8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)                     October 19, 2004

LODGENET ENTERTAINMENT CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	0-22334	46-0371161
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3900 West Innovation Street, Sioux Falls, SD	57107
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code                    (605) 988-1000

n/a

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
Press Release
PowerPoint Slides

Item 2.02. Results of Operations and Financial Condition.

     On October 19, 2004, LodgeNet Entertainment Corporation issued a press release regarding its financial results for the second quarter of 2004 and certain other information. A copy of the press release is furnished as Exhibit 99.1 hereto.

     LodgeNet Entertainment Corporation will host a conference call on Tuesday, October 19, 2004 at 4:00 pm CST. The call will be webcast live over the Internet via ECI at http://calleci.econfcall.net/pub_cs_activelist.jsp. The webcast will be archived at that site for one month and can be accessed via LodgeNet’s website at http://www.lodgenet.com. Additionally, LodgeNet has posted slides at its website under the investor relations, company presentation section, which will be referenced during the conference call. These slides are furnished as Exhibit 99.2 hereto.

     The press releases and the slides include information regarding operating income which include adjustments to amounts calculated under generally accepted accounting principles. These measures are not in accordance with, or an alternative for, GAAP, and may be different from similar measures used by other companies. The operating income information presented in the slides is provided as a complement to results provided in accordance with generally accepted accounting principles and is provided to give investors a more complete understanding of the underlying operational results and trends in LodgeNet’s performance. Management believes this information is useful in analyzing historical results because it shows investors and management the profitability of operations apart from the major non-cash items. In addition, management uses the information as a basis for planning and forecasting future periods.

     The information in this Item 2.02 and Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits

          99.1     Press Release (furnished)

          99.2     PowerPoint Slides (furnished)

SIGNATURES

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

Date:  October 19, 2004	By:	/s/ Scott C. Petersen
		Scott C. Petersen
	Its	President and Chief Executive Officer

EX-99.1

FOR IMMEDIATE RELEASE

Ann Parker, Director	Mike Smargiassi
Investor Relations	Brainerd Communicators
605-988-1000	212-986-6667
ann.parker@lodgenet.com	smarg@braincomm.com

LODGENET REPORTS RESULTS FOR THIRD QUARTER 2004

- Quarterly Revenue up 5.7% to $71.7 Million -
- - $10.9 Million of Net Free Cash Flow and 46% Increase in Operating Income -
- - Digital Systems Deployed in 469,000 Rooms, or 49% of Interactive Room Base -

     SIOUX FALLS, SD, October 19, 2004 – LodgeNet Entertainment Corporation (Nasdaq:LNET) today reported its 44^th consecutive increase of comparative quarterly revenue. Revenue for the quarter was $71.7 million, a 5.7% increase in comparison to the third quarter of 2003. Operating income was $5.4 million in the third quarter of 2004, an increase of $1.7 million or 46.2% compared to the year earlier quarter. Net loss for the third quarter of 2004 was $(3.5) million, or ($0.20) per share, versus $(5.4) million, or ($0.43) per share, in the third quarter of 2003. LodgeNet also reported $10.9 million in net free cash flow (defined as cash provided by operating activities exceeding cash used for investing) for the third quarter of 2004 as compared to $7.0 million in the third quarter of 2003.

     The following financial highlights are in thousands of dollars, except per-share data and average shares outstanding:

	Three Months Ended September 30,
	2004			2003
Total revenue	$	71,650		$	67,768
Operating income		5,373			3,674
Operating income exclusive of depreciation and amortization		24,535			23,121
Net loss		(3,482	)		(5,429	)
Net loss per common share	$	(0.20	)	$	(0.43	)
Average shares outstanding		17,244,562			12,503,325

-more-

LodgeNet Q3 2004 Earnings 2-2-2-2

     “In the third quarter we continued to make substantial progress toward our joint goals of growing our business while generating an increasing level of net free cash flow and improved profitability metrics,” said Scott C. Petersen, LodgeNet President and CEO. During the quarter we generated $10.9 million in net free cash flow, calculated after subtracting all growth-related capital investments, a 57% increase over the third quarter of 2003. For the first nine months, net free cash flow reached $13.0 million, a $9.3 million increase over the same period in 2003. In addition, operating income improved by 46% while we cut our net loss by 36% as compared to the third quarter of last year.”

     “We recorded these steadily improving results while we continued to capitalize on our growth opportunities through the expansion of our digital room base,” said Gary H. Ritondaro, LodgeNet Senior Vice President and CFO. “During the third quarter we added 27,200 net digital rooms to our base, bringing our total digital room count to 469,000, representing 49% of our total Guest Pay interactive room base. Looking ahead to the fourth quarter, we plan to accelerate that digital growth rate to around 35,000 rooms, of which approximately 22,000 will be net new room growth, as we will be installing a majority of the 14,000 rooms awarded by FelCor Lodging to us this past June.”

     “With a stronger balance sheet and an increasing level of cash being generated by our operations, we are committed to delivering on our stated goal of making 2004 the first year in our company’s history during which we generate positive net free cash flow after all growth-related investment activity. We estimate our full year net free cash flow will be in the range of $3.0 to $5.0 million, a substantial improvement over the negative $5.0 million of net cash flow generated last year,” added Petersen.

RESULTS FROM OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2004 VERSUS
THREE MONTHS ENDED SEPTEMBER 30, 2003

     Total revenue for the third quarter of 2004 was $71.7 million, an increase of $3.9 million, or 5.7%, compared to the third quarter of 2003. Revenue from Guest Pay interactive services increased $3.6 million, or 5.4%, driven by a 4.4% increase in average number of rooms in operation, and the continued deployment of digital systems. Revenue per room increased to $24.65 per month in the third quarter of 2004 from $24.42 per month in the third quarter of 2003. Movie revenue per room was $18.90 this year compared to last year’s $18.99. During the quarter, movie revenue was adversely impacted by the Summer Olympics, which was televised during August. Revenue per room from other interactive services increased 5.9%, from $5.43 per month in the third quarter of 2003 to $5.75 in the current year quarter. The increase was driven by the continued expansion of services available through the Company’s digital television and high-speed Internet access systems, and price changes associated with basic cable services.

     Gross profit increased 6.3% to $39.0 million in the third quarter of 2004 compared to $36.7 million in the third quarter of 2003. The overall gross profit margin increased to 54.4% in the current quarter compared to 54.1% in the prior year quarter. The increased margin was primarily a result of lower programming royalty costs.

     Guest Pay operations expenses were $8.5 million in the third quarter of 2004, a 5.1% increase as compared to $8.1 million in the year earlier quarter. The increase was primarily due to the 4.4% increase in the average number of rooms served. Guest Pay operations expenses as a percentage of revenue remained at 11.9% in the third quarter of 2004. Per average installed room, Guest Pay operations expense was $3.00 per month in the third quarter of 2004 as compared to $2.98 per month in the prior year quarter.

     Selling, general and administrative expenses were $5.9 million during the quarter compared to $5.4 million in the third quarter of 2003. SG&A as a percentage of revenue was 8.3% in the current quarter compared to 8.0% for third quarter 2003. Per average Guest Pay room, SG&A expenses were $2.09 in the third quarter of 2004 compared to $2.01 in the prior year quarter. The increase was primarily related to higher payroll expenses and accounting fees associated with Sarbanes-Oxley compliance.

     Depreciation and amortization expenses decreased to $19.2 million in the current year quarter versus $19.4 million in the third quarter of 2003. The decrease was primarily due to higher-cost assets becoming fully depreciated while the cost basis of new assets being added to the base was lower. As a percentage of revenue, depreciation and amortization expense decreased to 26.7% in the third quarter of 2004 versus 28.7% in the third quarter of 2003.

     Interest expense was $8.1 million in the current quarter versus $8.7 million in the third quarter of 2003, a decrease of $641,000. Average debt during the third quarter of 2004 was $324.7 million versus $367.6 million during the third quarter of 2003. The average interest rate remained at 9.5% for the third quarter of 2004 as compared to the prior year quarter.

LodgeNet Q3 2004 Earnings 3-3-3-3

     As a result of factors previously described, the Company generated operating income of $5.4 million in the third quarter of 2004, an increase of $1.7 million, or 46.2%, compared to operating income of $3.7 million in the year earlier quarter. Operating income exclusive of depreciation and amortization increased 6.1% to $24.5 million for the third quarter of 2004 compared to $23.1 million in the third quarter of 2003. During the third quarter, the Company also incurred a charge of $810,000 resulting from the early retirement of $35 million of the Company’s Term B notes under its bank credit facility. The Company’s net loss was $(3.5) million, a 35.9% reduction, as compared to $(5.4) million in the year earlier quarter. The loss per share for the third quarter of 2004 was $(0.20) compared to a loss of $(0.43).

     For the quarter, cash provided by operating activities was $25.5 million while cash used for investing activities, including growth-related capital, was $14.6 million, resulting in net free cash flow of $10.9 million. This compares to a net free cash flow of $7.0 million for the third quarter of 2003. The improvement in net free cash flow was driven by several factors, including an increased level of cash generated by operating activities, a reduction in the number of digital rooms installed during the quarter and a reduction in the cost of a digital room installation quarter over quarter. During the quarter, the Company installed 27,200 net digital rooms compared to 32,700 net digital rooms during the third quarter of 2003. The cost per new digital installed room averaged $375 during the quarter, compared to $396 during the third quarter of 2003. The cost per digital converted room averaged $275 during the quarter, compared to $330 during the third quarter of 2003.

2004 Outlook

     For the calendar year 2004, LodgeNet expects to report revenue in a range from $265.0 million to $268.0 million and operating income from $12.5 million to $14.0 million. Operating income exclusive of depreciation and amortization is expected to be $90.5 million to $92.0 million. Net loss is expected to be $(20.5) million to $(19.0) million or a loss per share of $(1.34) to $(1.24) for the full year 2004. The calendar year net loss per share calculation has been adjusted to reflect the additional shares issued by the Company as part of its recent equity offering.

     The Company will hold a conference call on Tuesday, October 19th, 2004 at 4:00 pm CST. A live webcast of the teleconference will also be available via the Internet at the ECI website http://calleci.econfcall.net/pub_cs_activelist.jsp. The webcast will be archived at that site for one month and can be accessed via LodgeNet’s website at www.lodgenet.com. Additionally, the Company has posted slides at its website under the investor relations, company presentation section, which will be referenced during the conference call.

About LodgeNet

     LodgeNet Entertainment Corporation is one of the world’s largest providers of interactive television systems and broadband services to hotels, including resort and casino hotels, throughout the United States and Canada as well as select international markets. These services include on-demand movies, music and music videos, Nintendo® video games, Internet on television, and other interactive television services, as well as high-speed Internet access, all designed to serve the needs of the lodging industry and the traveling public. LodgeNet provides service to more than one million rooms, including 985,000 interactive guest pay rooms, in more than 5,900 hotel properties worldwide. LodgeNet estimates that during 2003 more than 260 million travelers had access to LodgeNet’s interactive television systems. LodgeNet is listed on NASDAQ and trades under the symbol LNET.

     Certain statements in this press release constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release, words such as “expect”, “anticipate”, “estimate”, “believe”, “no assurance”, “intend”, “should”, “could”, “may”, “plan”, “project”, “predict”, and similar expressions and statements which are made in the future tense, or which refer to future events or developments, are intended to identify such forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others, the following factors: general economic and business conditions, and trends in the lodging and entertainment industries in particular; changes in hotel occupancy rates, business and leisure travel rates and the “buy rate” of our customers; our ability to access popular content on terms that are acceptable to us; timely availability of content; changes to the competition, including the ability of our competitors to deliver on demand entertainment or competitive services through the Internet or cable; the impact of changes in regulation which may limit our ability to provide content we currently provide; the occurrence of one or more future terrorist attacks, wars, public health concerns or other crises; availability of key components and services necessary for the manufacture and assembly of our interactive systems; uncertainties in our strategies or efforts to improve operating results by increasing revenue and decreasing costs; availability of capital on terms that are acceptable to us and sufficient to execute our business plan, including expanding the installation of our digital system in our customers’ guest rooms, and to adapt to technological changes in our industry; changes in customer relationships with hotel chains and their franchisees, including our ability to obtain new customers and to retain existing customers; the results of our product development difficulties and delays of new technologies and enhancement of existing technologies.

LodgeNet Q3 2004 Earnings 4-4-4-4

     These forward-looking statements speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

LodgeNet is a registered trademark of LodgeNet Entertainment Corporation. All rights reserved. Other names and brands may be claimed as the property of others.

(See attached financial and operational tables)

LodgeNet Q3 2004 Earnings 5-5-5-5

LodgeNet Entertainment Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollar amounts in thousands, except share data)

	September 30,			December 31,
	2004			2003
Assets
Current assets:
Cash and cash equivalents	$	33,488		$	2,772
Accounts receivable, net		32,132			28,150
Prepaid expenses and other		1,874			3,233
Total current assets		67,494			34,155
Property and equipment, net		215,458			227,037
Debt issuance costs, net		9,746			11,036
Intangible assets, net		5,537			8,270
Other assets		2,638			2,770
	$	300,873		$	283,268
Liabilities and Stockholders’ Equity (Deficiency)
Current liabilities:
Accounts payable	$	21,462		$	15,012
Current maturities of long-term debt		2,524			8,638
Accrued expenses		19,347			12,697
Deferred revenue		4,364			3,918
Total current liabilities		47,697			40,265
Long-term debt		310,082			359,610
Other long-term liability		3,999			3,999
Derivative instruments		7,299			8,396
Total liabilities		369,077			412,270
Commitments and contingencies
Stockholders’ equity (deficiency):
Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued or outstanding
Common stock, $.01 par value, 50,000,000 shares authorized; 17,622,914 and 12,722,267 shares outstanding at September 30, 2004 and December 31, 2003, respectively		176			127
Additional paid-in capital		226,855			155,163
Accumulated deficit		(291,271	)		(276,567	)
Accumulated other comprehensive loss		(3,964	)		(7,725	)
Total stockholders’ equity (deficiency)		(68,204	)		(129,002	)
	$	300,873		$	283,268

LodgeNet Q3 2004 Earnings 6-6-6-6

LodgeNet Entertainment Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Dollar amounts in thousands, except share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Revenues:
Guest Pay	$	69,902		$	66,304		$	196,443		$	185,121
Other		1,748			1,464			5,319			4,697
Total revenues		71,650			67,768			201,762			189,818
Direct costs:
Guest Pay		31,979			30,408			87,830			83,454
Other		694			701			2,156			2,182
Total direct costs (exclusive of other operating expenses shown separately below)		32,673			31,109			89,986			85,636
Gross profit (exclusive of other operating expenses shown separately below)		38,977			36,659			111,776			104,182
Operating expenses:
Guest Pay operations		8,503			8,092			24,980			23,518
Selling, general and administrative		5,939			5,446			17,823			15,742
Depreciation and amortization		19,162			19,447			58,292			59,157
Total operating expenses		33,604			32,985			101,095			98,417
Operating income		5,373			3,674			10,681			5,765
Investment gains		—			243			—			250
Loss on early retirement of debt		(810	)		—			(810	)		(7,061	)
Interest expense		(8,108	)		(8,749	)		(24,479	)		(25,765	)
Other income (expense), net		89			(497	)		187			52
Loss before income taxes		(3,456	)		(5,329	)		(14,421	)		(26,759	)
Provision for income taxes		(26	)		(100	)		(283	)		(345	)
Net loss	$	(3,482	)	$	(5,429	)	$	(14,704	)	$	(27,104	)
Net loss per common share (basic and diluted)	$	(0.20	)	$	(0.43	)	$	(1.01	)	$	(2.18	)
Weighted average shares outstanding		17,244,562			12,503,325			14,487,717			12,455,494

LodgeNet Q3 2004 Earnings 7-7-7-7

LodgeNet Entertainment Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Dollar amounts in thousands)

	Nine Months Ended
	September 30,
	2004			2003
Operating activities:
Net loss	$	(14,704	)	$	(27,104	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		58,292			59,157
Investment gains					(250	)
Loss on early retirement of debt, less cash portion		810			2,477
Change in operating assets and liabilities:
Accounts receivable		(3,945	)		(1,897	)
Prepaid expenses and other		225			757
Accounts payable		6,436			7,852
Accrued expenses and deferred revenue		6,473			4,427
Other		122			321
Net cash provided by operating activities		53,709			45,740
Investing activities:
Property and equipment additions		(41,259	)		(41,305	)
Note receivable repayments (advances)		567			(1,000	)
Proceeds from affiliates, net		—			250
Net cash used for investing activities		(40,692	)		(42,055	)
Financing activities:
Proceeds from long-term debt		—			200,000
Repayment of long-term debt		(48,125	)		(157,926	)
Payment of capital lease obligations		(818	)		(782	)
Borrowings under revolving credit facility		13,000			18,500
Repayments of revolving credit facility		(20,000	)		(52,500	)
Debt issuance costs		(838	)		(7,902	)
Proceeds from sale of interest rate swap		3,052			—
Proceeds from issuance of common stock, net of offering costs		66,767			—
Exercise of stock options		4,587			147
Net cash provided by (used for) financing activities		17,625			(463	)
Effect of exchange rates on cash		74			278
Increase in cash and cash equivalents		30,716			3,500
Cash and cash equivalents at beginning of period		2,772			1,107
Cash and cash equivalents at end of period	$	33,488		$	4,607

LodgeNet Q3 2004 Earnings 8-8-8-8

LodgeNet Entertainment Corporation and Subsidiaries
Five Quarter Summary

	3rd Qtr '04			2nd Qtr '04			1st Qtr '04			4th Qtr '03			3rd Qtr '03
Room Base Statistics
Total Rooms Served 1		1,014,538			1,006,421			1,001,876			994,127			983,158
Total Guest Pay Interactive Rooms 2		953,547			942,998			934,260			924,643			913,118
Total Digital Rooms 3		469,440			442,249			415,415			385,426			356,419
Percent of Total GP Interactive Rooms		49.2	%		46.9	%		44.5	%		41.7	%		39.0	%
Guest Pay Per Room Statistics (per month)
Movie Revenue	$	18.90		$	17.28		$	17.04		$	16.40		$	18.99
Other Interactive Service Revenue		5.75			5.56			5.37			4.89			5.43
Total Guest Pay Revenue Per Room	$	24.65		$	22.84		$	22.41		$	21.29		$	24.42
Guest Pay Operations Expense	$	3.00		$	2.97		$	2.93		$	2.93		$	2.98
Summary Operating Results
(Dollar amounts in thousands)
Total Revenue	$	71,650		$	66,281		$	63,831		$	60,331		$	67,768
Gross Profit (exclusive of other operating expenses)	$	38,977		$	37,217		$	35,582		$	34,020		$	36,659
Operating Income (exclusive of Depreciation and Amortization)	$	24,535		$	22,699		$	21,739		$	20,037		$	23,121
Operating Income	$	5,373		$	3,237		$	2,071		$	735		$	3,674
Loss on Early Retirement of Debt	$	(810	)	$	—		$	—		$	—		$	—
Net Loss	$	(3,482	)	$	(5,006	)	$	(6,216	)	$	(7,948	)	$	(5,429	)
Cash Provided by Operating Activities	$	25,538		$	9,891		$	18,280		$	2,823		$	19,979
Cash Used for Investing Activities	$	14,605		$	13,453		$	12,634		$	11,563		$	13,006
Gross Profit Margin		54.4	%		56.2	%		55.7	%		56.4	%		54.1	%
SG&A as Percent of Total Revenue		8.3	%		9.3	%		8.9	%		9.8	%		8.0	%
Operating Income Margin		7.5	%		4.9	%		3.2	%		1.2	%		5.4	%

¹ Total rooms served represents rooms receiving one or more of the Company’s services including rooms served by international licensees.

² Guest Pay interactive rooms receive one or more Guest Pay Services such as movies, video games, music or other interactive services. This number represents domestic Guest Pay Interactive Rooms.

³ Digital interactive rooms provide content stored on a digital file server as a component of LodgeNet’s interactive digital system.

EX-99.2

Certain statements in this presentation constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this presentation, words such as "expect", "anticipate", "estimate", "believe", "no assurance", "intend", "should", "could", "may", "plan", "project", "predict", and similar expressions and statements which are made in the future tense, or which refer to future events or developments, are intended to identify such forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others, the following factors: general economic and business conditions, and trends in the lodging and entertainment industries in particular; changes in hotel occupancy rates, business and leisure travel rates and the "buy rate" of our customers; our ability to access popular content on terms that are acceptable to us; timely availability of content; changes to the competition, including the ability of our competitors to deliver on demand entertainment or competitive services through the Internet or cable; the impact of changes in regulation which may limit our ability to provide content we currently provide; the occurrence of one or more future terrorist attacks, wars, public health concerns or other crises; availability of key components and services necessary for the manufacture and assembly of our interactive systems; uncertainties in our strategies or efforts to improve operating results by increasing revenue and decreasing costs; availability of capital on terms that are acceptable to us and sufficient to execute our business plan, including expanding the installation of our digital system in our customers' guest rooms, and to adapt to technological changes in our industry; changes in customer relationships with hotel chains and their franchisees, including our ability to obtain new customers and to retain existing customers; the results of our product development difficulties and delays of new technologies and enhancement of existing technologies.These forward- looking statements speak only as of the date of this presentation. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Slide 1

(in millions) Steady Revenue Growth TTM FINANCIAL HIGHLIGHTS Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Revenue 200 207 212 217 221 224 230 235 240 243 247 250 254 258 262 Occupancy 0.675 0.669 0.655 0.645 0.635 0.632 0.631 0.631 0.628 0.622 0.622 0.624 0.625 0.63 0.635 Slide 2 Trailing Twelve Months

Q3 2004 Q3 2003 % Change Movie Revenue $ 18.90 $ 18.99 - 0.5% Other Interactive Services 5.75 5.43 5.9% Guest Pay Revenue $ 24.65 $ 24.42 1.0% Q3 Revenue Per Room Analysis Occupancy Levels up Approximately 180 Basis Points Quarter over Quarter Olympics Negatively Impacted Per-Room Movie Revenue by $.20-$.30 Digital Platform Installed in 49% of Rooms FINANCIAL HIGHLIGHTS Slide 3

Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 22.44 Q2 '03 22.52 Q3 '03 22.63 Q4 '03 22.58 Q1 '04 22.71 Q2 '04 22.74 Q3 '04 22.8 Guest Pay Revenue Slide 4 FINANCIAL HIGHLIGHTS TTM per room per month Trailing Twelve Months

Gross Profit & Gross Profit Margin TTM Trailing Twelve Months per room per month Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Gross Profit 12.69 12.58 12.47 12.49 12.58 12.63 12.67 Gross Profit Margin 0.562 0.556 0.553 0.553 0.553 0.556 0.557 FINANCIAL HIGHLIGHTS Slide 5

Operating Expenses Slide 6 Q3 2004 Q3 2003 % Change Guest Pay Operations Expense $ 3.00 $ 2.98 0.6% SG&A Expense 2.09 2.01 4.0% Total Operating Expenses $ 5.09 $ 4.99 2.0% FINANCIAL HIGHLIGHTS SG&A as a Percent of Revenue - 8.3% Q3 2003 - Operating Expenses Managed to Business Conditions Q3 2004 - Sarbanes-Oxley Compliance Costs Per room per month

(in millions) Increasing Operating Income exclusive of Depreciation & Amortization TTM Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Operating Income exclusive of Depreciation & Amortization 69.6 72.4 73.4 75.1 77.6 79.6 81.7 81.9 82.1 82.6 83.2 84.9 86.7 87.6 89 Occupancy 0.675 0.669 0.655 0.645 0.635 0.632 0.631 0.631 0.628 0.622 0.622 0.624 0.625 0.63 0.635 FINANCIAL HIGHLIGHTS Slide 7 Trailing Twelve Months

New Installation Digital Capital per Room Slide 8 FINANCIAL HIGHLIGHTS 2000 423 2001 456 2002 439 2003 405 Q2 2003 408 Q3 2003 396 Q4 2003 391 Q1 2004 382 Q2 2004 373 Q3 2004 375 TAPE $423 $456 $439 $405 $382 DIGITAL DIGITAL DIGITAL DIGITAL $373 DIGITAL $375 DIGITAL

1st 9 Mo '02 -16.3 1st 9 Mo '03 3.7 1st 9 Mo '04 13 Cash Flow Net Of Investing Slide 9 FINANCIAL HIGHLIGHTS $3.7 (in millions) $(16.3) $13.0

Cash from Operations Analysis Q3 2004 9 Mo.'04 9 Mo '03 Cash from Operations $ 25.5 $ 53.7 $ 45.7 Corp Capital / Minor Extensions (5.3) (11.1) (6.8) Digital Renewal Investment * (4.0) (11.2) (12.2) Pre-Expansion Cash Flow 16.2 31.4 26.8 New Room Investment ** (5.3) (18.3) (23.1) Post-Expansion Cash Flow $ 10.9 $ 13.0 $ 3.7 *Digital Upgrade Rooms 14,561 38,566 35,933 **New Digital Rooms 13,952 48,457 56,664 Slide 10 (in millions) FINANCIAL HIGHLIGHTS

Liquidity Metrics Debt $ 312.6 $ 361.8 Debt Ratios 3.5x 4.4x Debt Covenants 4.5x 5.0x September 30, 2004 $75 Million Available Under Revolving Bank Credit Facility Stronger Balance Sheet -"Dry Powder" for Business Opportunities (in millions) FINANCIAL HIGHLIGHTS September 30, 2003 Slide 11

OUTLOOK Q4 & Full Year 2004 Guidance Q4 '04 Range FY' 04 Range Revenue $ 63.0 - $ 66.0 $ 265.0 - $268.0 Operating Income $ 2.0 - $ 3.5 $ 12.5 - $ 14.0 Operating Income exclusive of D & A $ 21.5 - $ 23.0 $ 90.5 - $ 92.0 Net Loss $ (6.0) - $ (4.5) $ (20.5) - $(19.0) EPS (Loss) $(0.33) - $(0.24) $ (1.34) - $(1.24) Capital Investment $ 16.0 - $ 17.0 $ 57.0 - $ 58.0 Net New Rooms 21,500 - 22,500 49,000 - 50,000 Slide 12 (in millions except per share)

Copyright 2004 LodgeNet Entertainment Corporation All rights reserved. Slide 13

Slide 14 Reconciliation of Operating Income exclusive of Depreciation & Amortization Operating Income exclusive of Depreciation and Amortization = Operating Income + D&A (12 months trailing)