442			14,765			677			4.6	%		14,612			153			1.0	%
Fisher Plaza		508			1,128			(620	)		(55.0	)%		1,880			(752	)		(40.0	)%
Corporate and eliminations		6,770			8,647			(1,877	)					8,956			(309	)
Consolidated		53,975			58,713			(4,738	)		(8.1	)%		54,553			4,160			7.6	%
Amortization of program rights
Television		8,396			9,959			(1,563	)		(15.7	)%		9,477			482			5.1	%
Radio		10,250			10,000			250			2.5	%		9,750			250			2.6	%
Consolidated		18,646			19,959			(1,313	)		(6.6	)%		19,227			732			3.8	%
Depreciation and amortization
Television		6,016			7,940			(1,924	)		(24.2	)%		10,588			(2,648	)		(25.0	)%
Radio		888			1,106			(218	)		(19.7	)%		1,178			(72	)		(6.1	)%
Fisher Plaza		3,116			3,544			(428	)		(12.1	)%		3,762			(218	)		(5.8	)%
Corporate and eliminations		257			245			12			4.9	%		207			38			18.4	%
Consolidated		10,277			12,835			(2,558	)		(19.9	)%		15,735			(2,900	)		(18.4	)%
Income (loss) from operations
Television		23,641			4,677			18,964						17,876			(13,199	)
Radio		1,289			(268	)		1,557						589			(857	)
Fisher Plaza		2,540			638			1,902						(2,744	)		3,382
Corporate and eliminations		(8,462	)		(10,613	)		2,151						(10,901	)		288
Consolidated		19,008			(5,566	)		24,574						4,820			(10,386	)
Net loss on derivative instruments								—						(12,656	)		12,656
Loss from extinguishment of long-term debt								—						(5,034	)		5,034
Other income, net		3,881			3,629			252						3,357			272
Interest expense, net		(13,956	)		(13,726	)		(230	)					(11,775	)		(1,951	)
Income (loss) from continuing operations before income taxes		8,933			(15,663	)		24,596						(21,288	)		5,625
Provision (benefit) for federal and state income taxes		2,677			(9,532	)		12,209						(8,249	)		(1,283	)
Income (loss) from continuing operations		6,256			(6,131	)		12,387						(13,039	)		6,908
Income from discontinued operations, net of income taxes		10,580			1,059			9,521						1,086			(27	)
Net Income (loss)	$	16,836		$	(5,072	)	$	21,908					$	(11,953	)	$	6,881

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Comparison of Fiscal Years Ended December 31, 2006, December 31, 2005, and December 31, 2004

Revenue

Television revenue increased in 2006, as compared to 2005, primarily due to improved national and local advertising in most of our markets as well as increased political advertising in all markets and the acquisition of Spanish-language television stations late in 2006. The increase was led by improvements at our two ABC-affiliated stations, with revenue from our Seattle and Portland television stations increasing 15.6% and 21.1%, respectively, in 2006 as compared to 2005. Revenue from our recently purchased Spanish-language stations accounted for $1.8 million or 12.7% of the overall increase from 2005. Revenue from the remaining television stations increased slightly in 2006 as compared to 2005.

In May 2005, we signed agreements with ABC to renew that network’s affiliation at KOMO TV in Seattle and KATU TV in Portland through August 2009. In January 2006, we also renewed affiliation agreements with CBS through February 2016. The terms of the renewals include decreasing network compensation, and we are recognizing network compensation revenue on a straight-line basis over the term of the agreements. Television network compensation revenue decreased to $1.0 million in 2006, compared to $2.0 million in 2005. Network compensation revenue decreased $1.3 million in 2005, as compared to 2004. In November 2006, we entered into affiliation agreements with Univision for five of our Spanish-language television stations for terms extending into 2011.

Television revenue decreased in 2005, as compared to 2004, due primarily to lower political advertising in 2005. This overall decrease in revenue was partially offset by improved local and non-political national advertising at our two largest stations (KOMO TV in Seattle and KATU in Portland), and improved local advertising at most of our small-market CBS-affiliated television stations. KOMO TV and KATU account for approximately three-fourths of our television revenue, and these stations experienced total revenue decreases of 9.6% and 14.0%, respectively, in 2005, as compared to 2004.

Radio revenue increased in 2006, as compared to 2005, primarily as a result of increased local revenue. We attribute the increase to improved ratings and a more aggressive sales strategy. Revenue and expenses from our small-market radio operations have been included in the discontinued operations category due to the sale of those stations. The sale of 18 of the 24 small-market radio stations was completed on October 31, 2006, with the sale of one additional station to the same buyer currently pending FCC approval. The remaining five stations continue to be held for sale.

The decline in broadcasting revenue in 2005, as compared to 2004 occurred primarily in the television segment, as most of our political advertising revenue is generated from television advertising. Our radio operations showed flat revenue in 2005, as compared to 2004. We noted increases in local spot revenue for our Seattle-based stations; however, these increases were offset by lower national revenue. Radio revenue from the Seattle Mariners Broadcast Rights was lower in 2005, as compared to 2004, due in some degree to the on-field performance of the Seattle Mariners. Though overall radio revenue in 2005 was flat, KOMO AM improved performance in the Seattle market. Excluding revenue specifically attributable to Seattle Radio’s agreement with the Seattle Mariners to broadcast baseball games, KOMO AM’s revenue increased 15.8% in 2005, compared to 2004. We attribute the increase primarily to the synergistic effect of the Seattle Mariners programming and KOMO AM’s all-news format gaining greater recognition in the Seattle market.

Fisher Plaza first opened in May of 2000, and the second phase of the project was open for occupancy in the summer of 2003. Occupancy levels have increased at Fisher Plaza over the past three years, and recurring third-party rental and service revenues have also increased. Fisher Plaza occupancy was at 93% as of December 31, 2006, compared to 91% as of December 31, 2005, and 89% as of December 31, 2004.

Fisher Plaza revenue increased in 2006 as compared to 2005 and 2005 increased as compared to 2004. These increases were due to the aforementioned increased rental and service fees, as well as increased electrical infrastructure fees, tenant reimbursements and parking garage fees.

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Direct operating costs

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

Direct operating costs in the television segment increased during 2006 as compared to 2005, primarily as a result of investments in our news product at certain stations and start up costs related to our Spanish-language operations. Direct operating costs at our radio segment decreased in 2006 as compared to 2005 as a result of decreased labor expense and a concerted effort to reduce overall expense. Expenses fluctuate seasonally consistent with the effect of the Seattle Mariners programming.

The increase in the television segment direct operating costs in 2005, as compared to 2004, is primarily the result of certain increased talent and labor costs. Higher direct operating costs at our radio segment in 2005, as compared 2004, was also primarily attributable to increased talent and labor expenses.

The increase in direct operating costs at Fisher Plaza in 2006, as compared to 2005 and in 2005, as compared to 2004, was primarily attributable to higher third-party tenant occupancy, for which expense reimbursements are classified as revenue under applicable accounting rules.

The corporate and eliminations category consists primarily of the reclassification and elimination of certain operating expenses between operating segments. For example, KOMO TV and Seattle Radio recognize facilities-related expenses as general and administrative, while Fisher Plaza records the reimbursement of these intercompany expenses as a reduction of cost of services sold.

Selling, general and administrative expenses

The decreases in selling, general and administrative expenses in the television segment in 2006, as compared to 2005, were due primarily to a $4.3 million non-cash charge resulting from our December 2005 decision to change our national advertising representation firm for our television stations. This decrease was partially offset by increases in compensation costs and consulting fees in 2006.

Broadcasters may periodically terminate existing agreements with national advertising representation firms; under such circumstances, the successor firm generally satisfies the broadcaster’s contractual termination obligation to the predecessor firm with no cash payment made by the broadcaster. When we terminate national advertising representation agreements with contractual termination penalties, we record a non-cash charge to selling, general and administrative expense and amortize the resulting liability over the term of the new agreement. Based on this policy, we recognized a non-cash charge of $4.3 million in the fourth quarter of 2005 and will recognize a non-cash benefit over the five-year term of the new contract.

The increases in selling, general and administrative expenses in the television segment in 2005, as compared to 2004, was due primarily due to the change in national advertising representation firm noted above, as well as increased commission-based labor based on the mix of revenue at our television stations. We also had increased promotional expense, which offset decreases that would be expected at somewhat lower revenue levels.

The increase in selling, general and administrative expenses in the radio segment in 2006, as compared to 2005, were due primarily to increased commission expense as a result of increased local revenue, partially offset by reduced administrative costs.

The radio segment selling, general and administrative expenses increased slightly in 2005, as compared to 2004 due to higher employment-related costs.

Decreased selling, general and administrative expenses at Fisher Plaza in 2006, as compared to 2005 and in 2005, as compared to 2004, were due primarily to reduced marketing efforts and headcount levels as the property was becoming substantially occupied and administrative functions were centralized to corporate in mid 2005. As of December 31, 2006, approximately 93% of Fisher Plaza was occupied or committed for occupancy (91% at December 31, 2005 and 89% at December 31, 2004) and, consequently, broad-based selling and marketing initiatives have been reduced.

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The corporate group incurred lower selling, general and administrative expenses in 2006, as compared to 2005, due primarily to reduced pension-related expense, decreased Sarbanes-Oxley related audit fees, and decreased severance-related expenses. In 2005, severance-related expense totaling approximately $1.4 million was recognized for the Company’s former chief executive officer and other executive-level restructuring. During 2006, approximately $300,000 of severance-related expense was recognized for an executive officer. As 2006 is the third year of compliance with Section 404 of the Sarbanes-Oxley Act of 2002, related expenses have been significantly reduced from prior year levels. Lower pension-related costs have been recognized during 2006 due to the curtailment of a supplemental employee retirement plan in the second quarter of 2005.

The corporate group incurred lower selling, general and administrative expenses in 2005, as compared to 2004, primarily as a result of reductions in employee benefit-related expenses for an inactive corporate entity and lower overall costs associated with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Overall corporate selling, general and administrative expense reductions in 2005 were partially offset by severance expenses totaling approximately $1.4 million and a pension curtailment loss of $451,000 recognized in 2005, as described above.

Amortization of program rights

Amortization of program rights for the television segment declined in 2006, as compared to 2005, and increased in 2005, as compared to 2004. These fluctuations were primarily due to increased syndicated programming costs in 2005 for a television program that was cancelled later in 2005; 2006 replacement programming was at a lower cost.

Amortization of program rights for the radio segment are related the agreement to broadcast Seattle Mariners baseball games, which increased slightly in 2006, as compared to 2005 and in 2005, as compared to 2004.

Depreciation and amortization

Depreciation for the television, radio and Plaza segments declined in 2006, as compared to 2005, and declined in 2005, as compared to 2004, primarily as a result of certain assets becoming fully depreciated.

Net loss on derivative instruments

We had no derivative instruments outstanding during 2006 or 2005; however, derivative instruments had a significant impact on our operating results in previous years. On March 21, 2002, we entered into a variable forward sales transaction (the “Forward Transaction”) with a financial institution. Our obligations under the Forward Transaction were collateralized by 3.0 million shares of Safeco Corporation common stock owned by us. A portion of the Forward Transaction was considered a derivative and, as such, we periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the statement of operations. Changes in the value of the Forward Transaction were based primarily on changes in the value of Safeco Corporation common stock, changes in underlying assumptions concerning the volatility of Safeco common stock, and changes in interest rates.

On April 28, 2004, we terminated one tranche of the Forward Transaction with a maturity date of March 15, 2007. In connection with the termination, the Company paid a termination fee of $2.5 million, which consisted of losses recorded in previous periods of $2.1 million and an additional loss of $436,000 recorded in the quarter ended June 30, 2004.

On November 4, 2004, we terminated all remaining tranches of the Forward Transaction. In connection with the termination, we paid a termination fee of $16.1 million. As a result of the termination, all shares of Safeco Corporation common stock owned by us became unencumbered.

In connection with borrowings for our broadcasting operations that were repaid in 2004, the broadcasting subsidiary entered into an interest rate swap agreement (the “Swap Agreement”) fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under these borrowings. The change in value of the Swap Agreement was recorded in the statement of operations. The interest rate swap expired in March 2004.

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Net loss on derivative instruments in 2004 consisted of losses resulting from changes in fair value of the Forward Transaction derivative amounting to $13.6 million, offset in part by a gain from changes in fair value of the Swap Agreement amounting to $907,000. The loss on the Forward Transaction was primarily attributable to the increased value of Safeco Corporation common stock during the period from January 1, 2004 through the date of its termination.

Loss from extinguishment of long-term debt

On September 20, 2004, we completed the private placement of $150 million of 8.625% senior notes due 2014 and used the net cash proceeds to retire our previous debt facilities. As a result, we wrote off deferred loan costs totaling $2.0 million relating to our broadcasting and media services debt facilities, and paid an additional amount of $3.0 million to retire obligations under our variable Forward Transaction.

Other income, net

Other income, net, includes dividends received on marketable securities and, to a lesser extent, interest and miscellaneous income. The increase in 2006, as compared to 2005 and in 2005, as compared to 2004, was due primarily to increases in the dividend rate of our investment in Safeco shares.

Interest expense, net

Interest expense consists primarily of interest on our $150 million senior notes, amortization of loan fees, and interest on borrowings under our $20.0 million senior credit facility. In 2004 interest expense also included net payments under the Swap Agreement that expired in the first quarter of 2004.

The increase in interest expense in 2006, compared to 2005, is due primarily to borrowings on our $20 million senior credit facility during 2006. This borrowing facilitated the purchase of three television stations in Oregon and Washington during 2006.

The increase in interest expense in 2005, compared to 2004, is due primarily to higher average debt balances outstanding in 2005 at a higher interest rate.

Provision (benefit) for federal and state income taxes

The provision (benefit) for federal and state income taxes generally varies directly with pre-tax loss. Therefore, the changes in benefit for federal and state income taxes were primarily due to fluctuating losses from continuing operations before income taxes for each of 2006, 2005 and 2004. In addition, the 2005 benefit includes a $3.4 million benefit for worthless stock that became available upon the dissolution of an inactive subsidiary in December 2005. The tax benefit in 2004 primarily reflected our ability to utilize net operating loss carrybacks. The effective tax rate varies from the statutory rate primarily due to the 2005 deduction for worthless stock, deduction for dividends received from our investment in Safeco corporate common stock, increases in cash surrender value of life insurance policies held by the Company (for which proceeds are received tax-free if held to maturity), and the impact of state income taxes. Due to the uncertainty of the Company’s ability to generate sufficient state taxable income to realize its deferred state tax assets, a valuation allowance has been established for financial reporting purposes (see Note 11 to the Consolidated Financial Statements).

Income from discontinued operations, net of income taxes

The income from discontinued operations is related to 24 small-market radio stations located in Montana and Eastern Washington and is presented net of income taxes. On October 31, 2006 we closed the sale of 18 of these stations and recognized a gain on sale of $10.0 million, net of tax. The remaining stations remain classified as held for sale as of December 31, 2006 (see Note 2 to the Consolidated Financial Statements).

Liquidity and Capital Resources

In September 2004, we completed a $150.0 million offering of 8.625% senior notes due 2014 and used $143.9 million of the initial $144.5 million net proceeds to retire existing debt and to settle the outstanding

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obligations. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by our current and future material domestic subsidiaries. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year. In September 2004, we also entered into a new six-year senior credit facility with a financial institution for borrowings of up to $20.0 million. The credit facility is collateralized by substantially all of the Company’s assets (excluding certain real property and our investment in shares of Safeco Corporation common stock).

Our current assets as of December 31, 2006 included cash and cash equivalents and restricted cash totaling $16.0 million, and we had working capital of $31.0 million. Restricted cash at December 31, 2006 consists of funds held by a qualified intermediary, pending completion of a tax deferred exchange in accordance with Internal Revenue Code Section 1031. It is the Company’s intent to utilize these funds to finance one or more qualifying tax deferred exchanges in 2007, subject to applicable IRS rules and regulations. As of December 31, 2005, our current assets included cash and cash equivalents totaling $19.6 million, and we had working capital of $35.6 million. We intend to finance working capital, debt service and capital expenditures primarily through operating activities and use of the senior credit facility. As of December 31, 2006, $20.0 million was available under the credit facility.

In November 2006, the Company finalized the purchase of two Oregon television stations for $19.3 million. This transaction was initially announced in December 2005 and included the purchase of two Idaho TV stations which was finalized in May 2006. A second amendment to this purchase agreement in September 2006 included a one year option to purchase one to three additional television stations in the Northwest.

In October 2006, the Company completed the sale of 18 of 24 small-market radio stations located in Montana and Eastern Washington for $26.1 million. The closing on the sale of one additional Montana station to the same buyer is currently pending FCC approval. The remaining five stations were excluded from this agreement in order to secure FCC approval, but continue to be held for sale. The 24 station group is treated as discontinued operations in the accompanying financial statements. A portion of the proceeds from this sale were used to partially fund the purchase of the two Oregon television stations noted above, in addition to being utilized to pay down the outstanding balance on our senior credit facility.

In September 2006, the Company completed a stock purchase of AABB, with its owner Christopher J. Racine. Under this agreement, the Company acquired 100 percent equity interest in AABB for $16.0 million.

In July 2006, the Company entered into an LMA with WatchTV, Inc. to manage four of their television stations located in Eastern Washington. The stations currently provide Spanish-language programming to the Yakima-Pasco-Richland-Kennewick television market through an affiliation with Univision. Contemporaneously with the LMA, the Company entered into an option agreement with WatchTV, whereby the Company has the right to acquire the stations until June 30, 2007. On February 15, 2007 we exercised our option to purchase these television stations for $5.0 million, pending FCC approval and other closing conditions.

Net cash provided by operating activities during 2006 was $24.7 million, compared to net cash provided by operations of $5.6 million in 2005 and $19.1 in 2004. Net cash provided by operating activities consists of our net income or loss, adjusted by non-cash expenses such as depreciation and amortization, further adjusted by gain on sale of radio stations (for the 2006 period), changes in deferred income tax and changes in operating assets and liabilities.

Net cash used in investing activities during 2006 included $23.2 million in proceeds from the sale of 18 small market radio stations, less an $8.5 million increase in restricted cash that was set aside from this transaction for further purchases of television stations under a like-kind tax exchange. In addition, investing activities included $16.1 million paid as an investment in AABB, $1.1 million paid for options to purchase additional television stations, $19.6 million paid for the purchase of the Oregon television stations from EBC, and $15.4 million used to purchase property, plant and equipment. Net cash used in investing activities during 2005 consisted primarily of $7.5 million to purchase property, plant and equipment, partially offset by the collection of two notes receivable totaling $1.6 million related to prior year asset sales. In 2004, we purchased $6.8 million of property, plant and equipment. The increase in purchases of property plant and equipment in 2006 is attributable to tenant-related construction at Fisher Plaza, centralization of master control capabilities and construction of full power digital broadcasting facilities for certain of our smaller market television stations to be in compliance with FCC rules.

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Broadcasting is a capital-intensive business; however, we have no significant commitments for the purchase of capital items.

Net cash provided by financing activities in 2006 was $569,000, consisting primarily of proceeds from exercise of stock options. Net cash provided by financing activities in 2005 was $3.3 million, comprised primarily of $3.4 million in proceeds from the exercise of stock options. These cash receipts were partially offset by payments of notes payable and deferred loan costs. Net cash provided by financing activities in 2004 was comprised primarily of the $150.0 million senior notes offering and $11.0 million in borrowings under our former credit facilities. Those amounts were offset by payments and retirements of borrowing agreements of $142.7 million, payments totaling $21.6 million to terminate the Forward Transaction and pay additional amounts to settle our obligations under the Forward Transaction, and $5.9 million in transaction costs related to the senior notes offering and new senior credit facility, resulting in net cash used in financing activities of $9.6 million.

We are subject to various debt covenants and other restrictions — including the requirement for early payments upon the occurrence of certain events, including the sale of assets — the violation of which could require repayment of outstanding borrowings and affect our credit rating and access to other financing (see Note 8 of the Consolidated Financial Statements). The Company was in compliance with all debt covenant requirements at December 31, 2006 and 2005.

As of December 31, 2006, the following table presents our contractual obligations:

Future contractual obligations are as follows (in thousands):

							Operating
	Debt		Broadcast		Other		Lease
12 Months Ending December 31	Maturities		Rights		Obligations		Obligations		Total
2007	$		$	17,559	$	4,228	$	1,178	$	22,965
2008				17,023		4,360		968		22,351
2009				7,137		1,920		783		9,840
2010				4,793		1,920		719		7,432
2011				1,091		960		652		2,703
Thereafter		150,000						2,575		152,575
	$	150,000	$	47,603	$	13,388	$	6,875	$	217,866

Commitments for broadcasting rights consist of $5.7 million recorded in the Consolidated Balance Sheet as television and radio broadcast rights payable as of December 31, 2006 and $41.9 million for future rights to broadcast television and radio programs. Other obligations consist of $4.7 million in related fees primarily associated with our contract to broadcast Seattle Mariners baseball games and $8.6 million for commitments under a joint sales agreement.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. SFAS 157 does not expand or require any new fair value measures; however, the application of this statement may change current practice. The requirements of SFAS 157 are effective for our fiscal year beginning January 1, 2008. We are in the process of evaluating this guidance and therefore have not yet determined the impact that SFAS 157 will have on our financial statements upon adoption.

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106 and 132R (“SFAS 158”). SFAS 158 requires employers to recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income, which is a component of

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stockholders’ equity. Additionally, SFAS 158 requires employers to measure the funded status of a plan as of the date of its year-end statement of financial position, which is consistent with the present measurement date. SFAS 158 does not change the amount of actuarially determined expense that is recorded in the consolidated statement of operations. The new reporting requirements and related new footnote disclosure rules of SFAS 158 are effective for fiscal years ending after December 15, 2006. The adoption of this Standard did not have a material impact on our financial statements.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on the consideration of effects of the prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. The SEC staff believes registrants must quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for the first annual period ending after November 15, 2006. We adopted SAB 108 in our fiscal fourth quarter. The adoption of SAB 108 did not have any impact on our consolidated financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined in FIN 48 as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. FIN 48 must be applied to all existing tax positions upon initial adoption. The cumulative effect of applying FIN 48 at adoption, if any, is to be reported as an adjustment to opening retained earnings for the year of adoption. FIN 48 is effective for fiscal years beginning after December 15, 2006. We plan to adopt the new requirements in the first quarter of 2007 and we are currently assessing the potential effect of FIN 48 on our financial statements.

In February 2006, the FASB issued Statement of Financial Accounting Standard No. 155, Accounting for Certain Hybrid Instruments, which is an amendment of FASB Statements No. 133 and 140. The statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. We do not anticipate that this standard will impact our financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment to FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose, at specific election dates, to measure eligible financial assets and liabilities at fair value (referred to as the “fair value option”) and report associated unrealized gains and losses in earnings. SFAS 159 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. SFAS 159 does not eliminate disclosure requirements of other accounting standards, including fair value measurement disclosures in SFAS 157. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the implications of SFAS 159, and its impact on our financial statements has not yet been determined.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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

Interest Rate Exposure

As a result of our September 2004 placement of $150.0 million of 8.625% senior notes due 2014, substantially all of our debt as of December 31, 2006, is at a fixed rate. As of December 31, 2006, our fixed-rate debt totaled $150.0 million. The fair market value of long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise.

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The estimated fair value of our long-term debt at December 31, 2006 was approximately $158.7 million, which was approximately $8.7 million more than its carrying value. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10% change in interest rates and, as of December 31, 2006, amounted to approximately $7.0 million. Fair market values are determined based on estimates made by investment bankers. For fixed rate debt, interest rate changes do not impact book value, operations, or cash flows.

As of December 31, 2005, our fixed-rate debt totaled $150.0 million. The estimated fair value of our long-term debt at December 31, 2005 was approximately $158.0 million, which was approximately $8.0 million more than its carrying value. Market risk is estimated as the potential change in fair value resulting from a hypothetical 10% change in interest rates and, as of December 31, 2005, amounted to approximately $7.7 million.

Marketable Securities Exposure

The fair value of our investments in marketable securities as of December 31, 2006 was $188.3 million. Marketable securities consist primarily of 3.0 million shares of Safeco Corporation common stock, valued based on the closing per-share sale price on the specific-identification basis as reported on the New York Stock Exchange. As of December 31, 2006, these shares represented 2.9% of the outstanding common stock of Safeco Corporation. We have classified the investments as available-for-sale under applicable accounting standards. A hypothetical 10% change in market prices underlying these securities would result in an $18.8 million change in the fair value of the marketable securities portfolio. Although changes in securities prices would affect the fair value of the marketable securities and cause unrealized gains or losses, such gains or losses would not be realized unless the investments are sold.

The fair value of our investments in marketable securities as of December 31, 2005 was $170.1 million. Marketable securities consisted primarily of 3.0 million shares of Safeco Corporation common stock. As of December 31, 2005, these shares represented 2.4% of the outstanding common stock of Safeco Corporation. A hypothetical 10% change in market prices underlying these securities would result in a $17.0 million change in the fair value of the marketable securities portfolio.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and related documents listed in the index set forth in Item 15 in this report are filed as part of this report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A.   CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2006, these disclosure controls and procedures are effective in ensuring that the information that the Company is required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that, as of December 31, 2006, the disclosure controls and procedures are effective in ensuring that the information required to be reported is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We made no changes in internal control over financial reporting during the fourth fiscal quarter of 2006 that materially affected or is reasonably likely to materially affect our internal control over financial reporting. We intend to continue to refine our internal control on an ongoing basis as we deem appropriate with a view towards continuous improvement.

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Management’s Report on Internal Control Over Financial Reporting

Fisher Communications, Inc.’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. We assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on our assessment using those criteria, we determined that as of December 31, 2006, Fisher Communications, Inc.’s internal control over financial reporting was effective.

Our management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears elsewhere in this report.

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

ITEM 9B.   OTHER INFORMATION

None

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, AND DIRECTOR INDEPENDENCE

The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 26, 2007, and is incorporated herein by reference.

ITEM 11.   EXECUTIVE COMPENSATION

The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 26, 2007, and is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except for the discussion below, the information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 26, 2007, and is incorporated herein by reference.

Securities authorized for issuance under equity compensation plans

We maintain two equity incentive compensation plans (the “Plans”), the Amended and Restated Fisher Communications Incentive Plan of 1995 (the “1995 Plan”) and the Fisher Communication Incentive Plan of 2001 (the “2001 Plan”). The 1995 Plan provided that up to 560,000 shares of the Company’s common stock could be issued to eligible key management employees pursuant to stock options, restricted stock rights and performance stock rights through 2002. As of December 31, 2006 options and rights for 146,533 shares, net of forfeitures, had been issued. No further options and rights will be issued pursuant to the 1995 Plan. The 2001 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to eligible key management employees pursuant to stock options, restricted stock rights and performance stock rights through 2008. As of December 31, 2006 options for 266,100 shares had been issued, net of forfeitures. The Plans were approved by shareholders and no non-Plan awards are outstanding (see Note 10 to the Consolidated Financial Statements for further information).

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The number of securities to be issued upon exercise of outstanding options and rights, the weighted average exercise price of outstanding options and rights, and the number of securities remaining for future issuance under the Plans are summarized as follows:

Number of Securities to be Issued	Weighted Average Exercise	Number of Securities
Upon Exercise of Outstanding	Price of Outstanding	Remaining Available
Options and Rights	Options and Rights	for Future Issuance
221,235	$45.49	333,900

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 26, 2007, and is incorporated herein by reference.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item will be contained in the definitive Proxy Statement for our Annual Meeting of Shareholders to be held on April 26, 2007, and is incorporated herein by reference.

PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1)  Consolidated Financial Statements:

•  Report of Independent Registered Public Accounting Firm

•  Consolidated Statements of Operations for the years ended December 31, 2006, 2005, and 2004

•  Consolidated Balance Sheets at December 31, 2006 and 2005

•  Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2006, 2005, and 2004

•  Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005, and 2004

•  Consolidated Statements of Comprehensive Income for the years ended December 31, 2006, 2005, and 2004

•  Notes to Consolidated Financial Statements

(2)  Financial Statement Schedules:

•  Schedule II — Valuation and Qualifying Accounts for the years ended December 31, 2006, 2005, and 2004

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

(3)  Exhibits: See “Exhibit Index.”

44

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Fisher Communications, Inc.

We have completed integrated audits of Fisher Communications, Inc.’s consolidated financial statements and of its internal control over financial reporting as of December 31, 2006, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Fisher Communications, Inc. and its subsidiaries at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 10 to the consolidated financial statements, the Company changed the manner in which it accounts for stock-based compensation in 2006.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A of this annual report on Form 10-K, that the Company maintained effective internal control over financial reporting as of December 31, 2006 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting

45

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

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

/s/  PricewaterhouseCoopers LLP

Seattle, Washington

March 14, 2007

46

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31
	2006			2005			2004
	(In thousands, except per-share
	amounts)
Revenue	$	154,699		$	137,086		$	141,731
Costs and expenses
Direct operating costs (exclusive of annual depreciation and amortization of $8,488, $10,749 and $13,015, respectively, and amortization of program rights of $18,646, $19,959 and $19,227, respectively, reported separately below)		52,793			51,145			47,396
Selling, general and administrative expenses		53,975			58,713			54,553
Amortization of program rights		18,646			19,959			19,227
Depreciation and amortization		10,277			12,835			15,735
		135,691			142,652			136,911
Income (loss) from operations		19,008			(5,566	)		4,820
Net loss on derivative instruments								(12,656	)
Loss from extinguishment of long-term debt								(5,034	)
Other income, net		3,881			3,629			3,357
Interest expense, net		(13,956	)		(13,726	)		(11,775	)
Income (loss) from continuing operations before income taxes		8,933			(15,663	)		(21,288	)
Provision (benefit) for federal and state income taxes		2,677			(9,532	)		(8,249	)
Income (loss) from continuing operations		6,256			(6,131	)		(13,039	)
Income (loss) from discontinued operations, net of income taxes:
Georgia television stations								(132	)
Radio stations		10,580			1,059			1,218
Income from discontinued operations, net of income taxes		10,580			1,059			1,086
Net income (loss)	$	16,836		$	(5,072	)	$	(11,953	)
Income (loss) per share:
From continuing operations	$	0.72		$	(0.70	)	$	(1.51	)
From discontinued operations		1.21			0.12			0.12
Net income (loss) per share	$	1.93		$	(0.58	)	$	(1.39	)
Income (loss) per share assuming dilution:
From continuing operations	$	0.72		$	(0.70	)	$	(1.51	)
From discontinued operations		1.21			0.12			0.12
Net income (loss) per share assuming dilution	$	1.93		$	(0.58	)	$	(1.39	)
Weighted average shares outstanding		8,713			8,678			8,617
Weighted average shares outstanding assuming dilution		8,716			8,678			8,617

See accompanying notes to consolidated financial statements.

47

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31			December 31
	2006			2005
	(In thousands, except share and per-share amounts)
ASSETS
Current Assets
Cash and cash equivalents	$	7,477		$	19,622
Restricted cash		8,473
Receivables, net		30,131			28,166
Income taxes receivable					986
Deferred income taxes		690			665
Prepaid expenses		3,592			4,295
Television and radio broadcast rights		6,676			6,519
Assets held for sale		19
Total current assets		57,058			60,253
Marketable securities, at market value		188,307			170,053
Cash value of life insurance and retirement deposits		15,959			15,303
Television and radio broadcast rights		1,041			2,075
Goodwill, net		32,714			38,354
Intangible assets		41,142			1,244
Investment in equity investee		2,789			2,759
Deferred financing fees and other assets		7,748			6,040
Assets held for sale		2,612
Property, plant and equipment, net		148,207			144,312
Total Assets	$	497,577		$	440,393
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	4,600		$	3,483
Accrued payroll and related benefits		7,567			7,355
Interest payable		3,809			3,809
Television and radio broadcast rights payable		5,667			5,524
Income taxes payable		486
Other current liabilities		3,626			4,520
Liabilities of businesses held for sale		289
Total current liabilities		26,044			24,691
Long-term debt		150,000			150,000
Accrued retirement benefits		19,027			19,644
Deferred income taxes		54,414			31,381
Other liabilities		8,527			5,056
Commitments and Contingencies
Stockholders’ Equity
Common stock, shares authorized 12,000,000, $1.25 par value; issued and outstanding 8,720,091 in 2006 and 8,705,041 in 2005		10,900			10,881
Capital in excess of par		9,454			8,590
Deferred compensation					(159	)
Accumulated other comprehensive income — net of income taxes:
Unrealized gain on marketable securities		121,441			109,600
Accumulated loss		(1,735	)		(2,172	)
Prior service cost		(212	)
Retained earnings		99,717			82,881
Total Stockholders’ Equity		239,565			209,621
Total Liabilities and Stockholders’ Equity	$	497,577		$	440,393

See accompanying notes to consolidated financial statements.

48

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

											Accumulated
					Capital in						Other
	Common Stock				Excess			Deferred			Comprehensive		Retained			Total
	Shares		Amount		of Par			Compensation			Income		Earnings			Equity
	(In thousands except share amounts)
Balance December 31, 2003		8,608,288	$	10,760	$	4,051		$	(2	)	$	73,089	$	99,906		$	187,804
Net loss														(11,953	)		(11,953	)
Other comprehensive income												26,103					26,103
Amortization of deferred compensation									2								2
Compensation expense for accelerated option vesting						41											41
Issuance of common stock under rights and options, and related tax benefit		10,493		13		443											456
Balance December 31, 2004		8,618,781		10,773		4,535			—			99,192		87,953			202,453
Net loss														(5,072	)		(5,072	)
Other comprehensive income												8,236					8,236
Issuance of common stock rights						188			(188	)							—
Amortization of deferred compensation									29								29
Compensation expense for accelerated option vesting						340											340
Issuance of common stock under rights and options, and related tax benefit		86,260		108		3,527											3,635
Balance December 31, 2005		8,705,041		10,881		8,590			(159	)		107,428		82,881			209,621
Net income														16,836			16,836
Other comprehensive income												12,066					12,066
Elimination of deferred stock-based compensation upon adoption of SFAS 123R						(159	)		159								—
Stock-based compensation						473											473
Issuance of common stock under rights and options, and related tax benefit		15,050		19		550											569
Balance December 31, 2006		8,720,091	$	10,900	$	9,454		$	—		$	119,494	$	99,717		$	239,565

See accompanying notes to consolidated financial statements.

49

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31
	2006			2005			2004
	(In thousands)
Cash flows from operating activities
Net income (loss)	$	16,836		$	(5,072	)	$	(11,953	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		10,385			13,085			16,017
Deferred income taxes		2,636			(8,991	)		(4,578	)
Equity in operations of equity investees		(30	)		(46	)		(139	)
Amortization of deferred financing fees		633			646			742
Decrease in fair value of derivative instruments								12,656
Interest accrued on forward sale transaction								3,564
Loss from extinguishment of long-term debt								5,034
Amortization of program rights		18,646			19,959			19,227
Payments for television and radio broadcast rights		(17,633	)		(18,953	)		(18,524	)
Gain on sale of radio stations		(9,971	)
Dividends from equity investee					112			138
Other		697			229			245
Change in operating assets and liabilities
Receivables		(1,964	)		(573	)		(319	)
Prepaid expenses		201			(642	)		502
Cash value of life insurance and retirement deposits		(656	)		(332	)		(278	)
Other assets		(440	)		(260	)		834
Trade accounts payable, accrued payroll and related benefits, interest payable, and other current liabilities		1,012			(781	)		3,294
Income taxes receivable and payable		1,472			2,369			(7,060	)
Accrued retirement benefits		(618	)		677			274
Other liabilities		3,527			4,146			(586	)
Net cash provided by operating activities		24,733			5,573			19,090
Cash flows from investing activities
Proceeds from sale of radio stations		23,238
Purchase of Seattle television station		(16,127	)
Payment for options to purchase television stations		(1,100	)
Proceeds from collection of notes receivable					1,585			428
Proceeds from sale of marketable securities					247
Proceeds from sale of commercial property and property, plant and equipment					418			112
Restricted cash		(8,473	)
Purchase of Oregon television stations		(19,554	)
Purchase of property, plant and equipment		(15,431	)		(7,523	)		(6,791	)
Purchase of radio station licenses								(204	)
Net cash used in investing activities		(37,447	)		(5,273	)		(6,455	)
Cash flows from financing activities
Net payments under notes payable					(53	)		(662	)
Borrowings under borrowing agreements		15,000						161,000
Payments on borrowing agreements and mortgage loans		(15,000	)					(142,709	)
Payments to terminate forward transaction tranche and additional amount to retire outstanding balances								(21,589	)
Payment of deferred financing fees					(87	)		(6,074	)
Proceeds from exercise of stock options		546			3,437			428
Excess tax benefit from exercise of stock options		23
Net cash provided by (used in) financing activities		569			3,297			(9,606	)
Net increase (decrease) in cash and cash equivalents		(12,145	)		3,597			3,029
Cash and cash equivalents, beginning of period		19,622			16,025			12,996
Cash and cash equivalents, end of period	$	7,477		$	19,622		$	16,025

See accompanying notes to consolidated financial statements.

50

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31
	2006			2005			2004
	(In thousands)
Net income (loss)	$	16,836		$	(5,072	)	$	(11,953	)
Other comprehensive income:
Unrealized gain on marketable securities		18,217			12,779			40,136
Effect of income taxes		(6,377	)		(4,473	)		(14,048	)
Accumulated loss		673			56			23
Effect of income taxes		(235	)		(20	)		(8	)
Prior service cost		(326	)
Effect of income taxes		114
Reclassification adjustment for gains included in net income (loss)					(163	)
Effect of income taxes					57
		12,066			8,236			26,103
Total comprehensive income	$	28,902		$	3,164		$	14,150

See accompanying notes to consolidated financial statements.

51

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

Operations and Accounting Policies

The principal operations of Fisher Communications, Inc. and subsidiaries (the Company) are television and radio broadcasting. The Company also owns and operates Fisher Plaza, a digital communications hub facility that houses a variety of office, retail, technology and other media and communications companies. The Company conducts its business primarily in Washington, Oregon, Idaho and Montana. A summary of significant accounting policies is as follows:

Principles of consolidation The Consolidated Financial Statements are presented on an accrual basis in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of Fisher Communications, Inc. and its wholly-owned subsidiaries. Television and radio broadcasting are conducted through Fisher Broadcasting Company. Fisher Media Services Company operates Fisher Plaza. All material intercompany balances and transactions have been eliminated.

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

Television and radio broadcast licenses The Company’s broadcast operations are subject to the jurisdiction of the Federal Communications Commission (the “FCC”) under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act empowers the FCC to regulate many aspects of the broadcasting industry, including the granting and renewal of broadcast licenses. Broadcasting licenses for certain indefinite-lived television licenses are included in Intangible Assets in the Consolidated Balance Sheets.

Revenue recognition Television and radio revenue is recognized when the advertisement is broadcast. The Company may barter unsold advertising time for products or services; barter transactions are reported at the estimated fair value of the product or service received. Barter revenue is reported when commercials are broadcast, and expense for goods or services received are reported when received or used. Revenue from production of broadcast media content is recognized when a contracted production is available for distribution. Revenue from satellite transmission services is recognized when the service is performed. Rentals from real estate leases are recognized on a straight-line basis over the term of the lease.

Termination of national advertising representation firms Broadcasters may periodically terminate existing agreements with national advertising representation firms; under such circumstances, the successor firm generally satisfies the broadcaster’s contractual termination obligation to the predecessor firm with no cash payment made by the broadcaster. When the Company terminates national advertising representation agreements with contractual termination penalties, the Company recognizes a non-cash termination charge to selling, general and administrative expenses and amortizes the resulting liability as a reduction of expense over the term of the new agreement. In the fourth quarter of 2005, the Company recognized a non-cash termination charge of $4.3 million and will recognize a non-cash benefit over the five year term of the new agreement.

Short-term cash investments Short-term cash investments are comprised of repurchase agreements collateralized by U.S. Government securities held by major banks. The Company considers short-term cash investments that have remaining maturities at date of purchase of 90 days or less to be cash equivalents.

Restricted cash Restricted cash at December 31, 2006 generally consists of funds held by a Qualified Intermediary, pending completion of a tax deferred exchange in accordance with Internal Revenue Code Section 1031. It is the Company’s intent to utilize these funds to finance one or more qualifying tax deferred exchanges in 2007, subject to applicable IRS rules and regulations.

52

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Marketable securities Marketable securities at December 31, 2006 and 2005 consist primarily of shares of Safeco Corporation common stock, valued based on the closing per-share sale price on the specific-identification basis as reported on the New York Stock Exchange. As of December 31, 2006 and 2005, these shares represented 2.9% and 2.4%, respectively of the outstanding common stock of Safeco Corporation. The Company has classified its investments as available-for-sale under applicable accounting standards, and those investments are reported at fair market value. Unrealized gains and losses are a separate component of stockholders’ equity, net of any related income tax effect. Dividends received of $3,348,000, $2,850,000 and $2,343,000 are included in other income, net for 2006, 2005 and 2004, respectively.

Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk are primarily accounts receivable. Concentrations of credit risk with respect to the receivables are limited due to the large number of customers in the Company’s customer base and their dispersion across different industries and geographic areas. The Company does not generally require collateral or other security for its accounts receivable.

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

Investments in equity investees Investments in equity investees represent investments in entities over which the Company does not have control, but has significant influence and owns 50% or less. Such investments are accounted for using the equity method of accounting (See Note 5).

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

The goodwill impairment test involves a comparison of the fair value of each of the Company’s reporting units with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount exceeds a reporting unit’s fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying amount of goodwill exceeds the implied fair value of goodwill in the reporting unit being tested. Fair values are determined based on valuations that rely primarily on the discounted cash flow method. This method uses future projections of cash flows from each of the Company’s reporting units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of the Company’s weighted average cost of capital. To the extent they have been separately identified, the Company’s indefinite-lived assets (broadcast licenses), which are not subject to amortization, are tested for impairment at least on an annual basis by applying a fair-value-based test as required by Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The Company’s evaluations of fair values include analyses based on the estimated future cash flows generated by the underlying

53

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assets, estimated trends, and other relevant determinants of fair value for these assets. If the fair value of the asset is less than its carrying amount, a loss is recognized for the difference between the fair value and its carrying value. Changes in any of these estimates, projections and assumptions could have a material effect on the fair value of these assets in future measurement periods and result in an impairment of goodwill or indefinite-lived intangibles which could materially affect the Company’s results of operations.

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

Real estate taxes, interest expense, and certain other costs related to real estate projects constructed for lease to third parties are capitalized as a cost of such projects until the project, including major tenant improvements, is substantially completed. A project is generally considered to be substantially completed when a predetermined occupancy level has been reached or the project has been available for occupancy for a period of one year. Costs, including depreciation, applicable to a project are charged to expense based on the ratio of occupied space to total rentable space until the project is substantially completed, after which such costs are expensed as incurred.

For financial reporting purposes, depreciation of property, plant and equipment is determined primarily by the straight-line method over the estimated useful lives of the assets as follows:

Buildings and improvements	5–55 years
Machinery and equipment	3–25 years
Land improvements	10–55 years

The Company classifies the net carrying values of stations as held for sale when the stations are actively marketed, their sale is considered probable within one year and various other criteria relating to their disposition are met. The Company discontinues depreciation of the stations at that time, but continues to recognize operating revenues and expenses until the date of sale. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”), the Company reports revenues and expenses of stations classified as held for sale in discontinued operations for all periods presented if the Company will sell or has sold the stations on terms where the Company has no continuing involvement with them after the sale. If active marketing ceases or the stations no longer meet the criteria to be classified as held for sale, the Company reclassifies the stations as held for use, resumes depreciation and recognizes the loss for the period that the Company classified the properties as held for sale, and deferred selling costs, if any, are charged to expense.

Tangible long-lived assets The Company evaluates the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable as required by SFAS 144. The Company uses its judgment when applying the impairment rules to determine when an impairment test is necessary. Factors the Company considers which could trigger an impairment review include significant underperformance relative to historical or forecasted operating results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant negative cash flows or industry trends.

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

54

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair value of financial instruments The carrying amount of cash and cash equivalents, restricted cash, receivables, marketable securities, trade accounts payable, and television and radio broadcast rights asset and payable approximate the fair values due to their short maturities.

The estimated fair value of the Company’s long-term debt at December 31, 2006 and 2005 was $158.7 million and $158.0 million, respectively. The fair value of long-term debt is based on estimates made by investment bankers based on the fair value of the Company’s fixed rate long-term debt. Currently, the Company does not anticipate settlement of long-term debt at other than book value.

Deferred financing costs The Company capitalizes costs associated with financing activities and amortizes such costs to interest expense using the effective interest method over the term of the underlying financing arrangements. Such costs associated with the senior notes issued in September 2004 are amortized over the 10-year life of the senior notes; costs corresponding to the Company’s $20 million revolving credit facility are amortized over the 6-year availability of this financing agreement.

Variable interest entities The Company may enter into Joint Sales Agreements (“JSAs”) or Local Marketing Agreements (“LMAs”) with non-owned stations. Under the terms of these agreements, the Company makes specific periodic payments to the station’s owner-operator in exchange for the right to provide programming and/or sell advertising on a portion of the station’s broadcast time. Nevertheless, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station. Generally, the Company continues to operate the station under the agreement until the termination of such agreement. As a result of these agreements, the Company may determine that the station is a Variable Interest Entity (“VIE”) as defined by the Financial Accounting Standards Board (“FASB”) Interpretation No. (“FIN”) 46R, Consolidation of Variable Interest Entities, and that the Company is the primary beneficiary of the variable interest. This typically occurs if the Company has an agreement to acquire a station and the conditions to close are considered to be perfunctory. The Company also may determine that a station is a VIE in connection with other types of local service agreements entered into with stations in markets in which the Company owns and operates a station.

Advertising The Company expenses advertising costs at the time the advertising first takes place. Advertising expense was $3,085,000, $3,825,000 and $4,026,000 in 2006, 2005, and 2004, respectively.

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

Income taxes Deferred income taxes are provided for temporary differences in reporting for financial reporting purposes versus income tax reporting purposes. The Company evaluates both positive and negative evidence that it believes is relevant in assessing whether the Company will realize the deferred tax assets. The Company provides valuation allowances for deferred taxes when it does not consider realization of such assets to be more likely than not.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Year Ended December 31	2006		2005			2004
Net income (loss)	$	16,836	$	(5,072	)	$	(11,953	)
Weighted average shares outstanding — basic		8,713		8,678			8,617
Weighted effect of dilutive options and rights		3
Weighted average shares outstanding assuming dilution		8,716		8,678			8,617
Basic net income (loss) per share	$	1.93	$	(0.58	)	$	(1.39	)
Diluted net income (loss) per share	$	1.93	$	(0.58	)	$	(1.39	)

The dilutive effect of 13,250 restricted stock rights and options to purchase 190,185 shares are excluded from the calculation of weighted average shares outstanding for the year ended December 31, 2006 because such rights and options were anti-dilutive. The dilutive effect of 4,000 restricted stock rights and options to purchase 275,430 shares are excluded for the year ended December 31, 2005 because such rights and options were anti-dilutive due to the Company’s net loss. The dilutive effect of 60 restricted stock rights and options to purchase 487,490 shares are excluded for the year ended December 31, 2004 because such rights and options were also anti-dilutive due to the Company’s net loss.

Stock-based compensation On January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised), “Share-Based Payment,” (“SFAS 123(R)”) which requires the measurement and recognition of compensation for all stock-based awards made to employees, including stock options and restricted stock rights, based on estimated fair values. SFAS 123(R) supersedes previous accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (“APB 25”) for periods beginning in 2006.

The Company adopted SFAS 123(R) using the modified prospective transition method, which requires the application of the accounting standard as of January  1, 2006. In accordance with the modified prospective transition method, the Company’s consolidated financial statements for periods prior to 2006 have not been restated to reflect this change. Stock-based compensation recognized under the new standard is based on the value of the portion of the stock-based award that vests during the period, adjusted for expected forfeitures. Stock-based compensation recognized in the Company’s consolidated financial statements for 2006 includes compensation cost for stock-based awards granted prior to, but not fully vested as of, December 31, 2005, and stock-based awards granted subsequent to December 31, 2005.

The compensation cost for awards granted prior to December 31, 2005 is based on the grant-date fair value estimated in accordance with the pro forma provisions of SFAS 123, while awards granted after December 31, 2005 follow the provisions of SFAS 123(R). Compensation cost for awards granted prior to December 31, 2005 is recognized on a straight-line basis over the requisite service period for each separately remaining vesting portion of the award, while compensation cost for awards granted after December 31, 2005 is recognized on a straight-line basis over the requisite service period for the entire award.

Upon adoption of SFAS 123(R), the Company continued to use the Black-Scholes option pricing model as its method of valuation for stock option awards. The Company’s determination of the fair value of stock option awards on the date of grant using an option pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected life of the award, the Company’s expected stock price volatility over the term of the award, forfeitures, and projected exercise behaviors. Although the fair value of stock option awards is determined in accordance with SFAS 123(R), the Black-Scholes option pricing model requires the input of subjective assumptions, and other reasonable assumptions could provide differing results.

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Prior to fiscal 2006, stock-based compensation plans were accounted for using the intrinsic value method prescribed in APB 25 and related interpretations. Had compensation cost for the plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS 123, the Company’s net loss and basic and diluted net loss per share would have been changed to the pro forma amounts indicated below (in thousands, except for per share data):

	2005			2004
Net loss, as reported	$	(5,072	)	$	(11,953	)
Add: stock-based compensation included in net loss, net of tax		221			41
Deduct: total stock-based compensation determined under fair value method for all awards, net of tax		(1	)		(1,090	)
Pro forma net loss	$	(4,852	)	$	(13,002	)
Basic and diluted net loss per share:
As reported	$	(0.58	)	$	(1.39	)
Pro forma	$	(0.56	)	$	(1.51	)

Reclassifications Certain amounts in the 2005 and 2004 consolidated financial statements have been reclassified to conform to the 2006 presentation. The reclassifications have no effect on shareholders’ equity, cash flows from operating, investing or financing activities or net income (loss). The reclassifications impact the Company’s Consolidated Statements of Operations in the following ways:

•  “Direct operating costs” has replaced the caption previously labeled “Cost of services sold”;

•  “Amortization of program rights” are now reported separately, whereas previously these amounts were reported within “Cost of services sold”; and

•  “Selling, general and administrative expenses” now include amounts previously reported separately under the captions “Selling expenses” and “General and administrative expenses”.

For all reported periods, the Company reclassified to discontinued operations the results of stations that the Company intended to sell or had sold as of December 31, 2006.

Recent accounting pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. SFAS 157 does not expand or require any new fair value measures; however, the application of this statement may change current practice. The requirements of SFAS 157 are effective for the Company’s fiscal year beginning January 1, 2008. The Company is in the process of evaluating this guidance and therefore has not yet determined the impact that SFAS 157 will have on its financial statements upon adoption.

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106 and 132R (“SFAS 158”). SFAS 158 requires employers to recognize the under-funded or over-funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income, which is a component of stockholders’ equity. Additionally, SFAS 158 requires employers to measure the funded status of a plan as of the date of its year-end statement of financial position, which is consistent with the Company’s present measurement date. SFAS 158 does not change the amount of actuarially determined expense that is recorded in the consolidated statement of operations. The new reporting requirements and related new footnote disclosure rules of

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SFAS 158 are effective for fiscal years ending after December 15, 2006. The adoption of this Standard did not have a material impact on the Company’s financial statements.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on the consideration of effects of the prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. The SEC staff believes registrants must quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for the first annual period ending after November 15, 2006. The Company adopted SAB 108 in its fiscal fourth quarter. The adoption of this Standard did not have any impact on the Company’s financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined in FIN 48 as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. FIN 48 must be applied to all existing tax positions upon initial adoption. The cumulative effect of applying FIN 48 at adoption, if any, is to be reported as an adjustment to opening retained earnings for the year of adoption. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company plans to adopt the new requirements in the first quarter of 2007. The Company is currently assessing the potential effect of FIN 48 on its financial statements.

In February 2006, the FASB issued Statement of Financial Accounting Standard No. 155, “Accounting for Certain Hybrid Instruments,” which is an amendment of FASB Statements No. 133 and 140. The statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Company does not anticipate that this standard will impact its financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment to FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose, at specific election dates, to measure eligible financial assets and liabilities at fair value (referred to as the “fair value option”) and report associated unrealized gains and losses in earnings. SFAS 159 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. SFAS 159 does not eliminate disclosure requirements of other accounting standards, including fair value measurement disclosures in SFAS 157. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the implications of SFAS 159, and its impact on the Company’s financial statements has not yet been determined.

NOTE 2

Discontinued Operations

On May 30, 2006, the Company entered into an agreement to sell its 24 small-market radio stations located in Montana and Eastern Washington. This agreement was amended in the third quarter of 2006 to reduce the number of stations being sold to 19, at a revised sales price of $29.1 million. On October 31, 2006, the Company completed the sale of 18 small-market radio stations for $26.1 million. The Company received $24.4 million in cash, and $1.6 million has been placed in escrow with respect to certain standard representations and warranties made by the Company. The Company has included the escrowed amount in the calculation of the gain on sale of the radio stations due to the Company’s assessment that no liabilities will arise under the indemnification provisions of the agreement. The current portion ($833,000) of the escrowed amount is included in prepaid expenses, with the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

balance included in deferred financing fees and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2006. Of the $24.4 million in cash received, $18.0 million was deposited directly with a Qualified Intermediary (“QI”) in order to facilitate a tax deferred exchange under Internal Revenue Code Section 1031. The closing on the sale of one additional Montana station to the same buyer is currently pending FCC approval. The remaining five stations were excluded from this agreement in order to secure FCC approval, but continue to be held for sale. In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company has reported the results of operations of these 24 stations as discontinued operations in the accompanying financial statements. These stations were included in the Company’s radio segment.

Operational data for the radio stations is summarized as follows (in thousands):

Year Ended December 31	2006			2005			2004
Revenue	$	8,507		$	12,233		$	12,135
Income from discontinued operations:
Discontinued operating activities	$	938		$	1,629		$	1,662
Gain on sale		15,339			—			—
		16,277			1,629			1,662
Income tax effect		(5,697	)		(570	)		(444	)
Income from discontinued operations	$	10,580		$	1,059		$	1,218

The following table summarizes the classes of assets and liabilities held for sale as of December 31, 2006 (in thousands):

Goodwill, net	$	1,129
Property, plant and equipment, net		718
Intangible assets		765
Other assets		19
Assets held for sale	$	2,631
Liabilities of businesses held for sale	$	289

On December 1, 2003, Fisher Broadcasting Company completed the sale of substantially all of the assets of its two Georgia television stations, WFXG-TV, Augusta and WXTX-TV, Columbus; net proceeds from the sale were $40,725,000. A minimal amount of activity associated with these discontinued operations carried into 2004.

Operational data associated with the final 2004 activity for the Georgia television stations sold is summarized as follows (in thousands):

Year Ended December 31	2004
Loss from discontinued operations:
Discontinued operating activities	$	(207	)
Income tax effect		75
Loss from discontinued Georgia television stations	$	(132	)

NOTE 3

Acquisitions

On June 26, 2006, the Company entered into a stock purchase agreement with African-American Broadcasting of Bellevue, Inc. (“AABB”), and its owner Christopher J. Racine. Under this agreement, the Company acquired an immediate 25 percent equity interest in AABB for $4.0 million and the rights and obligation to acquire the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

remaining equity interest in AABB pending FCC approval of the transaction and the fulfillment of certain other closing conditions by AABB. On September 26, 2006, the Company acquired the remaining 75 percent equity interest in AABB for $12.0 million. The purchase price of AABB, including liabilities assumed and direct costs of the acquisition, has been allocated as follows (in thousands):

Intangible assets - FCC license (indefinite life, non-amortizing)	$	24,012
Property, plant and equipment		790
Deferred tax liabilities		(8,626	)
	$	16,176

On September 22, 2006, the Company entered into a second amendment to an asset purchase agreement dated December 7, 2005 with Equity Broadcasting Corporation and entities owned or controlled by EBC (“EBC”). The amendment provided, among other things, that the Company paid an additional $6.0 million non-refundable fee in consideration for deferring the consummation of the acquisition of two television stations in Oregon (the “Oregon Closing”) to November 1, 2006, to be applied toward the purchase price of $19.3 million. As a result of the amended terms of the agreement and the JSA, the Company determined that it was the primary beneficiary of the two Oregon stations and as a result consolidated the operations and assets at their fair values as of September 22, 2006. On November 1, 2006, the Company finalized the Oregon Closing with EBC for $19.3 million. The excess of the purchase price of the stations over the fair value of the tangible and identifiable intangible net assets was recorded as goodwill. The purchase price of the Oregon stations, including direct costs of the acquisition, has been allocated as follows (in thousands):

Intangible assets — FCC license (indefinite life, non-amortizing)	$	16,800
Goodwill (non-amortizing, tax deductible)		2,593
Property, plant and equipment		161
	$	19,554

NOTE 4

Receivables

Receivables are summarized as follows (in thousands):

December 31	2006		2005
Trade accounts	$	26,978	$	27,273
Other		3,614		1,396
		30,592		28,669
Less-Allowance for doubtful accounts		461		503
Total receivables	$	30,131	$	28,166

The Company makes estimates of the uncollectability of accounts receivables, specifically analyzing accounts receivable and historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts. In addition to the identification of specific doubtful accounts receivable, the Company provides allowances based on percentages of past-due balances based on historical collection experience.

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NOTE 5

Investments in Equity Investee

Investments in entities over which the Company does not have control, but has significant influence, are accounted for using the equity method of accounting. The Company’s investments are reported in the Consolidated Balance Sheets as investment in equity investee and its proportionate share of income or losses is reported as a component of other income, net in the Consolidated Statements of Operations.

The Company owns 50% of the outstanding stock of South West Oregon Broadcasting Corporation (“South West Oregon Television”), licensee of a television station in Roseburg, Oregon. The broadcasting subsidiary serves as manager of the station. The Company’s investment in South West Oregon Television is carried at the initial allocated purchase price, increased by the Company’s 50% share of net operating income, and decreased by distributions received.

Investment in South West Oregon Television is summarized as follows (in thousands):

Balance, December 31, 2003	$	2,824
Dividends		(138	)
Equity in net income		139
Balance, December 31, 2004		2,825
Dividends		(112	)
Equity in net income		46
Balance, December 31, 2005		2,759
Dividends		—
Equity in net income		30
Balance, December 31, 2006	$	2,789

NOTE 6

Goodwill and Intangible Assets

The Company’s goodwill totaled $32,714,000 and $38,354,000 at December 31, 2006 and 2005, respectively. Goodwill with a carrying value of $7.6 million was disposed of in conjunction with the Company’s sale of 18 small-market radio stations in October 2006, while goodwill of $1.1 million associated with the remaining stations to be sold is classified as held for sale at December 31, 2006 (See Note 2). Intangible assets totaling $41,142,000 and $1,244,000 at December 31, 2006 and 2005, respectively, consist of amounts incurred to acquire certain television and radio broadcast licenses. The goodwill and broadcast licenses are considered indefinite-lived assets for which no periodic amortization is recognized. The television and radio broadcast licenses are issued by the FCC and provide the Company with the exclusive right to utilize certain frequency spectrum to air its stations’ programming. While FCC licenses are issued for only a fixed time, renewals of FCC licenses have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of its FCC licenses.

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

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required annual impairment test was performed in the fourth quarter of 2006, 2005 and 2004, resulting in no impairment.

NOTE 7

Property, Plant and Equipment

Property, plant and equipment are summarized as follows (in thousands):

December 31	2006		2005
Building and improvements	$	138,141	$	132,869
Machinery and equipment		107,498		103,448
Land and improvements		7,369		8,233
		253,008		244,550
Less-Accumulated depreciation		104,801		100,238
Total	$	148,207	$	144,312

Property, plant and equipment includes property leased to third parties and to other subsidiaries of the Company. The investment in property held for lease to third parties as of December 31, 2006, consists of Fisher Plaza and includes buildings, equipment and improvements of $139,546,000, and land and improvements of $4,354,000, less accumulated depreciation of $25,910,000. The Company receives rental income principally from the lease of data center, office and retail space under leases and agreements, which expire at various dates through 2019. These leases and agreements are accounted for as operating leases. Minimum future rentals from leases and agreements, which were in effect at December 31, 2006, are as follows (in thousands):

Year	Rentals
2007	$	3,222
2008		3,100
2009		2,278
2010		1,920
2011		1,513
Thereafter		3,772
	$	15,805

The Company did not capitalize any interest expense in 2006, 2005 or 2004.

NOTE 8

Notes Payable, Long Term Debt, and Derivative Instruments

Notes payable

The Company previously had certain outstanding notes payable to directors, stockholders and others that were due on demand. These notes were paid in full during 2005. Such notes bore interest at rates equivalent to those available to the Company for short-term cash investments. Interest on such notes amounted to $506 and $3,900 in 2005 and 2004, respectively.

Long-term debt and borrowing agreements

On September 20, 2004 the Company issued $150.0 million of 8.625% senior notes due 2014, which are freely tradable notes registered under the Securities Act of 1933. The notes are unconditionally guaranteed, jointly and

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severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year, commencing March 15, 2005.

Except as described below the notes are not redeemable at the Company’s option prior to September 15, 2009. On or after September 15, 2009, the Company may redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on September 15 of the years indicated below:

Year	Percentage
2009		104.3125	%
2010		102.8750	%
2011		101.4375	%
2012 and thereafter		100.0000	%

Notwithstanding the foregoing, at any time prior to September 15, 2007, the Company may redeem up to 35% of the aggregate principal amount of notes issued under the indenture at a redemption price of 108.625% of the principal amount thereof, plus accrued and unpaid interest thereon to the redemption date, with the net cash proceeds of one or more public equity offerings as further described in the indenture under which the notes were issued.

The indenture under which the notes were issued contains covenants that, among other things, limit the Company’s ability to:

•  incur additional indebtedness;

•  make certain asset dispositions;

•  make investments or other restricted payments;

•  pay dividends or make other distributions on, redeem or repurchase, capital stock;

•  issue capital stock of our restricted subsidiaries;

•  enter into transactions with affiliates or related persons;

•  incur certain liens on assets to secure debt; and

•  enter into a merger, sale or consolidation.

These covenants are subject to a number of important qualifications and exceptions as described in the indenture. As of December 31, 2006 and 2005, the Company was in compliance with these covenants.

Of the total initial cash proceeds of $144.5 million, net of transaction costs, $143.9 million was used to retire the Company’s broadcasting subsidiary’s credit facility and the Company’s media services subsidiary’s credit facility, and to settle the outstanding obligations under the Company’s variable forward sales transaction. The variable forward sales transaction was later terminated effective November 4, 2004. The Company recorded a total loss on extinguishment of debt of $5,034,000, which includes the loss on termination of the variable forward sales transaction of $3,019,000.

On September 20, 2004 the Company also entered into a new six-year senior credit facility (the “Revolver”). The Revolver provides for borrowings up to $20.0 million and is secured by substantially all of the Company’s assets (excluding certain real property and the Company’s investment in shares of Safeco Corporation common stock) and by all of the voting stock of its subsidiaries. The Revolver places limitations on various aspects of the Company’s operations (including, among other things, the payment of dividends to Company stockholders and the

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Company’s ability to consolidate, merge or sell a substantial part of its assets), requires compliance with a cash flow ratio, and requires prepayment upon the occurrence of certain events. Amounts borrowed under the Revolver bear interest at variable rates based at the Company’s option, on either (1) the LIBOR rate plus a margin of 250 basis points, or (2) the higher of the prime rate plus 175 basis points or the overnight federal funds rate plus 225 basis points. The Company was in compliance with all debt covenant requirements at December 31, 2006 and 2005, and no amounts were outstanding under the Revolver at December 31, 2006. Total transaction costs of $5,978,000 were capitalized, of which $5,457,000 related to the senior notes, and $521,000 related to the Revolver. The capitalized balances are amortized to interest expense using the effective interest method over 10 years for the Senior notes and over 6 years for the Revolver.

Derivative Instruments

In connection with a previous broadcast borrowing facility, the broadcasting subsidiary entered into an interest rate swap agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiary’s ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under the broadcast borrowing facility. The swap expired in the first quarter of 2004, resulting in a gain of $907,000 which is included in the total net loss on derivative instruments in the accompanying Consolidated Statement of Operations.

On March 21, 2002, the Company entered into a variable forward sales financing transaction (the “Forward Transaction”) with a financial institution. A portion of the Forward Transaction was considered a derivative and, as such, the Company periodically measured its fair value and recognized the derivative as an asset or a liability. The change in the fair value of the derivative was recorded in the Consolidated Statement of Operations. On April 28, 2004, the Company terminated one tranche of the Forward Transaction with a maturity date of March 15, 2007. In connection with the termination, the Company paid a termination fee of $2.5 million, of which $2.1 million had been recognized as a derivative instrument liability as of March 31, 2004. The remaining $436,000 was recognized as a loss on termination in the second quarter of 2004 and is included within net loss on derivative instruments in the accompanying Consolidated Statement of Operations. In addition, the Company recognized $212,000 in interest expense to write-off the remaining unamortized expenses related to the terminated tranche.

On November 4, 2004, the Company terminated all remaining tranches of the Forward Transaction. In connection with the termination, the Company paid a termination fee of $16,070,000. As a result of the termination, all shares of Safeco Corporation common stock owned by the Company became unencumbered. The termination was accounted for as an adjustment to net loss on derivative instruments.

Debt Maturities

Future maturities of long term debt are as follows (in thousands):

2007	$	—
2008		—
2009		—
2010		—
2011		—
Thereafter		150,000
	$	150,000

Cash paid for interest (net of amounts capitalized) during 2006, 2005, and 2004 was $13,076,000, $12,804,000 and $4,200,000, respectively. The Company’s September 2004 retirement of prior debt included payments to retire obligations under the Forward Transaction, a portion of which had been recognized as interest expense since the inception of this financing arrangement. Of the total 2004 payments to retire the obligations, $11,638,000 represented cumulative interest recognized on the Forward Transaction.

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NOTE 9

Television and Radio Broadcast Rights and Other Broadcast Commitments

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

At December 31, 2006 the Company had commitments under license agreements amounting to $41,921,000 for future rights to broadcast television and radio programs through 2008 and $4,748,000 in related fees primarily associated with the Company’s contract to broadcast Seattle Mariners baseball games. In 2002, the broadcasting subsidiary acquired exclusive rights to sell available advertising time for a radio station in Seattle (“Joint Sales Agreement”). This agreement was extended in 2006. Under the Joint Sales Agreement, the broadcasting subsidiary has commitments for monthly payments totaling $8,640,000 through 2011.

Television and radio broadcast rights acquired under contractual arrangements were $17,769,000 and $17,069,000 in 2006 and 2005, respectively. The Company periodically performs impairment tests of its capitalized broadcast rights and as a result recorded a charge of $84,000 and $105,000 in 2005 and 2004, respectively, to write the asset balance down to its estimated net realizable value. No such charge was recorded in 2006.

NOTE 10

Stockholders’ Equity

Effective January 1, 2006, the Company adopted SFAS 123(R), which establishes accounting for stock-based awards exchanged for employee services, using the modified prospective application transition method. Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized over the requisite service period. Previously, the Company applied APB 25 and related Interpretations, as permitted by SFAS 123. The Company applied the alternative transition (shortcut) method in calculating its pool of excess tax benefits (APIC pool), as provided for in FASB Staff Position FAS 123(R)-3, Transition Election Accounting for the Tax Effects of Share-Based Payment Awards.

The Company maintains two incentive plans (the “Plans”), the Amended and Restated Fisher Communications Incentive Plan of 1995 (the “1995 Plan”) and the Fisher Communications Incentive Plan of 2001 (the “2001 Plan”). The 1995 Plan provided that up to 560,000 shares of the Company’s common stock could be issued to eligible key management employees pursuant to options and rights through 2002. The Company issues new shares of common stock upon option exercise or rights vesting. As of December 31, 2006, options and rights for 146,533 shares, net of forfeitures, had been issued. No further options and rights will be issued pursuant to the 1995 Plan. The 2001 Plan provides that up to 600,000 shares of the Company’s common stock may be issued to eligible key management employees pursuant to options and rights through 2008. As of December 31, 2006, options and rights for 266,100 shares had been issued, net of forfeitures.

Stock options The Plans provide that eligible key management employees may be granted options to purchase the Company’s common stock at the fair market value on the date the options are granted. The options generally vest over five years and generally expire ten years from the date of grant. Non-cash compensation expense of $382,000 ($248,000 after-tax) related to the options was recorded for 2006. During 2005 and 2004, the vesting on certain previously granted options was accelerated as part of separation agreements with certain management personnel; as a result, the Company recognized non-cash compensation expense of $340,000 ($221,000 after-tax) and $65,000 ($41,000 after-tax), respectively.

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Restricted stock rights The Plans also provide that eligible key management employees may be granted restricted stock rights which entitle such employees to receive a stated number of shares of the Company’s common stock. The rights generally vest over five years and expire upon termination of employment. Non-cash compensation expense of $91,000 ($59,000 after-tax), $29,000 ($19,000 after-tax) and $2,000 ($1,300 after-tax) related to the rights was recorded during 2006, 2005 and 2004, respectively.

Determining Fair Value Under SFAS 123(R)

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

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

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

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

Expected Dividend Yield.  The Company uses an expected dividend yield of zero in the Black-Scholes option valuation model, consistent with the Company’s recent experience.

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

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

	Years Ended December 31
	2006			2005			2004
Assumptions:
Weighted average risk-free interest rate		4.6	%		4.1	%		3.7	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Expected volatility		31.3	%		30.8	%		27.5	%
Expected life of options		6 years			6 years			7 years
Weighted average fair value at date of grant	$	17.25		$	19.27		$	19.63

Stock-based Compensation Under SFAS 123(R)

Stock-based compensation expense related to stock-based awards under SFAS 123(R) for 2006 totaled $473,000, which is included in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations.

As of December 2006, the Company had approximately $1,863,000 of total unrecognized compensation cost related to non-vested stock-based awards granted under all equity compensation plans. Total unrecognized

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

compensation cost will be adjusted for any future changes in estimated forfeitures. The Company expects to recognize this cost over a period of approximately five years (or a weighted average period of 2.1 years). A greater percentage of the stock-based compensation expense is recognized in the first few years due to the prior method under APB 25 for which compensation cost is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award, while compensation cost for awards granted after December 31, 2005 is recognized on a straight-line basis over the requisite service period for the entire award.

The following table presents the impact of the Company’s adoption of SFAS 123(R) on selected line items from our consolidated financial statements in 2006 (in thousands, except per share amounts):

Consolidated statement of operations:
Decrease in income from operations	$	(382	)
Decrease in income from continuing operations before income taxes		(382	)
Decrease in net income		(248	)
Decrease in basic and diluted net income per share		(0.03	)
Consolidated statement of cash flows:
Decrease in net cash provided by operating activities		(23	)
Increase in net cash provided by financing activities		23

Stock Award Activity

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

	Stock Options									Restricted Stock Rights
				Weighted		Weighted
				Average		Average							Weighted
				Exercise		Remaining		Aggregate					Average
	Number			Price per		Contractual		Intrinsic		Number			Grant-Date
	of Shares			Share		Life		Value		of Shares			Fair Value
Outstanding at December 31, 2003		456,263		$	52.93						460		$	62.19
Options and stock rights granted		77,800			51.50
Options exercised/stock rights vested		(10,100	)		42.35						(400	)		62.53
Options and stock rights forfeited		(36,473	)		60.94
Outstanding at December 31, 2004		487,490			52.32						60			59.88
Options and stock rights granted		69,600			50.33						4,000			46.89
Options exercised/stock rights vested		(86,200	)		40.11						(60	)		59.88
Options and stock rights forfeited		(195,460	)		56.21
Outstanding at December 31, 2005		275,430			52.88						4,000			46.89
Options and stock rights granted		85,800			43.44						19,650			44.20
Options exercised/stock rights vested		(14,800	)		36.86						(850	)		40.07
Options expired		(4,000	)		37.25
Options and stock rights forfeited		(141,745	)		53.26						(2,250	)		45.05
Outstanding at December 31, 2006		200,685		$	50.14		6.5 years	$	151,561		20,550		$	44.51
Exercisable at December 31, 2006		96,160		$	55.75		3.8 years	$	61,740

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The aggregate intrinsic value of options outstanding at December 31, 2006 is calculated as the difference between the market price of the underlying common stock and the exercise price of the options for the 51,100 options that had exercise prices that were lower than the $44.21 closing market price of the Company’s common stock at December 31, 2006.

The total intrinsic value of options exercised during 2006, 2005 and 2004 was $69,000, $956,000 and $80,000, respectively, determined as of the date of exercise. During 2006, 850 restricted stock rights vested, with a total fair value of $34,000. During 2005, 60 restricted stock rights vested, with a total fair value of $3,000. During 2004, 400 restricted stock rights vested, with a total fair value of $20,000.

NOTE 11

Income Taxes

Income taxes have been provided as follows (in thousands):

Year Ended December 31	2006		2005			2004
Current tax expense (benefit)
Continuing operations	$	465	$	29		$	(3,418	)
Discontinued operations		21					115
		486		29			(3,303	)
Deferred tax expense (benefit)
Continuing operations		2,212		(9,561	)		(4,831	)
Discontinued operations		5,676		570			254
		7,888		(8,991	)		(4,577	)
Total	$	8,374	$	(8,962	)	$	(7,880	)
Income taxes are allocated as follows:
Continuing operations	$	2,677	$	(9,532	)	$	(8,249	)
Discontinued operations		5,697		570			369
	$	8,374	$	(8,962	)	$	(7,880	)

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

Year Ended December 31	2006			2005			2004
Normal expense (benefit) computed at 35% of pretax income	$	3,127		$	(5,482	)	$	(7,451	)
Dividends received deduction		(820	)		(690	)		(565	)
State taxes, net of federal tax benefit		733			(119	)		(8	)
Change in state tax valuation allowance		(733	)		119			8
Pension death and disability benefits, and increases in pension values		(301	)		(291	)		(438	)
Non-deductible expenses		325			252			283
Worthless stock deduction of liquidated subsidiary					(3,437	)
Other		346			116			(78	)
	$	2,677		$	(9,532	)	$	(8,249	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

December 31	2006			2005
Assets
Accrued employee benefits	$	8,150		$	8,154
Allowance for doubtful accounts		171			187
Goodwill and intangible assets					9,053
Net operating loss carryforwards		8,936			10,271
Contract termination charge		1,955			1,607
Other		1,015			518
		20,227			29,790
Liabilities
Marketable securities		(53,791	)		(47,416	)
Property, plant and equipment		(11,645	)		(11,306	)
Goodwill and intangible assets		(7,491	)
Prepaid insurance		(427	)		(454	)
		(73,354	)		(59,176	)
Valuation allowance		(597	)		(1,330	)
Net	$	(53,724	)	$	(30,716	)
Current		690			665
Noncurrent		(54,414	)		(31,381	)
	$	(53,724	)	$	(30,716	)

Due to the uncertainty of the Company’s ability to generate sufficient state taxable income to realize its deferred state tax assets, a valuation allowance has been established for financial reporting purposes. The valuation allowance was $597,000 and $1,330,000 at December 31, 2006 and 2005, respectively. As of December 31, 2006, the Company had estimated federal net operating losses totaling $8,020,000, as tax-effected, which expire through 2025.

The 2005 income tax benefit includes a $3.4 million benefit for worthless stock that became available upon the dissolution of an inactive subsidiary in December 2005.

Net cash received from income tax refunds during 2006 was $1.0 million and net cash received from income tax refunds during 2005 was $2.3 million. Net cash paid for income taxes during 2004 was $3.6 million.

NOTE 12

Retirement Benefits

The Company has a noncontributory supplemental retirement program for key management. No new participants have been admitted to this program since 2001. The program provides for vesting of benefits under certain circumstances. Funding is not required, but generally the Company has acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of such policies; accordingly, the cash values of the policies as well as the accrued liability are reported in the financial statements. The program requires continued employment or disability through the date of expected retirement. The cost of the program is accrued over the average expected future lifetime of the participants.

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In June 2005, the program was amended to freeze accrual of all benefits to active participants provided under the program. As a result, the Company recorded a charge of $451,000 in the second quarter of 2005 as a curtailment loss associated with an unrecognized transition obligation that was required to be recognized at the effective date of the program amendment. The Company will continue to recognize periodic pension cost related to the program, but the amount is expected to be lower as a result of the curtailment. The curtailment loss was calculated based on a current discount rate of 5.02% and no future compensation increases. The program amendment in June 2005 resulted in a decrease of our projected benefit obligation of $597,000. Pursuant to the provisions of SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS 88), this gain was netted against unrecognized actuarial losses resulting in no impact on our Consolidated Statement of Operations.

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

Year Ended December 31	2006			2005
Projected benefit obligation, beginning of year	$	19,559		$	20,012
Service cost					80
Interest cost		1,039			1,028
Assumption changes		(690	)		696
Actuarial (gains) losses		226			(469	)
Curtailment gain					(597	)
Benefit payments		(1,199	)		(1,191	)
Projected benefit obligation, end of year	$	18,935		$	19,559
Unfunded status	$	18,935		$	19,559
Accumulated loss		(2,722	)		(3,341	)
Net amount recognized	$	16,213		$	16,218

Amounts recognized in consolidated balance sheets consist of (in thousands):

December 31	2006			2005
Accrued pension liability	$	18,935		$	19,559
Accumulated other comprehensive loss		(2,722	)		(3,341	)
Net amount recognized	$	16,213		$	16,218

Assumptions used to determine pension obligations are as follows:

	2006			2005
Discount rate		5.80	%		5.48	%
Rate of compensation increase		N/A			N/A

In selecting the discount rate, the Company’s policy is to refer to yields available on high-quality, long-term US corporate bonds on the measurement date of December 31, and is intended to reflect prevailing market conditions. At December 31, 2006 and 2005, the Company has estimated its discount rate based on the Moody’s AA long-term corporate bond yield, which is a well established and credible source based upon bonds of appropriate credit quality and similar duration to the Company’s pension obligations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Year Ended December 31	2006		2005		2004
Service cost	$		$	80	$	291
Interest cost		1,039		1,028		1,096
Amortization of transition obligation				52		104
Recognition of remaining transition obligation, curtailment loss				451
Amortization of loss		154		267		213
Net periodic pension cost		1,193		1,878		1,704
Cost of termination benefits						471
Total cost, including termination benefits	$	1,193	$	1,878	$	2,175

Assumptions used to determine net periodic pension costs are as follows:

	2006			2005	2004
Discount Rate		5.48	%	5.02% - 5.74%		6.25	%
Rate of Compensation increase		0.00	%	0.00% - 3.00%		3.00	%

The accumulated benefit obligation of the Company’s supplemental retirement program was $18,935,000 and $19,559,000 as of December 31, 2006 and 2005, respectively. At December 31, 2006 and 2005, the accumulated benefit obligation of the Company’s supplemental retirement program exceeded plan assets.

Health insurance benefits are provided to certain employees who retire before age 65 and, in certain cases, spouses of retired employees. The accrued postretirement benefit cost was $559,000 and $266,000 as of December 31, 2006 and 2005, respectively. The Company has not accepted new participants into this benefit program since 2001.

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

			Postretirement
	Supplemental		Health Insurance
	Retirement Program		Program
2007	$	1,125	$	75
2008		1,133		69
2009		1,139		74
2010		1,140		63
2011		1,175		67
Next 5 years		6,876		300

The aggregate expected contributions by the Company to fund the supplemental retirement program and postretirement health insurance program for 2007 are $1,125,000 and $75,000, respectively.

The Company has a defined contribution retirement plan which is qualified under Section 401(k) of the Internal Revenue Code. All U.S. employees are eligible to participate. The Company may make a discretionary profit-sharing contribution. The Company did not make a contribution during 2006, 2005 or 2004.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 13

Segment Information

The Company reports financial data for three reportable segments: television, radio, and Fisher Plaza. The television reportable segment includes the operations of the Company’s owned or operated 18 network-affiliated television stations, and a 50% interest in a company that owns a 19th television station. The radio reportable segment includes the operations of the Company’s three Seattle radio stations, while operations of the Company’s small-market radio stations are reported as discontinued operations. Corporate expenses of the broadcasting business unit are allocated to the television and radio reportable segments based on actual expenditures incurred or based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment includes the operations of a communications center located near downtown Seattle that serves as home of the Company’s Seattle television and radio operations, the Company’s corporate offices, and third-party tenants.

Operating results and other financial data for each segment are as follows (in thousands):

Revenue

Year Ended December 31	2006		2005			2004
Television	$	107,457	$	93,083		$	101,190
Radio		37,615		36,101			36,118
Fisher Plaza		9,406		8,061			4,555
Corporate and eliminations		221		(159	)		(132	)
	$	154,699	$	137,086		$	141,731

Depreciation and amortization

Year Ended December 31	2006		2005		2004
Television	$	6,016	$	7,940	$	10,588
Radio		888		1,106		1,178
Fisher Plaza		3,116		3,544		3,762
Corporate and eliminations		257		245		207
	$	10,277	$	12,835	$	15,735

The following table shows segment income (loss) from continuing operations before interest and income taxes (in thousands):

Year Ended December 31	2006			2005			2004
Television	$	23,903		$	5,032		$	17,698
Radio		1,377			(177	)		444
Fisher Plaza		2,542			627			(2,851	)
Corporate and eliminations		(4,933	)		(7,419	)		(24,804	)
Total segment income (loss) from continuing operations before interest and income taxes	$	22,889		$	(1,937	)	$	(9,513	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table reconciles total segment income (loss) from continuing operations before interest and income taxes shown above to consolidated income (loss) from continuing operations before income taxes (in thousands):

Year Ended December 31	2006			2005			2004
Total segment income (loss) from continuing operations before interest and income taxes	$	22,889		$	(1,937	)	$	(9,513	)
Interest expense		(13,956	)		(13,726	)		(11,775	)
Consolidated income (loss) from continuing operations before income taxes	$	8,933		$	(15,663	)	$	(21,288	)

The following tables provide further segment data, as indicated (in thousands):

Total assets

December 31	2006		2005
Television	$	130,994	$	92,543
Radio		24,436		41,487
Fisher Plaza		119,872		118,611
Corporate and eliminations		219,644		187,752
		494,946		440,393
Assets held for sale		2,631
	$	497,577	$	440,393

Goodwill

December 31	2006		2005
Television	$	24,498	$	21,453
Radio		8,216		16,901
	$	32,714	$	38,354

Capital expenditures

Year Ended December 31	2006		2005		2004
Television	$	8,304	$	4,260	$	3,069
Radio		841		595		440
Fisher Plaza		6,120		2,361		3,093
Corporate and eliminations		166		307		189
	$	15,431	$	7,523	$	6,791

Inter-segment sales amounted to $162,000, $173,000 and $220,000 in 2006, 2005 and 2004, respectively, related primarily to telecommunications fees charged from Fisher Plaza. Corporate assets are principally marketable securities. Capital expenditures are reported exclusive of acquisitions.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 14

Commitments and Contingencies

The Company leases office space and equipment under non-cancelable leases. Rental expense was $910,000, $1,211,000 and $1,683,000 in 2006, 2005 and 2004, respectively. Minimum future payments as of December 31, 2006 are as follows (in thousands):

	Lease
Year	Commitments
2007		1,178
2008		968
2009		783
2010		719
2011		652
Thereafter		2,575
	$	6,875

In July 2006, the Company entered into a LMA with WatchTV, Inc. to manage four of their television stations located in Eastern Washington. The stations currently provide Spanish-language programming to the Yakima-Pasco-Richland-Kennewick television market through an affiliation with Univision. Contemporaneously with the LMA, the Company entered into an option agreement with WatchTV, whereby the Company has the right to acquire the stations until June 30, 2007. On February 15, 2007 the Company exercised its option to purchase these television stations for $5.0 million, pending FCC approval and other closing conditions.

Action on many television license renewal applications has been delayed because of the pendency of complaints relating to the contents of local and network programming. Pursuant to FCC rules, the Company continues to operate these stations pending final action on their license renewal applications. Management cannot predict when or how the FCC will address these complaints or act on the renewal applications.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 15

Interim Financial Information (Unaudited)

The Company separately reports as discontinued operations the historical operating results attributable to stations sold or held for sale and the applicable gain or loss on the disposition of the properties. As a result, the Company has made the appropriate reclassification adjustments to its previously issued financial statements for the quarter ended March 31, 2006 and for the quarters ended March 31, June 30, September 30 and December 31, 2005.

Quarterly financial information is presented in the following table. Data may not add due to rounding (in thousands, except per-share amounts).

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter		Annual
Revenue
2006	$	31,081		$	40,190		$	38,712		$	44,716	$	154,699
2005	$	28,313		$	36,865		$	35,635		$	36,273	$	137,086
Income (loss) from continuing operations
2006	$	(1,787	)	$	1,792		$	(784	)	$	7,035	$	6,256
2005	$	(5,106	)	$	(1,462	)	$	(1,118	)	$	1,555	$	(6,131	)
Income from discontinued operations
2006	$	86		$	476		$	113		$	9,905	$	10,580
2005	$	38		$	372		$	328		$	321	$	1,059
Net income (loss)
2006	$	(1,701	)	$	2,268		$	(671	)	$	16,940	$	16,836
2005	$	(5,068	)	$	(1,090	)	$	(790	)	$	1,876	$	(5,072	)
Income (loss) per share — basic:
From continuing operations
2006	$	(0.21	)	$	0.21		$	(0.09	)	$	0.81	$	0.72
2005	$	(0.59	)	$	(0.17	)	$	(0.13	)	$	0.18	$	(0.70	)
From discontinued operations
2006	$	0.01		$	0.05		$	0.01		$	1.13	$	1.21
2005	$	—		$	0.04		$	0.04		$	0.04	$	0.12
Net income (loss)
2006	$	(0.20	)	$	0.26		$	(0.08	)	$	1.94	$	1.93
2005	$	(0.59	)	$	(0.13	)	$	(0.09	)	$	0.22	$	(0.58	)
Income (loss) per share, assuming dilution:
From continuing operations
2006	$	(0.21	)	$	0.21		$	(0.09	)	$	0.81	$	0.72
2005	$	(0.59	)	$	(0.17	)	$	(0.13	)	$	0.18	$	(0.70	)
From discontinued operations
2006	$	0.01		$	0.05		$	0.01		$	1.13	$	1.21
2005	$	—		$	0.04		$	0.04		$	0.04	$	0.12
Net income (loss)
2006	$	(0.20	)	$	0.26		$	(0.08	)	$	1.94	$	1.93
2005	$	(0.59	)	$	(0.13	)	$	(0.09	)	$	0.22	$	(0.58	)

75

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income from discontinued operations for the fourth quarter of 2006 includes a gain on sale of radio stations of $10.0 million, net of income taxes.

Income from continuing operations for the fourth quarter of 2005 is net of a $4.3 million pre-tax non-cash charge resulting from the change in national advertising representation firm and includes a $3.4 million tax benefit for worthless stock upon dissolution of an inactive subsidiary.

NOTE 16

Financial Information for Guarantors

On September 20, 2004 the Company completed the private placement of $150.0 million of 8.625% senior notes due 2014 to qualified institutional buyers pursuant to Rule 144A of the Securities Act. The Company exchanged the notes for freely tradable notes registered under the Securities Act on February 2, 2005. The notes are unconditionally guaranteed, jointly and severally, on an unsecured, senior basis by the current and future material domestic subsidiaries of the Company. Interest on the notes is payable semiannually in arrears on March 15 and September 15 of each year, commencing March 15, 2005.

Presented below are condensed consolidated statements of operations and cash flows for 2006, 2005 and 2004 and the condensed consolidated balance sheets as of December 31, 2006 and 2005. The condensed consolidated information is presented for the Company (issuer) with its investments accounted for under the equity method, the 100% owned guarantor subsidiaries, eliminations, and the Company on a consolidated basis. The Company (issuer) information consists primarily of corporate oversight and administrative personnel and related activities, as well as certain investments in marketable securities.

76

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the year ended December 31, 2006

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
	Inc.			Subsidiaries			Eliminations			Subsidiaries
	(In thousands, except per-share amounts)
Revenue	$			$	154,861		$	(162	)	$	154,699
Costs and expenses
Direct operating costs					51,137			1,656			52,793
Selling, general and administrative expenses		8,496			47,297			(1,818	)		53,975
Amortization of program rights					18,646						18,646
Depreciation and amortization		257			10,020						10,277
		8,753			127,100			(162	)		135,691
Income (loss) from operations		(8,753	)		27,761						19,008
Other income, net		3,498			383						3,881
Equity in income of subsidiaries		28,577						(28,577	)
Interest expense, net		(13,951	)		(5	)					(13,956	)
Income (loss) from continuing operations before income taxes		9,371			28,139			(28,577	)		8,933
Provision (benefit) for federal and state income taxes		(7,465	)		10,142						2,677
Income (loss) from continuing operations		16,836			17,997			(28,577	)		6,256
Income from discontinued operations net of income taxes					10,580						10,580
Net income (loss)	$	16,836		$	28,577		$	(28,577	)	$	16,836

77

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the year ended December 31, 2005

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
	Inc.			Subsidiaries			Eliminations			Subsidiaries
	(In thousands, except per-share amounts)
Revenue	$			$	137,259		$	(173	)	$	137,086
Costs and expenses
Direct operating costs					49,586			1,559			51,145
Selling, general and administrative expenses		10,018			50,427			(1,732	)		58,713
Amortization of program rights					19,959						19,959
Depreciation and amortization		243			12,592						12,835
		10,261			132,564			(173	)		142,652
Income (loss) from operations		(10,261	)		4,695						(5,566	)
Other income, net		2,936			693						3,629
Equity in income of subsidiaries		4,543						(4,543	)
Interest expense, net		(13,703	)		(23	)					(13,726	)
Income (loss) from continuing operations before income taxes		(16,485	)		5,365			(4,543	)		(15,663	)
Provision (benefit) for federal and state income taxes		(11,413	)		1,881						(9,532	)
Income (loss) from continuing operations		(5,072	)		3,484			(4,543	)		(6,131	)
Income from discontinued operations net of income taxes					1,059						1,059
Net income (loss)	$	(5,072	)	$	4,543		$	(4,543	)	$	(5,072	)

78

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Operations

for the Year Ended December 31, 2004

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
	Inc.			Subsidiaries			Eliminations			Subsidiaries
				(In thousands)
Revenue	$			$	141,951		$	(220	)	$	141,731
Costs and expenses
Direct operating costs					45,924			1,472			47,396
Selling, general and administrative expenses		10,057			46,188			(1,692	)		54,553
Amortization of program rights					19,227						19,227
Depreciation and amortization		204			15,531						15,735
		10,261			126,870			(220	)		136,911
Income (loss) from operations		(10,261	)		15,081						4,820
Net gain (loss) on derivative instruments		(13,563	)		907						(12,656	)
Loss from extinguishment of long-term debt		(3,170	)		(1,864	)					(5,034	)
Other income, net		2,326			1,031						3,357
Equity in income of subsidiaries		8,104						(8,104	)
Interest expense, net		(7,476	)		(4,299	)					(11,775	)
Income (loss) from continuing operations before income taxes		(24,040	)		10,856			(8,104	)		(21,288	)
Provision (benefit) for federal and state income taxes		(12,087	)		3,838						(8,249	)
Income (loss) from continuing operations		(11,953	)		7,018			(8,104	)		(13,039	)
Income from discontinued operations net of income taxes					1,086						1,086
Net income (loss)	$	(11,953	)	$	8,104		$	(8,104	)	$	(11,953	)

79

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Balance Sheet

as of December 31, 2006

				100%					Fisher
	Fisher			Owned					Communications,
	Communications,			Guarantor					Inc. and
	Inc.			Subsidiaries		Eliminations			Subsidiaries
	(In thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	8,544		$		$	(1,067	)	$	7,477
Restricted cash					8,473					8,473
Receivables, net		768			29,363					30,131
Due from affiliate					17,357		(17,357	)
Deferred income taxes		106			584					690
Prepaid expenses		438			3,154					3,592
Television and radio broadcast rights					6,676					6,676
Assets held for sale					19					19
Total current assets		9,856			65,626		(18,424	)		57,058
Marketable securities, at market value		187,833			474					188,307
Investment in consolidated subsidiaries		253,632					(253,632	)
Cash value of life insurance and retirement deposits		15,959								15,959
Television and radio broadcast rights					1,041					1,041
Goodwill, net					32,714					32,714
Intangible assets					41,142					41,142
Investments in equity investee					2,789					2,789
Deferred financing fees and other assets		4,538			3,210					7,748
Assets held for sale					2,612					2,612
Property, plant and equipment, net		813			147,394					148,207
Total Assets	$	472,631		$	297,002	$	(272,056	)	$	497,577
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	1,543		$	4,124	$	(1,067	)	$	4,600
Due to affiliate		17,357					(17,357	)
Accrued payroll and related benefits		1,841			5,726					7,567
Interest payable		3,809								3,809
Television and radio broadcast rights payable					5,667					5,667
Income taxes payable					486					486
Other current liabilities		950			2,676					3,626
Liabilities of businesses held for sale					289					289
Total current liabilities		25,500			18,968		(18,424	)		26,044
Long-term debt		150,000								150,000
Accrued retirement benefits		18,942			85					19,027
Deferred income taxes		38,559			15,855					54,414
Other liabilities		65			8,462					8,527
Stockholders’ Equity
Common stock		10,900			1,131		(1,131	)		10,900
Capital in excess of par		9,454			164,234		(164,234	)		9,454
Deferred compensation
Accumulated other comprehensive income — net of income taxes:
Unrealized gain on marketable securities		121,441								121,441
Accumulated loss		(1,735	)							(1,735	)
Prior service cost		(212	)							(212	)
Retained earnings		99,717			88,267		(88,267	)		99,717
Total Stockholders’ Equity		239,565			253,632		(253,632	)		239,565
Total Liabilities and Stockholders’ Equity	$	472,631		$	297,002	$	(272,056	)	$	497,577

80

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Balance Sheet

as of December 31, 2005

				100%					Fisher
	Fisher			Owned					Communications,
	Communications,			Guarantor					Inc. and
	Inc.			Subsidiaries		Eliminations			Subsidiaries
				(In thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	3,660		$	15,962	$			$	19,622
Receivables, net		105			28,061					28,166
Due from affiliate		6,184					(6,184	)
Income taxes receivable		1,538					(552	)		986
Deferred income taxes		7			658					665
Prepaid expenses		414			3,881					4,295
Television and radio broadcast rights					6,519					6,519
Total current assets		11,908			55,081		(6,736	)		60,253
Marketable securities, at market value		169,634			419					170,053
Investment in consolidated subsidiaries		225,057					(225,057	)
Cash value of life insurance and retirement deposits		5,115			10,188					15,303
Television and radio broadcast rights					2,075					2,075
Goodwill, net					38,354					38,354
Intangible assets					1,244					1,244
Investments in equity investee					2,759					2,759
Deferred financing fees and other assets		5,169			871					6,040
Property, plant and equipment, net		904			143,408					144,312
Total Assets	$	417,787		$	254,399	$	(231,793	)	$	440,393
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	693		$	2,790	$			$	3,483
Due to affiliate					6,184		(6,184	)
Accrued payroll and related benefits		1,113			6,242					7,355
Interest payable		3,809								3,809
Television and radio broadcast rights payable					5,524					5,524
Income taxes payable					552		(552	)
Other current liabilities		2,058			2,462					4,520
Total current liabilities		7,673			23,754		(6,736	)		24,691
Long-term debt		150,000								150,000
Accrued retirement benefits		19,560			84					19,644
Deferred income taxes		30,868			513					31,381
Other liabilities		65			4,991					5,056
Stockholders’ Equity
Common stock		10,881			1,131		(1,131	)		10,881
Capital in excess of par		8,590			164,234		(164,234	)		8,590
Deferred compensation		(159	)							(159	)
Accumulated other comprehensive income — net of income taxes:
Unrealized gain on marketable securities		109,600								109,600
Accumulated loss		(2,172	)							(2,172	)
Retained earnings		82,881			59,692		(59,692	)		82,881
Total Stockholders’ Equity		209,621			225,057		(225,057	)		209,621
Total Liabilities and Stockholders’ Equity	$	417,787		$	254,399	$	(231,793	)	$	440,393

81

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the Year Ended December 31, 2006

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
	Inc.			Subsidiaries			Eliminations			Subsidiaries
	(In thousands)
Net cash provided by (used in) operating activities	$	4,481		$	21,319		$	(1,067	)	$	24,733
Cash flows from investing activities
Proceeds from sale of radio stations					23,238						23,238
Purchase of Seattle television stations					(16,127	)					(16,127	)
Option payment for purchase of television stations					(1,100	)					(1,100	)
Increase in restricted cash		—			(8,473	)					(8,473	)
Purchase of Oregon television stations					(19,554	)					(19,554	)
Purchase of property, plant and equipment		(166	)		(15,265	)					(15,431	)
Net cash used in investing activities		(166	)		(37,281	)					(37,447	)
Cash flows from financing activities
Borrowings under borrowing agreements		15,000									15,000
Payments on borrowing agreements		(15,000	)								(15,000	)
Excess tax benefit from exercise of stock options		23									23
Proceeds from exercise of stock options		546									546
Net cash provided by financing activities		569			—						569
Net increase (decrease) in cash and cash equivalents		4,884			(15,962	)		(1,067	)		(12,145	)
Cash and cash equivalents, beginning of period		3,660			15,962						19,622
Cash and cash equivalents, end of period	$	8,544		$	—		$	(1,067	)	$	7,477

82

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the Year Ended December 31, 2005

				100%				Fisher
	Fisher			Owned				Communications,
	Communications,			Guarantor				Inc. and
	Inc.			Subsidiaries			Eliminations	Subsidiaries
				(In thousands)
Net cash provided by (used in) operating activities	$	(417	)	$	5,990		$	$	5,573
Cash flows from investing activities
Proceeds from collection of notes receivable					1,585				1,585
Proceeds from sale of marketable securities		73			174				247
Proceeds from sale of property, plant and equipment					418				418
Purchase of property, plant and equipment		(309	)		(7,214	)			(7,523	)
Net cash used in investing activities		(236	)		(5,037	)			(5,273	)
Cash flows from financing activities
Net payments under notes payable		(44	)		(9	)			(53	)
Payment of deferred financing fees		(87	)						(87	)
Proceeds from exercise of stock options		3,437							3,437
Net cash provided by (used in) financing activities		3,306			(9	)			3,297
Net increase in cash and cash equivalents		2,653			944				3,597
Cash and cash equivalents, beginning of period		1,007			15,018				16,025
Cash and cash equivalents, end of period	$	3,660		$	15,962		$	$	19,622

83

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Information for Guarantors

Condensed Consolidated Statement of Cash Flows

for the Year Ended December 31, 2004

				100%						Fisher
	Fisher			Owned						Communications,
	Communications,			Guarantor						Inc. and
	Inc.			Subsidiaries			Eliminations			Subsidiaries
				(In thousands)
Net cash provided by (used in) operating activities	$	12,591		$	13,999		$	(7,500	)	$	19,090
Cash flows from investing activities
Proceeds from collection of notes receivable					428						428
Proceeds from sale of property, plant and equipment					112						112
Purchase of radio station license					(204	)					(204	)
Purchase of property, plant and equipment		(784	)		(6,007	)					(6,791	)
Net cash used in investing activities		(784	)		(5,671	)					(6,455	)
Cash flows from financing activities
Net payments under notes payable		(662	)								(662	)
Borrowings under borrowing agreements		158,000			3,000						161,000
Payments on borrowing agreements		(142,709	)								(142,709	)
Payment to terminate forward transaction tranche and additional amount to retire outstanding balances		(21,589	)								(21,589	)
Payment of deferred financing fees		(5,907	)		(167	)					(6,074	)
Dividends Paid					(7,500	)		7,500
Proceeds from exercise of stock options		428									428
Net cash provided by (used in) financing activities		(12,439	)		(4,667	)		7,500			(9,606	)
Net increase (decrease) in cash and cash equivalents		(632	)		3,661						3,029
Cash and cash equivalents, beginning of period		1,639			11,357						12,996
Cash and cash equivalents, end of period	$	1,007		$	15,018		$			$	16,025

84

Schedule II

FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

Year Ended December 31	2006			2005			2004
	(In thousands)
Allowance for doubtful accounts
Balance at beginning of year	$	503		$	651		$	930
Additions charged to expense		694			492			318
Balances written off, net of recoveries		(736	)		(640	)		(597	)
Balance at end of year	$	461		$	503		$	651

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th day of March, 2007.

Fisher Communications, Inc.
(Registrant)

By:  /s/  Colleen B. Brown

Colleen B. Brown

President and Chief Executive Officer

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

Signatures	Title	Date
/s/  Colleen B. Brown Colleen B. Brown	President, Chief Executive Officer and Director (Principal Executive Officer)	March 14, 2007
/s/  S. Mae Fujita Numata S. Mae Fujita Numata	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March 14, 2007
/s/  Deborah L. Bevier Deborah L. Bevier	Director	March 14, 2007
/s/  James W. Cannon James W. Cannon	Director	March 14, 2007
/s/  Phelps K. Fisher Phelps K. Fisher	Director	March 14, 2007
/s/  Carol H. Fratt Carol H. Fratt	Director	March 14, 2007
/s/  Donald G. Graham, Jr. Donald G. Graham, Jr.	Director	March 14, 2007
/s/  Donald G. Graham, III Donald G. Graham, III	Director	March 14, 2007
/s/  Richard L. Hawley Richard L. Hawley	Director	March 14, 2007

Signatures	Title	Date
/s/  Brian P. McAndrews Brian P. McAndrews	Director	March 14, 2007
/s/  Jerry A. St. Dennis Jerry A. St. Dennis	Director	March 14, 2007
/s/  George F. Warren, Jr. George F. Warren, Jr.	Director	March 14, 2007
/s/  William W. Warren, Jr. William W. Warren, Jr.	Director	March 14, 2007

EXHIBIT INDEX

Exhibit No.			Description
	2	.1*	Asset Purchase Agreement between Fisher Radio Regional Group, Inc. and Equity Broadcasting Corporation, dated December 7, 2005 (filed as Exhibit 2.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 000-22439)).
	3	.1*	Articles of Incorporation (filed as Exhibit 3.1 of the Company’s Registration Statement on Form 10 (File No. 000-22439)).
	3	.2*	Articles of Amendment to the Amended and Restated Articles of Incorporation filed December 10, 1997 (filed as Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 000-22439)).
	3	.3*	Articles of Amendment to the Amended and Restated Articles of Incorporation filed March 8, 2001 (filed as Exhibit 3.3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File No. 000-22439)).
	3	.4	Bylaws amended as of October 26, 2006.
	4	.1*	Indenture relating to Fisher Communications, Inc.’s 8.625% Senior Notes Due 2014, dated as of September 20, 2004 (filed as Exhibit 4.1 to the Current Report on Form 8-K dated September 20, 2004).
	4	.2*	Registration Rights Agreement among Fisher Communications, Inc., its domestic subsidiaries listed on Schedule 1 thereto and Wachovia Securities, Inc., dated September 20, 2004 (filed as Exhibit 4.2 to the Current Report on Form 8-K dated September 20, 2004).
	4	.3*	Form of Fisher Communications, Inc.’s 8.625% Exchange Note due 2014 (filed as Exhibit 4.3 to the Registration Statement on Form S-4 filed on December 20, 2004).
	10	.1*+	Amended and Restated Fisher Communications, Inc. Supplemental Pension Plan, dated December 31, 2005 (filed as Exhibit 3.3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 000-22439)).
	10	.2*	Form of Affiliation Agreement between CBS Television Network and Retlaw Enterprises, Inc. regarding KJEO-TV, KJEO-TV, KIMA-TV, KBCI-TV, KIDK-TV, KVAL-TV, KCBY-TV and KPIC-TV (filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 000-22439)).
	10	.3*+	Amended and Restated Fisher Communications Incentive Plan of 1995. (Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 000-22439)).
	10	.4*+	Fisher Communications Incentive Plan of 2001. (Filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 000-22439)).
	10	.5*	Credit Agreement, dated September 20, 2004, among Fisher Communications, Inc., certain subsidiary guarantors, the lenders thereto and Wachovia Bank, National Association, as administrative agent (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on September 21, 2004 (File No. 000-22439).
	10	.6*+	Form of Non-Qualified Stock Option Contract (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 13, 2005 (File No. 000-22439)).
	10	.7*+	Form of Restricted Stock Rights Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 13, 2005 (File No. 000-22439)).
	10	.8*†	Renewal Letter Agreements dated May 6, 2005 between American Broadcasting Companies, Inc. (“ABC”) and Fisher Broadcasting Company, Inc. (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2005 (File No. 000-22439)).
	10	.9*†	Renewal Letter Agreements dated January 6, 2006 between CBS Television and Fisher Broadcasting — Oregon TV LLC (filed as Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 000-22439)).
	10	.10*†	Renewal Letter Agreements dated January 6, 2006 between CBS Television and Fisher Broadcasting — Washington TV LLC. (filed as Exhibit 10.14 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 000-22439)).
	10	.11*†	Renewal Letter Agreements dated January 6, 2006 between CBS Television and Fisher Broadcasting — Idaho TV LLC (filed as Exhibit 10.15 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 000-22439)).

Exhibit No.			Description
	10	.12*†	Renewal Letter Agreements dated January 6, 2006 between CBS Television and Fisher Broadcasting — S.E. Idaho TV LLC (filed as Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 000-22439)).
	10	.13*	Joint Sales Agreement dated July 1, 2006 between La Grande Broadcasting, Inc., Fisher Broadcasting — Portland TV, L.L.C. and Equity Broadcasting Company (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 9, 2006 (File No. 000-22439)).
	10	.14*	Amendment No. 2 to Purchase and Sale Agreement dated August 24, 2006 by and among Cherry Creek Radio LLC, Fisher Communications, Inc. and Fisher Radio Regional Group Inc. (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 9, 2006 (File No. 000-22439))
	10	.15*	Second Amendment and Agreement Regarding Asset Purchase Agreement dated September 22, 2006 by and among Fisher Radio Regional Group Inc., Equity Broadcasting Corporation, La Grande Broadcasting, Inc., EBC Boise, Inc. and EBC Pocatello, Inc. (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 9, 2006 (File No. 000-22439))
	10	.16*	Amendment and Agreement Regarding Asset Purchase Agreement dated May 1, 2006 between Fisher Radio Regional Group Inc., Equity Broadcasting Corporation, La Grande Broadcasting, Inc., EBC Boise, Inc. and EBC Pocatello, Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 3, 2006 (File No. 000-22439)).
	10	.17*	Purchase and Sale Agreement dated May 30, 2006 by and between Cherry Creek Radio LLC, Fisher Communications, Inc. and Fisher Radio Regional Group Inc (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2006 (File No. 000-22439)).
	10	.18*	Stock Purchase Agreement dated June 26, 2006 by and among Christopher J. Racine, African-American Broadcasting of Bellevue, Inc. and Fisher Broadcasting Company (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2006 (File No. 000-22439)).
	10	.19*	Local Marketing Agreement dated June 26, 2006 by and between Fisher Broadcasting Company and African-American Broadcasting of Bellevue, Inc. (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2006 (File No. 000-22439)).
	10	.20*+	Change in Control Severance Agreement with Colleen B. Brown, dated October 10, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 7, 2005 (File No. 000-22439)).
	10	.21*+	Offer Letter to Colleen B. Brown, dated October 3, 2005 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 7, 2005 (File No. 000-22439)).
	10	.22	Offer Letter to S. Mae Fujita Numata, dated October 20, 2006.
	21	.1	Subsidiaries of the Registrant.
	23	.1	Consent of PricewaterhouseCoopers LLP.
	31	.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Incorporated by reference.
+	Management contract or arrangement.
†	Certain information in this exhibit has been omitted and filed separately with the Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.406.

EX-3.4

Exhibit 3.4

BYLAWS

OF

FISHER COMMUNICATIONS, INC.

(Incorporated Under the Laws of the State of Washington)

Amended as of October 26, 2006

ARTICLE I

REGISTERED OFFICE

     The location and post office address of the registered office of the corporation shall be 100 Fourth Avenue North, Suite 510, Seattle, Washington 98109.

ARTICLE II

STOCKHOLDERS’ MEETINGS

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

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

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

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

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

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

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

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     8. Business and Nominations at Shareholders’ Meetings.

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

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

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

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

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

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

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

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

ARTICLE III

BOARD OF DIRECTORS

     1. Number and Qualifications. The business and affairs of the corporation shall be managed by a board of twelve (12) Directors who need not be stockholders of the corporation nor residents of the State of Washington.

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

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

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

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

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

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

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

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

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

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

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

ARTICLE IV

COMMITTEES

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

     2. Executive Committee.

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

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

          (c) Powers and Duties. The Executive Committee shall have and may exercise all of the authority of the Board of Directors. The Executive Committee shall specifically have the power and duty to vote the stock of fully and partially owned subsidiary companies, which power and duty of the Executive Committee shall include authority to make all determinations and decisions with respect thereto. All actions of the Executive Committee shall be recorded in minutes of its meetings and shall be reported to the Board of Directors at its meeting next succeeding any such action and shall be

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subject to revision or alteration by the Board, except that existing rights of third parties shall not be affected thereby.

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

     3. Compensation Committee.

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

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

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

(1)	Review and establish the salary of officers and selected other key management employees of the corporation and its subsidiaries;
(2)	Review and establish all cash bonuses under and pursuant to the Management Incentive Plans of the corporation and its subsidiaries;
(3)	Review and recommend changes in compensation for members of the corporation’s Board of Directors and its Chairman;
(4)	Administer the Fisher Communications Incentive Plans and review and establish all stock options and stock rights to be granted to officers and selected other key management employees of the corporation and its subsidiaries, pursuant to such Plans;
(5)	Authorize the enrollment of selected management employees of the corporation and its subsidiaries as new participants in the supplemental pension plans;
(6)	Recommend to the Board any additional compensation or employee benefit programs of a substantial nature and changes to existing programs of the corporation or its subsidiaries;

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(7) On behalf of the Board, administer the Fisher 401(k) Retirement Plan (“Plan”) which includes without limitation interpreting the terms of the Plan, approving and adopting Plan amendments, approving and executing governmental filings, appointing and removing the Trustee of the Plan, selecting and entering into agreements with any advisors, consultants, record keepers or other agents that provide services with respect to the Plan and delegating administrative duties and responsibilities to one or more parties, provided that:

(a)	the Compensation Committee shall obtain Board approval prior to taking any action with respect to the Plan that the Committee determines i) is not required by law or the existing terms of the Plan and ii) may have a significant effect on the Company or Plan participants; and
(b)	the Compensation Committee may take other actions with respect to the Plan without prior Board approval, as long as the Compensation Committee reports all of its actions to the Board, the Board retroactively ratifies such actions and the Committee keeps the Board apprised of all information necessary for the Board to fulfill its fiduciary responsibilities with respect to the Plan.

(8)	Record all actions of the Committee in minutes of its meetings; and
(9)	Report to the Board compensation actions of the Committee prior to their effective date.

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

     4. Audit Committee.

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

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

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

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

     5. Nominating and Corporate Governance Committee.

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

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

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

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

     6. Planning Committee

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

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

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

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

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

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

ARTICLE V

OFFICERS

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

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

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

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

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

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

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

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

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

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

ARTICLE VI

STOCK

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

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

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on the books of the corporation until the outstanding certificate or certificates therefor have been surrendered to the corporation, or to the transfer agent, if any.

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

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

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

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

ARTICLE VII

BOOKS AND RECORDS

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

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

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ARTICLE VIII

CORPORATE SEAL

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

ARTICLE IX

INDEMNIFICATION

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

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

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

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

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

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

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

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

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

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

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

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circumstances or even if the corporation (including its Board of Directors, independent legal counsel or its stockholders) actually determined that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses.

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

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

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

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

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

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

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

     13. Severability. Each of the substantive provisions of this Article IX and Article V of the corporation’s Articles of Incorporation is separate and independent of the others, so that if any provision of this Article IX or Article V of the corporation’s Articles of Incorporation shall be held to

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be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other provisions.

ARTICLE X

AMENDMENT OF BYLAWS

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

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

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EX-10.22

Exhibit 10.22

	Fisher Communications, Inc. 100 4th Avenue North, Suite 510 Seattle, WA 98109 Tel: (206) 404-6783 Fax: (206) 404-6787 www.fsci.com
October 20, 2006	Colleen Brown President & CEO cbrown@fsci.com

Ms. Mae Numata
7815 80th Pl SE
Mercer Island, WA 98040

RE: Offer of Employment

Dear Mae,

I am pleased to extend this offer for you to join Fisher Communications, Inc. (the “Company”) as Senior Vice President and Chief Financial Officer. We look forward to you starting on November 27, 2006.

The following outlines your initial compensation and benefits provisions:

1.	Base Salary: $250,000
2.	Participation in the Fisher Communications, Inc. Short-Term Incentive Plan:

a.	Payout Target percentage equal to 45% of Base Salary;
b.	Maximum payout equal to 200% of Target;
c.	Payout is calculated based upon defined criteria and metrics tied to the financial performance of Fisher Communications, Inc.;
d.	Payout will be pro-rated for 2006.

3.	Participation in the Fisher Communications, Inc. Long-Term Incentive Plan:
	You will receive an initial grant of Stock Options to purchase 6,000 shares of Fisher Communications, Inc. common stock. In addition, you will receive 1,500 in Restricted Stock Rights. Both are scheduled to vest over a five-year period with a ten-year expiration period.
4.	Benefits:
	You will be eligible to receive healthcare coverage (medical, RX, dental and vision) for you and your family beginning the first day of the month following your date of hire. You will also be eligible to participate in the Company’s 401(k) and disability plans

Mae Numata
October 20, 2006

	and other fringe benefits, according to the Company’s standard coverage and eligibility requirements for each plan. Our current Benefits-at-a-Glance is enclosed which provides the highlights of our group benefit programs.
5.	As with all employees, this offer is contingent upon passing results of a drug test and criminal background check.
6.	You will receive Fisher’s standard paid time off benefits, with the exception that you will receive four weeks of vacation per year.

We look forward to working with you on an announcement and press release regarding your appointment.

I want to express my distinct pleasure in welcoming you to Fisher Communications, Inc. and my enthusiasm over your assumption of the critical role of SVP/CFO of the Company.

Sincerely,

/s/ Colleen B. Brown

Colleen B. Brown

Accepted:

/s/ S. Mae Fujita Numata

S. Mae Fujita Numata

Dated: 10/21/06

EX-21.1

Exhibit No. 21.1

Fisher Communications, Inc.
Subsidiaries

	Jurisdiction in which
Subsidiary	Organized
Fisher Broadcasting Company	Washington
Fisher Mills Inc.	Washington
Fisher Properties Inc.	Washington
Fisher Media Services Company	Washington
Fisher Radio Regional Group Inc. /(1)/	Washington
Fisher Broadcasting — Seattle TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Seattle Radio, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Portland TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Oregon TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Washington TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Idaho TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — S.E. Idaho TV, L.L.C. /(1)/	Delaware
Fisher Broadcasting — Bellevue TV, L.L.C. /(1)/	Delaware

(1) Wholly owned by Fisher Broadcasting Company

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-32103) of Fisher Communications, Inc. our report dated March 14, 2007, relating to the consolidated financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, of Fisher Communications, Inc., which appear in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Seattle, Washington
March 14, 2007

EX-31.1

Exhibit 31.1

Section 302 Certification
Annual Report on Form 10-K

I, Colleen B. Brown, certify that:

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

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

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

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

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

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

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

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

5. The registrant’s other certifying officer(s) 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.

Dated: March 14, 2007

/s/ Colleen B. Brown  

Colleen B. Brown 

President and Chief Executive Officer 

EX-31.2

Exhibit 31.2

Section 302 Certification
Annual Report on Form 10-K

I, S. Mae Fujita Numata, certify that:

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

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

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

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

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

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

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

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

5. The registrant’s other certifying officer(s) 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.

Dated: March 14, 2007

/s/ S. Mae Fujita Numata  

S. Mae Fujita Numata 

Senior Vice President
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 Annual Report of Fisher Communications, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, Colleen B. Brown, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 14, 2007

/s/ Colleen B. Brown  

Colleen B. Brown
President and Chief Executive Officer 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Fisher Communications, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, S. Mae Fujita Numata, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 14, 2007

/s/ S. Mae Fujita Numata  

S. Mae Fujita Numata
Senior Vice President
Chief Financial Officer