10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM             TO            .

COMMISSION FILE NUMBER: 000-26076

SINCLAIR BROADCAST GROUP, INC.

(Exact name of Registrant as specified in its charter)

Maryland	52-1494660
(State of incorporation)	(I.R.S. Employer Identification No.)

10706 Beaver Dam Road
Hunt Valley, MD 21030

(Address of principal executive offices)

(410) 568-1500

(Registrant’s telephone number, including area code)

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

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

Class A Common Stock, par value $.01 per share

Series D Preferred Stock, par value $.01 per share

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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 an accelerated filer (as defined in Rule 126-2 of the Act).  Yes ý  No o

Based on the closing sales price of $10.27 per share as of June 30, 2004, the aggregate market value of the voting and non-voting common equity of the Registrant held by non-affiliates was approximately $479.0 million.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

Title of each class	Number of shares outstanding as of March 7, 2005
Class A Common Stock	46,125,535
Class B Common Stock	39,072,649
Series D Preferred Stock	3,337,033

Documents Incorporated by Reference – Portions of our definitive Proxy Statement relating to our 2005 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.  We anticipate that our Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2004.

SINCLAIR BROADCAST GROUP, INC.

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004

TABLE OF CONTENTS

PART I
ITEM 1.	BUSINESS
ITEM 2.	PROPERTIES
ITEM 3.	LEGAL PROCEEDINGS
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
ITEM 6.	SELECTED FINANCIAL DATA
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A.	CONTROLS AND PROCEDURES
ITEM 9B.	OTHER INFORMATION
PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11.	EXECUTIVE COMPENSATION
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES

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PART I

FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements.  We have based these forward-looking statements on our current expectations and projections about future events.  These forward-looking statements are subject to risks, uncertainties and assumptions about us, including among other things, the following risks:

General risks

•the impact of changes in national and regional economies;

•terrorism acts of violence or war and other geopolitical events;

•the activities of competitors;

Industry risks

•the business conditions of our advertisers;

•competition with other broadcast television stations, radio stations, satellite providers, cable channels and cable system operators and telecommunications providers serving in the same markets;

•pricing and demand fluctuations in local and national advertising;

•availability of programming and volatility of programming costs;

•the effects of governmental regulation of broadcasting or changes in those regulations and court actions interpreting those regulations, including ownership, indecency and regulations regarding the transition from analog to digital over the air broadcasting;

Risks specific to Sinclair Broadcast Group

•the effectiveness of our management;

•our ability to attract and maintain local and national advertising;

•our ability to service our outstanding debt;

•the popularity of syndicated programming we purchase and network programming that we air;

•the strength of ratings for our news broadcasts;

•our ability to maintain our affiliation agreements with the relevant networks;

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

•successful integration of outsourcing agreements; and

•FCC license renewals.

Other matters set forth in this report, including the risk factors set forth in Item 7 of this report and/or in the documents incorporated by reference, may also cause actual results in the future to differ materially from those described in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

ITEM 1.BUSINESS

We are a diversified television broadcasting company that owns or provides certain programming, operating or sales services to more television stations than any other commercial broadcasting group in the United States.  We currently own, provide programming and operating services pursuant to local marketing agreements (LMAs) or provide (or are provided) sales services pursuant to outsourcing agreements to 62 television stations in 39 markets.  For the purpose of this report, these 62 stations are referred to as “our” stations.  We currently have 11 duopoly markets where we own and operate two stations within the same market.  We have eight LMA markets where, with one exception, we own and operate one station in the market and provide programming and operating services to (by) another station within that market.  In the remaining sixteen markets, we own and operate a single television station.

On November 12, 2004, we announced the sale of KSMO-TV, our WB affiliate in Kansas City, Missouri, to Meredith Corporation for $33.5 million, of which we have closed on $26.8 million for the non-license assets.  Until the Federal Communications Commission (FCC) approves the transfer of the FCC license, we will continue our involvement in certain operations of this station through an outsourcing agreement with Meredith.  On December 2, 2004, we announced the sale of KOVR-TV, our CBS affiliate in Sacramento, California, to CBS Broadcasting, Inc. for $285.0 million.  Closing will occur when the FCC approves this transaction.  We expect both transactions to close in 2005 and we have reclassified the operations of these stations as discontinued operations and

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the assets and liabilities as held for sale in our financial statements in accordance with all applicable accounting rules and principles.  (See Note 12: Discontinued Operations in our Notes to our Consolidated Financial Statements.)

We broadcast free over-the-air programming to television viewing audiences in the communities we serve through our local television stations. The programming that we provide consists of network provided programs, news produced locally, syndicated local sporting events and syndicated entertainment programs at all but two of our stations. We provide network produced programming which we broadcast pursuant to our agreements with the network with which the stations are affiliated. We produce news at 38 stations in 32 markets, 16 of those stations in 14 markets are provided with our News Central format and six stations have a local news sharing arrangement with a competitive station in that market.  The remaining 16 stations in the remaining 12 markets have news operations that are mostly independent from our News Central format.  We provide popular local sporting events on many of our stations by acquiring the local television broadcast rights for these events. Additionally, we purchase syndicated programming from third parties to be shown on our television stations. See Operating Strategy later in this Item for more information regarding the programming that we provide.

Our primary source of revenue is the sale of commercial air time on our television stations to our advertising customers. Our objective is to meet the needs of our advertising customers by delivering significant audiences in key demographics.  Our strategy is to achieve this objective by providing quality local news programming and popular network and syndicated programs to our viewing audience. We attract our national television advertisers through a single national marketing representation firm, which communicates the benefits of advertising in our 39 markets to national advertisers. Our local television advertisers are attracted through the efforts of our local sales force, which encourages local advertisers to purchase airtime on our stations in order to advertise their products and services to our viewing audience.

Our operating results are usually subject to seasonal fluctuations.  Usually, the fourth quarter operating results are higher than the other three quarters primarily because advertising expenditures are increased in anticipation of holiday season spending by consumers.  Usually, the second quarter operating results are higher than the first and third quarters primarily because advertising expenditures are increased in anticipation of consumer spending on “summer related” items such as home improvements, lawn care and travel plans.  Our operating results are usually subject to fluctuations from political advertising.  In even years, political spending is significantly higher than in odd years due to advertising expenditures surrounding local and national elections.  Additionally, every four years political spending is elevated further due to advertising expenditures surrounding the presidential election.

We seek to own, operate or engage in operating service agreements with multiple television stations in the markets we serve in order to increase revenues, reduce expenses and improve margins through increased economies of scale.  We have entered into LMAs in eight markets where, for a variety of reasons, we do not own the broadcast license related to the second station.  The remaining LMA is in Tampa, Florida where we operate only one station for which we do not own the broadcast license. Under LMAs, we provide substantial portions of the broadcast programming and sell advertising time during such program segments for that second station. Our strategy for attracting viewers and advertisers for our LMA television stations is essentially the same as for our owned and operated television stations. In order to further improve our margins, we have entered into outsourcing agreements in four of our markets in which our stations are provided, or provide, various non-programming related services such as sales, operational and managerial services to or by other stations. See Operating Strategy later in this Item for more information regarding our LMAs, duopolies and outsourcing agreements.

We have a mid-size market focus and 47 of our 62 stations are located in television designated market areas (DMAs) that rank between the 13^th and 75^th largest in the United States. Our television station group is diverse in network affiliation with 20 stations affiliated with FOX, 19 with WB, nine with ABC, six with UPN, three with NBC and three with CBS. Two stations are not affiliated with any network.

In January 1999, we acquired approximately 35% of Acrodyne Communications, Inc. (Acrodyne), a company that manufactures UHF transmitters for the television industry. Along with this investment, we hired a team of highly qualified individuals to develop the next generation of UHF transmitters. We have assigned the rights to this technology to Acrodyne and it has manufactured most of our digital transmitters. In January 2003, our ownership interest increased to 82.4% as a result of a restructuring of our investment in Acrodyne in which we forgave indebtedness of Acrodyne and invested an additional $1.0 million.

In November 1999, we acquired an 82.5% equity interest in an entity that is now known as G1440 Holdings, Inc. and currently, we hold a 93.9% equity interest.  G1440 Holdings, Inc. and its subsidiaries (G1440) provide single-source, end-to-end e-Business solutions and a number of services and products, including a homebuilder application, an immigration tracking tool application, a syndicated television program management and scheduling application and a procurement application.

We are a Maryland corporation formed in 1986. Our principal offices are located at 10706 Beaver Dam Road, Hunt Valley, MD 21030. Our telephone number is (410) 568-1500 and our website address is www.sbgi.net.

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TELEVISION BROADCASTING

Markets and Stations

We own and operate, provide programming services to, provide sales services to or have agreed to acquire the following television stations:

Market	Market Rank (a)	Stations	Status (b)	Channel	Affiliation	Expiration of affiliation agreement	Number of Commercial Stations in the Market (c)	Station Rank (d)	Expiration Date of FCC License
Tampa, Florida	13	WTTA	LMA	38	WB	1/15/08	9	6	2/01/05 (e)
Minneapolis/St. Paul, Minnesota	14	KMWB	O&O	23	WB	1/15/08	7	6	4/01/06
Sacramento, California	19	KOVR (f)	O&O	13	CBS	3/05/08	6	2	12/01/06
St. Louis, Missouri	21	KDNL	O&O	30	ABC	8/07/05	8	4	2/01/06
Pittsburgh, Pennsylvania	22	WPGH	O&O	53	FOX	6/30/05	9	4	8/01/07
		WCWB	O&O	22	WB	1/15/08		6	8/01/07
Baltimore, Maryland	23	WBFF	O&O	45	FOX	6/30/05	6	4	10/01/04 (g)
		WNUV	LMA (h)	54	WB	1/15/08		5	10/01/04 (i)
Raleigh/Durham, North	29	WLFL	O&O	22	WB	1/15/08	7	5	12/01/04 (j)
Carolina		WRDC	O&O	28	UPN	7/31/07		6	12/01/04 (j)
Nashville, Tennessee	30	WZTV	O&O	17	FOX	6/30/05	8	4	8/01/05
		WUXP	O&O	30	UPN	7/31/07		5	8/01/05
		WNAB	OSA (k)	58	WB	5/24/05 (l)		6	8/01/05
Kansas City, Missouri	31	KSMO (m)	O&O	62	WB	1/15/08	7	5	2/01/06
Milwaukee, Wisconsin	32	WCGV	O&O	24	UPN	7/31/07	9	5	12/01/05
		WVTV	O&O	18	WB	1/15/08		6	12/01/05
Cincinnati, Ohio	33	WSTR	O&O	64	WB	1/15/08	6	5	10/01/05
Columbus, Ohio	34	WSYX	O&O	6	ABC	1/31/05 (n)	5	3	10/01/05
		WTTE	LMA (h)	28	FOX	6/30/05		4	10/01/05
Asheville, North Carolina/	35	WLOS	O&O	13	ABC	1/31/05 (n)	8	3	12/01/04 (j)
Greenville/Spartanburg/		WBSC	LMA (h)	40	WB	1/15/08		5	12/01/04 (j)
Anderson, South Carolina
San Antonio, Texas	37	KABB	O&O	29	FOX	6/30/05	7	4	8/01/06
		KRRT	O&O	35	WB	1/15/08		5	8/01/06
Birmingham, Alabama	40	WTTO	O&O	21	WB	1/15/08	8	5	4/01/05 (e)
		WABM	O&O	68	UPN	7/31/07		6	4/01/05 (e)
		WDBB	LMA (o)	17	WB	1/15/08		5	4/01/05 (p)
Norfolk, Virginia	41	WTVZ	O&O	33	WB	1/15/08	7	6	10/01/04 (e)
Oklahoma City, Oklahoma	45	KOCB	O&O	34	WB	1/15/08	10	5	6/01/06
		KOKH	O&O	25	FOX	6/30/05		4	6/01/06
Buffalo, New York	46	WUTV	O&O	29	FOX	6/30/05	8	4	6/01/07
		WNYO	O&O	49	WB	9/01/06		5	6/01/07
Greensboro/Winston-Salem/	48	WXLV	O&O	45	ABC	9/03/05	7	4	12/01/04 (j)
Highpoint, North Carolina		WUPN	O&O	48	UPN	7/30/07		6	12/01/04 (j)
Las Vegas, Nevada	51	KVWB	O&O	21	WB	1/15/08	7	5	10/01/06
		KFBT	O&O	33	IND (q)	n/a		7	10/01/06
Dayton, Ohio	56	WKEF	O&O	22	ABC	open ended	8	3	10/01/05
		WRGT	LMA (h)	45	FOX	6/30/05		4	10/01/05
Richmond, Virginia	61	WRLH	O&O	35	FOX	6/30/05	5	4	10/01/04 (e)
Charleston and Huntington,	62	WCHS	O&O	8	ABC	1/01/00 (n)	6	3	10/01/04 (e)
West Virginia		WVAH	LMA (h)	11	FOX	6/30/05		4	10/01/04 (i)
Mobile, Alabama and	63	WEAR	O&O	3	ABC	1/01/00 (n)	8	2	2/01/05 (e)
Pensacola, Florida		WFGX	O&O	35	IND (q)	n/a		not rated	2/01/05 (e)
Lexington, Kentucky	64	WDKY	O&O	56	FOX	6/30/05	6	4	8/01/05
Flint/Saginaw/Bay City, Michigan	65	WSMH	O&O	66	FOX	6/30/05	5	4	10/01/05
Des Moines, Iowa	73	KDSM	O&O	17	FOX	6/30/05	5	4	2/01/06
Portland, Maine	74	WGME	O&O	13	CBS	12/31/07	6	2	4/01/07
Rochester, New York	75	WUHF	O&O	31	FOX	6/30/05	6	4	6/01/07
Syracuse, New York	77	WSYT	O&O	68	FOX	6/30/05	6	4	6/01/07
		WNYS	LMA	43	WB	6/30/06		5	6/01/07
Cape Girardeau, Missouri/	79	KBSI	O&O	23	FOX	6/30/05	7	4	2/01/06
Paducah, Kentucky		WDKA	LMA	49	WB	6/15/04 (n)		5	8/01/05
Springfield/Champaign,	82	WICS	O&O	20	NBC (r)	4/01/04 (n)	6	2	12/01/05
Illinois		WICD	O&O	15	NBC (r)	4/01/04 (n)		2 (s)	12/01/05
Madison, Wisconsin	85	WMSN	O&O	47	FOX	6/30/05	6	4	12/01/05
Cedar Rapids, Iowa	88	KGAN	O&O (t)	2	CBS	12/31/07	6	3	2/01/06
Tri-Cities, Tennessee	89	WEMT	O&O	39	FOX	6/30/05	7	4	8/01/05
Charleston, South Carolina	101	WMMP	O&O	36	UPN	7/31/07	5	5	12/01/04 (j)
		WTAT	LMA (h)	24	FOX	6/30/05		4	12/01/04 (j)
Springfield, Massachusetts	106	WGGB	O&O	40	ABC	1/31/05 (n)	3	2	4/01/07
Tallahassee, Florida	109	WTWC	O&O	40	NBC	12/31/06	5	3	2/01/05 (e)
		WTXL	OSA (u)	27	ABC	7/3/05		2	2/01/05 (p)
Peoria/Bloomington, Illinois	117	WYZZ	O&O (v)	43	FOX	6/30/05	5	4	12/01/05

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a)Rankings are based on the relative size of a station’s designated market area (DMA) among the 210 generally recognized DMAs in the United States as estimated by Nielsen as of November 2004.

b)“O & O” refers to stations that we own and operate. “LMA” refers to stations to which we provide programming services pursuant to a local marketing agreement. “OSA” refers to stations to which we provide sales services pursuant to an outsourcing agreement.

c)Represents the estimated number of television stations designated by Nielsen as “local” to the DMA, excluding public television stations and stations that do not meet the minimum Nielsen reporting standards (weekly cumulative audience of at least 0.1%) for the Monday-Sunday, 7:00 a.m. to 1:00 a.m. time period as of November 2004.

d)The rank of each station in its market is based upon the November 2004 Nielsen estimates of the percentage of persons tuned to each station in the market from 7:00 a.m. to 1:00 a.m., Monday-Sunday.

e)We timely filed applications for renewal of these licenses with the FCC.  These applications are currently pending.

f)On December 2, 2004, we filed an application to assign KOVR-TV to CBS Broadcasting, Inc.  That application is currently pending with the FCC.

g)We timely filed an application for renewal of this license with the FCC.  On September 1, 2004, Richard D’Amato filed a petition to deny the license renewal application.  We opposed the petition to deny and that application is currently pending.

h)The license assets for these stations are currently owned by Cunningham Broadcasting Corporation, (“Cunningham”) a related party or one of its subsidiaries. See Federal Regulations of Television Broadcasting for more information.

i)Cunningham timely filed applications for renewal of these stations with the FCC.  These applications are currently pending.

j)We timely filed applications for the license renewal of WXLV, WUPN, WLFL, WRDC, WLOS and WMMP with the FCC.  Cunningham timely filed applications for the license renewal of WBSC and WTAT with the FCC.  On November 1, 2004, an organization calling itself “Free Press” filed a petition to deny the license renewal applications of these stations.  We opposed the petition to deny and the applications are currently pending.

k)We have entered into an outsourcing agreement with the unrelated third party owner of WNAB-TV to provide certain non-programming related sales, operational and administrative services to WNAB-TV.

l)Although this agreement has expired, we have extended it through May 24, 2005 under the same terms and conditions.

m)We have entered into an outsourcing agreement with Meredith Corporation, under which the Meredith Corporation provides non-programming related sales, operational and managerial services to KSMO-TV.  We own the FCC license and its related assets including programming.  On January 7, 2005, we filed an application to assign the FCC license for KSMO-TV to Meredith Corporation.  That application is currently pending with the FCC.

n)Although these affiliation agreements have expired, we continue to operate these stations under the same terms and conditions of the expired agreements.

o)WDBB-TV simulcasts the programming broadcast on WTTO-TV pursuant to a programming services agreement and the station rank applies to the combined viewership of these stations.

p)The unrelated third party licensees of these stations timely filed applications for renewal of these licenses.  These applications are currently pending.

q)“IND” or “Independent” refers to a station that is not affiliated with any of ABC, CBS, NBC, FOX, WB or UPN.

r)On February 25, 2004, NBC informed us that they intend to terminate our affiliation with WICS-TV and WICD-TV effective September 2005.

s)WICD-TV, a satellite of WICS-TV, under FCC rules, simulcasts all of the programming aired on WICS-TV except the news broadcasts and the station rank applies to the combined viewership of these stations.

t)We have entered into a five-year outsourcing agreement with an unrelated third party under which the unrelated third party provides certain non-programming related sales, operational and managerial services to KGAN-TV.  We continue to own all of the assets of KGAN-TV and to program and control the station’s operations.

u)We have entered into an outsourcing agreement with the unrelated third party owner of WTXL-TV to provide certain non-programming related sales, operational and managerial services for WTXL-TV.

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v)We have entered into an outsourcing agreement with an unrelated third party, under which the unrelated third party provides certain non-programming related sales, operational and managerial services to WYZZ-TV.  We continue to own all of the assets of WYZZ-TV and to program and control the station’s operations.

Operating Strategy

Our operating strategy includes the following elements:

Programming to Attract Viewership.  We seek to target our programming offerings to attract viewership, to meet the needs of the communities in which we serve and to meet the needs of our advertising customers.  In pursuit of this strategy, we seek to obtain, at attractive prices, popular syndicated programming that is complementary to each station’s network programming. We also seek to broadcast live local and national sporting events that would appeal to a large segment of the local community.  Moreover, we produce news at 38 stations in 32 separate markets, 16 of those stations in 14 markets are provided with our News Central format and six stations have a local news sharing arrangement with a competitive station in that market.  The remaining 16 stations in the remaining 12 markets have news operations that are mostly independent from our News Central format.  In October 2002, we launched our News Central strategy, which is a project that allows us to add, in a cost-effective manner, local news programming at many of our stations by using a central support operation providing national and regional news coverage in coordination with local news operations at the station location.

Developing Local Franchises.  We believe that the greatest opportunity for a sustainable and growing customer base lies within our local communities. Therefore, we have focused on developing a strong local sales force at each of our television stations.  Excluding political advertising revenue, 61.6% of our time sales were local for the year ended December 31, 2004, up from 61.2% in 2003.  Our goal is to continue to grow our local revenues by increasing our market share and by developing new business opportunities.

Development of new business.  In general, the market for local direct mail advertising is approximately three to four times larger than the local television advertising market.  We believe that we can convert direct mail advertisers to become our customers by offering greater value and return for their advertising investment.  We can provide both the exposure and branding intrinsic with television advertising while at the same time, including them in a direct mail piece that is sophisticated and compelling to the consumer.  While there is significant complexity in developing this business, we believe that over time this effort, if successful, would provide our stations and account executives with a competitive advantage over our competitors.  The initiative has resulted in generating new business on our television platform using our existing sales force as well as newly hired sales staff.

Control of Operating and Programming Costs.  By employing a disciplined approach to managing programming acquisition and other costs, we have been able to achieve operating margins that we believe are very competitive within the television broadcast industry. We believe our national reach of approximately 24% of the country provides us with a strong position to negotiate with programming providers and, as a result, the opportunity to purchase high quality programming at more favorable prices. Moreover, we emphasize control of each of our station’s programming and operating costs through program-specific profit analysis, detailed budgeting, regionalization of staff and detailed long-term planning models.

Utilization of Local Marketing Agreements and Duopolies.  We have sought to increase our revenues and improve our margins by providing programming services pursuant to an LMA to a second station in eight designated market areas (DMAs) where we already own one station.  We refer to these two-station arrangements as a duopoly.  They allow us to realize significant economies of scale in marketing, programming, overhead and capital expenditures. We also believe that these arrangements assist stations whose stand-alone operations may have been marginally profitable to continue to air popular programming and contribute to the diversity of programming in their respective DMAs. Although under the new FCC ownership rules released in June 2003, we would be allowed to continue to program most of the stations with which we have an LMA, in the absence of a waiver, the new rules would require us to terminate or modify three of our LMAs in markets where both the stations we own and the station with which we have an LMA are ranked among the top four stations in their particular DMA.  The FCC’s new ownership rules include specific provisions permitting waivers of this “top four restriction.”  Although there can be no assurances, we have studied the application of the new rules to our markets and believe we are qualified for waivers.  As discussed in Risk Factors - - Changes in Rules on Television Ownership, because the effectiveness of the new rules has been stayed and the FCC concluded the old rules could not be justified as necessary to the public interest, we believe an issue exists regarding whether the FCC has any current legal right to enforce any rules prohibiting the acquisition of television stations.  See Risk Factors—The FCC’s multiple ownership rules limit our ability to operate multiple television stations in some markets and may result in a reduction in our revenue or prevent us from reducing costs. Changes in these rules may threaten our existing strategic approach to certain television markets.

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Use of Outsourcing Agreements.  In addition to our LMAs and duopolies, we have entered into four (and may seek opportunities for additional) outsourcing agreements in which our stations provide or are provided various non-programming related services such as sales, operational and managerial services to or by other stations. Pursuant to these agreements, our stations currently provide services to other stations in Tallahassee, Florida and Nashville, Tennessee and other parties provide services to our stations in Peoria/Bloomington, Illinois and in Cedar Rapids, Iowa. We believe this structure allows stations to achieve operational efficiencies and economies of scale, which should otherwise improve broadcast cash flow and competitive positions. While television joint sales agreements (JSAs) are not currently attributable, on August 2, 2004, the FCC released a notice of proposed rulemaking seeking comments on its tentative conclusion that television joint sales agreements should be attributable.  We cannot predict the outcome of this proceeding, nor can we predict how any changes, together with possible changes to the ownership rules, would apply to our existing outsourcing agreements.

Strategic Realignment of Station Portfolio  We continue to examine our television station group portfolio in light of the FCC’s broadcast ownership rules adopted by the FCC in 2003 which, among other things:

•increase the number of stations a group may own nationally by increasing the audience reach cap from 35% to 45% (See, however, discussion under National Ownership Rule regarding congressional action changing the cap to 39%);

•increase the number of stations an entity can own or control in many local markets, subject to restrictions including the number of stations an entity can own or control which are ranked among the top four in their DMA;

•repeal the newspaper-broadcast limits and replace them with general cross media limits which would permit owners of daily newspapers to own one or more television stations in the same market as the newspaper’s city of publication in many markets; and

•repeal the radio-television broadcast ownership limits and replace them with new general cross media limits.

The new rules have yet to take effect as a result of numerous legal challenges, including one filed by us.  If these rules become law, broadcast television owners would be permitted to own more television stations, potentially affecting our competitive position.  Our objective is to build our local franchises in the markets we deem strategic.  We routinely review and conduct investigations of potential television station acquisitions, dispositions and station swaps. At any given time, we may be in discussions with one or more station owners. In November 2003, following our exercise of an option to acquire the intangible assets of WFGX-TV, we filed an assignment application with the FCC to obtain its consent for the assignment of the WFGX-TV broadcast license from an unrelated third party to us.  The sale was completed in March 2004.  On December 2, 2004, we filed an application to assign television station KOVR-TV to an unrelated third party.  That application is currently pending with the FCC.  On January 7, 2005, we filed an application to assign television station KSMO-TV to an unrelated third party.  That application is currently pending with the FCC.

On November 15, 1999, we entered into five separate plans and agreements of merger, pursuant to which we would acquire through merger with subsidiaries of Cunningham Broadcasting Corporation (Cunningham), a related party, television broadcast stations WABM-TV, Birmingham, Alabama, KRRT-TV, San Antonio, Texas, WVTV-TV, Milwaukee, Wisconsin, WRDC-TV, Raleigh-Durham, North Carolina and WBSC-TV (formerly WFBC-TV), Anderson, South Carolina.  In December 2001, we received FCC approval on all the transactions except WBSC-TV.  Accordingly, on February 1, 2002, we closed on the purchase of the FCC license and related assets of WABM-TV, KRRT-TV, WVTV-TV, and WRDC-TV.  We have filed a petition for reconsideration with the FCC to reconsider its denial of the acquisition of WBSC-TV and amended our application to acquire the license in light of the FCC’s multiple ownership rules adopted in June 2003.  However, the new rules have been stayed by the U.S. Court of Appeals for the Third Circuit and remanded to the FCC.  Several parties have filed with the Supreme Court of the United States petitions for writ of certiorari seeking review of the Third Circuit decision. A petition for a writ of certiorari is a legal term that means a document filed with the U. S. Supreme Court asking the Court to review the decision of a lower court.  It includes, among other things, an argument as to why the Supreme Court should hear the appeal.  On March 3, 2005, we filed a conditional cross-petition with the Supreme Court asking the Court to consider our arguments together with the arguments contained in the petitions filed by the other parties.  We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations, WRGT-TV, Dayton, Ohio; WTAT-TV, Charleston, South Carolina; WVAH-TV, Charleston, West Virginia; WNUV-TV, Baltimore, Maryland; and WTTE-TV, Columbus, Ohio.  The FCC dismissed our applications in light of the stay of the new ownership rules and we filed an application for review of the dismissal.  The applications are still pending and may be impacted by the remand of the FCC’s multiple ownership rules.  We also filed a petition with the U. S. Court of Appeals for the D. C. Circuit requesting that the Court direct the FCC to take final action on our applications.

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At this time, we have not otherwise entered into any agreements or understandings with respect to any transaction and there can be no assurance that any transaction will be completed. See Risk Factors—The FCC’s multiple ownership rules limit our ability to operate multiple television stations and may result in a reduction in our revenue or prevent us from reducing costs. Changes in these rules may threaten our existing strategic approach to certain television markets.

Local News.  We believe that the production and broadcasting of local news is an important link to the community and an aid to a station’s efforts to expand its viewership. In addition, local news programming can provide access to advertising sources targeted specifically to local news viewers.  We assess the anticipated benefits and costs of producing local news prior to introduction at our stations because a significant investment in capital equipment is required and substantial operating expenses are incurred in introducing, developing and producing local news programming. We are seeking to provide cost effective local news programming through the News Central format described below. We also continuously review the performance of our existing news operations to make sure that they are economically viable. We produce news at 38 stations in 32 markets, 16 of those stations in 14 markets are provided with our News Central format and six stations have a local news sharing arrangement with a competitive station in that market.  The remaining 16 stations in the remaining 12 markets have news operations that are mostly independent from our News Central format.  Since October 2002, we have instituted our News Central project to increase, in a cost-effective manner, local news programming at many of our stations by using a central support operation which provides local weather and national and regional news coverage in coordination with local news operations at the station level.  Our News Central format serves the local community by providing additional news with an alternative view in these markets.

Popular Sporting Events.  Our WB and UPN affiliated and independent stations generally face fewer restrictions on broadcasting live local sporting events compared with FOX, ABC, NBC and CBS affiliates, which are required to broadcast a greater number of hours of programming supplied by the networks.  At some of our stations, we have been able to acquire the local television broadcast rights for certain sporting events, including NBA basketball, Major League Baseball, NFL football, NHL hockey, ACC basketball and both Big Ten and SEC football and basketball.  We seek to expand our sports broadcasting in DMAs only as profitable opportunities arise. In addition, our stations that are affiliated with FOX, ABC, NBC and CBS broadcast certain Major League Baseball games, NFL football games, NHL hockey games and NASCAR races, as well as other popular sporting events.

Attract and Retain High Quality Management.  We believe that much of our success is due to our ability to attract and retain highly skilled and motivated managers at both the corporate and local station levels. A significant portion of the compensation available to our Chief Operating Officer, sales vice presidents, group managers, general managers, sales managers and other station managers is based on their exceeding certain operating results.  We also provide some of our corporate and station managers with deferred compensation plans.  We have established a practice of granting options to acquire our Class A Common Stock to station sales managers as an incentive to join us and we provide additional options as part of the compensation package when we promote sales managers.  Annually, managers at our stations and at our corporate offices are eligible for options tied to performance at the discretion of the Compensation Committee (which is comprised of certain members of the Board of Directors).

Community Involvement.  Each of our stations actively participates in various community activities and offers many community services. Our activities include broadcasting programming of local interest and sponsorship of community and charitable events. We also encourage our station employees to become active members of their communities and to promote involvement in community and charitable affairs. In response to the Tsunami tragedy in Southeast Asia, our employees generously donated over $17,000; we matched this amount with a contribution to the Red Cross.  We believe that active community involvement by our stations provides our stations with increased exposure in their respective DMAs and is our responsibility as stewards of the community’s broadcast license.

Investment Strategy

Sinclair Ventures, Inc.  (SVI), is our wholly-owned subsidiary that is charged with seeking out business opportunities that have the possibility of equity investment, acquisition or barter transactions.  SVI’s primary focus is on businesses that add value related to our core television business.  At any given time, we may be in discussions with one or more parties.  We cannot be assured that any of these negotiations will lead to definitive agreements or, if agreements are reached, that any transactions would be consummated and completed.

Acrodyne Communications Inc. (Acrodyne).  In January 1999, we acquired approximately 35.0% of Acrodyne, a company that manufactures UHF transmitters for the television industry. Along with this investment, we hired a team of highly qualified individuals to develop the next generation of UHF transmitters. We have assigned the rights to this technology to Acrodyne and it has manufactured most of our digital transmitters. In January 2003, our ownership interest increased to 82.4% as a result of a restructuring of our investment in Acrodyne in which we forgave indebtedness of Acrodyne and invested an additional $1.0 million in cash.  We have a controlling interest in and a strategic alliance with Acrodyne.  The financial statements of Acrodyne have been consolidated with ours since January 1, 2003.

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G1440  Holdings Inc. and its subsidiaries (G1440).  Although we have continued to see a decrease in the value of internet-related and wireless businesses that began in 2000, we continue to explore opportunities for television broadcasters to work with these businesses to increase their profitability and to use the resources of the internet and wireless outlets to enhance the offerings and value of our broadcast stations. In November 1999, we acquired an 82.5% equity interest in G1440 and currently, we hold a 93.9% equity interest.  The financial statements of G1440 are included in our consolidated financial statements. G1440 provides single-source, end-to-end e-business solutions and a number of services and products, including a homebuilder application, an immigration tracking tool application, a syndicated television program management and scheduling application and a procurement application.

Summa Holdings, Ltd. (Summa).  On December 30, 2002, we invested $20.0 million in Summa resulting in a 17.5% equity interest.  Summa is a holding company which owns automobile dealerships and a leasing company. Summa has an integrated network of automotive sales and service representing 26 automobile brands in 44 retail locations, six regional collision centers, and 11 rental and leasing service locations.  David D. Smith, our President and Chief Executive Officer, has a controlling interest in Summa and is on the Board of Directors. We have significant influence over the operating and financial policies of Summa by holding a board seat (in addition to the board seat held personally by David D. Smith); therefore, we account for this investment under the equity method of accounting.

For additional information related to our investments, see Note 2. Investments in the Notes to our Consolidated Financial Statements.

FEDERAL REGULATION OF TELEVISION BROADCASTING

The ownership, operation and sale of television stations are subject to the jurisdiction of the FCC, which acts under authority granted by the Communications Act of 1934, as amended (Communications Act). Among other things, the FCC assigns frequency bands for broadcasting; determines the particular frequencies, locations and operating power of stations; issues, renews, revokes and modifies station licenses; regulates equipment used by stations; adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations; and has the power to impose penalties for violations of its rules or the Communications Act.

The following is a brief summary of certain provisions of the Communications Act, the Telecommunications Act of 1996 (the 1996 Act) and specific FCC regulations and policies.  Reference should be made to the Communications Act, the 1996 Act, FCC rules and the public notices and rulings of the FCC for further information concerning the nature and extent of federal regulation of broadcast stations.

License Grant and Renewal

Television stations operate pursuant to broadcasting licenses that are granted by the FCC for maximum terms of eight years and are subject to renewal upon application to the FCC. During certain periods when renewal applications are pending, petitions to deny license renewals can be filed by interested parties, including members of the public. The FCC will generally grant a renewal application if it finds:

•that the station has served the public interest, convenience and necessity;

•that there have been no serious violations by the licensee of the Communications Act or the rules and regulations of the FCC; and

•that there have been no other violations by the licensee of the Communications Act or the rules and regulations of the FCC that, when taken together, would constitute a pattern of misconduct.

All of the stations that we currently own and operate or provide programming services to pursuant to LMAs, are presently operating under regular licenses, which expire as to each station on the dates set forth under Television Broadcasting above. Although renewal of a license is granted in the vast majority of cases even when petitions to deny are filed, there can be no assurance that the license of any station will be renewed.

We timely filed with the FCC applications for the license renewal of television stations WXLV-TV, Winston-Salem, North Carolina; WUPN-TV, Greensboro, North Carolina; WLFL-TV, Raleigh/Durham, North Carolina; WRDC-TV, Raleigh/Durham, North Carolina; WLOS-TV, Asheville, North Carolina and WMMP-TV, Charleston, South Carolina.  On November 1, 2004, an organization calling itself “Free Press” filed a petition to deny the applications of these stations and also the license renewal applications for WBSC-TV and WTAT-TV, which are licensed to Cunningham and which we program pursuant to LMAs.  We opposed the petition to deny against our stations, and the renewal applications are currently pending.  Several individuals and an organization named “Sinclair Media Watch” also filed informal objections to the license renewal applications of WLOS-TV and WBSC-TV, raising essentially the same arguments presented in the Free Press petition.  We believe that the filings from these

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organizations are without merit and that these organizations are using the FCC’s license renewal process as a way to increase our costs associated with renewing our licenses.

We timely filed with the FCC an application for the license renewal of WBFF-TV.  On September 1, 2004, Richard D’Amato filed a petition to deny the application.  We opposed the petition to deny and the license renewal application is currently pending.

On October 12, 2004, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) in the amount of $7,000 per station to all FOX stations, including sixteen FOX affiliates licensed to us.  The NAL alleged that the stations broadcast allegedly indecent material contained in an episode of a FOX network program that aired on April 7, 2003.  The FOX network and Sinclair filed oppositions to the NAL.  That proceeding is still pending.  We cannot predict the effect of any adverse outcome of this proceeding on the stations’ license renewal applications.

Recent actions by the FCC have also made it difficult for us to predict the impact on our license renewals from allegations that may arise in the ordinary course of our business related to the airing of indecent material.  For example, on Veteran’s Day in November of 2004, we preempted (did not air) “Saving Private Ryan”, a program that was aired during ABC’s network programming time.  We felt that the program contained indecent material as defined by the FCC and could result in a fine or other negative consequences to one or more of our ABC stations.  In February 2005, the FCC dismissed all complaints filed against ABC stations regarding this program.  The FCC’s decision justified what some may consider indecent material as appropriate in the context of the program.  Although this ruling has expanded the programming opportunities of our stations it still leaves us at risk because what might be determined as legitimate context by us may not be deemed so by the FCC.  We are only sure that “Saving Private Ryan” and “Schindler’s List” are allowed to be aired in their entirety under current FCC rulings.

Ownership Matters

General.  The Communications Act prohibits the assignment of a broadcast license or the transfer of control of a broadcast license without the prior approval of the FCC. In determining whether to permit the assignment or transfer of control of, or the grant or renewal of, a broadcast license, the FCC considers a number of factors pertaining to the licensee, including compliance with various rules limiting common ownership of media properties, the “character” of the licensee and those persons holding “attributable” interests in that licensee and compliance with the Communications Act’s limitations on alien ownership.

To obtain the FCC’s prior consent to assign a broadcast license or transfer control of a broadcast license, appropriate applications must be filed with the FCC. If the application involves a “substantial change” in ownership or control, the application must be placed on public notice for a period of approximately 30 days during which petitions to deny the application may be filed by interested parties, including members of the public. If the application does not involve a “substantial change” in ownership or control, it is a “pro forma” application. The “pro forma” application is not subject to petitions to deny or a mandatory waiting period, but is nevertheless subject to having informal objections filed against it. If the FCC grants an assignment or transfer application, interested parties have approximately 30 days from public notice of the grant to seek reconsideration or review of the grant. Generally, parties that do not file initial petitions to deny or informal objections against the application face difficulty in seeking reconsideration or review of the grant. The FCC normally has an additional 10 days to set aside such grant on its own motion. When passing on an assignment or transfer application, the FCC is prohibited from considering whether the public interest might be served by an assignment or transfer to any party other than the assignee or transferee specified in the application.

The FCC generally applies its ownership limits to “attributable” interests held by an individual, corporation, partnership or other association. In the case of corporations holding, or through subsidiaries controlling, broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the corporation’s stock (or 20% or more of such stock in the case of insurance companies, investment companies and bank trust departments that are passive investors) are generally attributable. In August 1999, the FCC revised its attribution and multiple ownership rules and adopted the equity-debt-plus rule that causes certain creditors or investors to be attributable owners of a station. Under this rule, a major programming supplier (any programming supplier that provides more than 15% of the station’s weekly programming hours) or same-market media entity will be an attributable owner of a station if the supplier or same-market media entity holds debt or equity, or both, in the station that is greater than 33% of the value of the station’s total debt plus equity. For purposes of this rule, equity includes all stock, whether voting or non-voting, and equity held by insulated limited partners in partnerships. Debt includes all liabilities whether long-term or short-term. In addition, LMAs are attributable where a licensee owns a television station and programs a television station in the same market.

The Communications Act prohibits the issuance of broadcast licenses to, or the holding of a broadcast license by, any corporation of which more than 20% of the capital stock is owned of record or voted by non-U.S. citizens or their representatives or by a foreign government or a representative thereof, or by any corporation organized under the laws of a foreign country (collectively, aliens). The Communications Act also authorizes the FCC, if the FCC determines that it would be in the public interest, to prohibit the issuance of a broadcast license to, or the holding of a broadcast license by, any corporation directly or indirectly controlled by any other corporation

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of which more than 25% of the capital stock is owned of record or voted by aliens. The FCC has issued interpretations of existing law under which these restrictions in modified form apply to other forms of business organizations, including partnerships.

As a result of these provisions, the licenses granted to our subsidiaries by the FCC could be revoked if, among other restrictions imposed by the FCC, more than 25% of our stock were directly or indirectly owned or voted by aliens. Sinclair and its subsidiaries are domestic corporations, and the members of the Smith family (who together hold almost 90% of the common voting rights of Sinclair) are all United States citizens.  Our amended and restated Articles of Incorporation (“the amended certificate”) contain limitations on alien ownership and control that are substantially similar to those contained in the Communications Act. Pursuant to the amended certificate, we have the right to repurchase alien-owned shares at their fair market value to the extent necessary, in the judgment of the board of directors, to comply with the alien ownership restrictions.

In June 2003, the FCC adopted a Report and Order modifying its multiple ownership rules.  The new rules, among other things:

•increase the number of stations an entity may own nationally by increasing the national audience reach cap from 35% to 45% and leave unchanged the method of calculating an entity’s audience reach (Congress passed a bill requiring the FCC to establish a national audience reach cap of 39%.  See discussion below in National Ownership Rule);

•increase the number of stations an entity can own or control in many local markets, subject to restrictions including the number of stations an entity can own or control which are ranked among the top four in their DMA;

•repeal the newspaper-broadcast ownership limits and replace them with general cross media limits which, in many markets, would permit owners of daily newspapers to own one or more television stations and/or radio stations in the same market as the newspaper’s city of publication; and

•repeal the radio-television broadcast ownership limits and replace them with new general cross media limits.

If the new rules become law, broadcast television owners would be permitted to own more television stations, potentially affecting our competitive position.  The Third Circuit Court of Appeals has stayed the application of the new rules as a result of numerous legal challenges, including one we filed.  In July 2004, the court issued a decision holding, among other things, that the numerical limits established by the FCC’s new local television ownership rule were patently unreasonable and not consistent with the record evidence.  The court remanded the numerical limits for the FCC to justify or modify and left the stay in effect pending the FCC’s action on remand.  Several parties have filed with the Supreme Court of the United States petitions for writ of certiorari seeking review of the Third Circuit decision and on March 3, 2005, we filed a conditional cross-petition for a writ of certiorari related to the Third Circuit decision.  During the pendency of the remand, the Third Circuit has ordered the FCC to continue to apply the existing ownership rules.  Following is a description of these FCC ownership rules:

Radio/Television Cross-Ownership Rule.  The FCC’s radio/television cross-ownership rule (the “one to a market” rule) generally permits a party to own a combination of up to two television stations and six radio stations in the same market depending on the number of independent media voices in the market.

Broadcast/Daily Newspaper Cross-Ownership Rule.  The FCC’s rules prohibit the common ownership of a radio or television broadcast station and a daily newspaper in the same market.

Dual Network Rule.  The four major television networks, ABC, CBS, NBC and FOX, are prohibited, absent a waiver, from merging with each other. In May 2001, the FCC amended its dual network rule to permit the four major television networks to own, operate, maintain or control the UPN and/or the WB television network.

National Ownership Rule.  The FCC’s current national ownership rule states that no individual or entity may have an attributable interest in television stations reaching more than 35% of the national television viewing audience. However, Congress passed a bill requiring the FCC to establish a national audience reach cap of 39% and President Bush signed the bill into law on January 23, 2004.  Under this rule, where an individual or entity has an attributable interest in more than one television station in a market, the percentage of the national television viewing audience encompassed within that market is only counted once. Since, historically, VHF stations (channels 2 through 13) have shared a larger portion of the market than UHF stations (channels 14 through 69), only half of the households in the market area of any UHF station are included when calculating an entity’s national television viewing audience (commonly referred to as the “UHF discount”).

All but eight of the stations we own and operate, or to which we provide programming services, are UHF. We reach approximately 24% of U.S. television households or 14% taking into account the FCC’s UHF discount.

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Local Television (Duopoly) Rule.  A party may own two television stations in adjoining markets, even if there is Grade B (discussed below) overlap between the two stations’ analog signals, and generally may own two stations in the same market:

•if there is no Grade B overlap between the stations; or

•if the market containing both the stations contains at least eight independently owned full-power television stations (the “eight voices test”) and not more than one station is among the top-four ranked stations in the market.

In addition, a party may request a waiver of the rule to acquire a second station in the market if the station to be acquired is economically distressed or not yet constructed and there is no party who does not own a local television station who would purchase the station for a reasonable price.

There are three grades of service for traditional television broadcasts, City (strongest), Grade A and Grade B (least strong); and the signal decreases in strength the further away the viewer is from the broadcast antenna tower.  Generally, it is not as easy for viewers with properly installed outdoor antennas to receive a Grade B signal.

Antitrust Regulation.  The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have increased their scrutiny of the television industry since the adoption of the 1996 Act and have reviewed matters related to the concentration of ownership within markets (including LMAs) even when the ownership or LMA in question is permitted under the laws administered by the FCC or by FCC rules and regulations. The DOJ takes the position that an LMA entered into in anticipation of a station’s acquisition with the proposed buyer of the station constitutes a change in beneficial ownership of the station which, if subject to filing under the Hart-Scott-Rodino Anti Trust Improvements Act (HSR Act), cannot be implemented until the waiting period required by that statute has ended or been terminated.

Expansion of our broadcast operations on both a local and national level will continue to be subject to the FCC’s ownership rules and any changes the FCC or Congress may adopt. At the same time, any further relaxation of the FCC’s ownership rules, which could occur if the rules adopted in 2003 become effective, may increase the level of competition in one or more of the markets in which our stations are located, more specifically to the extent that any of our competitors may have greater resources and thereby be in a superior position to take advantage of such changes.

Local Marketing Agreements

Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs.  One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such program segments on the other licensee’s station subject to the ultimate editorial and other controls being exercised by the latter licensee.  We believe these arrangements allow us to reduce our operating expenses and enhance profitability.  Although under the FCC ownership rules adopted in 2003 we would be allowed to continue to program most of the stations with which we have an LMA, in the absence of a waiver, the new rules would require us to terminate or modify three of our LMAs in markets where both the station we own and the station with which we have an LMA are ranked among the top four stations in their particular DMA.  The FCC’s new ownership rules include specific provisions permitting waivers of this “top four restriction.”  Although there can be no assurances, we have studied the application of the new rules to our markets and believe we are qualified for waivers.  As discussed in Risk Factors - - The FCC’s multiple ownership rules limit our ability to operate multiple television stations in some markets and may result in a reduction in our revenue or prevent us from reducing costs.  Changes in these rules may threaten our existing strategic approach to certain television markets.  Because the effectiveness of the new rules has been stayed and the FCC concluded the old rules could not be justified as necessary to the public interest, we believe an issue exists regarding whether the FCC has any current legal right to enforce any rules prohibiting the acquisition of television stations.  The Third Circuit Court of Appeals has stayed the application of the new rules as a result of numerous legal challenges, including one we filed.  In July 2004, the court issued a decision holding, among other things, that the numerical limits established by the FCC’s new local television ownership rule were patently unreasonable and not consistent with the record evidence.  The court remanded the numerical limits for the FCC to justify or modify and left the stay in effect pending the FCC’s action on remand, requiring the FCC to continue to apply the existing ownership rules.  Several parties have filed with the Supreme Court of the United States petitions for writ of certiorari seeking review of the Third Circuit decision and on March 3, 2005, we filed a conditional cross-petition for a writ of certiorari related to the Third Circuit decision.

On November 15, 1999, we entered into five separate plans and agreements of merger, pursuant to which we would acquire through merger with subsidiaries of Cunningham, a related party, television broadcast stations WABM-TV, Birmingham, Alabama, KRRT-TV, San Antonio, Texas, WVTV-TV, Milwaukee, Wisconsin, WRDC-TV, Raleigh/Durham, North Carolina and WBSC-TV (formerly WFBC-TV), Anderson, South Carolina.  The consideration for these mergers was the issuance to Cunningham, of shares

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of our Class A Common Voting Stock.  In December 2001, we received FCC approval on all the transactions except WBSC-TV.  Accordingly, on February 1, 2002, we closed on the purchase of the FCC license and related assets of WABM-TV, KRRT-TV, WVTV-TV, and WRDC-TV.  The total value of the shares issued in consideration for the approved mergers was $7.7 million.  We have filed a petition for reconsideration with the FCC to reconsider its denial of the acquisition of WBSC-TV and amended our application to acquire the license in light of the FCC’s new multiple ownership rules adopted in June 2003.  However, the new rules have been stayed and are on remand to the FCC.  We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations, WRGT-TV, Dayton, Ohio, WTAT-TV, Charleston, South Carolina, WVAH-TV, Charleston, West Virginia, WNUV-TV, Baltimore, Maryland, and WTTE-TV, Columbus, Ohio.  The Rainbow/PUSH Coalition filed a petition to deny these five applications and to revoke all of our licenses.  The FCC dismissed our applications in light of the stay of the new ownership rules, and we filed an application for review of the dismissal, which may be impacted by the remand of the FCC’s new multiple ownership rules.  We also filed a petition with the U. S. Court of Appeals of the D. C. Circuit requesting that the Court direct the FCC to take action on our applications.  The FCC denied the Rainbow/PUSH petition, and Rainbow filed a petition for reconsideration of that denial.  Both the applications and the associated petition to deny are still pending.  We believe the Rainbow/PUSH petition is without merit.

The Satellite Home Viewer Improvement Act (SHVIA) and the Satellite Home Viewer Extension and Reauthorization Act (SHVERA)

In 1988, Congress enacted the Satellite Home Viewer Act (SHVA), which enabled satellite carriers to provide broadcast programming to those satellite subscribers who were unable to obtain broadcast network programming over-the-air. SHVA did not permit satellite carriers to retransmit local broadcast television signals directly to their subscribers. The Satellite Home Viewer Improvement Act of 1999 (SHVIA) revised SHVA to reflect changes in the satellite and broadcasting industry. This legislation allowed satellite carriers, until December 31, 2004, to provide local television signals by satellite within a station market, and effective January 1, 2002, required satellite carriers to carry all local signals in any market where they carry any local signals. On or before July 1, 2001, SHVIA required all television stations to elect to exercise certain “must carry” or “retransmission consent” rights in connection with their carriage by satellite carriers.  We have entered into compensation agreements granting the two primary satellite carriers retransmission consent to carry all of our stations.  In December 2004, President Bush signed into law the Satellite Home Viewer Extension and Reauthorization Act (SHVERA).  SHVERA extended, until December 31, 2009, the rights of broadcasters and satellite carriers under SHVIA to retransmit local television signals by satellite.  SHVERA also authorized satellite delivery of distant network signals, significantly viewed signals and local low-power television station signals into local markets under defined circumstances.  With respect to digital signals, SHVERA established a process to allow satellite carriers to retransmit distant network signals and significantly viewed signals to subscribers under certain circumstances.  The FCC is required to conduct and complete a study within one year to assess the technical standards for determining when a subscriber may receive a distant digital network signal.  Pursuant to SHVERA, the FCC has also initiated a rulemaking proceeding to establish rules implementing the carriage of “significantly viewed” signals in a market.  The carriage of two network stations on the same satellite system could result in a decline of viewership, adversely affecting the revenues of our owned or programmed stations.

Must-Carry/Retransmission Consent

Pursuant to the Cable Act of 1992, television broadcasters are required to make triennial elections to exercise either certain “must-carry” or “retransmission consent” rights in connection with their carriage by cable systems in each broadcaster’s local market. By electing the must-carry rights, a broadcaster demands carriage on a specified channel on cable systems within its DMA, in general, as defined by the Nielsen DMA Market and Demographic Rank Report of the prior year. These must-carry rights are not absolute and their exercise is dependent on variables such as:

•the number of activated channels on a cable system;

•the location and size of a cable system; and

•the amount of programming on a broadcast station that duplicates the programming of another broadcast station carried by the cable system.

Therefore, under certain circumstances, a cable system may decline to carry a given station. Alternatively, if a broadcaster chooses to exercise retransmission consent rights, it can prohibit cable systems from carrying its signal or grant the appropriate cable system the authority to retransmit the broadcast signal for a fee or other consideration. In October 2002, we elected must-carry or retransmission consent with respect to each of our stations based on our evaluation of the respective markets and the position of our owned or programmed station(s) within the market. Our stations continue to be carried on all pertinent cable systems and we do not believe that

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our elections have resulted in the shifting of our stations to less desirable cable channel locations. Many of the agreements we have negotiated for cable carriage are short term, subject to month-to-month extensions.

In February 2005, the FCC adopted an order stating that cable television systems are not required to carry both a station’s analog and digital signals during the digital transition.  Thus, only television stations operating solely with digital signals are entitled to mandatory carriage of their digital signal by cable companies.  In addition, it is technically possible for a television station to broadcast more than one channel of programming using its digital signal.  The same FCC order clarified that cable system need only carry a broadcast station’s primary video stream, and not any of the station’s other programming streams in those situations where a station chooses to transmit multiple programming streams.  As a result of this decision by the FCC, cable customers in our broadcast markets may not receive the full digital signal or even part of the digital signal of any of our television stations.

Many of the viewers of our television stations receive the signals of the stations via cable television service.  Cable television systems generally transmit our signals pursuant to permission granted by us in retransmission consent agreements.  A material portion of these agreements have no definite term and may be terminated either by us or by the applicable cable television company on very short notice (typically 45 or 60 days). We are currently engaged in negotiations with respect to these agreements with several major cable television companies and we recently reached an agreement with Comcast, the nation's largest cable operator.  There can be no assurance that the results of these negotiations will be advantageous to us or that we or the cable companies might not determine to terminate some or all of these agreements.  A termination of our retransmission agreements would make it more difficult for our viewers to watch our programming and could result in lower ratings and a negative financial impact on us.  In addition, we generally have not provided the major cable television companies with the right to transmit our stations’ digital signals.  Although the lack of carriage of these signals does not, at this time, have a material impact on our results of operations, this could change as the number of households in the United States with the capability of viewing digital and high definition television increases.  There can be no assurance that we will be able to negotiate mutually acceptable retransmission agreements in the future relating to the carriage of our digital signals.

Syndicated Exclusivity/Territorial Exclusivity

The FCC’s syndicated exclusivity rules allow local broadcast television stations to demand that cable operators black out syndicated non-network programming carried on “distant signals” (i.e., signals of broadcast stations, including so-called “superstations,” which serve areas substantially removed from the cable system’s local community). The FCC’s network non-duplication rules allow local broadcast network television affiliates to require that cable operators black out duplicating network programming carried on distant signals. However, in a number of markets in which we own or program stations affiliated with a network, a station that is affiliated with the same network in a nearby market is carried on cable systems in our market. This is not necessarily in violation of the FCC’s network non-duplication rules. However, the carriage of two network stations on the same cable system could result in a decline of viewership adversely affecting the revenues of our owned or programmed stations.

In December 2004, President Bush signed into law the Satellite Home Viewer Extension and Reauthorization Act (SHVERA).  Among other things, SHVERA allows satellite carriers to transmit distant signals and the signals of “significantly viewed” stations under certain circumstances.  The FCC is required to complete a study and report on, among other things, how its syndicated exclusivity and network non-duplication rules impact competition among multi-channel video programming distributors, such as satellite carriers and cable companies.  The carriage of two network stations on the same satellite system could result in a decline of viewership adversely affecting the revenues of our owned or programmed stations.

Digital Television

The FCC has taken a number of steps to implement digital television (DTV) broadcasting services. The FCC has adopted an allotment table that provides all authorized television stations with a second channel on which to broadcast a DTV signal. The FCC has attempted to provide DTV coverage areas that are comparable to stations’ existing service areas. The FCC has ruled that television broadcast licensees may use their digital channels for a wide variety of services such as high-definition television, multiple standard definition television programming, audio, data and other types of communications, subject to the requirement that each broadcaster provide at least one free video channel equal in quality to the current technical standard and further subject to the requirement that broadcasters pay a fee of 5% of gross revenues on all DTV subscription services.

DTV channels are generally located in the range of channels from channel 2 through channel 51. All commercial stations were required to have begun digital broadcasting by May 1, 2002. Under the FCC’s rules, a network-affiliated station in the top 30 markets must operate its DTV station at any time that the associated analog station is operating.  All other DTV stations are required to operate during prime time hours  and, as of April 1, 2004, for a total of 75% of the time in which their associated analog stations are operating.  On April 1, 2005, these digital stations will be required to operate for 100% of the time in which their analog stations

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are operating.  In September 2004, the FCC eliminated its requirement that a digital station simulcast a certain percentage of the programming transmitted on its associated analog station.

As of December 31, 2004, DTV stations were required to meet a more stringent signal strength standard for the digital signal coverage of their communities of license.  Additionally, by July 2005, a DTV licensee affiliated with a top-four network (i.e., ABC, CBS, FOX, or NBC) that is located in one of the top 100 markets must meet a higher replication standard or lose interference protection for those areas not covered by the digital signal.  For all other commercial DTV licensees as well as noncommerical DTV licensees, that deadline is July 2006.  There are no guarantees that our stations will be able to meet these requirements.  Loss of interference protection for any of our stations could reduce the number of viewers of that station and could adversely impact revenues for that station.

Of the television stations that we own and operate, as of December 31, 2004, thirteen are operating at their full digital television power.  One DTV station, which is licensed at full power, is operating pursuant to special temporary authority at reduced power because of an equipment problem.  Thirty-five stations are operating their DTV facilities at low power as permitted by the FCC pursuant to special temporary authority.  Three stations have applications for digital construction permits pending before the FCC, but two of these stations are operating their DTV facilities at low power, pursuant to special temporary authority.  One station, which we acquired in March 2004, has filed an application to extend its DTV construction permit.  All of the Cunningham stations with which we have LMAs are operating their DTV facilities at low power pursuant to special temporary authority.  The tower for Cunningham station WVAH-TV, Charleston, West Virginia was irreparably damaged in a severe ice storm on February 19, 2003.  Because the digital equipment was also destroyed in the disaster, the FCC permits this station to broadcast an analog signal only from its temporary placement on the WCHS-TV tower.  Construction of a new tower and building at the WCHS-TV site has been completed, and the facilities will support the operations of both WCHS-TV and WVAH-TV.  Once FCC authorization is received, WVAH-TV will resume broadcasting a full service digital and analog signal.

Three of the other LMA stations, WTTA-TV, WDBB-TV, and WDKA-TV are operating at low power pursuant to special temporary authority. WNYS-TV was granted a construction permit for a digital facility on November 10, 2004, which does not expire until November 10, 2005.

In April 2003, the FCC adopted a policy of graduated sanctions to be imposed upon licensees who do not meet the FCC’s DTV build-out schedule. Under the policy, the stations could face monetary fines and possible loss of any digital construction permits for non-compliance with the build-out schedule.

After completion of the transition period, the FCC will reclaim the non-digital channels. Subject to an extension period (discussed below), the FCC’s plan calls for the DTV transition period to end December 31, 2006, at which time the FCC expects that television broadcasters will cease non-digital broadcasting and return one of their two channels to the government, allowing that spectrum to be recovered for other uses. During the transition period, each existing analog television station will be permitted to operate a second station that will broadcast using the digital standard.

By statute, Congress has instructed the FCC to extend the 2006 deadline for reclamation of a television station’s analog channel if, in any given case:

•one or more television stations affiliated with ABC, CBS, NBC or FOX in a market is not broadcasting digitally and the FCC determines that each such station has “exercised due diligence” in attempting to convert to digital broadcasting and satisfies the conditions for an extension of the FCC’s applicable construction deadlines for DTV service in that market;

•digital-to-analog converter technology is not generally available in such market; or

•15% or more of the television households in such market do not subscribe to a multichannel video service (cable, wireless cable or direct-to-home broadcast satellite television) that carries at least one digital channel from each of the local stations in that market and cannot receive digital signals using either a television receiver capable of receiving digital signals or a receiver equipped with a digital-to-analog converter.

On January 27, 2003, the FCC initiated its second periodic review of its rules on the conversion to digital television, releasing a notice of proposed rulemaking. The notice invited comments on number of topics, including the difficulties broadcasters face in building their DTV stations and on the interpretation of the statutory language concerning the 2006 deadline.   The FCC concluded that review in September 2004 but stated that it would address the issue regarding the interpretation of the statutory language in a future order.

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Implementation of digital television has imposed substantial additional costs on television stations because of the need to replace equipment and because some stations will need to operate at higher utility costs. There can be no assurance that our television stations will be able to increase revenue to offset such costs. In addition, the FCC has proposed imposing new public interest requirements on television licensees in exchange for their receipt of DTV channels.

There is considerable uncertainty about the final form of the FCC digital regulations. Even so, we believe that these new developments may have the following effects on us:

Reclamation of analog channels.  Congress directed the FCC to begin auctioning analog channels 60-69 in 2001, even though the FCC is not to reclaim them until 2006. The channel 60-69 auction was scheduled to be held in January 2003, but has been delayed and no new auction date has been established. Congress further permitted broadcasters to bid on the non-digital channels in cities with populations over 400,000. If the channels are owned by our competitors, they may exert increased competitive pressure on our operations. In addition, the FCC reallocated the spectrum band, currently comprising television channels 52-59, to permit both wireless services and certain new broadcast operations. The FCC completed auctions for part of this spectrum in September 2002 and July 2003. With respect to the remaining spectrum, the FCC has not yet established an auction date. Analog broadcasters are required to cease operation on this spectrum by the end of 2006 unless the FCC extends the end of the digital transition. The FCC envisions that this band will be used for a variety of broadcast-type applications including two-way interactive services and services using Coded Orthogonal Frequency Division Multiplexing technology. We cannot predict how the development of this spectrum will affect our television operations.

Digital must carry.  In February 2005, the FCC adopted an order stating that cable television systems are not required to carry both a station’s analog and digital signals during the digital transition.  The same order also clarified that a cable system need only carry a broadcast station’s primary video stream and not any of the station’s other programming streams in those situations where a station chooses to transmit multiple programming streams.

Cable customers in our broadcast markets may only be able to receive our digital signal over the air, which could negatively impact our stations.  Many of the viewers of our television stations receive the signals of the stations via cable television service.  Cable television systems generally transmit our signals pursuant to permission granted by us in retransmission consent agreements.  A material portion of these agreements have no definite term and may be terminated either by us or by the applicable cable television company on very short notice (typically 45 or 60 days). We are currently engaged in negotiations with respect to these agreements with several major cable television companies and we recently reached an agreement with Comcast, the nation's largest cable operator.  There can be no assurance that the results of these negotiations will be advantageous to us or that we or the cable companies might not determine to terminate some or all of these agreements.  A termination of our retransmission agreements would make it more difficult for our viewers to watch our programming and could result in lower ratings and a negative financial impact on us.  In addition, we generally have not provided the major cable television companies with the right to transmit our stations’ digital signals.  Although the lack of carriage of these signals does not at this time have a material impact on our current results of operations, this could change as the number of households in the United States with the capability of viewing digital and high definition television increases.  There can be no assurance that we will be able to negotiate mutually acceptable retransmission agreements in the future relating to the carriage of our digital signals.

Capital and operating costs.  We have incurred and will continue to incur costs to replace equipment in our stations in order to provide digital television. Some of our stations will also incur increased utilities costs as a result of converting to digital operations. We cannot be certain we will be able to increase revenues to offset these additional costs.

Restrictions on Broadcast Programming

Advertising of cigarettes and certain other tobacco products on broadcast stations has been banned for many years. Various states also restrict the advertising of alcoholic beverages and from time to time certain members of Congress have contemplated legislation to place restrictions on the advertisement of such alcoholic beverage products. FCC rules also restrict the amount and type of advertising which can appear in programming broadcast primarily for an audience of children 12 years old and younger.   In addition, the Federal Trade Commission issued guidelines in December 2003 to help media outlets voluntarily screen out weight loss product advertisements that are misleading.

The Communications Act and FCC rules also place restrictions on the broadcasting of advertisements by legally qualified candidates for elective office.  These restrictions state that:

•stations must provide “reasonable access” for the purchase of time by legally qualified candidates for federal office;

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•stations must provide “equal opportunities” for the purchase of equivalent amounts of comparable broadcast time by opposing candidates for the same elective office; and

•during the 45 days preceding a primary or primary run-off election and during the 60 days preceding a general or special election, legally qualified candidates for elective office may be charged no more than the station’s “lowest unit charge” for the same class of advertisement, length of advertisement and daypart.

Programming and Operation

General.  The Communications Act requires broadcasters to serve the “public interest.” The FCC has relaxed or eliminated many of the more formalized procedures it had developed in the past to promote the broadcast of certain types of programming responsive to the needs of a station’s community of license.  FCC licensees continue to be required, however, to present programming that is responsive to the needs and interests of their communities and to maintain certain records demonstrating such responsiveness. Complaints from viewers concerning a station’s programming may be considered by the FCC when it evaluates renewal applications of a licensee, although such complaints may be filed at any time and generally may be considered by the FCC at any time. Stations also must pay regulatory and application fees and follow various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identifications, obscene and indecent broadcasts and technical operations, including limits on radio frequency radiation.

Indecency.  It is a violation of federal law and FCC regulations to broadcast obscene or indecent programming.  FCC licensees are, in general, responsible for the contents of their broadcast programming, including that supplied by television networks.  Accordingly, there is a risk of being fined as a result of our broadcast of programming, including network programming.  Currently the maximum forfeiture amount for the broadcast of indecent or obscene material is $27,500 for each violation.  However, recently the House of Representatives approved legislation with a $500,000 cap for indecent or obscene material.  This legislation is currently in the Senate and we cannot predict the outcome.  The FCC has intensified its scrutiny of allegedly indecent and obscene programming.  There has also been interest in Congress to raise the maximum forfeiture amount for such violations.

Equal Employment Opportunity.  On November 20, 2002, the FCC adopted new rules requiring licensees to create equal employment opportunity outreach programs and maintain records and make filings with the FCC evidencing such efforts. The FCC simultaneously released a notice of proposed rulemaking seeking comments on whether and how to apply the new rules and policies to part-time positions, defined as less than 30 hours per week.

Children’s Television Programming.  Television stations are required to broadcast a minimum of three hours per week of “core” children’s educational programming, which the FCC defines as programming that:

•has the significant purpose of serving the educational and informational needs of children 16 years of age and under;

•is regularly scheduled weekly and at least 30 minutes in duration; and

•is aired between the hours of 7:00 a.m. and 10:00 p.m. local time.

Furthermore, “core” children’s educational programs, in order to qualify as such, are required to be identified as educational and informational programs over the air at the time they are broadcast and are required to be identified in the children’s programming reports, which are required to be placed quarterly in stations’ public inspection files and filed quarterly with the FCC.

Additionally, television stations are required to identify and provide information concerning “core” children’s programming to publishers of program guides. The FCC has recently concluded that a digital broadcaster must air an additional half hour of “core” children’s programming per every increment of 1 to 28 hours of free video programming provided in addition to the main DTV program stream.  The FCC is also applying its children’s commercial limits and policies to all digital video programming directed to children ages 12 and under.

The FCC has also recently initiated a notice of inquiry seeking comments on issues relating to the presentation of violent programming on television and its impact on children.

Television Program Content.  The television industry has developed an FCC approved ratings system that is designed to provide parents with information regarding the content of the programming being aired. Furthermore, the FCC requires certain television sets to include the so-called “V-chip,” a computer chip that allows blocking of rated programming.

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The FCC has initiated a notice of inquiry seeking comments on what actions, if any, it should take to ensure that licensees air programming that is responsive to the interests and needs of their communities of license.

Pending Matters

Congress and the FCC have under consideration and in the future may consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation, ownership and profitability of our broadcast stations, result in the loss of audience share and advertising revenues for our broadcast stations and affect our ability to acquire additional broadcast stations or finance such acquisitions.

Other matters that could affect our broadcast properties include technological innovations and developments generally affecting competition in the mass communications industry, such as direct television broadcast satellite service, Class A television service, the continued establishment of wireless cable systems and low power television stations, digital television technologies, the internet and the advent of telephone company participation in the provision of video programming service.

Other Considerations

The preceding summary is not a complete discussion of all provisions of the Communications Act, the 1996 Act or other congressional acts or of the regulations and policies of the FCC. For further information, reference should be made to the Communications Act, the 1996 Act, other congressional acts and regulations and public notices circulated from time to time by the FCC. There are additional regulations and policies of the FCC and other federal agencies that govern political broadcasts, advertising, equal employment opportunity and other matters affecting our business and operations.

ENVIRONMENTAL REGULATION

Prior to our ownership or operation of our facilities, substances or waste that are or might be considered hazardous under applicable environmental laws may have been generated, used, stored or disposed of at certain of those facilities. In addition, environmental conditions relating to the soil and groundwater at or under our facilities may be affected by the proximity of nearby properties that have generated, used, stored or disposed of hazardous substances. As a result, it is possible that we could become subject to environmental liabilities in the future in connection with these facilities under applicable environmental laws and regulations. Although we believe that we are in substantial compliance with such environmental requirements and have not in the past been required to incur significant costs in connection therewith, there can be no assurance that our costs to comply with such requirements will not increase in the future.  We presently believe that none of our properties have any condition that is likely to have a material adverse effect on our financial position, results of operations or cash flows.

COMPETITION

Our television stations compete for audience share and advertising revenue with other television stations in their respective designated market areas (DMAs), as well as with other advertising media such as radio, newspapers, magazines, outdoor advertising, transit advertising, telecommunications providers, internet, yellow page directories, direct mail, satellite television, local cable television and wireless video.  Some competitors are part of larger organizations with substantially greater financial, technical and other resources than we have.

Television Competition.  Competition in the television broadcasting industry occurs primarily in individual DMAs. Generally, a television broadcasting station in one DMA does not compete with stations in other DMAs. Our television stations are located in highly competitive DMAs. In addition, certain of our DMAs are overlapped by both over-the-air and cable carriage of stations in adjacent DMAs, which tends to spread viewership and advertising expenditures over a larger number of television stations.

Broadcast television stations compete for advertising revenues primarily with other broadcast television stations, radio stations, cable channels, cable system operators and satellite providers serving the same market, as well as with newspapers, the internet, yellow page directories, direct mail, outdoor advertising operators and transit advertisers.  Traditional network programming (ABC, CBS and NBC) generally achieves higher household audience levels than FOX, WB and UPN programming and syndicated programming aired by our independent stations. This can be attributed to a combination of factors including the traditional networks’ efforts to reach a broader audience, generally better signal carriage available when broadcasting over VHF channels 2 through 13 versus broadcasting over UHF channels 14 through 69 and the higher number of hours of traditional network programming being broadcast weekly. However, greater

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amounts of advertising time are available for sale on our FOX, UPN and WB affiliated stations and, as a result, we believe that our programming typically achieves a share of television market advertising revenues greater than its share of the market’s audience.

Television stations compete for audience share primarily on the basis of program popularity, which has a direct effect on advertising rates. Our affiliated stations are largely dependent upon the performance of the networks’ programs in attracting viewers. Non-network time periods are programmed by the station primarily with syndicated programs purchased for cash, cash and barter or barter-only as well as through self-produced news, public affairs programs, live local sporting events and other entertainment programming.

Television advertising rates are based upon factors which include the size of the DMA in which the station operates, a program’s popularity among the viewers that an advertiser wishes to attract, the number of advertisers competing for the available time, the demographic makeup of the DMA served by the station, the availability of alternative advertising media in the DMA including radio, cable, satellite, newspapers and yellow page directories, direct mail, the aggressiveness and knowledge of sales forces in the DMA and development of projects, features and programs that tie advertiser messages to programming. We believe that our sales and programming strategies allow us to compete effectively for advertising revenues within our DMAs.

Satellite customers may be one of the fastest growing segments of our viewing audience.  Currently, several satellite providers make available our local signal to their satellite subscribers in our DMAs.  We are compensated by these satellite providers on a per subscriber basis and this revenue has continued an upward trend.  We cannot assume that these providers will continue to pay these fees in the future.

Other factors that are material to a television station’s competitive position include signal coverage, local program acceptance, network affiliation, audience characteristics and assigned broadcast frequency. Historically, our UHF broadcast stations have suffered a competitive disadvantage in comparison to stations with VHF broadcast frequencies. This historic disadvantage has gradually declined through:

•carriage on cable systems and in certain markets, direct broadcast satellite;

•improvement in television receivers;

•improvement in television transmitters;

•wider use of all channel antennae;

•increased availability of programming; and

•the development of new networks such as FOX, WB and UPN.

The broadcasting industry is continuously faced with technical changes and innovations, competing entertainment and communications media, changes in labor conditions and governmental restrictions or actions of federal regulatory bodies, including the FCC, any of which could possibly have a material effect on a television station’s operations and profits. For instance, the FCC has established Class A television service for qualifying low power television stations. This Class A designation provides low power television stations, which ordinarily have no broadcast frequency rights when the low power signal conflicts with a signal from any full power stations, some additional frequency rights.  These rights may allow low power stations to compete more effectively with full power station.  We cannot predict the effect of increased competition from Class A television stations in markets where we have full-power television stations.

There are sources of video service other than conventional television stations, the most common being cable television, which can increase competition for a broadcast television station by bringing into its market distant broadcasting signals.  These signals not otherwise available to the station’s audience serve as a distribution system for national satellite-delivered programming and other non-broadcast programming originated on a cable system and selling advertising time to local advertisers. Other principal sources of competition include home video exhibition and Direct Broadcast Satellite (DBS) services and Broadband Radio Service (BRS). DBS and cable operators, in particular, are competing more aggressively than in the past for advertising revenues. This competition could adversely affect our stations’ revenues and performance in the future.  In addition, SHVIA allows on a limited basis, satellite carriers to provide distant stations’ signals with the same network affiliation as our stations to their subscribers.

Moreover, technology advances and regulatory changes affecting programming delivery through fiber optic telephone lines and video compression could lower entry barriers for new video channels and encourage the development of increasingly specialized “niche” programming. Telephone companies are permitted to provide video distribution services via radio communication, on a

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common carrier basis, as “cable systems” or as “open video systems,” each pursuant to different regulatory schemes. Additionally, in January 2004, the FCC concluded an auction for licenses operating in the 12 GHz band that can be used to provide multichannel video programming distribution.  Those licenses were granted in July 2004.  We are unable to predict what other video technologies might be considered in the future or the effect that technological and regulatory changes will have on the broadcast television industry and on the future profitability and value of a particular broadcast television station.

We are currently exploring whether or not television broadcasting will be enhanced significantly by the development and increased availability of DTV technology. This technology has the potential to permit us to provide viewers multiple channels of digital television over each of our existing standard channels, to provide certain programming in a high definition television format and to deliver various forms of data, including data on the internet, to PCs and handheld devices. These additional capabilities may provide us with additional sources of revenue as well as additional competition.   In addition, emerging technologies that will allow viewers to digitally record and play back television programming may decrease viewership of commercials and, as a result, lower our advertising revenues.

While DTV technology is currently available in a large number of viewing markets, a successful transition from the current analog broadcast format to a digital format may take many years. We cannot be assured that our efforts to take advantage of the new technology will be commercially successful.

We also compete for programming, which involves negotiating with national program distributors or syndicators that sell first-run and rerun packages of programming. Our stations compete for exclusive access to those programs against in-market broadcast station competitors for syndicated products. Although historically cable systems did not generally compete with local stations for programming, more recently national cable networks have more frequently acquired programs that would have otherwise been offered to local television stations. Public broadcasting stations generally compete with commercial broadcasters for viewers but not for advertising dollars.

We believe we compete favorably against other television stations because of our management skill and experience, our ability historically to generate revenue share greater than our audience share, our network affiliations and our local program acceptance. In addition, we believe that we benefit from the operation of multiple broadcast properties, affording us certain non-quantifiable economies of scale and competitive advantages in the purchase of programming.

EMPLOYEES

As of March 7, 2005, we had approximately 3,310 employees. Approximately 225 employees at eight of our television stations are represented by labor unions under certain collective bargaining agreements. We have not experienced any significant labor problems and consider our overall labor relations to be good.

AVAILABLE INFORMATION

Our internet address is: www.sbgi.net. We make available, free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 as soon as reasonably practicable after such documents are electronically submitted to the SEC.  In addition, a replay of each of our quarterly earnings conference calls is available on our website until the subsequent quarter’s earnings call.

ITEM 2.PROPERTIES

Generally, each of our stations has facilities consisting of offices, studios and tower sites.  Transmitter and tower sites are located to provide maximum signal coverage of our stations’ markets.  The following is a summary of our principal owned and leased real properties as we believe that no one property represents a material amount of the total properties owned or leased.

	OWNED	LEASED
Office and Studio Buildings	666,147 square feet	443,227 square feet
Office and Studio Land	377 acres	4 acres
Transmitter Building Site	84,313 square feet	56,402 square feet
Transmitter and Tower Land	1,816 acres	3,223 acres

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Included in the table above, are properties held for sale of approximately 46,000 sq. ft. of buildings and 6.25 acres of land owned.  We believe that all of our properties, both owned and leased, are generally in good operating condition, subject to normal wear and tear and are suitable and adequate for our current business operations.

ITEM 3.LEGAL PROCEEDINGS

Lawsuits and claims are filed against us from time to time in the ordinary course of business.  These actions, other than what is discussed below, are in various preliminary stages and no judgments or decisions have been rendered by hearing boards or courts.  After reviewing developments to date with legal counsel, management is of the opinion that the outcome of such matters will not have a material adverse effect on our consolidated financial position, consolidated results of operations or consolidated cash flows.

There has been some controversy surrounding the airing in 2004 of a news program, POW Story: Politics, Pressure, and the Media.  On October 19, 2004, a nominal shareholder filed a derivative suit in the Baltimore City Circuit Court against our directors and us.  The suit alleged mismanagement of our company by the directors in allowing the controlling shareholders to impose their own political and personal agendas on our news programming.  After our outside counsel filed a motion which noted that none of the claims of financial losses were realized and the speculation of significant loss of advertising revenue and eroded ratings were incorrect, this shareholder derivative suit was voluntarily dismissed on February 23, 2005.  Additionally, just before the presidential election, we received a formal letter demanding that we sue three of our directors for insider trading.  Our outside counsel responded to the letter by noting to its writer that the allegations supporting the claims of insider trading were objectively incorrect.  Outside counsel also advised the writer that the action demanded by the letter, even if based upon accurate facts, failed to support a shareholder derivative suit or any action by us on the demand.  We have received no further communication from this writer.  Lastly, certain parties filed formal complaints against us with the Federal Communications Commission (FCC) and the Federal Election Commission (FEC).  The complaint filed with the FCC was withdrawn, and we have filed a response to the complaints with the FEC.  Based on the information currently available, we have no reason to believe that the FEC complaint has merit.  We believe that we have appropriately responded to this controversy and that there will be no material adverse effect on our consolidated financial position, consolidated results of operations or consolidated cash flows.

On November 1, 2004, an organization calling itself “Free Press” filed a petition with the FCC to deny the license renewal applications of six of our stations (WXLV-TV, Winston-Salem, North Carolina; WUPN-TV, Greensboro, North Carolina; WLFL-TV, Raleigh/Durham, North Carolina; WRDC-TV, Raleigh/Durham, North Carolina; WLOS-TV, Asheville, North Carolina; and WMMP-TV, Charleston, South Carolina) and two Cunningham Broadcasting Corporation stations (WBSC-TV, Anderson, South Carolina and WTAT-TV, Charleston, South Carolina), which are programmed by us pursuant to LMAs.  The petition contains essentially the same allegations that have been brought in the past by the Rainbow/PUSH Coalition, which were dismissed or denied by the FCC, and several other allegations which we believe have no merit nor will they have a material adverse effect on our consolidated financial position, consolidated results of operations or consolidated cash flows.

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

No matters were submitted to a vote of our shareholders during the fourth quarter of 2004.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER

                PURCHASES OF EQUITY SECURITIES

Our Class A Common Stock is listed for trading on the NASDAQ stock market under the symbol SBGI. Our Class B Common Stock is not traded on a market.  The following table sets forth for the periods indicated the high and low sales prices on the NASDAQ stock market.

2004	High		Low
First Quarter	$	15.03	$	12.05
Second Quarter	$	13.51	$	10.27
Third Quarter	$	10.34	$	7.16
Fourth Quarter	$	9.21	$	6.26

2003	High		Low
First Quarter	$	12.02	$	7.68
Second Quarter	$	13.24	$	7.76
Third Quarter	$	12.20	$	9.63
Fourth Quarter	$	15.43	$	10.12

As of March 7, 2005, there were approximately 77 shareholders of record of our common stock. This number does not include beneficial owners holding shares through nominee names.  Based on information available to us, we believe we have more than 5,000 beneficial owners of our Class A Common Stock and nine beneficial owners of our Class B Common Stock.

Our Bank Credit Agreement and some of our subordinated debt instruments have general restrictions on the amount of dividends that may be paid.  Under the indentures governing our 8.75% Senior Subordinated Notes due 2011 and 8% Senior Subordinated Notes due 2012, we are restricted from paying dividends on our common stock unless certain specified conditions are satisfied, including that:

•no event of default then exists under the indenture or certain other specified agreements relating to our indebtedness; and

•after taking account of the dividend, we are in compliance with certain net cash flow requirements contained in the indenture.  In addition, under certain of our senior unsecured debt, the payment of dividends is not permissible during a default thereunder.

In 2004, we began paying a quarterly dividend on our common stock of $0.025 per share.  On February 10, 2005, the Board of Directors voted to increase the common stock dividend to $0.05 per share per quarter or $0.20 per share annually.  These dividend levels are not in excess of the applicable restrictions and conditions and we expect to continue to pay these dividends on our common stock into the foreseeable future.

We did not repurchase any stock during the quarter ended December 31, 2004.

ITEM 6.SELECTED FINANCIAL DATA

The selected consolidated financial data for the years ended December 31, 2004, 2003, 2002, 2001 and 2000 have been derived from our audited consolidated financial statements. The consolidated financial statements for the years ended December 31, 2004, 2003 and 2002 are included elsewhere in this report.

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The information below should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements included elsewhere in this report.

STATEMENT OF OPERATIONS DATA

(in thousands, except per share data)

	Years Ended December 31,
	2004			2003			2002			2001			2000
Statement of Operations Data:
Net broadcast revenues (a)	$	637,186		$	614,682		$	624,375		$	583,347		$	654,543
Revenues realized from station barter arrangements	58,039			59,155			57,628			51,129			50,701
Other operating divisions revenues	13,054			14,568			4,344			6,925			4,494
Total revenues	708,279			688,405			686,347			641,401			709,738
Station production expenses	148,408			142,469			132,146			134,080			139,463
Station selling, general and administrative expenses	154,352			138,284			134,978			132,019			133,699
Expenses recognized from station barter arrangements	53,494			54,315			51,283			45,399			44,649
Depreciation and amortization (b) (c)	157,099			161,767			174,431			248,765			219,877
Stock-based compensation expense	1,603			1,397			1,301			1,462			1,645
Other operating divisions expenses	14,932			16,375			6,051			8,910			7,076
Corporate general and administrative expenses	21,160			19,532			17,797			18,622			21,386
Impairment and write down charge of long-lived assets	—			—			—			16,075			—
Restructuring costs	—			—			—			3,700			—
Contract termination costs	—			—			—			5,135			—
Cumulative adjustment for change in assets held for sale	—			—			—			—			619
Operating income	157,231			154,266			168,360			27,234			141,324
Interest expense (c)	(120,400		)	(121,165		)	(118,114		)	(130,794		)	(133,240		)
Subsidiary trust minority interest expense (d)	—			(11,246		)	(23,890		)	(23,890		)	(23,890		)
Net (loss) gain on sale of assets	(52		)	(452		)	(46		)	204			—
Unrealized gain (loss) from derivative instrument	29,388			17,354			(30,939		)	(32,220		)	(296		)
Loss from extinguishment of securities	(2,453		)	(15,187		)	(15,362		)	(22,010		)	—
Income (loss) from equity and cost investees	1,100			1,193			(1,189		)	(7,616		)	(16,764		)
Gain on insurance settlement	3,341			—			—			—			—
Interest and other income	1,086			1,747			3,295			3,787			2,552
Impairment of goodwill	(44,055		)	—			—			—			—
Income (loss) from continuing operations before income taxes	25,186			26,510			(17,885		)	(185,305		)	(30,314		)
Income tax (provision) benefit	(11,182		)	(10,676		)	7,591			58,865			(5,127		)
Net income (loss) from continuing operations	14,004			15,834			(10,294		)	(126,440		)	(35,441		)
Discontinued Operations:
Income (loss) from discontinued operations, net of related income taxes	10,018			8,558			4,685			(1,282		)	4,542
Gain on sale of discontinued operations, net of related income taxes	—			—			7,519			—			108,264
Cumulative adjustment for change in accounting principle, net of related income taxes	—			—			(566,404		)	¾			¾
Net income (loss)	$	24,022		$	24,392		$	(564,494	)	$	(127,722	)	$	77,365
Net income (loss) available to common shareholders	$	13,842		$	14,042		$	(574,844	)	$	(138,072	)	$	67,015
Dividends declared on common stock	$	6,403		$	—		$	—		$	—		$	—

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	Years Ended December 31,
	2004		2003		2002			2001			2000
Per Share Data:
Basic and diluted earnings (loss) per share from continuing operations	$	0.04	$	0.06	$	(0.24	)	$	(1.62	)	$	(0.50	)
Basic and diluted earnings (loss) per share from discontinued operations	$	0.12	$	0.10	$	0.14		$	(0.02	)	$	1.23
Basic and diluted loss per share from cumulative effect of change in accounting principle	$	—	$	—	$	(6.64	)	$	—		$	—
Basic and diluted earnings (loss) per common share	$	0.16	$	0.16	$	(6.74	)	$	(1.64	)	$	0.73
Balance Sheet Data:
Cash and cash equivalents	$	10,491	$	28,730	$	5,327		$	32,063		$	4,091
Total assets	$	2,465,663	$	2,567,106	$	2,606,773		$	3,289,426		$	3,324,435
Total debt (e)	$	1,639,615	$	1,729,921	$	1,549,488		$	1,683,204		$	1,616,426
HYTOPS (f)	$	—	$	—	$	200,000		$	200,000		$	200,000
Total shareholders’ equity	$	226,551	$	229,005	$	211,180		$	771,960		$	912,530

(a)“Net broadcast revenues” are defined as broadcast revenues, net of agency commissions.

(b)Depreciation and amortization includes amortization of program contract costs and net realizable value adjustments, depreciation and amortization of property and equipment and amortization of acquired intangible broadcasting assets, other assets and costs related to excess syndicated programming.

(c)Depreciation and amortization and interest expense amounts differ from prior presentations for the fiscal year ended December 31, 2000.  Previously the amortized costs associated with the issuance of indebtedness had been classified as depreciation and amortization instead of being classified as interest expense. Accordingly, we reclassified $3,313 as interest expense for the fiscal year ended December 31, 2000.  Interest expense amounts for the years presented differ from prior years related to allocation of interest expense to discontinued operations.  Accordingly we reclassified interest expense to discontinued operations in the amounts of $7.7 million, $6.8 million, $8.1 million, $12.7 million and $19.0 million for the years ended December 31, 2004, 2003, 2002, 2001 and 2000, respectively.

(d)Subsidiary trust minority interest expense represents the distributions on the HYTOPS and amortization of deferred finance costs. See footnote (f).

(e)“Total debt” is defined as long-term debt, net of unamortized discount and capital lease obligations, including the current portion thereof. Total debt does not include the HYTOPS or our preferred stock.

(f)HYTOPS represents our high yield trust originated preferred securities representing $200 million aggregate liquidation value, which were redeemed in 2003.

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

Introduction

We are a diversified television broadcasting company that owns or provides certain programming, operating or sales services to more television stations than any other commercial broadcasting group in the United States.  We currently own, provide programming and operating services pursuant to local marketing agreements (LMAs) or provide (or are provided) sales services pursuant to outsourcing agreements to 62 television stations in 39 markets.  We currently have 11 duopoly markets where we own and operate two stations within the same market.  We have eight LMA markets where, with one exception, we own and operate one station in the market and provide programming and operating services to (by) another station within that market.  In the remaining sixteen markets, we own and operate a single television station.

We believe that owning duopolies enables us to accomplish two very important strategic business objectives: increasing our share of revenues available in each market and operating television stations more efficiently by minimizing costs.  We constantly monitor revenue share and cost efficiencies and we aggressively pursue opportunities to improve both using new technology and by sharing best practices among our station groups.

Most of our revenues are generated from the transactional spot market rather than the traditional “up front” and “scatter” markets that some of our competitors can access.  These operating revenues are derived from local and national advertisers and, to a much lesser extent, from political advertisers and television network compensation. Our revenues from local advertisers have continued to trend upward and revenues from national advertisers have continued to trend downward when measured as a percentage of gross broadcast revenue. We believe this trend is the result of our focus on increasing local advertising revenues as a percentage of total advertising revenues, from a decrease in overall spending by national advertisers and from an increase in the number of competitive media outlets providing national advertisers a means by which to advertise their goods or services. Our efforts to mitigate the effect of these increasing competitive media outlets for

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national advertisers include continuing our efforts to increase local revenues and developing innovative sales and marketing strategies to sell traditional and non-traditional services to our advertisers.

Our primary operating expenses are syndicated program rights fees, commissions on revenues, employee salaries, news gathering and station promotional costs.  Amortization and depreciation of costs other than goodwill associated with the acquisition of our stations and interest carrying charges are significant factors in determining our overall profitability.

Sinclair Television Group, Inc. (STG) is a wholly owned subsidiary of Sinclair Broadcast Group, Inc. (SBG) that we created in 2003.  As part of our redemption of our HYTOPS, on September 30, 2003, we completed the creation of a modified holding company structure, whereby we transferred substantially all of our television broadcast assets and liabilities to STG. As such, STG has become the primary obligor under our existing Bank Credit Agreement, the 8.75% Senior Subordinated Notes due 2011 and the 8% Senior Subordinated Notes due 2012.  Our Class A Common Stock, Class B Common Stock, Series D Convertible Exchangeable Preferred Stock and the 4.875% Convertible Senior Subordinated Notes remain obligations or securities of SBG and are not obligations or securities of STG.

On November 12, 2004, we announced the sale of KSMO-TV in Kansas City, Missouri, to Meredith Corporation for $33.5 million, of which we have closed on $26.8 million for the non-license assets.  Until the Federal Communications Commission (FCC) approves the transfer of the FCC license, we will continue our involvement in certain operations of this station through an outsourcing agreement with Meredith.  On December 2, 2004, we announced the sale of KOVR-TV in Sacramento, California, to CBS Broadcasting, Inc. for $285.0 million.  Closing will occur if and when the FCC approves this transaction.  We expect both transactions to close in 2005 and we have reclassified the operations of these stations as discontinued operations and the assets and liabilities as held for sale in our financial statements in accordance with all applicable accounting rules and principles.  (See Note 12. Discontinued Operations in the Notes to our Consolidated Financial Statements.)

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial position, results of operations and cash flows are based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, program contract costs, intangible assets, income taxes, property and equipment, investments and derivative contracts. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. These estimates have been consistently applied for all years presented in this report and, in the past we have not experienced material differences between these estimates and actual results.  However, because future events and their effects cannot be determined with certainty, actual results could differ from our estimates, and such differences could be material.

We have identified the policies below as critical to our business operations and the understanding of our results of operations. For a detailed discussion on the application of these and other accounting policies, see Note 1. Summary of Significant Accounting Policies in the Notes to our Consolidated Financial Statements.

Allowance for Doubtful Accounts.  We maintain an allowance for doubtful accounts for estimated losses resulting from extending credit to our customers that are unable to make required payments. If the economy and/or the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make their payments, additional allowances may be required. For example, a 10% increase of the balance of our allowance for doubtful accounts as of December 31, 2004, would have affected net income available to common shareholders by approximately $0.3 million.

Program Contract Costs.  We have agreements with distributors for the rights to television programming over contract periods, which generally run from one to seven years. Contract payments are made in installments over terms that are generally equal to or shorter than the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross cash contractual commitment when the license period begins and the program is available for its first showing. The portion of program contracts which become payable within one year is reflected as a current liability in the Consolidated Balance Sheets.

The programming rights are reflected in the Consolidated Balance Sheets at the lower of unamortized cost or estimated net realizable value (NRV). Estimated NRVs are based upon management’s expectation of future advertising revenues, net of sales commissions, to be generated by the remaining program material. Amortization of program contract costs is generally computed using either a four year accelerated method or straight-line method, depending upon the length of the contract. Program contract costs estimated by management to be amortized within one year are classified as current assets. Payments of program contract liabilities are typically paid on a scheduled basis and are not affected by adjustments for amortization or estimated NRV. If our estimate of future advertising revenues declines, then additional write downs to NRV may be required.

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Valuation of Goodwill, Long-Lived Assets and Intangible Assets.  We periodically evaluate our goodwill, broadcast licenses, long-lived assets and intangible assets for potential impairment indicators. Our judgments regarding the existence of impairment indicators are based on estimated future cash flows, market conditions, operating performance of our stations and legal factors. Future events could cause us to conclude that impairment indicators exist and that the net book value of long-lived assets and intangible assets is impaired. Any resulting impairment loss could have a material adverse impact on our financial position and results of operations.

We have determined our broadcast licenses to be indefinite-lived intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets, which requires such assets to be tested for impairment on an annual basis.  We test our broadcast licenses by estimating the fair market value of each FCC license using a discounted cash flow model. We then compare the estimated fair market value to the book value of each of our FCC licenses to determine if an impairment exists.  Our discounted cash flow model is based on our judgment of future market conditions within the designated marketing area of each broadcast license as well as discount rates that would be used by market participants in an arms-length transaction. Future events could cause us to conclude that market conditions have declined or discount rates have increased to the extent that our broadcast licenses could be impaired. Any resulting impairment loss could have a material adverse impact on our financial position, results of operations and cash flows.

Income Taxes.  We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. A valuation allowance has been provided for deferred tax assets relating to various federal and state net operating losses (NOL) being carried forward based on the expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income. Although realization is not assured for the remaining deferred tax assets, we believe that it is more likely than not that they will be realized in the future. If we are unable to generate sufficient taxable income, if there is a material change in our projected future taxable income or if there is a change in our ability to utilize the NOL carryforwards due to changes in federal and state laws, we will make any necessary adjustments to the valuation allowance. This may result in a substantial increase in our effective tax rate and a material adverse impact on our financial position, results of operations and cash flows.  Management periodically performs a comprehensive review of our tax positions and accrues amounts for tax contingencies.  Based on these reviews, the status of ongoing audits and the expiration of applicable statute of limitations, accruals are adjusted as necessary. The resolution of audits is unpredictable and could result in tax liabilities that are significantly higher or lower than that which has been provided by us.

Set forth below are the principal types of broadcast revenues from continuing operations received by our stations for the periods indicated and the percentage contribution of each type to our total gross broadcast revenues:

BROADCAST REVENUES

(in thousands)

	Years ended December 31,
	2004					2003					2002
Local/regional advertising	$	408,009		55.5	%	$	405,540		57.2	%	$	385,886		53.5	%
National advertising	259,341			35.3	%	269,007			38.0	%	279,090			38.7	%
Network compensation	14,340			1.9	%	15,915			2.2	%	14,901			2.1	%
Political advertising	37,978			5.2	%	5,541			0.8	%	29,107			4.0	%
Production	1,466			0.2	%	1,797			0.3	%	1,944			0.3	%
Other station revenues	14,165			1.9	%	10,860			1.5	%	10,362			1.4	%
Broadcast revenues	735,299			100.0	%	708,660			100.0	%	721,290			100.0	%
Less: agency commissions	(98,113		)			(93,978		)			(96,915		)
Net broadcast revenues	637,186					614,682					624,375
Revenues realized from station barter arrangements	58,039					59,155					57,628
Other operating divisions revenues	13,054					14,568					4,344
Total revenues	$	708,279				$	688,405				$	686,347

Our primary types of programming and their approximate percentages of 2004 net broadcast revenues from continuing operations were syndicated programming (45.4%), network programming (23.5%), news (14.9%), direct advertising programming (7.7%), sports programming (5.6%), children’s programming (0.5%) and other programming (2.5%). Similarly, our five largest categories of advertising and their approximate percentages of 2004 net broadcast revenues were automotive (23.8%), professional services (11.7%), paid programming including religious programming (8.0%), fast food (6.6%) and retail department stores (5.8%).  Other than political advertising, no other advertising category accounted for more than 4.6% of our broadcast revenues in 2004. Along

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with the industry, we have seen softness in the auto advertising category and we expect this to continue in 2005.  No individual advertiser accounted for more than 2.6% of our consolidated net broadcast revenues in 2004.

The following table sets forth certain of our operating data from continuing operations for the years ended December 31, 2004, 2003 and 2002.  For definitions of items, see the footnotes to the table in Item 6. Selected Financial Data.

OPERATING DATA

(in thousands)

	Years ended December 31,
	2004		2003		2002
Net broadcast revenues	$	637,186	$	614,682	$	624,375
Revenues realized from station barter arrangements	58,039		59,155		57,628
Other operating divisions revenues	13,054		14,568		4,344
Total revenues	708,279		688,405		686,347
Station production expenses	148,408		142,469		132,146
Station selling, general and administrative expenses	154,352		138,284		134,978
Expenses recognized from station barter arrangements	53,494		54,315		51,283
Depreciation and amortization	157,099		161,767		174,431
Stock-based compensation	1,603		1,397		1,301
Other operating divisions expenses	14,932		16,375		6,051
Corporate general and administrative expenses	21,160		19,532		17,797
Operating income	$	157,231	$	154,266	$	168,360
Cumulative adjustment for change in accounting principle	$	—	$	—	$	(566,404	)
Net income (loss)	$	24,022	$	24,392	$	(564,494	)
Net income (loss) available to common shareholders	$	13,842	$	14,042	$	(574,844	)

RESULTS OF OPERATIONS

Overview

The following discussion is related to the results of our continuing operations, except discussion regarding our statements of cash flows (which also include the results of our discontinued operations).

Record levels of political advertising spending at our stations was the primary driver of our revenues in 2004.  Political revenues were 29.3% higher than the previous election year in 2002 and were 42.5% higher than the previous presidential election year in 2000.  Our local advertising revenues, excluding political advertising, have remained stable and we attribute this primarily to our new business initiatives.  Meanwhile, automotive spending, our largest advertising category, was soft in the second half of 2004 due to the drop in spending, commercial production and consumer incentive programs by the automotive manufacturers.

Our results also include increased expenses reflecting continued expansion of our News Central operations and implementation of our new business initiatives.  As part of our direct mail initiative, we increased the number of mailings during the year, thereby increasing our printing and postage costs.  We believe that through these efforts, we are now able to maximize the benefit of offering our advertisers direct mailings along with traditional television spots.  In 2005, we plan to monitor the number and size of our mailings and adjust them to achieve efficient levels of market penetration and saturation.

During the fourth quarter, we entered into agreements to dispose of our television stations in Sacramento, California and Kansas City, Missouri for prices higher than current public valuations.  We will continue to have involvement in certain operations of both stations until the Federal Communications Commission approves the transfer of the broadcast licenses to the respective buyers.  Beginning in the second quarter of 2004, we declared quarterly dividends of $0.025 per share on our common stock and in February of 2005, we announced an increase to $0.05 per share.

Unless otherwise indicated, references in this discussion and analysis to 2004, 2003, and 2002 are to our fiscal years ended December 31, 2004, 2003 and 2002, respectively.  Additionally, references to the first, second, third or fourth quarter are to the three months ended March 31, June 30, September 30 and December 31, respectively, for the year being discussed.

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Operating Results

The following table presents our revenues from continuing operations, net of agency commissions, for the past three years (in millions):

							Percent Change
	2004		2003		2002		’04 vs. ‘03		’03 vs. ‘02
Local revenues
Non-Political	$	354.5	$	356.0	$	342.7	(0.4	)%	3.9	%
Political	9.4		1.6		8.2		487.5	%	(80.5	)%
Total Local	363.9		357.6		350.9		1.8	%	1.9	%
National revenues
Non-Political	220.6		225.7		229.6		(2.3	)%	(1.7	)%
Political	22.8		2.8		16.7		714.3	%	(83.2	)%
Total National	243.4		228.5		246.3		6.5	%	(7.2	)%
Other revenues	29.9		28.6		27.2		4.5	%	5.1	%
Total Broadcasting Revenues	$	637.2	$	614.7	$	624.4	3.7	%	1.6	%

Political Revenues:  Both local and national political revenues were the primary drivers of our revenues in 2004.  When comparing political revenues to 2002, the most recent election year, local and national political revenues were up 14.6% and 36.5%, respectively.  We attribute this increase to the fact that we have stations in nine of the 16 so called “battleground states,” including five stations in Ohio and multiple stations in each of Florida, Iowa, Missouri and Wisconsin.  We do not expect political revenues to be significant in 2005.

Local Revenues:  Our revenues from local advertisers, excluding political revenues remain stable.  We continue to focus on increasing local advertising revenues through innovative sales and marketing strategies in our markets.  Revenues from our business initiatives increased to $27.2 million in 2004 from $20.5 million in 2003.  We are not able to compare these amounts to 2002 because there was no comparable direct mail program in that year.  Additionally, during 2004 we implemented an enhanced sales training course for all of our salespeople with a focus on local revenue sales.  We expect that these efforts will enable us to continue the upward trend of local revenues, excluding political sales, in 2005.

National Revenues:  Our revenues from national advertisers, excluding political revenues, have continued to trend downward over time.  We believe this trend represents a significant shift in the way national advertising dollars are being spent.  We are seeing a shift by the national advertisers towards spending more resources during our network programming hours and away from other times during the day where we have more inventory available for sale.

Other Operating Divisions Revenue and Expense:  During 2004, the other operating divisions revenue that related to G1440, our software development and consulting company, increased by $2.0 million to $6.7 million or 42.6% from revenues of $4.7 million in 2003.  G1440’s operating expenses increased to $6.4 million for 2004 as compared to $5.0 million for the same period last year.  The growth of G1440’s IT Staffing and Builder 1440 divisions largely contributed to the increase in revenues in 2004.  Likewise, expenses rose as a result of the increase in resources and expenses to run these divisions.  Other operating divisions revenue related to our ownership interest in Acrodyne decreased by $3.5 million to $6.4 million or 35.4% from revenues of $9.9 million in 2003.  Acrodyne’s operating expenses decreased $2.9 million to $8.5 million for 2004 as compared to $11.4 million for the same period last year.  Acrodyne did not receive the commitments for new transmitters that it expected during 2004.  Staffing was reduced as a result of the decreased sales.  However, commitments for new transmitters with expected sales of approximately $7.0 million were received in the beginning of 2005 for shipment during the first half of the year.

During 2003, the G1440 operating divisions revenue that related to software development and consulting increased by $0.4 million to $4.7 million, or 9.3%, from $4.3 million for the same period last year.  Other operating divisions revenue related to our interest in Acrodyne increased by $9.9 million because beginning January 1, 2003, we commenced consolidating the financial statements of Acrodyne and discontinued accounting for the investment under the equity method of accounting.  Other operating divisions expenses increased by $10.3 million, of which $11.4 million resulted from the consolidation of Acrodyne, offset by a decrease in general and administrative costs of $1.1 million for G1440, primarily related to the consolidation from three offices to one office and continued focus on cost reduction, for the year ended December 31, 2003, as compared to the year ended December 31, 2002.

29

The following table presents our time sales revenue from continuing operations, net of agency commissions, by network affiliates for the past three years (in millions):

	# of		Percent of Sales		Net Time Sales						Percent Change
	Stations		2004		2004		2003		2002		’04 vs. ‘03		’03 vs. ‘02
FOX	20		39.5	%	$	240.2	$	237.0	$	240.9	1.4	%	(1.6	)%
WB	18	(a)	25.9	%	156.7		157.5		155.4		0.5	%	1.3	%
ABC	9		19.5	%	118.3		104.9		111.8		12.8	%	(6.1	)%
UPN	6		7.6	%	46.0		42.5		39.0		8.2	%	9.0	%
NBC	3		4.4	%	26.9		26.5		28.1		1.5	%	(5.7	)%
CBS	2	(a)	2.2	%	13.5		12.4		16.8		8.9	%	(26.2	)%
IND(b)	2		0.9	%	5.7		5.3		5.2		7.5	%	1.9	%
Total	60	(a)	100.0	%	$	607.3	$	586.1	$	597.2

(a) During 2004, we entered into agreements to sell our CBS station in Sacramento, California and our WB station Kansas City, Missouri.  The time sales from these stations are not included in this table because they are accounted for as time sales from discontinued operations.

(b) Stations without a network affiliation.

The following table presents our significant expense categories for the past three years (in millions):

								Percent Change
	2004		2003		2002			’04 vs. ‘03		’03 vs. ‘02
Station production expenses	$	148.4	$	142.5	$	132.1		4.1	%	7.9	%
Station selling, general and administrative expenses	$	154.4	$	138.3	$	135.0		11.6	%	2.4	%
Depreciation of property and equipment	$	48.6	$	44.0	$	38.2		10.5	%	15.2	%
Amortization of program contract costs	$	89.9	$	99.0	$	117.3		(9.2	)%	(15.6	)%
Amortization of definite-lived intangible assets	$	18.5	$	18.8	$	19.0		(1.6	)%	(1.1	)%
Corporate general and administrative expenses	$	21.2	$	19.5	$	17.8		8.7	%	9.6	%
Interest expense	$	120.4	$	121.2	$	118.1		(0.7	)%	2.6	%
Unrealized gain (loss) from derivative instruments	$	29.4	$	17.4	$	(30.9	)	68.9	%	156.3	%
Gain on insurance settlement	$	3.3	$	—	$	—		—		—
Impairment of goodwill	$	44.1	$	—	$	—		—		—
Income tax provision (benefit)	$	11.2	$	10.7	$	(7.6	)	(4.7	)%	240.8	%

Station production expenses

Station production costs increased in 2004 compared to 2003 as a result of news expense related to the commencement of News Central during 2003 in the Greensboro, Milwaukee, Tampa, Birmingham, Las Vegas and Cincinnati markets of $5.5 million, an increase in rating service fees of $1.8 million, engineering expense of $0.9 million, promotion expense of $0.2 million, offset by a decrease in costs related to LMAs and outsourcing agreements of $1.8 million, programming expenses of $0.5 million and other miscellaneous increases of $0.2 million.

In 2003, the increase from 2002 in station production costs was primarily related to an increase in promotion costs of $3.3 million during the February 2003 ratings sweeps compared to February 2002, when we reduced our spending due to direct competition from the Olympics.  We also experienced increases in spending of $4.7 million for the commencement of News Central in our Greensboro, Milwaukee, Tampa, Birmingham, Las Vegas and Cincinnati markets. Rating service fees of $1.4 million related to new contracts for eleven stations, programming costs of $1.9 million, engineering costs of $1.2 million related to news expansions in the fourth quarter, the full year effect of the addition of our WNAB-TV outsourcing agreement during the second quarter of 2002 and increased electricity costs related to digital TV.  These increases were offset by a decrease in costs of $1.4 million related to our outsourcing and LMA agreements, a decrease in music license fees of $0.3 million, production expenses of $0.3 million and other miscellaneous decreases of $0.1 million.  We will continue to assess profitable opportunities for our news expansion.

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Station selling, general and administrative expenses

In 2004, we had an increase in sales and other expense related to our direct mail initiative of $6.0 million, an increase in bad debt expense of $1.5 million, an increase in vacation, salary and payroll taxes of $3.2 million, an increase in local sales commissions of $1.0 million, an increase in national commissions of $1.0 million related to increased revenue during 2004, an increase in insurance costs of $1.0 million, an increase in trade expense of $0.3 million, an increase in building rent and related expenses of $1.5 million and miscellaneous increases of $0.6 million compared to 2003.

During 2003, we experienced increases in direct mail marketing campaign costs of $3.2 million, sales expenses for the addition of our WNAB-TV outsourcing agreement of $0.5 million, an increase in sales compensation costs of $2.9 million, legal fees of $0.5 million and miscellaneous general and administrative costs of $0.3 million when compared to the prior corresponding period.  These increases were offset by a decrease in selling, general and administrative expenses related to a reduction of $2.4 million in bad debt expense as a result of improvements in the economy, national commissions of $0.4 million, expenses for Cunningham of $0.6 million, trade expense of $0.3 million, property taxes of $0.3 million and vacation expense of $0.1 million.

Depreciation and Amortization

Depreciation and amortization expenses are comprised of three components: depreciation of property and equipment, amortization of program contract costs and amortization of definite-lived intangible assets.

Depreciation of Property and Equipment:  The depreciation of property and equipment was $48.6 million in 2004, $44.0 million in 2003 and $38.2 million in 2002.  This expense is increasing over time because of the significant amount of capital expenditures we have incurred for digital equipment and for our News Central operations.  We expect to incur an additional $30.0 million in capital expenditures during 2005 and we expect depreciation expense to increase to approximately $51.0 million in 2005.

Amortization of Program Contract Costs:  The amortization of program contract costs was $89.9 million in 2004, $99.0 million in 2003 and $117.3 million in 2002.  The decrease in amortization expense over time is primarily because in each of the last three years we have spent less for program additions than we had in the year before.  We expect amortization of program contracts to decrease to approximately $74.0 million in 2005.

Amortization of Definite-lived Intangible Assets:  The amortization of definite-lived intangibles was $18.5 million in 2004, $18.8 million in 2003 and $19.0 million in 2002.  This expense is decreasing only slightly over time as a result of certain intangible assets becoming fully amortized each year.  We do not expect any changes in the intangible balance in the near future and we expect amortization of definite-lived intangibles to decrease slightly to approximately $18.0 million in 2005.

Corporate general and administrative expenses

Corporate general and administrative expenses represent the cost to operate our corporate headquarters location.  Such costs include, among other things, corporate departmental salaries, bonuses and fringe benefits, officers’ life insurance, rent, telephone, consulting fees, legal, accounting, and director fees.  Corporate departments include executive, treasury, finance and accounting, human resources, technology, corporate relations, legal, sales, operations and purchasing.  In 2004, there was an increase of $1.7 million from 2003, due primarily to increase of salary expense of $1.2 million, and increase in training and education costs of $0.5 million, an increase in corporation relation costs of $0.2 million, an increase in expense of $0.1 million related to compliance with Sarbanes Oxley and an increase in legal fees of $0.1 million.  These were offset by decreases in consulting fees of $0.3 million and other miscellaneous decreases of $0.1 million.

In 2003, the increase in corporate general and administrative expenses primarily related to an increase of consulting fees of $0.9 million, increased costs for telecommunications related to upgrades of $0.5 million, and insurance costs of $0.5 million, offset by other miscellaneous decreases in expense of $0.2 million.

Interest expense

Interest expense is comprised of three components:  Interest expense, amortization of certain debt financing costs and subsidiary trust minority interest expense.  Interest expense presented in the financial statements is related to continuing operations, with a portion of interest expense being allocated to discontinued operations in accordance with applicable accounting rules.  (See Note 12. Discontinued Operations, in the Notes to our Consolidated Financial Statements.)

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Interest Expense:  Interest expense decreased slightly in 2004 by $0.8 million as a result of the refinancing we did in the second quarter in an effort to reduce our overall interest costs.  Interest expense increased in 2003 by $3.1 million as a result of the redemption of HYTOPS in June of that year.  This increase was offset by refinancings in the second quarter of 2003.  Assuming no changes in the interest rate yield curve, no changes in debt levels and the sale of our Sacramento, California station in the second quarter of 2005, we expect interest expense to decrease to approximately $115.0 million next year.

Amortization of Certain Debt Financing Costs:  Amortization of certain debt financing costs decreased slightly in 2004 by $0.2 million and decreased significantly in 2003 by $1.3 million.  The decrease in 2004 includes reduced amortization of $0.3 million related to the HYTOPS that were redeemed in 2003, offset by a full year of amortization of $0.1 million related to the 2003 convertible notes.  The decrease in 2003 includes reduced amortization of $1.1 million related to the 1997 notes that were redeemed in December of 2002 along with a partial year of amortization of $0.4 million related to the HYTOPS that were redeemed in 2003, offset by the a partial year of amortization of $0.2 million related to the 2003 convertible notes.  Assuming no changes to our existing debt structure, we expect these cost to remain stable in 2005.

Subsidiary Trust Minority Interest:  In June of 2003, we refinanced our HYTOPS with long-term debt so that we no longer incurred subsidiary trust minority interest.  As a result, the 2003 interest expense was approximately one half of the 2002 expense and there was no associated interest expense in 2004.  We do not expect to enter into a similar financing instrument in 2005.

Derivative Instruments

We record gains and losses related to certain of our derivative instruments.  These instruments were entered into by us prior to implementing FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, and due to the way they were structured, they did not qualify as effective hedges (as that term is defined in the accounting guidance).  Generally, when derivative instruments are not effective, the change in the fair value of the instruments is recorded in the statement of earnings for each respective period.  The fair value of our derivative instruments is primarily based on the future interest rate curves at the end of each period.

In 2003 and 2004, when the future interest rate curves reflected increasing interest rates, we recorded unrealized gain from derivative instruments in our statements of operations.  Similarly, in 2002, when the future interest rate curves reflected decreasing interest rates, we recorded an unrealized loss from derivative instruments.  Currently, assuming we do not terminate these derivative instruments before expiration, the maximum aggregate unrealized gain from derivative instruments that we will record in all future periods is $24.7 million (which equals the fair value of the obligation related to these instruments as of December 31, 2004).  Since we cannot predict how the interest rate curves will change in the future, we are not able to predict the impact our derivative instruments will have on earnings in 2005 and future periods.

Gain on insurance settlement

In the first quarter of 2003, one of our towers in Charleston, West Virginia collapsed during a severe ice storm.  This tower was insured and we used the insurance proceeds to rebuild the tower and to replace the other assets that were destroyed by the collapse.  In the fourth quarter of 2004, we completed substantially all of the construction of the new tower and placed it in service, and at that time we recognized a gain on insurance settlement of $3.3 million.  Of this amount, $0.1 million was related to business interruption insurance recoveries.  We expect to receive an additional $1.3 million of insurance proceeds in 2005 related to the completion of the tower and related assets and we will recognize that as income when the cash is received.

Impairment of goodwill

On a periodic basis, we test our goodwill for impairment in accordance with the applicable accounting rules.  (See Note 4. Goodwill and Other Intangible Assets, in the Notes to our Consolidated Financial Statements.)  When we performed this test in the fourth quarter of 2004, we determined that the goodwill in one of our markets was impaired.  We recognized a loss of $44.1 million in the fourth quarter related to this impairment.  We will continue to test our goodwill on a periodic basis and, if required, we will record additional goodwill impairments in the future.

Income tax provision

The income tax provision from continuing operations increased to $11.2 million for the year ended December 31, 2004, from the income tax provision of $10.7 million for the year ended December 31, 2003.  For the year ended December 31, 2004, our pre-tax book income from continuing operations was $25.2 million and for the year ended December 31, 2003, our pre-tax book income from continuing operations was $26.5 million.

The effective tax rate from continuing operations was 44.4%, 40.3% and (42.4)% for the years ended December 31, 2004, 2003 and 2002, respectively.  Our tax rate changed to a provision in 2003, from a benefit in 2002 because we reported pre-tax book income in 2003, compared to a pre-tax book loss in 2002.  We believe that the effective tax rate will be 40.0% in 2005.

As of December 31, 2004, we have a net deferred tax liability of $196.6 million as compared to a net deferred tax liability of $180.7 million as of December 31, 2003.  The increase in deferred taxes primarily relates to deferred tax liabilities associated with book and tax differences relating to the amortization, depreciation and impairment of intangible assets and fixed assets, offset by deferred tax assets resulting from Federal and state net operating losses (NOLs) generated during 2004.

Recent Accounting Pronouncements

In September 2004, the Emerging Issues Task Force (EITF) finalized EITF No. 04-8, The Effect of Contingently Convertible Debt on Diluted Earnings per Share (EITF 04-8).  Issue 04-8 requires all issued securities that have embedded market price contingent conversion features be included in the diluted earnings per share (diluted EPS) calculation, if dilutive.  We adopted EITF 04-8 for our diluted EPS calculation on December 15, 2004.  Our Convertible Senior Subordinated Notes due 2018 were not included in our diluted EPS calculation for December 31, 2004 and 2003 because the effect was antidilutive.  The Convertible Senior Subordinated

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Notes due 2018 were issued during May 2003 and were not available to be included in our December 31, 2002 diluted EPS calculation.  (See Note 15. Earnings Per Share, in theNotes to our Consolidated Financial Statements.)

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123R,Share-Based Payment (SFAS 123R)as a revision to FASB Statement No. 123, Accounting for Stock-Based Compensation (SFAS 123).   SFAS 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows.  This standard requires that all share-based payments, including grants of employee stock options and our employee stock purchase plan, be recognized in the income statement as compensation expense based on their fair values.  SFAS 123R is effective for interim and annual periods beginning after June 15, 2005. We expect to adopt SFAS 123R on July 1, 2005.

Statement 123R permits public companies to adopt its requirements using one of two methods:

•a “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date; and

•a “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

As permitted by SFAS 123, we currently account for share-based payments to employees using Opinion 25’s intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of SFAS 123R’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of SFAS 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS 123R in prior periods, the impact of that standard would have approximated the impact of SFAS 123 as described in the disclosure of Pro Forma Information Related to Stock-Based Compensation below Note 1 to our Consolidated Financial Statements. SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.

Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operations and availability under our Bank Credit Agreement. Our Bank Credit Agreement consists of a $225.0 million revolving credit facility maturing on June 30, 2008, a $150.0 million Term Loan A Facility and a $250.0 million Term Loan C Facility.  On June 25, 2004, we amended and restated our Bank Credit Agreement, lowering our annual interest rate.  As part of the amendment, we fully redeemed our $460.9 million Term Loan B Facility with borrowings under our revolving credit facility and with new lower priced, $150.0 million Term Loan A and $250.0 million Term Loan C Facilities.  We did not make any changes to the terms of the revolving credit facility.

The Term Loan A Facility is repayable in quarterly installments, amortizing as follows:

•1.25% per quarter commencing March 31, 2005 to March 31, 2007; and

•2.50% per quarter commencing March 31, 2007 and continuing through its maturity on June 30, 2009.

The Term Loan C Facility is repayable in quarterly installments, amortizing 0.25%, commencing March 31, 2005 through its maturity on December 31, 2009.  The applicable interest rate on the revolving credit facility is either London Interbank Offered Rate (LIBOR) plus 1.25% to 2.25% or the alternative base rate plus 0.25% to 1.25% adjusted quarterly based on the ratio of total debt, net of cash, to four quarters’ trailing earnings before interest, taxes, depreciation and amortization, as adjusted in accordance with the Bank Credit Agreement.  Commitments under the revolving credit facility do not reduce incrementally and terminates at maturity.  We are required to prepay the Term Loan Facilities and reduce the revolving credit facility with (i) 100% of the net proceeds of any casualty loss or condemnation and; (ii) 100% of the net proceeds of any sale or other disposition of our assets in excess of $100 million in the aggregate for any fiscal year, to the extent not used to acquire new assets.  The applicable interest rate on the Term Loan A Facility is LIBOR plus 1.75% with step-downs tied to a leverage grid.  The applicable interest rate on the Term Loan C Facility is LIBOR plus 1.75%.

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As a result of amending the Bank Credit Agreement, we incurred debt acquisition costs of $1.8 million and recognized a loss of $2.5 million, which includes cash payments related to extinguishment of debt of $1.2 million and a write-off of deferred financing fees of $1.3 million.  The loss represents the write-off of certain debt acquisition costs associated with indebtedness replaced by the new term loan facilities.  The loss was computed in accordance with EITF No. 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments.

As of December 31, 2004, we had $10.5 million in cash balances and working capital of approximately $41.5 million. We anticipate that cash flow from our operations and revolving credit facility will be sufficient to satisfy our debt service obligations, dividend requirements, capital expenditure requirements and working capital needs for the next year.  As of December 31, 2004, we had fully redeemed our $460.9 million Term Loan B Facility, borrowed $400.0 million on our Term Loan A and Term Loan C facilities and had no borrowings outstanding under our revolving credit facility.  The remaining balance available under the revolving credit facility was $225.0 million as of December 31, 2004 and we had approximately $175.5 million of current borrowing capacity available under our revolving credit facility for the period ended December 31, 2004.  Our ability to draw down our revolving credit facility is based on pro forma trailing cash flow levels as defined in our Bank Credit Agreement.

On April 19, 2002, we filed a $350.0 million universal shelf registration statement with the Securities and Exchange Commission which will permit us to offer and sell various types of securities from time to time. Offered securities may include common stock, debt securities, preferred stock, depositary shares or any combination thereof in amounts, prices and on terms to be announced when the securities are offered.  As a result of the late filing of Form 8-K in August 2004, we are ineligible to register for securities on Form S-3 until August 2005.  In addition, upon the filing of this Form 10-K, we will become ineligible to issue securities under our currently effective shelf registration statement until August 2005.  After August 2005, if we decide to offer any such securities, we intend to use the proceeds for general corporate purposes, including, but not limited to, the reduction, redemption or refinancing of debt or other obligations, acquisitions, capital expenditures and working capital.  As of December 31, 2004, we had $350.0 million of availability under this shelf registration.

Sinclair Television Group (STG) is the primary obligor under our 8.75% Senior Subordinated Notes due 2011 and our 8% Senior Subordinated Notes due 2012.  Sinclair Broadcast Group, Inc. (SBG) and KDSM, LLC have fully and unconditionally guaranteed these securities.  SBG is the primary obligor under our 4.875% Convertible Senior Subordinated Notes due 2018.   In addition, certain wholly-owned subsidiaries of STG have jointly and severally, fully and unconditionally guaranteed our 8.75% Senior Subordinated Notes and our 8% Senior Subordinated Notes.  (See Note 16. Condensed Consolidating Financial Statements in the Notes to Consolidated Financial Statements for the consolidating financial statements of our guarantor and non-guarantor subsidiaries.)  None of SBG, STG, KDSM, LLC or any other subsidiary guarantors has any significant restrictions on their ability to obtain funds from their subsidiaries in the form of dividends or loans.

We hold two interest rate swap agreements that have notional amounts totaling $575.0 million that expire on June 5, 2006.  On December 31, 2004, the interest rate swap agreement with a notional amount of $375.0 million contained a European style (that is, exercisable only on the expiration date) termination option and could be terminated partially or in full by the counterparty on June 3, 2005 at its fair market value.  This instrument was amended March 2, 2005, resulting in removal of the termination option by the counterparty.  The interest rate swap agreement with a notional amount of $200.0 million does not have an option to terminate before it expires.  We estimate the fair market value of the $375.0 million and $200.0 million agreements at December 31, 2004 to be $16.0 million and $8.7 million, respectively, based on quotations from the counterparty.  These amounts are reflected as a component of other long-term liabilities on our consolidated balance sheet as of December 31, 2004.

Net cash flows from operating activities decreased to $120.1 million for the year ended December 31, 2004 from $146.5 million for the year ended December 31, 2003.  We paid income tax, net of refunds, of $0.8 million for the year ended December 31, 2004 as compared to receiving income tax refunds, net of payments, of $38.3 million for the year ended December 31, 2003.  Interest payments on outstanding indebtedness increased $13.6 million to $130.5 million from $116.9 million for the year ended December 31, 2004 as compared to the year ended December 31, 2003.  We made no payments related to our HYTOPS for the year ended December 31, 2004 as compared to payments of $11.0 million for the year ended December 31, 2003.  The HYTOPS were redeemed on June 20, 2003 through the issuance of indebtedness with lower interest rates.  Program rights payments increased to $110.2 million for the year ended December 31, 2004 from $105.5 million for the year ended December 31, 2003 or 4.5%.

Net cash flows used in investing activities were $17.7 million for the year ended December 31, 2004 as compared to net cash flows used in investing activities of $90.0 million for the year ended December 31, 2003.  The decrease in cash flows used in investing activities resulted from a decrease in cash payments for property and equipment of $24.6 million to $44.9 million for the year ended December 31, 2004, compared to $69.5 million for the year ended December 31, 2003.  The cash payments for property and equipment during 2004 included $21.3 million related to digital conversion costs and $7.4 million related to implementation of our News Central format.  The cash payments for property during 2003 included $30.9 million related to digital conversion costs and $24.1 million related to implementation of our News Central format.  During the year ended December 31, 2004, we received proceeds of $26.8

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million for the sale of our non-license assets of KSMO-TV in Kansas City and $1.75 million for the close on the option to purchase the license assets of KETK-TV in Tyler, Texas.  We made an $18.0 million cash deposit related to a future acquisition of broadcast assets during the year ended December 31, 2003.  There was no similar activity for the year ended December 31, 2004.  During the years ended December 31, 2004 and 2003, we received proceeds of $2.5 million and $3.3 million, respectively, from the insurance settlement related to the destruction of our tower for WVAH-TV in Charleston, West Virginia, during a severe ice storm in 2003.  During the years ended December 31, 2004 and 2003, we made cash payments of $5.5 million and $5.7 million, respectively, for the purchase of equity and cost investments.  We funded these investing activities using cash provided by operating activities.

For 2005, we anticipate incurring approximately $30.0 million of capital expenditures for station maintenance and equipment replacement and to consolidate building and tower needs in some markets.  In addition, we anticipate that future requirements for expenditures will include expenditures incurred during the ordinary course of business and additional strategic station acquisitions and equity investments if suitable investments can be identified on acceptable terms.  We expect to fund such capital expenditures with cash generated from operating activities and funding from our revolving credit facility or an issuance of securities.

Net cash flows used in financing activities was $120.7 million for the year ended December 31, 2004 compared to net cash flows used in financing activities of $33.1 million for the year ended December 31, 2003.  During the year ended December 31, 2004, we repaid a net $87.4 million of indebtedness, whereas in the comparable period in 2003, we repaid a net of $10.8 million of indebtedness including redemption of $200.0 million aggregate principal amount of the HYTOPS.  We repurchased $9.6 million and $1.5 million of our Class A Common Stock for the year ended December 31, 2004 and 2003, respectively.  For the year ended December 31, 2004, we repurchased $4.8 million of our Series D Preferred Stock.  We received proceeds from exercise of stock options of $1.2 million and $1.4 million for the years ended December 31, 2004 and 2003, respectively.  We incurred deferred financing costs of $1.0 million and $7.4 million for the years ended December 31, 2004 and 2003, respectively.

On October 28, 1999, we announced a share repurchase program.  Under this program, the Board of Directors authorized the repurchase of up to $300 million worth of our Class A Common Stock.  There is no expiration date for this program and currently, management has no plans to terminate this program.

On June 10, 2004, the Board of Directors authorized the repurchase of our Series D Convertible Exchangeable Preferred Stock.  This program was not publicly announced, no minimum or maximum dollar amounts were established by the Board and there is no expiration date for this program.  Currently, management has no plans to terminate this program.

We entered into an agreement to sell our television station KOVR-TV in Sacramento for $285.0 million on December 2, 2004 and expect to close in 2005.  We expect to use the after tax proceeds to repay our long-term debt.

Preferred Stock. For the year ended December 31, 2004 and 2003, we paid quarterly dividends of $10.2 million and $10.4 million on our Series D Preferred Stock, respectively.  We expect to incur these dividend payments in each of our future quarters and expect to fund these dividends with cash generated from operating activities and borrowings under our Bank Credit Agreement.

Common Stock.  In May 2004, we declared a quarterly cash dividend on our Class A Common Stock for the first time in our company’s history.  The dividend of $0.025 per share was paid as shown below:

For the quarter ended	Total amount dividends paid		Date dividends were paid
June 30, 2004	$	2.1 million	July 15, 2004
September 30, 2004	$	2.1 million	October 15, 2004
December 31, 2004	$	2.1 million	January 14, 2005

In February 2005, the board of directors increased the annual per share dividend paid on the Class A and Class B Common shares from $0.10 to $0.20 per share.  We expect to continue to pay the current dividend rate of $0.05 in each of our future quarters and to fund these dividends with cash generated from operating activities and borrowings under our Bank Credit Agreement.

Seasonality/Cyclicality

Our operating results are usually subject to seasonal fluctuations.  Usually, the fourth quarter operating results are higher than the other three quarters primarily because advertising expenditures are increased in anticipation of holiday season spending by consumers.  Usually, the second quarter operating results are higher than the first and third quarters primarily because advertising expenditures are increased in anticipation of consumer spending on “summer related” items such as home improvements, lawn care and travel plans.  Our operating results are usually subject to fluctuations from political advertising.  In even years, political spending is significantly higher than in odd years due to advertising expenditures surrounding local and national elections.  Additionally, in every four years, political spending is elevated further due to advertising expenditures surrounding the presidential election.

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Indebtedness and Other Commitments

Indebtedness under the Bank Credit Agreement, as amended.  As of December 31, 2004, we owed $400.0 million under the Bank Credit Agreement, as amended and had a $225.0 million available balance of which $175.5 million of current borrowing capacity was available.

Indebtedness under notes.  We have issued and outstanding two series of senior subordinated notes and one series of senior convertible notes with aggregate principal amount issued and outstanding of $1.1 billion.

Series D Convertible Exchangeable Preferred Stock.  We have issued 3,337,033 shares of Series D Convertible Exchangeable Preferred Stock with an aggregate liquidation preference of approximately $166.9 million. The liquidation preference means we would be required to pay the holders of Series D Convertible Exchangeable Preferred Stock $166.9 million before we paid holders of common stock (or any other stock that is junior to the Series D Convertible Exchangeable Preferred Stock) in any liquidation of Sinclair.  We are not obligated to buy back or retire the Series D Convertible Exchangeable Preferred Stock, but may do so at our option at a conversion rate of $22.8125 per share. In some circumstances, we may also exchange the Series D Convertible Exchangeable Preferred Stock for 6% subordinated debentures due 2012 with an aggregate principal amount of $166.9 million.

Program contracts payable and programming commitments.  Total current and long-term program contracts payable at December 31, 2004 were $113.1 million and $60.8 million, respectively. In addition, we enter into commitments to purchase future programming. Under these commitments, we were obligated on December 31, 2004 to make future payments totaling $184.9 million.

Other.  Our commitments also include capital leases, operating leases, sports programming, personnel contracts and other liabilities. The amount of these commitments may be material.

CONTRACTUAL CASH OBLIGATIONS

We have various contractual obligations which are recorded as liabilities in our consolidated financial statements.  Other items, such as certain purchase commitments and other executory contracts are not recognized as liabilities in our consolidated financial statements but are required to be disclosed.  For example, we are contractually committed to acquire future programming and make certain minimum lease payments for the use of property under operating lease agreements.

The following tables reflect a summary of our contractual cash obligations as of December 31, 2004 and the future periods in which such arrangements are expected to be settled in cash (in thousands):

CONTRACTUAL CASH OBLIGATOINS RELATED TO CONTINUING OPERATIONS

	Total		2005		2006-2007		2008-2009		2010 and thereafter
Notes payable, capital leases and commercial bank financing (a)	$	2,066,307	$	69,217	$	144,284	$	483,279	$	1,369,527
Notes and capital leases payable to affiliates	53,508		7,897		10,581		7,462		27,568
Fixed rate derivative instrument	51,712		36,078		15,634		—		—
Operating leases	26,358		4,529		6,925		4,126		10,778
Employment contracts	12,523		9,003		3,520		—		—
Film liability – active	173,890		113,109		51,789		8,992		—
Film liability – future (b)	166,972		11,210		69,967		59,024		26,771
Programming services	13,134		5,647		5,753		1,682		52
Maintenance and support	14,245		5,346		4,556		3,097		1,246
Network affiliation agreements	14,040		10,275		3,690		75		—
Other operating contracts	7,895		3,691		1,987		1,047		1,170
Total contractual cash obligations	$	2,660,584	$	276,002	$	318,686	$	568,784	$	1,437,112

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CONTRACTUAL CASH OBLIGATIONS RELATED TO DISCONTINUED OPERATIONS

	Total		2005		2006-2007		2008-2009		2010 and thereafter
Notes payable, capital leases and commercial bank financing (a)	$	2,585	$	233	$	495	$	535	$	1,322
Operating leases	24		17		6		1		—
Employment contracts	1,158		747		411		—		—
Film liability – active	9,197		5,700		2,955		542		—
Film liability – future (b)	17,901		1,122		6,968		5,935		3,876
Programming services	644		266		378		—		—
Maintenance and support	631		99		81		79		372
Other operating contracts	40		12		28		—		—
Total contractual cash obligations	$	32,180	$	8,196	$	11,322	$	7,092	$	5,570

a)Only includes interest on fixed rate debt.

b)Future film liabilities reflect a license agreement for program material that is not yet available for its first showing or telecast and is therefore not recorded as an asset or liability on our balance sheet.  Pursuant to SFAS No. 63, Financial Reporting for Broadcasters, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet when the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement and the program is available for its first showing or telecast.

OFF BALANCE SHEET ARRANGEMENTS

Off balance sheet arrangements as defined by the Securities and Exchange Commission (SEC) include the following four items:  obligations under certain guarantees or contracts; retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangements; obligations under certain derivative arrangements; and obligations under material variable interests.  We have entered into arrangements where we have obligations under certain guarantees or contracts because we believe they will help improve shareholder returns.  The following table reflects a summary of these off balance sheet arrangements (a) as defined by the SEC as of December 31, 2004 and the future periods in which such arrangements may be settled in cash if certain contingent events occur (in thousands):

	Total		2005		2006-2007		2008-2009		2010 and thereafter
Letters of credit	$	898	$	82	$	164	$	164	$	488
Guarantees	153		122		31		—		—
Investments (b)	6,579		6,579		—		—		—
Purchase options (c)	22,250		13,250		9,000		—		—
LMA and outsourcing agreements (d)	12,805		5,598		6,253		954		—
Total other commercial commitments	$	42,685	$	25,631	$	15,448	$	1,118	$	488

a)There are no off balance sheet arrangements related to discontinued operations.

b)Commitments to contribute capital to Allegiance Capital, LP and Sterling Ventures Partners, LP.

c)We have entered into an agreement with an unrelated third party, whereby the unrelated third party may require us to purchase certain license and non-license broadcast assets at the option of the unrelated third party, no earlier than July 1, 2005.  The contractual commitment for 2006 and beyond represents the increase in purchase option price should the exercise occur in 2006 or 2007.  We intend to exercise the license and non-license options prior to March 31, 2005.

d)Certain LMAs require us to reimburse the licensee owner their operating costs.  Certain outsourcing agreements require us to pay a fee to another station for providing non-programming services.  The amount will vary each month and accordingly, these amounts were estimated through the date of the agreements’ expiration, based on historical cost experience.

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Risk Factors

You should carefully consider the risks described below before investing in our publicly traded securities.  Our business is also subject to the risks that affect many other companies such as general economic conditions, geopolitical events, competition, technological obsolescence and employee relations.  The risks described below, along with risks not currently known to us or that we currently believe are immaterial, may impair our business operations and our liquidity in a material adverse way.

Our advertising revenue can vary substantially from period to period based on many factors beyond our control. This volatility affects our operating results and may reduce our ability to repay indebtedness or reduce the market value of our securities.

We rely on sales of advertising time for substantially all of our revenues and as a result, our operating results are sensitive to the amount of advertising revenue we generate. If we generate less revenue, it may be more difficult for us to repay our indebtedness and the value of all our business may decline. Our ability to sell advertising time depends on:

•the levels of automobile advertising, which generally represents about one fourth of our advertising revenue;

•the health of the economy in the areas where our stations are located and in the nation as a whole;

•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, telecommunications, internet and radio;

•the decreased demand for political advertising in non-election years; and

•other factors that may be beyond our control.

Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt obligations.

We have a high level of debt (totaling $1.6 billion at December 31, 2004) compared to the book value of shareholders’ equity of $226.5 million on the same date. Our relatively high level of debt poses the following risks, particularly in periods of declining revenues:

•we use a significant portion of our cash flow to pay principal and interest on our outstanding debt and to pay dividends on preferred and common stock, limiting the amount available for working capital, capital expenditures and other general corporate purposes;

•our lenders may not be as willing to lend additional amounts to us for future working capital needs, additional acquisitions or other purposes;

•the interest rate under the Bank Credit Agreement, is a floating rate and will increase if general interest rates increase. This will reduce the funds available to repay our obligations and for operations and future business opportunities and will make us more vulnerable to the consequences of our leveraged capital structure;

•we may be more vulnerable to adverse economic conditions than less leveraged competitors and thus, less able to withstand competitive pressures;

•if our cash flow were inadequate to make interest and principal payments, we might have to refinance our indebtedness or sell one or more of our stations to reduce debt service obligations; and

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•our ability to finance our working capital needs and general corporate purposes for the public and private markets, as well as the associated cost of funding is dependent, in part, by our credit ratings.  As of December 31, 2004, our credit ratings, as assigned by Moody’s Investor Services (Moody’s) and Standard & Poor’s Ratings Services (S&P) were:

	Moody’s	S&P
Senior Secured Credit Facilities	Ba2	BB
Senior Implied	Ba3
Senior Unsecured Issuer	Ba3
Corporate Credit		BB-
Senior Subordinated Notes	B2	B
Convertible Senior Subordinated Notes	B3	B
Convertible Preferred Stock	Caa1	B-

The credit ratings previously stated are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organization.  Each rating should be evaluated independently of any other rating.

Any of these events could reduce our ability to generate cash available for investment or debt repayment or to make improvements or respond to events that would enhance profitability.

We may not close on the sale of our television stations in 2005.

On December 2, 2004, we entered into an agreement to sell KOVR-TV in Sacramento, California for $285.0 million.  We expect to close on this station sale in 2005 and we expect to use the after-tax proceeds to repay our long-term debt.  If we do not close on this transaction, we may not be able to fulfill some or all of our debt obligations.

On November 12, 2004, we entered into an agreement to sell KSMO-TV in Kansas City, Missouri for $33.5 million.  We have received $26.8 million in cash when we entered into the agreement and we expect to receive the remaining $6.7 million in 2005 upon FCC approval to transfer the broadcast license.  If we do not close on the transaction we will not receive the remaining $6.7 million due to us.

We may be able to incur significantly more debt in the future, which will increase each of the foregoing risks related to our indebtedness.

At December 31, 2004, we had an additional $225.0 million available (subject to certain borrowing conditions) for additional borrowings under the Bank Credit Agreement of which $175.5 million of current borrowing capacity was available. In addition, under the terms of our debt instruments, we may be able to incur substantial additional indebtedness in the future, including additional senior debt and in some cases secured debt. Provided we meet certain financial and other covenants, the terms of the indentures governing our outstanding notes do not prohibit us from incurring such additional indebtedness. If we incur additional indebtedness, the risks described above relating to having substantial debt could intensify.

As a result of the late filing of Form 8-K in August 2004, we are ineligible to register securities on Form S-3 until August 2005.  In addition, upon the filing of this Form 10-K, we will become ineligible to issue securities under our currently effective shelf registration statement until August 2005.  The inability to register securities on Form S-3 or to issue securities under our shelf registration statement until August 2005 could adversely affect our ability to raise capital during this period.

We must purchase television programming in advance and may therefore incur programming costs that we cannot cover with revenue from these programs. If this happens, we could experience losses that may make our securities less valuable.

One of our most significant costs is television programming and our ability to generate revenue to cover this cost may affect the value of our securities.  If a particular program is not popular in relation to its costs, we may not be able to sell enough advertising time to cover the costs of the program.  Since we generally purchase programming content from others rather than produce it ourselves, we have little control over the costs of programming.  We usually must purchase programming several years in advance and may have to commit to purchase more than one year’s worth of programming.  Finally, we may replace programs that are doing poorly before we have recaptured any significant portion of the costs we incurred or before we have fully amortized the costs.  Any of these factors could reduce our revenues or otherwise cause our costs to escalate relative to revenues.  These factors are exacerbated during a weak advertising market.  Additionally, our business is subject to the popularity of the programs provided by the networks with which we have network affiliation agreements or which provide us

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programming.  Excluding political revenue, each of our affiliation groups experienced revenue increases in 2004, but this trend may not continue in the future.

Promises we have made to our lenders limit our ability to take actions that could increase the value of our securities or may require us to take actions that decrease the value of our securities.

Our existing financing agreements prevent us from taking certain actions and require us to meet certain tests. These restrictions and tests may require us to conduct our business in ways that make it more difficult for us to repay our indebtedness or decrease the value of our business. These restrictions and tests include the following:

•restrictions on additional debt;

•restrictions on our ability to pledge our assets as security for our indebtedness;

•restrictions on payment of dividends, the repurchase of stock and other payments relating to capital stock;

•restrictions on some sales of assets and the use of proceeds from asset sales;

•restrictions on mergers and other acquisitions, satisfaction of conditions for acquisitions and a limit on the total amount of acquisitions without consent of bank lenders;

•restrictions on the type of businesses we and our subsidiaries may be in;

•restrictions on the type and amounts of investments we and our subsidiaries may make; and

•financial ratio and condition tests including the ratio of earnings before interest, taxes, depreciation and amortization, as adjusted (adjusted EBITDA) to total interest expense, the ratio of adjusted EBITDA to certain of our fixed expenses and the ratio of indebtedness to adjusted EBITDA.

Future financing arrangements may contain additional restrictions and tests. All of these restrictive covenants may restrict our ability to pursue our business strategies, prevent us from taking action that could increase the value of our securities or may require actions that decrease the value of our securities. In addition, we may fail to meet the tests and thereby default on one or more of our obligations (particularly if the economy continues to soften and thereby reduces our advertising revenues). If we default on our obligations, creditors could require immediate payment of the obligations or foreclose on collateral. If this happens, we could be forced to sell assets or take other action that would reduce significantly the value of our securities and we may not have sufficient assets or funds to pay our debt obligations.

Key officers and directors have financial interests that are different and sometimes opposite our own and we may engage in transactions with these officers and directors that may benefit them to the detriment of other securityholders.

Some of our officers, directors and majority shareholders own stock or partnership interests in businesses that engage in television broadcasting, do business with us or otherwise do business that conflicts with our interests. They may transact some business with us even when there is a conflict of interest or they may engage in business competitive to our business and those transactions may benefit the officers, directors or majority shareholders to the detriment of our other securityholders. David D. Smith, Frederick G. Smith and J. Duncan Smith are each an officer and director of Sinclair and Robert E. Smith is a director of Sinclair. Together, the Smiths hold shares of our common stock that control the outcome of most matters submitted to a vote of shareholders. The Smiths own a television station which we program pursuant to an LMA with us. The Smiths also own businesses that lease real property and tower space to us, buy advertising time from us and engage in other transactions with us.  In addition, David D. Smith, our President and Chief Executive Officer, has a controlling interest in and is a member of the Board of Directors of Summa Holdings, Ltd., a company in which we hold a 17.5% equity interest and exercise significant influence over Summa by virtue of David D. Smith’s board seat and our board seat.  David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and David B. Amy, our Executive Vice President and Chief Financial Officer together own less than 2.2% of Allegiance Capital Limited Partnership, a limited partnership in which we hold a 87.8% interest.  Also, David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith together own less than 1% of the stock of G1440, a company of which Sinclair owns approximately 93.9%.  We can give no assurance that these transactions or any transactions that we may enter into in the future with our officers, directors or majority shareholders, have been, or will be, negotiated on terms as favorable to us as we would obtain from unrelated parties.

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Maryland law and our financing agreements limit the extent to which our officers, directors and majority shareholders may transact business with us and pursue business opportunities that we might pursue. These limitations do not, however, prohibit all such transactions.

For additional information related to transactions with related parties, see Note 11.  Related Party Transactions in the Notes to our Consolidated Financial Statements.

The Smiths exercise control over most matters submitted to a shareholder vote and may have interests that differ from yours. They may, therefore, take actions that are not in the interests of other securityholders.

David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith hold shares representing almost 90% of the common stock voting rights and therefore control the outcome of most matters submitted to a vote of shareholders, including, but not limited to, electing directors, adopting amendments to our certificate of incorporation and approving corporate transactions. The Smiths hold substantially all of the Class B Common Stock, which generally has ten votes per share. Our Class A Common Stock has only one vote per share. Our Series D of preferred stock generally does not have voting rights.  In addition, the Smiths hold half our board of director seats and therefore, have the power to exert significant influence over our corporate management and policies.  The Smiths have entered into a stockholders’ agreement pursuant to which they have agreed to vote for each other as candidates for election to the board of directors until June 12, 2005.

Circumstances may occur in which the interests of the Smiths, as the controlling equity holders, could be in conflict with the interests of other securityholders and the Smiths would have the ability to cause us to take actions in their interest. In addition, the Smiths could pursue acquisitions, divestitures or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to our other securityholders. (See Item 12. Security Ownership of Certain Beneficial Owners and Item 13. Certain Relationships and Related Transactions.)

For additional information related to transactions with related parties, see Note 11.  Related Party Transactions in the Notes to our Consolidated Financial Statements.

Certain features of our capital structure that discourage others from attempting to acquire our company may prevent our securityholders from receiving a premium on their securities or result in a lower price for our securities.

The control the Smiths have over shareholder votes may discourage other parties from trying to acquire us. In addition, our board of directors can issue additional shares of preferred stock with rights that might further discourage other parties from trying to acquire us. Anyone trying to acquire us would likely offer to pay more for shares of Class A Common Stock than the amount those shares were trading for in the open market at the time of the offer. If the voting rights of the Smiths or the right to issue preferred stock discourage such takeover attempts, shareholders may be denied the opportunity to receive such a premium. The general level of prices for Class A Common Stock might also be lower than it would otherwise be if these deterrents to takeovers did not exist.

The commencement of the Iraq War resulted in a decline in advertising revenues and negatively impacted our operating results. Future conflicts may have a similar effect.

The commencement of the war in Iraq resulted in a reduction in advertising revenues as a result of uninterrupted news coverage and general economic uncertainty. During the first quarter 2003, we experienced $2.2 million in advertiser cancellations and preemptions, which resulted in lower earnings than we would have experienced without this disruption. If the United States becomes engaged in similar conflicts in the future, they may have a similar adverse impact on our results of operations.

We may lose a large amount of programming if a network terminates its affiliation with us, which could increase our costs and/or reduce our revenue.

Network Affiliation Agreements

Sixty of the 62 television stations that we own and operate, or to which we provide programming services or sales services, currently operate as affiliates of FOX (20 stations), WB (19 stations), ABC (9 stations), NBC (3 stations), UPN (6 stations) and CBS (3 stations).  The remaining two stations are independent.  The networks produce and distribute programming in exchange for each station’s commitment to air the programming at specified times and for commercial announcement time during the programming.

During July 2004, we entered into an affiliation agreement with ABC for WKEF-TV in Dayton, Ohio.  WKEF-TV (channel 22) switched from its NBC network affiliation to the ABC Television Network beginning August 30, 2004.  WKEF-TV’s current syndicated and local news programming continues to be aired on channel 22.  As of December 31, 2004, the corresponding net book value of the affiliation agreement was $13.8 million.  We tested the affiliation agreement of WKEF-TV for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and determined that this asset was not impaired.

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The NBC affiliation agreement with WICS/WICD-TV in Champaign/Springfield, Illinois expired on April 1, 2004.  We continue to program this station as an NBC affiliate without a formal agreement.  On February 25, 2004, NBC informed us that they intend to terminate our affiliation with WICS/WICD effective September 2005 in order to affiliate with another station in that market.  We have engaged in discussions with ABC Television Network regarding affiliating with ABC in that market because the station which is scheduled to acquire our NBC affiliation is currently the ABC affiliate in Champaign/Springfield.  As of December 31, 2004, the corresponding net book value of the affiliation agreement was $9.8 million.

During December 2004, we entered into renewals with CBS Broadcasting, Inc. of all of our affiliation agreements for UPN and CBS.  The UPN agreements terminate in July of 2007 and two of the CBS agreements terminate in December of 2007 and one expires March 2008.

The affiliation agreements of five ABC stations (WSYX-TV in Columbus, Ohio; WLOS-TV in Asheville, North Carolina; WCHS-TV in Charleston, West Virginia; WEAR-TV in Pensacola, Florida; and WGGB in Springfield, Massachusetts) have expired; in the case of WLOS and WSYX, these agreements (including extensions thereto) expired on January 31, 2005; the other agreements expired prior to 2004.  We continue to operate these stations as ABC affiliates and we do not believe ABC has any current plans to terminate the affiliation with any of these stations, although we can make no assurance that ABC will not do so.  We are currently engaged in negotiations with ABC regarding continuing our network affiliation agreements.  The net aggregate book value of these ABC affiliate agreements was $68.6 million as of December 31, 2004.

The affiliation agreements of our 20 FOX stations will expire on June 30, 2005.  We have begun preliminary negotiations to renew our affiliation agreements.  The aggregate net book value of our FOX affiliate agreements was $39.6 million as of December 31, 2004.

The non-renewal or termination of one or more of these or any of our other network affiliation agreements would prevent us from being able to carry programming of the relevant network. This loss of programming would require us to obtain replacement programming, which may involve higher costs and which may not be as attractive to our target audiences, resulting in reduced revenues.  Upon the termination of any of the above affiliation agreements, we would be required to establish new affiliation agreements with other networks or operate as an independent station.  At such time, the remaining value of the network affiliation asset could become impaired and we would be required to write down the value of the asset.  At this time we cannot predict the final outcome of these negotiations and any impact they may have on our financial position, consolidated results of operations or consolidated cash flows.

Competition from other broadcasters and changes in technology may cause a reduction in our advertising revenues and/or an increase in our operating costs.

The television industry is highly competitive and this competition can draw viewers and advertisers from our stations, which reduces our revenue or requires us to pay more for programming, which increases our costs. We face intense competition from the following:

New technology and the subdivision of markets

Cable providers and direct broadcast satellite companies are developing new technology that allow them to transmit more channels on their existing equipment to highly targeted audiences, reducing the cost of creating channels and potentially leading to the division of the television industry into ever more specialized niche markets. Competitors who target programming to such sharply defined markets may gain an advantage over us for television advertising revenues. Lowering the cost of creating channels may also encourage new competitors to enter our markets and compete with us for advertising revenue. In addition, emerging technologies that will allow viewers to digitally record, store and play back television programming may decrease viewership of commercials and, as a result, lower our advertising revenues.

In-market competition

We also face more conventional competition from rivals that may have greater resources than we have. These include:

•other local free over-the-air broadcast stations; and

•other media, such as newspapers, periodicals and cable and satellite systems.

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Deregulation

The Telecommunications Act of 1996 and subsequent actions by the FCC have removed some limits on station ownership, allowing telephone, cable and some other companies to provide video services in competition with us. In addition, the FCC has reallocated a portion of the spectrum for new services including fixed and mobile wireless services and digital broadcast services. As a result of these changes, new companies are able to enter our markets and compete with us.

The phased introduction of digital television will increase our costs, due to increased equipment and operational costs and could have a variety of other adverse effects on our business.

The FCC has adopted rules for implementing digital (including high definition) television (DTV) service in the United States. Under the rules, our stations are required to begin DTV operations over a transition period. In addition, we expect that the FCC will reclaim our non-digital channels at the end of the transition period. We believe that the transition to DTV may have the following effects on us, which could increase our costs or reduce our revenue:

Conversion and programming costs

We have incurred $151.1 million through December 31, 2004, to convert our stations from the current analog format to digital format.  We expect to continue to incur costs to convert our stations to digital format and we may incur additional costs to obtain programming for the additional channels made available by digital technology and higher utility costs as a result of converting to digital operations. Increased revenues from the additional channels may not make up for the conversion cost and additional programming expenses.

Possible Sanctions

The FCC has adopted a series of graduated sanctions to be imposed upon licensees who do not meet the FCC’s DTV build-out schedule. Some of our stations could face monetary fines and possible loss of any digital construction permits if they cannot comply with the DTV build-out schedule.

Reclamation of analog channels

Congress directed the FCC to auction analog channels when the current holders convert to digital transmission. In addition, the FCC has reallocated a portion of the spectrum band to permit both wireless services and to allow new broadcast operations. If the channels are owned or programmed by our competitors, they may exert increased competitive pressure on our operations.

Signal quality issues

Our signal quality under digital transmission may be lower relative to our competitors.  This may cause us to lose viewers and thereby lose revenue or be forced to rely on cable television or other alternative means of transmission with higher costs to deliver our digital signals to all of the viewers we are able to reach with our current analog signals.  Station revenue could be effected by a reduction in advertising because cable customers in our broadcast market may not receive our digital signal.

Digital must carry

In February 2005, the FCC adopted an order stating that cable television systems are not required to carry both a station’s analog and digital signals during the digital transition.  The same order also clarified that a cable system need only carry a broadcast station’s primary video stream, and not any of the station’s other programming streams in those situations where a station chooses to transmit multiple programming streams.

Cable customers in our broadcast markets may only be able to receive our digital signal over the air, which could negatively impact our stations.  Many of the viewers of our television stations receive the signals of the stations via cable television service.  Cable television systems generally transmit our signals pursuant to permission granted by us in retransmission consent agreements.  A material portion of these agreements have no definite term and may be terminated either by us or by the applicable cable television company on very short notice (typically 45 or 60 days). We are currently engaged in negotiations with respect to these agreements with several major cable television companies and we recently reached an agreement with Comcast, the nation's largest cable operator.  There can be no assurance that the results of these negotiations will be advantageous to us or that we or the cable companies might not determine to terminate some or all of these agreements.  A termination of our retransmission agreements would make it more difficult for our viewers to watch our programming and could result in lower ratings and a negative financial impact on us.  In addition, we generally have not provided the major cable television companies with the right to transmit our stations’ digital signals.  Although the lack of carriage of these signals does not at this time have a material impact on our current results of operations, this could change as the

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number of households in the United States with the capability of viewing digital and high definition television increases.  There can be no assurance that we will be able to negotiate mutually acceptable retransmission agreements in the future relating to the carriage of our digital signals.

Subscription fees

The FCC has determined to assess a fee in the amount of 5% of gross revenues on digital television subscription services. If we provide subscription services and are unable to pass this cost through to our subscribers, this fee will reduce our earnings from any digital television subscription services we implement in the future.

Given this climate of market uncertainty and regulatory change, we cannot be sure what impact the FCC’s actions might have on our plans and results in the area of digital television. (See Item 1. Business.)

Federal regulation of the broadcasting industry limits our operating flexibility, which may affect our ability to generate revenue or reduce our costs.

The FCC regulates our business, just as it does all other companies in the broadcasting industry. We must ask the FCC’s approval whenever we need a new license, seek to renew, assign or modify a license, purchase a new station, sell an existing station, or transfer the control of one of our subsidiaries that holds a license. Our FCC licenses and those of the stations we program pursuant to LMAs are critical to our operations; we cannot operate without them. We cannot be certain that the FCC will renew these licenses in the future or approve new acquisitions. If licenses were not renewed or acquisitions approved, we may lose revenue that we otherwise could have earned.

In addition, Congress and the FCC may in the future adopt new laws, regulations and policies regarding a wide variety of matters (including technological changes) that could, directly or indirectly, materially and adversely affect the operation and ownership of our broadcast properties.  (See Item 1. Business.)

The FCC’s multiple ownership rules limit our ability to operate multiple television stations in some markets and may result in a reduction in our revenue or prevent us from reducing costs.  Changes in these rules may threaten our existing strategic approach to certain television markets.

Changes in Rules on Television Ownership

Congress passed a bill requiring the FCC to increase the national audience reach cap from 35% to 39% and President Bush signed the bill into law on January 23, 2004.  This law permits broadcast television owners to own more television stations nationally, potentially affecting our competitive position.

In June 2003, the FCC adopted new multiple ownership rules. In June 2004, the Court of Appeals for the Third Circuit issued a decision which upheld a portion of such rules and remanded the matter to the FCC for further justification of the rules.  The court also issued a stay of the new rules pending the remand.  We cannot predict the outcome of the remand or any subsequent court actions.  Changes to the rules imposed by the FCC on remand or by the Third Circuit could significantly impact our business.

Changes in Rules on Local Marketing Agreements

Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs.  One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such program segments on the other licensee’s station subject to the ultimate editorial and other controls being exercised by the latter licensee.  We believe these arrangements allow us to reduce our operating expenses and enhance profitability.  Under the FCC ownership rules adopted in 2003, we would be allowed to continue to program most of the stations with which we have an LMA.  In the absence of a waiver, the new rules would require us to terminate or modify three of our LMAs in markets where both the station we own and the station with which we have an LMA are ranked among the top four stations in their particular designated market area.  The FCC’s new ownership rules include specific provisions permitting waivers of this “top four restriction.”  Although there can be no assurances, we have studied the application of the new rules to our markets and believe we are qualified for waivers.  The new rules have been stayed by the U.S. Court of Appeals for the Third Circuit and are on remand to the FCC.  Several parties have filed with the Supreme Court of the United States petitions for writ of certiorari (defined below) seeking review of the Third Circuit decision.  Because the new ownership rules have been remanded, it is not clear if we will be required to terminate or modify our LMAs in markets where we have such arrangements.  A petition for a writ of certiorari is a legal term that means a document filed with the U. S. Supreme

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Court asking the Court to review the decision of a lower court.  It includes, among other things, an argument as to why the Supreme Court should hear the appeal.  On March 3, 2005, we filed a conditional cross-petition with the U. S. Supreme Court asking the Court to consider our arguments together with the arguments contained in the petitions filed by the other parties.

When the FCC decided to attribute LMAs for ownership purposes in 1999, it grandfathered our LMAs that were entered into 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 it would conduct a case-by case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering period.  Recently, the FCC invited comments as to whether, instead of beginning the review of the grandfathered LMAs in 2004, it should do so in 2006.  We cannot predict when the FCC will begin its review of those LMAs.

Because the effectiveness of the new rules has been stayed and, in connection with the adoption of the new rules, the FCC concluded the old rules could not be justified as necessary to the public interest, we have taken the position that an issue exists regarding whether the FCC has any current legal right to enforce any rules prohibiting the acquisition of television stations.  The FCC, however, dismissed our applications to acquire certain LMA stations.  We filed an application for review of that decision, which is still pending.

On November 15, 1999, we entered into five separate plans and agreements of merger, pursuant to which we would acquire through merger with subsidiaries of Cunningham, television broadcast stations WABM-TV, Birmingham, Alabama, KRRT-TV, San Antonio, Texas, WVTV-TV, Milwaukee, Wisconsin, WRDC-TV, Raleigh/Durham, North Carolina and WBSC-TV (formerly WFBC-TV), Anderson, South Carolina.  The consideration for these mergers was the issuance to Cunningham, of shares of our Class A Common Voting Stock.  In December 2001, we received FCC approval on all the transactions except WBSC-TV.  Accordingly, on February 1, 2002, we closed on the purchase of the FCC license and related assets of WABM-TV, Birmingham, Alabama, KRRT-TV, San Antonio, Texas, WVTV-TV, Milwaukee, Wisconsin and WRDC-TV, Raleigh/Durham, North Carolina.  The total value of the shares issued in consideration for the approved mergers was $7.7 million.  We have filed a petition for reconsideration with the FCC to reconsider its denial of the acquisition of WBSC-TV and amended our application to acquire the license in light of the FCC’s new 2003 multiple ownership rules.  However, the new rules have been stayed.  We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations, WRGT-TV, Dayton, Ohio, WTAT-TV, Charleston, South Carolina, WVAH-TV, Charleston, West Virginia, WNUV-TV, Baltimore, Maryland, and WTTE-TV, Columbus, Ohio.    The Rainbow/PUSH Coalition filed a petition to deny these five applications and to revoke all of our licenses.  The FCC dismissed our applications in light of the stay of the new ownership rules, and we filed an application for review of the dismissal, which may be impacted by the remand of the FCC’s new multiple ownership rules. The FCC denied the Rainbow/PUSH petition, and Rainbow filed a petition for reconsideration of that denial.  Both the applications and the associated petition to deny are still pending.  We believe the Rainbow/PUSH petition is without merit.

If we are required to terminate or modify our LMAs, our business could be affected in the following ways:

Losses on investments.  As part of our LMA arrangements, we own the non-license assets used by the stations with which we have LMAs.  If certain of these LMA arrangements are no longer permitted, we would be forced to sell these assets, restructure our agreements or find another use for them.  If this happens, the market for such assets may not be as good as when we purchased them and, therefore, we cannot be certain that we will recoup our original investments.

Termination penalties.  If the FCC requires us to modify or terminate existing LMAs before the terms of the LMAs expire, or under certain circumstances, we elect not to extend the term of the LMAs, we may be forced to pay termination penalties under the terms of some of our LMAs.  Any such termination penalty could be material.

Use of outsourcing agreements

In addition to our LMAs and duopolies, we have entered into four (and may seek opportunities for additional) outsourcing agreements in which our stations provide or are provided various non-programming related services such as sales, operational and managerial services to or by other stations.  Pursuant to these agreements, our stations currently provide services to other stations in Tallahassee, Florida and Nashville, Tennessee and other parties provide services to our stations in Peoria-Bloomington, Illinois and in Cedar Rapids, Iowa.  We believe this structure allows stations to achieve operational efficiencies and economies of scale, which should otherwise improve broadcast cash flow and competitive positions.  While television joint sales agreements (JSAs) are not currently attributable, on August 2, 2004, the FCC released a notice of proposed rulemaking seeking comments on its tentative conclusion that television joint sales agreements should be attributable.  We cannot predict the outcome of this proceeding, nor can we

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predict how any changes, together with possible changes to the ownership rules, would apply to our existing outsourcing agreements.

Failure of owner/licensee to exercise control

The FCC requires the owner/licensee of a station to maintain independent control over the programming and operations of the station.  As a result, the owners/licensees of those stations with which we have LMAs or outsourcing agreements can exert their control in ways that may counter our interests, including the right to preempt or terminate programming in certain instances.  The preemption and termination rights cause some uncertainty as to whether we will be able to air all of the programming that we have purchased and therefore, uncertainty about the advertising revenue that we will receive from such programming.  In addition, if the FCC determines that the owner/licensee is not exercising sufficient control, it may penalize the owner/licensee by a fine, revocation of the license for the station or a denial of the renewal of that license.  Any one of these scenarios might result in a reduction of our cash flow and an increase in our operating costs or margins, especially the revocation of or denial of renewal of a license.  In addition, penalties might also affect our qualifications to hold FCC licenses and thus put those licenses at risk.

We have lost money in two of the last five years, and may continue to incur losses in the future, which may impair our ability to pay our debt obligations.

We reported earnings in 2004 and 2003, but we have suffered net losses in two of the last five years. In 2000, we reported earnings, but this was largely due to a gain on the sale of our radio stations. Our losses are due to a variety of cash and non-cash expenses which may or may not recur. Our net losses may therefore continue indefinitely and as a result, we may not have sufficient funds to operate our business.

ITEM 7A.               QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risks

We are exposed to market risk from changes in interest rates.  We enter into derivative instruments primarily for the purpose of reducing the impact of changing interest rates on our floating rate debt and to reduce the impact of changing fair market values on our fixed rate debt.

We account for derivative instruments under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities –Deferral of the Effective Date of FASB Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133 (Collectively, SFAS 133).  For additional information on SFAS 133 see Note 8. Derivative Instruments in the Notes to our Consolidated Financial Statements.

As of December 31, 2004, we held the following derivative instruments:

•we hold two interest rate swap agreements with two financial institutions that have notional amounts totaling $575.0 million that expire on June 5, 2006.  In June 2003, we assigned $200.0 million of the notional amount to a second financial institution.  These swap agreements require us to pay a fixed rate, which is set in the range of 6.25% to 7.00% and receive a floating rate based on the three month London Interbank Offered Rate (LIBOR).  LIBOR is a measurement and settlement is performed quarterly.  These swap agreements are reflected as a derivative obligation based on their fair value of $24.7 million and $54.1 million as a component of other long-term liabilities in the accompanying consolidated balance sheets as of December 31, 2004 and December 31, 2003, respectively.  These swap agreements do not qualify for hedge accounting treatment under SFAS 133; therefore, changes in their fair market values are reflected currently in earnings as unrealized gain (loss) from derivative instruments.  We incurred an unrealized gain related to these instruments of $29.4 million and $17.4 million for the years ended December 31, 2004 and 2003, respectively.  The unrealized gain (loss) from derivative instruments related to these swap agreements do not impact our financial covenants under the Bank Credit Agreement.  On December 31, 2004, the instrument with a notional amount of $375.0 million contained a European Style termination option (that is, exercisable only on the expiration date) and could be terminated partially or in full by the counterparty on June 3, 2005 at its fair market value.  The instrument was amended March 2, 2005, resulting in removal of termination option by the counterparty.  The interest rate swap agreement with a notional amount of $200.0 million does not have an option to terminate before it expires.  We estimate the fair market value of the $375.0 million and $200.0 million agreements at December 31, 2004 to be a liability of $16.0 million and $8.7 million, respectively, based on a quotation from the counterparty.  These amounts are reflected as a component of other long-term liabilities on our consolidated balance sheet as of December 31, 2004.  We estimate that a 1.0% increase in interest rates would result in a gain of $8.1 million, while a 1.0% decrease would result in a loss of $7.4 million;

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•in March 2002, we entered into two interest rate swap agreements with notional amounts totaling $300.0 million which expire on March 15, 2012, for which we receive a fixed rate of 8% and pay a floating rate based on LIBOR (measurement and settlement is performed quarterly).  These swaps are accounted for as a hedge of our 8% Senior Subordinated Notes in accordance with SFAS 133 whereby changes in the fair market value of the swaps are reflected as adjustments to the carrying amount of the 8% Senior Subordinated Notes.  These swaps are reflected in the accompanying balance sheet as a derivative asset and as a premium on the 8% Senior Subordinated Notes based on their fair value of $15.2 million.  Consequently, we had $300.0 million in floating rate debt at December 31, 2004 and a 1.0% increase in LIBOR would result in annualized interest expense of approximately $3.0 million.  We estimate that a 1.0% increase in interest rates would result in a loss of $13.8 million, while a 1.0% decrease would result in a gain of $11.4 million; and

•in November 2003, we entered into two interest rate swap agreements with notional amounts totaling $100.0 million, which expire March 15, 2012, for which we receive a fixed rate of 8% and pay a floating rate based on LIBOR (measurement and settlement is performed quarterly).  These swaps are accounted for as a hedge of our 8% Senior Subordinated Notes in accordance with SFAS 133, whereby changes in the fair market value of the swaps are reflected as adjustments to the carrying amount of the 8% Senior Subordinated Notes.  These swaps are reflected on the accompanying balance sheet as a derivative asset and as a premium on the 8% Senior Subordinated Notes based on their fair value of $0.7 million.  Consequently, we had $100.0 million in floating rate debt at December 31, 2004 and a 1.0% increase in LIBOR would result in annualized interest expense of approximately $1.0 million.  We estimate that a 1.0% increase in interest rates would result in a loss of $5.4 million, while a 1.0% decrease would result in a gain of $6.4 million.

The counterparties to these agreements are international financial institutions. We estimate the net fair value of these instruments at December 31, 2004 to be a liability of $8.9 million.  The fair value of the interest rate swap agreements is estimated by obtaining quotations from the financial institutions, which are a party to our derivative contracts. The fair value is an estimate of the net amount that we would pay on December 31, 2004 if we cancelled the contracts or transferred them to other parties.

We are also exposed to risk from a change in interest rates to the extent we are required to refinance existing fixed rate indebtedness at rates higher than those prevailing at the time the existing indebtedness was incurred. As of December 31, 2004, we had senior subordinated notes totaling $310.0 million, $650.0 million and $150.0 million expiring in the years 2011, 2012 and 2018, respectively. Based upon the quoted market price, the fair value of the notes was $1.2 billion as of December 31, 2003. Generally, the fair market value of the notes will decrease as interest rates rise and increase as interest rates fall. We estimate that a 1.0% increase from prevailing interest rates would result in a decrease in fair value of the notes by approximately $67.7 million as of December 31, 2004.  The estimates related to the increase or decrease of interest rates are based on assumptions for forecasted future interest rates.

ITEM 8.                 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by this item are filed as exhibits to this report, are listed under Item 15(a)(1) and (2) and are incorporated by reference in this report.

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

There were no changes in and/or disagreements with accountants on accounting and financial disclosure during the year ended December 31, 2004.

ITEM 9A.              CONTROLS AND PROCEDURES

As of the date of filing this Form 10-K we are in the process of testing our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires an annual management report of the effectiveness of our internal controls over financial reporting and for our independent registered public accounting firm, Ernst & Young LLP, to attest to this report.  In late November 2004, the Securities and Exchange Commission issued an exemptive order providing a 45 day extension for the filing of these reports and attestations by eligible companies.  We are eligible and have elected to utilize this 45 day extension, and therefore, this Form 10-K does not include these reports.  We anticipate completing this process and filing these reports in an amended Form 10-K, which we intend to file in April 2005.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2004.   The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded,

47

processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.   Based on the evaluation of our disclosure controls and procedures as of December 31, 2004, the Company’s chief executive officer and chief financial officer concluded that, we have reasonable assurance that our disclosure controls and procedures were effective.

In August 2004, we failed to timely file a Form 8-K with the SEC.  This Form 8-K was related to a change in the Code of Ethics that was reviewed and authorized by the Board of Directors on August 5, 2004.  The Form 8-K was filed on August 25, 2004, which was after the required filing date of August 12, 2004.  The changes in the Code of Ethics involved provisions on conflicts of interest, investigations of alleged violations of the Code and requests for waivers under the Code.  The failure to timely file was due to a delay in communication of the Board’s action to our financial reporting personnel.  We have further educated our Board members regarding items for which a Form 8-K is required and have also implemented additional disclosure controls and procedures designed to avoid such inadvertent filing failures.

There were no significant changes in our internal control over financial reporting identified in connection with the evaluation that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item will be included in our Proxy statement for the 2005 annual meeting of shareholders under the caption, “Directors and Executive Officers” which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2004 and is incorporated by reference in this report.

ITEM 11.EXECUTIVE COMPENSATION

The information required by this Item will be included in our proxy statement for the 2005 annual meeting of shareholders under the caption, “Executive Compensation” which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2004 and is incorporated by reference in this report.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item will be included in our proxy statement for the 2005 annual meeting of shareholders under the caption, “Security Ownership of Certain Beneficial Owners and Management” which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2004 and is incorporated by reference in this report.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item will be included in our proxy statement for the 2005 annual meeting of shareholders under the caption, “Certain Relationships and Related Transactions” which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2004 and is incorporated by reference in this report.

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item will be included in our proxy statement for the 2005 annual meeting of shareholders under the caption, “Principal Accountant Fees and Services” which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2004 and is incorporated by reference in this report.

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PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1) Financial Statements

The following financial statements required by this item are submitted in a separate section beginning on page F-1 of this report.

Sinclair Broadcast Group, Inc. Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets As of December 31, 2004 and 2003

Consolidated Statements of Operations for the Years Ended December 31, 2004, 2003 and 2002

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002

(a) (2)  Financial Statements Schedules

The following financial statements schedules required by this item are submitted on pages S-1 and S-2 of this Report.

Index to Schedules

Schedule II-Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or the accompanying notes.

(a) (3) Exhibits

The exhibit index in Item 15(c) is incorporated by reference in this report.

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(c) Exhibits

The following exhibits are filed with this report:

EXHIBIT NO.	EXHIBIT DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation.(7)
3.2	Amended By-Laws of Sinclair Broadcast Group, Inc.
4.1	First Supplemental Indenture, dated as of December 17, 1997, among Sinclair Broadcast Group, Inc., the Guarantors named therein and First Union National Bank, as trustee, including Form of Note.(5)
4.2	Indenture, dated as of December 10, 2001, among Sinclair Broadcast Group, Inc., the Guarantors named therein, and First Union National Bank as trustee. (10)
4.3	First Supplemental Indenture, dated as of April 4, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and First Union National Bank, as trustee.(16)
4.4	Second Supplemental Indenture, dated as of July 26, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (16)
4.5	Third Supplemental Indenture, dated as of January 17, 2003, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (16)
4.6	Fourth Supplemental Indenture, dated as of May 9, 2003, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee.(16)
4.7	Fifth Supplemental Indenture, dated as of July 17, 2003, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee.(16)
4.8	Indenture, dated as of March 14, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein, and First Union National Bank as trustee. (10)
4.9	First Supplemental Indenture, dated as of July 26, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank) as trustee.(14)
4.10	Second Supplemental Indenture, dated as of November 8, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee.(14)
4.11	Indenture, dated as of May 20, 2003, between Sinclair Broadcast Group, Inc. and Wachovia Bank, National Association. (16)
4.12	Registration Rights Agreement, dated as of May 20, 2003, between Sinclair Broadcast Group, Inc., and Bear, Stearns & Co., Inc., UBS Warburg LLC, J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., and Wachovia Securities, Inc. (16)
4.13	Registration Rights Agreement, dated as of May 29, 2003, by and among Sinclair Broadcast Group, Inc., the Guarantors named therein, and J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Wachovia Securities, Inc., Bear, Stearns & Co. Inc., and UBS Warburg LLC. (16)
10.1	Lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc. (1)
10.2	Amendment No. 1 to the lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc.
10.3	Amendment No. 2 to the lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc.
10.4	Amendment No. 3 to the lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc.
10.5	Lease Agreement dated as of April 2, 1987 between Cunningham Communications, Inc. and Chesapeake Television, Inc. as amended on September 23, 1993.(2)
10.6	Lease Agreement dated as of June 1, 1991 between Cunningham Communications, Inc. and Chesapeake Television, Inc. as amended on September 23, 1993.(2)
10.7	Lease Agreement dated as of April 1, 1992 between Cunningham Communications, Inc. and Chesapeake Television, Inc. as amended on September 23, 1993.(2)
10.8	Lease dated February 1, 1996 by and between Keyser Investment Group, Inc., a Maryland corporation, and Sinclair

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	Broadcast Group, Inc., a Maryland corporation.
10.9	Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and William Richard Schmidt, as trustee.(1)
10.10	Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and C. Victoria Woodward, as trustee.(1)
10.11	Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and Dyson Ehrhardt, as trustee.(1)
10.12	Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and Mark Knobloch, as trustee.(1)
10.13	Term Note, dated as of September 30, 1990, in the principal amount of $7,515,000 between Sinclair Broadcast Group, Inc. (as borrower) and Julian S Smith (as lender).(3)
10.14	Replacement Term Note, dated as of September 30, 1990 in the principal amount of $6,700,000 between Sinclair Broadcast Group, Inc. (as borrower) and Carolyn C. Smith (as lender).(1)
10.15	Corporate Guaranty Agreement, dated as of September 30, 1990 by Chesapeake Television, Inc., Commercial Radio, Inc., Channel 63, Inc. and WTTE, Channel 28, Inc. (as guarantors) to Julian S. Smith and Carolyn C. Smith (as lenders).(2)
10.16	Security Agreement, dated as of September 30, 1999 among Sinclair Broadcast Group, Inc., Chesapeake Television, Inc., Commercial Radio Institute, Inc., WTTE, Channel 28, Inc. and Channel 63, Inc. (as borrowers and subsidiaries of the borrower) and Julian S. Smith and Carolyn C. Smith (as lenders).(2)
10.17	Incentive Stock Option Plan for Designated Participants.(1)
10.18	Incentive Stock Option Plan of Sinclair Broadcast Group, Inc.(1)
10.19	First Amendment to Incentive Stock Option Plan of Sinclair Broadcast Group, Inc., adopted April 10, 1996.(4)
10.20	Second Amendment to Incentive Stock Option Plan of Sinclair Broadcast Group, Inc., adopted May 31, 1996.(4)
10.21	1996 Long-Term Incentive Plan of Sinclair Broadcast Group, Inc.(4)
10.22	First Amendment to 1996 Long-term Incentive Plan of Sinclair Broadcast Group, Inc.(9)
10.23	Primary Television Affiliation Agreement, dated as of March 24, 1997 by and between American Broadcasting Companies, Inc., River City Broadcasting, L.P. and Chesapeake Television, Inc.(6)
10.24	Primary Television Affiliation Agreement, dated as of March 24, 1997 by and between American Broadcasting Companies, Inc., River City Broadcasting, L.P. and WPGH, Inc.(6)
10.25	Employment Agreement by and between Sinclair Broadcast Group, Inc. and Frederick G. Smith, dated June 12, 1998.(8)
10.26	Employment Agreement by and between Sinclair Broadcast Group, Inc. and J. Duncan Smith, dated June 12, 1998.(8)
10.27	Employment Agreement by and between Sinclair Broadcast Group, Inc. and David B. Amy, dated September 15, 1998.(8)
10.28	Credit Agreement dated as of July 15, 2002, between Sinclair Broadcast Group, Inc., the Subsidiary Guarantors party to the Credit Agreement, the Lenders party to the Credit Agreement, JP Morgan Chase Bank, as Administrative Agent.(11)
10.29	Registration Rights Agreement, dated as of November 8, 2002, by and among Sinclair Broadcast Group, Inc., the Guarantors, and Deutsche Bank Securities Inc., Wachovia Securities, Inc., JP Morgan Securities Inc., BNP Paribas Securities Corp., Lehman Brothers Inc., and UBS Warburg LLC.(12)
10.30	Registration Rights Agreement, dated as of December 31, 2002, by and among Sinclair Broadcast Group, Inc., the Guarantors, and JP Morgan Securities Inc., Deutsche Bank Securities Inc., Wachovia Securities, Inc. and UBS Warburg LLC.(12)
10.31	Subscription Agreement, effective as of January 1, 2003 by and between Acrodyne Communications, Inc., a Delaware corporation, and Sinclair Broadcast Group, Inc., a Maryland corporation.(13)
10.32	Modification Agreement dated as of January 2, 2003, by and among Nashville Broadcasting Limited Partnership, a Tennessee limited partnership, Nashville License Holdings, LLC, a Delaware limited liability company, and Sinclair Television of Nashville, Inc., a Tennessee corporation.(12)
10.33	Series A Preferred Stock Purchase Agreement dated as of December 23, 2002 is entered into by and among Summa Holdings, Ltd., a Maryland corporation, and Sinclair Broadcast Group, Inc., a Maryland corporation.(12)
10.34	Employment Agreement dated as of February 21, 1997, between Sinclair Communications, Inc., a Maryland corporation, and Steven Marks.(12)
10.35	Form of Fox Broadcasting Company Station Affiliation Agreement.(12)

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10.36	Amendment No. 1 dated May 28, 2003 to the Credit Agreement between Sinclair Broadcast Group, Inc., the Subsidiary Guarantors party to the Credit Agreement and JP Morgan Chase Bank, as Administrative Agent thereunder. (15)
10.37	Employment Agreement by and between Sinclair Broadcast Group, Inc. and Barry M. Faber dated August 4, 2004.(18)
10.38	First Amended and Restated Credit Agreement dated as of June 25, 2004 between Sinclair Television Group, Inc., the Subsidiary Guarantors party to the Credit Agreement, the Lenders party to the Credit Agreement and JP Morgan Chase Bank, as Administrative Agent.(17)
10.39	Asset Purchase Agreement dated as of December 2, 2004 among CBS Broadcasting Inc., Sinclair Broadcast Group, Inc., Chesapeake Television, Inc., and SCI-Sacramento Licensee, LLC.(19)
10.40	Beaver Dam Limited Liability Company Operating Agreement dated as of May 30, 1996 by and among David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and Sinclair Broadcast Group, Inc.(20)
10.41	First Amendment to the Operating Agreement and Agreement to Retire dated as of April 18, 1997 by and among Beaver Dam Limited Liability Company, David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and Sinclair Broadcast Group, Inc. (20)
10.42	Second Amendment to the Operating Agreement and Agreement to Redeem Membership Rights dated as of May 6, 1998 by and among Beaver Dam Limited Liability Company, David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and Sinclair Broadcast Group, Inc. (20)
10.43	Agreement of Lease dated as of December 18, 1998 by and between Beaver Dam Limited Liability Company and Sinclair Communications, Inc.(20)
10.44	Agreement of Lease dated as of December 18, 1998 by and between Beaver Dam Limited Liability Company and SBG Group.(20)
10.45	Agreement of Lease dated as of May 25, 2000 by and between Beaver Dam Limited Liability Company and Sinclair Broadcast Group, Inc.(20)
10.46	Agreement of Lease dated as of May 25, 2000 by and between Beaver Dam Limited Liability Company and Sinclair Broadcast Group.(20)
10.47	Agreement of Lease dated as of May 14, 2002 by and between Beaver Dam Limited Liability Company and Sinclair Broadcast Group, Inc.(20)
10.48	Asset Purchase Agreement dated November 12, 2004 among KSMO Licensee, Inc. and Meredith Corporation
10.49	Joint Sales and Shared Services Agreement dated as of November 12, 2004, by and among KSMO Licensee, Inc., a Delaware Corporation, KSMO, Inc., a Maryland Corporation, and Meredith Corporation, an Iowa Corporation.
10.50	Form of WB Television Network Affiliation Agreement.
10.51	Director Compensation.
10.52	Executive Compensation.(21)
11	Statement re computation of per share earnings.
12	Computation of Ratio of Earnings to Fixed Charges.
21	Subsidiaries of the Registrant.
23	Consent of Independent Public Accountants (Sinclair Broadcast Group, Inc.).
24	Power of Attorney (contained on signature pages hereto).
31.1	Certification by David D. Smith, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to § 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7241).
31.2	Certification by David B. Amy, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to § 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7241).
32.1	Certification by David D. Smith, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350).
32.2	Certification by David B. Amy, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350).

(1)Incorporated by reference from Sinclair’s Registration Statement on Form S-1, No. 33-90682.

(2)Incorporated by reference from Sinclair’s Registration Statement on Form S-1, No. 33-69482.

(3)Incorporated by reference from Sinclair’s Report on Form 10-K for the year ended December 31, 1995.

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(4)Incorporated by reference from Sinclair’s Report on Form 10-K for the year ended December 31, 1996.

(5)Incorporated by reference from Sinclair’s Current Report on Form 8-K, dated as of December 16, 1997.

(6)Incorporated by reference from Sinclair’s Report on Form 10-K for the year ended December 31, 1997.

(7)Incorporated by reference from Sinclair’s Report on Form 10-Q for the quarter ended June 30, 1998.

(8)Incorporated by reference from Sinclair’s Report on Form 10-Q for the quarter ended September 30, 1998.

(9)Incorporated by reference from Sinclair’s Proxy Statement for the 1998 Annual Meeting filed on Schedule 14A.

(10)Incorporated by reference from Sinclair’s Report on Form 10-K for the year ended December 31, 2001.

(11)Incorporated by reference from Sinclair’s Report on Form 10-Q for the quarter ended June 30, 2002.

(12)Incorporated by reference from Sinclair’s Report on Form 10-K for the year ended December 31, 2002.

(13)Incorporated by reference from Sinclair’s report on Schedule 13D, dated January 8, 2003.

(14) Incorporated by reference from Sinclair’s Report on Form S-4 filed on March 7, 2003, No. 333-103681.

(15)Incorporated by reference from Sinclair’s Report on Form 8-K filed on May 30, 2003.

(16)Incorporated by reference to our Registration Statement on Form S-4 filed on July 31, 2003 (File No. 333-107522).

(17)Incorporated by reference from Sinclair’s Report on Form 8-K filed on June 29, 2004.

(18)Incorporated by reference from Sinclair’s Report on Form 10-Q for the quarter ended June 30, 2004.

(19)Incorporated by reference from Sinclair’s Report on Form 8-K filed on December 3, 2004.

(20)Incorporated by reference from Sinclair’s Report on Form 8-K filed on December 20, 2004.

(21)Incorporated by reference from Sinclair's Report on Form 8-K filed on March 15, 2005.

(d)Financial Statements Schedules

The financial statement schedules required by this Item are listed under Item 15 (a) (2).

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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 on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on this 16th day of March 2005.

SINCLAIR BROADCAST GROUP, INC.
By:	/s/ David D. Smith
	David D. Smith
	Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below under the heading “Signature” constitutes and appoints David B. Amy as his true and lawful attorney-in-fact each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities to sign any or all amendments to this 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, or their substitutes, each acting alone, may lawfully do or cause to be done by virtue hereof.

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 dates indicated.

Signature	Title	Date
/s/ David D. Smith	Chairman of the Board, President and	March 16, 2005
David D. Smith	Chief Executive Officer
/s/ David B. Amy	Executive Vice President and	March 16, 2005
David B. Amy	Chief Financial Officer
/s/ David R. Bochenek	Chief Accounting Officer	March 16, 2005
David R. Bochenek
/s/ Frederick G. Smith	Director	March 16, 2005
Frederick G. Smith
/s/ J. Duncan Smith	Director	March 16, 2005
J. Duncan Smith
/s/ Robert E. Smith	Director	March 16, 2005
Robert E. Smith
/s/ Basil A. Thomas	Director	March 16, 2005
Basil A. Thomas
/s/ Lawrence E. McCanna	Director	March 16, 2005
Lawrence E. McCanna
/s/ Daniel C. Keith	Director	March 16, 2005
Daniel C. Keith
/s/ Martin Leader	Director	March 16, 2005
Martin Leader

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SINCLAIR BROADCAST GROUP, INC.

INDEX TO FINANCIAL STATEMENTS

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Sinclair Broadcast Group, Inc.

We have audited the accompanying consolidated balance sheets of Sinclair Broadcast Group, Inc (a Maryland corporation) and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004.  Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sinclair Broadcast Group, Inc. and subsidiaries at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.  Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Note 4 to the notes to the consolidated financial statements, during the year ended December 31, 2002, the Company changed the method in which it accounts for goodwill and other intangible assets upon adoption of Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets” on January 1, 2002.

	/s/ ERNST & YOUNG LLP
Baltimore, Maryland
February 8, 2005

F-2

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	As of December 31,
	2004			2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,491		$	28,730
Accounts receivable, net of allowance for doubtful accounts of $4,518 and $4,909, respectively	132,062			139,761
Current portion of program contract costs	49,062			57,655
Taxes receivable	624			1,952
Prepaid expenses and other current assets	17,525			13,914
Deferred barter costs	2,210			2,705
Assets held for sale	97,822			100,522
Deferred tax assets	20,354			12,443
Total current assets	330,150			357,682
PROGRAM CONTRACT COSTS, less current portion	27,175			32,785
LOANS TO AFFILIATES	13			1,381
PROPERTY AND EQUIPMENT, net	339,779			338,078
GOODWILL, net	1,041,452			1,085,507
BROADCAST LICENSES, net	406,694			392,258
DEFINITE-LIVED INTANGIBLE ASSETS, net	237,972			252,666
OTHER ASSETS	82,428			106,749
Total assets	$	2,465,663		$	2,567,106
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	7,056		$	8,301
Accrued liabilities	77,291			70,586
Current portion notes payable, capital leases and commercial bank financing	43,737			38,986
Current portion of notes and capital leases payable to affiliates	5,209			3,296
Current portion of program contracts payable	113,108			114,725
Deferred barter revenues	2,684			3,077
Deferred gain on sale of broadcast assets	26,129			—
Liabilities held for sale	13,447			15,367
Total current liabilities	288,661			254,338
LONG-TERM LIABILITIES:
Notes payable, capital leases and commercial bank financing, less current portion	1,571,346			1,661,998
Notes and capital leases payable to affiliates, less current portion	19,323			25,641
Program contracts payable, less current portion	60,782			87,357
Deferred tax liabilities	216,937			193,138
Other long-term liabilities	80,796			114,691
Total liabilities	2,237,845			2,337,163
MINORITY INTEREST IN CONSOLIDATED ENTITIES	1,267			938
SHAREHOLDERS’ EQUITY:
Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized, 3,337,033 and 3,450,000 issued and outstanding, respectively; liquidation preference of $166,851,650 and $172,500,000, respectively	33			35
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 46,018,574 and 44,598,278 shares issued and outstanding, respectively	460			446
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 39,150,828 and 41,213,653 shares issued and outstanding, respectively; convertible into Class A Common Stock.	391			412
Additional paid-in capital	752,135			762,720
Additional paid-in capital-deferred stock compensation	(5		)	(132		)
Accumulated deficit	(526,463		)	(533,916		)
Accumulated other comprehensive loss	—			(560		)
Total shareholders’ equity	226,551			229,005
Total liabilities and shareholders’ equity	$	2,465,663		$	2,567,106

The accompanying notes are an integral part of these consolidated statements.

F-3

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(in thousands, except per share data)

	2004			2003			2002
REVENUES:
Station broadcast revenues, net of agency commissions	$	637,186		$	614,682		$	624,375
Revenues realized from station barter arrangements	58,039			59,155			57,628
Other operating divisions revenue	13,054			14,568			4,344
Total revenues	708,279			688,405			686,347
OPERATING EXPENSES:
Station production expenses	148,408			142,469			132,146
Station selling, general and administrative expenses	154,352			138,284			134,978
Expenses recognized from station barter arrangements	53,494			54,315			51,283
Amortization of program contract costs and net realizable value adjustments	89,938			98,966			117,255
Stock-based compensation expense	1,603			1,397			1,301
Other operating divisions expenses	14,932			16,375			6,051
Depreciation and amortization of property and equipment	48,617			44,004			38,211
Corporate general and administrative expenses	21,160			19,532			17,797
Amortization of definite-lived intangible assets and other assets	18,544			18,797			18,965
Total operating expenses	551,048			534,139			517,987
Operating income	157,231			154,266			168,360
OTHER INCOME (EXPENSE):
Interest expense and amortization of debt discount and deferred financing costs	(120,400		)	(121,165		)	(118,114		)
Subsidiary trust minority interest expense	—			(11,246		)	(23,890		)
Interest income	191			560			1,484
Loss on sale of assets	(52		)	(452		)	(46		)
Unrealized gain (loss) from derivative instruments	29,388			17,354			(30,939		)
Loss from extinguishment of securities	(2,453		)	(15,187		)	(15,362		)
Income (loss) from equity and cost investees	1,100			1,193			(1,189		)
Gain on insurance settlement	3,341			—			—
Impairment of goodwill	(44,055		)	—			—
Other income	895			1,187			1,811
Total other expense	(132,045		)	(127,756		)	(186,245		)
Income (loss) from continuing operations before income taxes	25,186			26,510			(17,885		)
INCOME TAX (PROVISION) BENEFIT	(11,182		)	(10,676		)	7,591
Net income (loss) from continuing operations	14,004			15,834			(10,294		)
DISCONTINUED OPERATIONS:
Income from discontinued operations, net of related income tax provision of $6,255, $3,352 and $3,776, respectively	10,018			8,558			4,685
Gain on disposal of discontinued operations, net of taxes of $8,175	—			—			7,519
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, net of tax benefit of $30,383	—			—			(566,404		)
NET INCOME (LOSS)	24,022			24,392			(564,494		)
PREFERRED STOCK DIVIDENDS	10,180			10,350			10,350
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	13,842		$	14,042		$	(574,844	)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share from continuing operations	$	0.04		$	0.06		$	(0.24	)
Earnings per share from discontinued operations	$	0.12		$	0.10		$	0.14
Loss per share from cumulative effect of change in accounting principle	$	—		$	—		$	(6.64	)
Earnings (loss) per common share	$	0.16		$	0.16		$	(6.74	)
Weighted average common shares outstanding	85,590			85,651			85,337
Weighted average common and common equivalent shares outstanding	85,741			85,793			85,580
Dividends per common share	$	0.075		$	—		$	—

The accompanying notes are an integral part of these consolidated statements.

F-4

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND OTHER COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(in thousands)

	Series D Preferred Stock		Class A Common Stock		Class B Common Stock			Additional Paid-In Capital			Deferred Compensation			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity
BALANCE, December 31, 2001	$	35	$	411	$	432		$	748,353		$	(1,452	)	$	26,886		$	(2,705	)	$	771,960
Dividends paid on Series D Preferred Stock	¾		¾		¾			¾			¾			(10,350		)	¾			(10,350		)
Class B Common Stock converted into Class A Common Stock	¾		15		(15		)	¾			¾			¾			¾			¾
Stock options exercised	¾		3		¾			2,803			¾			¾			¾			2,806
Class A Common Stock issued pursuant to employee benefit plans	¾		2		¾			1,754			¾			¾			¾			1,756
Class A Common Stock issued to acquire broadcast licenses	¾		8		¾			7,695			¾			¾			¾			7,703
Issuance of Shares under ESPP	¾		¾		¾			338			¾			¾			¾			338
Amortization of deferred compensation	¾		¾		¾			¾			730			¾			¾			730
Deferred compensation adjustment related to forfeited stock option	¾		¾		¾			(842		)	171			¾			¾			(671		)
Tax benefit of nonqualifying stock option exercises	—		—		—			377			—			—			—			377
Net loss	¾		¾		¾			¾			¾			(564,494		)	¾			(564,494		)
Amortization of derivative instruments, net of tax benefit of $716	¾		¾		¾			¾			¾			¾			871			871
Realized loss on investment, net of tax benefit of $101	¾		¾		¾			¾			¾			¾			154			154
BALANCE, December 31, 2002	$	35	$	439	$	417		$	760,478		$	(551	)	$	(547,958	)	$	(1,680	)	$	211,180
Other comprehensive loss:
Net loss	$	—	$	—	$	—		$	—		$	—		$	(564,494	)	$	—		$	(564,494	)
Amortization of derivative instruments, net of tax benefit of $716	¾		¾		¾			¾			¾			¾			871			871
Realized loss on investment, net of tax benefit of $101	¾		¾		¾			¾			¾			¾			154			154
Comprehensive loss	$	—	$	—	$	—		$	—		$	—		$	(564,494	)	$	1,025		$	(563,469	)

The accompanying notes are an integral part of these consolidated statements.

F-5

	Series D Preferred Stock		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital			Deferred Compensation			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity
BALANCE, December 31, 2002	$	35	$	439		$	417		$	760,478		$	(551	)	$	(547,958	)	$	(1,680	)	$	211,180
Dividends paid on Series D Preferred Stock	¾		¾			¾			¾			¾			(10,350		)	¾			(10,350		)
Class B converted into Class A Common Stock	¾		5			(5		)	¾			¾			¾			¾			¾
Stock options exercised	¾		2			¾			1,429			¾			¾			¾			1,431
Class A Common Stock issued pursuant to employee benefit plans	¾		2			¾			2,508			¾			¾			¾			2,510
Repurchase of 194,500 shares of Class A Common Stock	¾		(2		)	¾			(1,542		)	¾			¾			¾			(1,544		)
Amortization of deferred compensation	¾		¾			¾			¾			494			¾			¾			494
Deferred compensation adjustment related to forfeited stock option	¾		¾			¾			(340		)	(75		)	¾			¾			(415		)
Tax benefit of nonqualifying stock option exercises	—		—			—			187			—			—			—			187
Net income	¾		¾			¾			¾			¾			24,392			¾			24,392
Amortization of derivative instruments, net of tax provision of $608	¾		¾			¾			¾			¾			¾			1,120			1,120
BALANCE, December 31, 2003	$	35	$	446		$	412		$	762,720		$	(132	)	$	(533,916	)	$	(560	)	$	229,005
Other comprehensive income:
Net income	$	—	$	—		$	—		$	—		$	—		$	24,392		$	—		$	24,392
Amortization of derivative instruments, net of tax provision of $608	¾		¾			¾			¾			¾			—			1,120			1,120
Comprehensive income	$	—	$	—		$	—		$	—		$	—		$	24,392		$	1,120		$	25,512

The accompanying notes are an integral part of these consolidated statements.

F-6

	Series D Preferred Stock			Class A Common Stock			Class B Common Stock			Additional Paid-In Capital			Deferred Compensation			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity
BALANCE, December 31, 2003	$	35		$	446		$	412		$	762,720		$	(132	)	$	(533,916	)	$	(560	)	$	229,005
Dividends declared on common stock	—			—			—			—			—			(6,403		)	—			(6,403		)
Dividends paid on Series D Preferred Stock	—			—			—			—			—			(10,166		)	—			(10,166		)
Class A Common Stock issued pursuant to employee benefit plans and stock options exercised	—			3			—			3,509			—			—			—			3,512
Class B Common Stock converted to Class A Common Stock	—			21			(21		)	—			—			—			—			—
Repurchase of 970,500 shares of Class A Common Stock	—			(10		)	—			(9,540		)	—			—			—			(9,550		)
Amortization of deferred compensation	—			—			—			—			127			—			—			127
Repurchase of Series D Preferred Stock	(2		)	—			—			(4,750		)	—			—			—			(4,752		)
Tax benefit of nonqualifying stock option exercises	—			—			—			196			—			—			—			196
Net income	—			—			—			—			—			24,022			—			24,022
Amortization of derivative instruments, net of tax provision of $304	—			—			—			—			—			—			560			560
BALANCE, December 31, 2004	$	33		$	460		$	391		$	752,135		$	(5	)	$	(526,463	)	$	—		$	226,551
Other comprehensive income:
Net income	$	—		$	—		$	—		$	—		$	—		$	24,022		$	—		$	24,022
Amortization of derivative instruments, net of tax provision of $304	—			—			—			—			—			—			560			560
Comprehensive income	$	—		$	—		$	—		$	—		$	—		$	24,022		$	560		$	24,582

The accompanying notes are an integral part of these consolidated statements.

F-7

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(in thousands)

	2004			2003			2002
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss)	$	24,022		$	24,392		$	(564,494	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Amortization of debt (premium) discount	(1,081		)	(838		)	98
Depreciation and amortization of property and equipment	50,877			47,023			41,513
Recognition of deferred revenue	(4,928		)	(4,942		)	(4,942		)
Accretion of capital leases	706			723			621
(Income) loss from equity and cost investees	(1,100		)	(976		)	1,519
Gain on sale of broadcast assets related to discontinued operations	—			—			(12,413		)
Gain on involuntary conversion-non cash portion	(3,212		)	—			—
Loss on sale of property	52			517			478
Impairment of goodwill	44,055			—			—
Unrealized (gain) loss from derivative instruments	(29,388		)	(17,354		)	30,939
Amortization of definite-lived intangible assets and other assets	19,035			19,288			19,581
Amortization of program contract costs and net realizable value adjustments	94,180			105,082			130,832
Amortization of deferred financing costs	2,839			2,990			3,954
Amortization of deferred compensation	1,906			1,686			1,775
Extinguishment of debt, non-cash portion	1,289			3,705			12,307
Cumulative effect of change in accounting principle	—			—			596,787
Amortization of derivative instruments	1,098			1,658			1,409
Deferred tax provision related to operations	11,125			17,250			49,490
Deferred tax provision (benefit) related to sale of broadcast assets from discontinued operations	5,828			—			(11,582		)
Deferred tax provision related to extraordinary loss	—			—			649
Deferred tax benefit related to change in accounting principle	—			—			(30,383		)
Net effect of change in deferred barter revenues and deferred barter costs	118			(112		)	(571		)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable, net	7,477			8,035			(2,871		)
Decrease in taxes receivable	1,328			36,954			7,244
(Increase) decrease in prepaid expenses and other current assets	(3,206		)	9,319			(2,680		)
Decrease in other long-term assets	555			3,659			3,173
Increase (decrease) in accounts payable and accrued liabilities	4,809			(2,898		)	(14,266		)
(Decrease) increase in other long-term liabilities	(1,380		)	(3,298		)	58
Dividends and distributions from equity investees	3,327			307			654
Payments on program contracts payable	(110,151		)	(105,535		)	(106,327		)
Increase in minority interest	(67		)	(180		)	(1,662		)
Net cash flows from operating activities	120,113			146,455			150,890
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(44,881		)	(69,531		)	(62,909		)
Consolidation of variable interest entity	239			—			—
Payments for acquisition of television station and related assets	—			(18,000		)	(21,178		)
Contributions in equity investments	(5,549		)	(5,699		)	(25,820		)
Proceeds from sale of property	39			138			694
Proceeds from sale of broadcast assets	28,561			—			124,472
Repayment of note receivable	—			—			30,257
Loans to affiliates	(143		)	(1,115		)	(104		)
Proceeds from loans to affiliates	1,511			903			6,756
Proceeds from insurance settlement	2,521			3,328			—
Net cash flows (used in) from investing activities	(17,702		)	(89,976		)	52,168
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from commercial bank financing and notes payable	533,000			318,336			1,263,075
Repayments of notes payable, commercial bank financing and capital leases	(620,400		)	(129,100		)	(1,492,548		)
Proceeds from exercise of stock options	1,152			1,431			2,807
Payments for deferred financing costs	(953		)	(7,402		)	(10,503		)
Dividends paid on Series D Convertible Preferred Stock	(10,180		)	(10,350		)	(10,350		)
Dividends paid on common stock	(4,274		)	—			—
Repurchase of Series D Preferred Stock	(4,752		)	—			—
Repurchase of Class A Common Stock	(9,550		)	(1,544		)	—
Redemption of High Yield Trust Originated Preferred Securities	—			(200,000		)	—
Proceeds from termination of derivative instruments	—			—			21,849
Repayments of notes and capital leases to affiliates	(4,693		)	(4,447		)	(4,124		)
Net cash flows used in financing activities	(120,650		)	(33,076		)	(229,794		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(18,239		)	23,403			(26,736		)
CASH AND CASH EQUIVALENTS, beginning of year	28,730			5,327			32,063
CASH AND CASH EQUIVALENTS, end of year	$	10,491		$	28,730		$	5,327

The accompanying notes are an integral part of these consolidated statements.

F-8

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

Sinclair Broadcast Group, Inc. is a diversified television broadcasting company that owns or provides certain programming, operating or sales services to television stations pursuant to broadcasting licenses that are granted by the Federal Communications Commission.  We currently own, provide programming and operating services pursuant to local marketing agreements (LMAs) or provide (or are provided) sales services pursuant to outsourcing agreements to 62 television stations in 39 markets.  For the purpose of this report, these 62 stations are referred to as “our” stations.  We currently have 11 duopoly markets where we own and operate two stations within the same market.  We have eight LMA markets where, with one exception, we own and operate one station in the market and provide programming and operating services to (by) another station within that market.  In the remaining 16 markets, we own and operate a single television station.  Our television station group is diverse in network affiliation with 20 stations affiliated with FOX, 19 with The WB, nine with ABC, six with UPN, three with NBC and three with CBS. Two stations are not affiliated with any network.

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities.  Minority interest represents a minority owner’s proportionate share of the equity in certain of our consolidated entities.  All significant intercompany transactions and account balances have been eliminated in consolidation. The financial statements of Cunningham Broadcasting Corporation, Acrodyne Communications, Inc. and G1440 Holdings, Inc. are consolidated for the years ended December 31, 2004, 2003 and 2002.  The financial statements for the unrelated third party owner of WNAB-TV in Nashville, Tennessee, a variable interest entity for which we are primary beneficiary, have been consolidated since March 31, 2004. (See Variable Interest Entities below.)

The operating results of WTTV-TV, Bloomington, Indiana, which was sold in 2002, are not included in our consolidated results from continuing operations for the year ended December 31, 2002.  The operating results of KSMO-TV, Kansas City, Missouri and KOVR-TV, Sacramento, California are not included in our consolidated results from continuing operations for the years ended December 31, 2004, 2003 and 2002, since the asset purchase agreements for KSMO-TV, Kansas City, Missouri and KOVR-TV, Sacramento, California, met all of the criteria for a qualifying plan of sale.  The assets and liabilities being disposed of have been classified as “held for sale” on the accompanying balance sheets presented and their operations have been treated and disclosed as income from discontinued operations.  Their financial position and results of operations have been reclassified accordingly for all years presented.  (See Note 12. Discontinued Operations.)

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in the disclosures of contingent assets and liabilities.  Actual results could differ from those estimates.

Recent Accounting Pronouncements

In September 2004, the Emerging Issues Task Force (EITF) finalized EITF No. 04-8, The Effect of Contingently Convertible Debt on Diluted Earnings per Share (EITF 04-8).  Issue 04-8 requires all issued securities that have embedded market price contingent conversion features be included in the diluted earnings per share (diluted EPS) calculation, if dilutive.  We adopted EITF 04-8 for our diluted EPS calculation on December 15, 2004.  Our Convertible Senior Subordinated Notes due 2018 were not included in our diluted EPS calculation for December 31, 2004 and 2003 because the effect was antidilutive.  The Convertible Senior Subordinated Notes due 2018 were issued during May 2003 and were not available to be included in our December 31, 2002 diluted EPS calculation.  (See Note 15.  Earnings Per Share.)

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123R,Share-Based Payment (SFAS 123R)as revision to FASB Statement No. 123, Accounting for Stock-Based Compensation (SFAS 123).   SFAS 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees (Opinion 25), and amends FASB Statement No. 95, Statement of Cash Flows.  This standard requires that all share-based payments, including grants of employee stock options and our employee stock purchase plan, be recognized in the income statement as compensation expense based on their fair values.  SFAS 123R is effective for interim and annual periods beginning after June 15, 2005. We expect to adopt SFAS 123R on July 1, 2005.

F-9

Statement 123R permits public companies to adopt its requirements using one of two methods:

•a “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date; and

•a “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

As permitted by SFAS 123, we currently account for share-based payments to employees using Opinion 25’s intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of SFAS 123R’s fair value method will have an impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of SFAS 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS 123R in prior periods, the impact of that standard would have approximated the impact of SFAS 123 as described in the disclosure of Pro Forma Information Related to Stock-Based Compensation below.  SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.

Variable Interest Entities

In January 2003, the FASB issued Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (FIN 46R).  FIN 46R introduces the variable interest consolidation model, which determines control and consolidation based on potential variability in gains and losses of the entity being evaluated for consolidation.  We adopted FIN 46R on March 31, 2004.

We have determined that WNAB-TV in Nashville, Tennessee is a variable interest entity (VIE) and that we are the primary beneficiary of the variable interests as a result of the terms of our outsourcing agreement, put options and call options. As a result, we were required to consolidate the assets and liabilities of WNAB-TV at their fair market values as of March 31, 2004.  The consolidated assets of WNAB-TV consist of broadcast licenses of $14.4 million, network affiliation of $3.0 million and property and equipment of $1.9 million.  The consolidation of WNAB-TVdid not have a material impact on our results of operations.  We made payments to the unrelated third-party owner of WNAB-TV of $2.2 million and of $2.3 million related to our outsourcing agreement for the years ended December 31, 2004 and 2003, respectively.  On January 2, 2003, we made an $18.0 million non-refundable deposit against the purchase price of the put or call option on the non-license assets.  We believe that our maximum exposure to loss as a result of our involvement with WNAB-TV consists of the fees that we pay related to the outsourcing agreement as well as any payments that we would be required to make under the put options held by the current owner related to the license and non-license assets.  (See Note 10.  Commitments and Contingencies.)

We have determined that Cunningham Broadcasting Corporation (Cunningham) is a VIE and that we are the primary beneficiary of the variable interests.  We have been consolidating Cunningham’s financial statements since February 1, 2002; therefore, the implementation of FIN 46R did not have an effect on our financial statements with respect to our variable interest in Cunningham.  We made LMA payments to Cunningham of $5.9 million, $4.7 million and $4.0 million for the years ended December 31, 2004, 2003 and 2002, respectively.  We received payments from Cunningham of $2.1 million, $0.8 million and $0.2 million for the years ended December 31, 2004, 2003 and 2002, respectively.  The creditors of Cunningham have no recourse with respect to us.  We believe that our maximum exposure to loss as a result of our involvement with Cunningham consists of the fees that we pay related to the LMA agreements as well as payments that we would make as a result of exercising our option to acquire Cunningham, which provides for an option exercise price based on a formula that provides a 10% annual return to Cunningham.

We have determined that we have a variable interest in WTXL-TV in Tallahassee, Florida as a result of the terms of the outsourcing agreement with the unrelated third-party owner of WTXL-TV. However, we are not the primary beneficiary of the variable interests and, therefore, we are not required to consolidate WTXL-TV under the provisions of FIN 46R. We believe that we do not have a material exposure to loss as a result of our involvement with WTXL-TV.

F-10

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Accounts Receivable

Management regularly reviews accounts receivable and determines an appropriate estimate for the allowance for doubtful accounts based upon the impact of economic conditions on the merchant’s ability to pay, past collection experience and such other factors which, in management’s judgment, deserve current recognition.  In turn, a provision is charged against earnings in order to maintain the allowance level.

Programming

We have agreements with distributors for the rights to television programming over contract periods, which generally run from one to seven years.  Contract payments are made in installments over terms that are generally equal to or shorter than the contract period.  Each contract is recorded as an asset and a liability at an amount equal to its gross contractual cash commitment when the license period begins and the program is available for its first showing.  The portion of program contracts which become payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.

The rights to this programming are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or estimated net realizable value.  Estimated net realizable values are based on management’s expectation of future advertising revenues, net of sales commissions, to be generated by the program material.  Amortization of program contract costs is generally computed using either a four year accelerated method or based on usage, whichever method results in the most accelerated amortization for each program.  Program contract costs estimated by management to be amortized in the succeeding year are classified as current assets.  Payments of program contract liabilities are typically made on a scheduled basis and are not affected by adjustments for amortization or estimated net realizable value.

Barter Arrangements

Certain program contracts provide for the exchange of advertising airtime in lieu of cash payments for the rights to such programming.  The revenues realized from station barter arrangements are recorded as the programs are aired at the estimated fair value of the advertising airtime given in exchange for the program rights.  Network programming is excluded from these calculations.  Revenues are recorded as revenues realized from station barter arrangements and the corresponding expenses are recorded to expenses recognized from station barter arrangements.

We broadcast certain customers’ advertising in exchange for equipment, merchandise and services.  The estimated fair value of the equipment, merchandise or services received is recorded as deferred barter costs and the corresponding obligation to broadcast advertising is recorded as deferred barter revenues.  The deferred barter costs are expensed or capitalized as they are used, consumed or received and are included in the station production expenses and the station selling, general and administrative expenses.  Deferred barter revenues are recognized as the related advertising is aired and are recorded in revenues realized from station barter arrangements.

Other Assets

Other assets as of December 31, 2004 and 2003 consisted of the following (in thousands):

	2004		2003
Investments	$	44,000	$	40,594
Other costs relating to future acquisitions	—		20,486
Unamortized costs relating to securities issuances	17,101		20,397
Fair value of derivative instruments	15,831		18,884
Other	5,496		6,388
	$	82,428	$	106,749

Investments

We use the equity method of accounting for investments in which we have a 20% to 50% ownership interest or when we exercise significant influence over the operating and financial policies of the investee.  For investments in which we have less

F-11

than a 20% interest and do not exercise significant influence over the operating and financial policies of the investee, we use the lower of cost or fair market value method of accounting.

Impairment of Long-lived Assets

Under the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), we periodically evaluate our long-lived assets for impairment and will continue to evaluate them as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.  We evaluate the recoverability of long-lived assets by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with them.  At the time such evaluations indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values.  As of December 31, 2004, management believes that the carrying amounts of our tangible and definite-lived intangible assets have not been impaired under SFAS 144.

Accrued Liabilities

Accrued liabilities consisted of the following as of December 31, 2004 and 2003 (in thousands):

	2004		2003
Compensation	$	16,661	$	16,431
Interest	23,394		23,853
Other accruals relating to operating expenses	37,236		30,302
Total accrued liabilities	$	77,291	$	70,586

We do not accrue for repair and maintenance activities in advance of planned or unplanned major maintenance activities.  We generally expense these activities when incurred.

Supplemental Information – Statements of Cash Flows

During 2004, 2003 and 2002, we incurred the following transactions (in thousands):

	2004		2003		2002
Capital lease obligations incurred	$	4,727	$	2,699	$	29,526
Income taxes paid related to operations	$	1,854	$	2,123	$	2,822
Income taxes paid related to sale of discontinued operations	$	429	$	205	$	168
Income tax refunds received	$	1,462	$	40,643	$	47,077
Subsidiary trust minority interest payments	$	—	$	10,979	$	23,250
Interest paid	$	130,493	$	116,884	$	119,669
Payments related to extinguishment of debt	$	1,168	$	11,482	$	2,411
Stock issued to acquire broadcast licenses	$	—	$	—	$	7,703

Non-cash barter and trade revenue and expense are presented in the consolidated statements of operations.

Local Marketing Agreements

We generally enter into local marketing agreements (LMAs) and similar arrangements with stations located in markets in which we already own and operate a station.  Under the terms of these agreements, we make specific periodic payments to the owner-operator in exchange for the right to program and sell advertising on a specified portion of the station’s inventory of broadcast time.  Nevertheless, as the holder of the FCC license, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

Included in the accompanying consolidated statements of operations for the years ended December 31, 2004, 2003 and 2002 are net revenues of $114.6 million, $101.7 million and $111.6 million, respectively, that relate to LMAs.

F-12

Outsourcing Agreements

We have entered into outsourcing agreements in which our stations provide or are provided various non-programming related services such as sales, operational and managerial services to or by other stations.

Revenue Recognition

Advertising revenues, net of agency and national representatives’ commissions, are recognized in the period during which time spots are aired.  Total revenues include (i) cash and barter advertising revenues, net of agency and national representatives’ commissions, (ii) network compensation and (iii) other revenues.

Advertising Expenses

Advertising expenses are recorded in the period when incurred and are included in station production expenses.  Total advertising expenses from continuing operations, net of advertising co-op credits, were $9.7 million, $10.4 million and $7.4 million for the years ended December 31, 2004, 2003 and 2002, respectively.

Financial Instruments

Financial instruments as of December 31, 2004 and 2003 consist of cash and cash equivalents, trade accounts receivable, notes receivable (which are included in other current assets), accounts payable, accrued liabilities and notes payable.  The carrying amounts approximate fair value for each of these financial instruments except for the notes payable.  See Note 5. Notes Payable and Commercial Bank Financing for determination of fair value of notes payable.

Pro Forma Information Related To Stock-Based Compensation

As permitted under SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), we measure compensation expense for our stock-based employee compensation plans using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and provide pro forma disclosures of net income (loss) and earnings (loss) per share as if the fair value-based method prescribed by SFAS 123 had been applied in measuring compensation expense.

Had compensation cost related to our grants for stock-based compensation plans been determined consistent with SFAS 123, our net income (loss) available to common shareholders for these years would approximate the pro forma amounts below (in thousands, except per share data):

	For the Years Ended December 31,
	2004				2003				2002
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported			Pro Forma
Net income (loss) available to common shareholders	$	13,842	$	11,719	$	14,042	$	9,227	$	(574,844	)	$	(579,274	)
Basic and diluted earnings (loss) per common share	$	0.16	$	0.14	$	0.16	$	0.11	$	(6.74	)	$	(6.79	)

We have computed for pro forma disclosure purposes the value of all options granted during 2004, 2003 and 2002, respectively, using the Black-Scholes option pricing model as prescribed by SFAS 123 using the following weighted average assumptions for common stock:

	For the Years Ended December 31,
	2004			2003			2002
Risk-free interest rate	3.10		%	3.00		%	4.24		%
Expected lives	5 years			5 years			5 years
Expected volatility	48		%	48		%	55		%
Dividend yield	2.2		%	—			—
Weighted average fair value	$	5.48		$	4.63		$	6.34

Adjustments are made for options forfeited prior to vesting.

F-13

Reclassifications

Certain reclassifications have been made to the prior years’ financial statements to conform to the current year’s presentation.

2.INVESTMENTS:

The following is a summary of our material investments included in our consolidated financial statements:

Acrodyne Communications, Inc.

As of December 31, 2004 and 2003, we had a 82.4% ownership interest in Acrodyne Communications, Inc. (Acrodyne).  Acrodyne designs, manufactures and markets digital and analog television broadcast transmitters for domestic and international television stations, broadcasters, government agencies, not-for-profit organizations and educational institutions.

On January 1, 2003, we forgave indebtedness owed to us by Acrodyne in the aggregate amount of $9.0 million in exchange for $20.3 million additional shares of Acrodyne common stock.  The terms of the agreement also committed us to an additional investment of $1.0 million, which we funded on January 1, 2003.  Beginning January 1, 2003, we consolidated the financial statements of Acrodyne and ceased accounting for the investment under the equity method of accounting.

G1440 Holdings, Inc.

As of December 31, 2004 and 2003, we had a 93.9% and 89.6% equity interest in G1440 Holdings, Inc., (G1440), respectively. G1440 and its subsidiaries provide single-source, end-to-end e-Business solutions and a number of services and products, including a homebuilder application, an immigration tracking tool application, a syndicated television program management and scheduling application and a procurement application.  We consolidate the financial statements of G1440.

Allegiance Capital Limited Partnership

As of December 31, 2004 and 2003, we had an 87.8% and 76.3% limited partnership interest in Allegiance Capital Limited Partnership (Allegiance), respectively.  Allegiance is a private mezzanine venture capital fund, which invests in the subordinated debt and equity of privately held companies.  The partnership is structured as a debenture Small Business Investment Company (SBIC) and is a federally licensed SBIC.  Since we do not have significant control, but only significant influence, we account for our investment in Allegiance under the equity method of accounting.

Summa Holdings, Ltd.

As of December 31, 2004 and 2003, we had a 17.5% equity interest in Summa Holdings, Ltd. (Summa).  Summa is a holding company, which owns automobile dealerships and a leasing company.  David D. Smith, our President and Chief Executive Officer, has a controlling interest in Summa and is on the Board of Directors.  We have significant influence by holding a board seat (in addition to the board seat personally held by David D. Smith); therefore, we account for this investment under the equity method of accounting.

We have other cost and equity investments in internet related activities and venture capital companies.  Management does not believe these investments individually, or in the aggregate, are material to the accompanying consolidated financial statements.

F-14

In the event one or more of our investments are significant, we are required to disclose summarized financial information.  The table below presents the unaudited summarized financial information for these investments for the years ended December 31, 2004, 2003 and 2002, respectively (in thousands):

	For the Years Ended December 31,
	2004		2003
Current assets	$	225,118	$	229,533
Long-term assets	137,933		137,524
Total assets	$	363,051	$	367,057
Current liabilities	$	205,657	$	206,786
Long-term liabilities	102,799		113,494
Total liabilities	308,456		320,280
Redeemable preferred stock	20,000		20,000
Minority interests	690		3,000
Equity	33,905		23,777
Total liabilities and equity	$	363,051	$	367,057

	For the Years Ended December 31,
	2004		2003		2002
Operating revenue	$	1,109,217	$	902,081	$	704,074
Cost of sales	$	935,389	$	752,212	$	578,082
Operating expenses	$	153,090	$	132,864	$	115,256
Income from continuing operations	$	16,709	$	12,791	$	5,814
Net income	$	16,234	$	9,274	$	4,452

Impairment of Investments

Each quarter, we review our investments for impairment.  For any investments that indicate a potential impairment, we estimate the fair values of those investments using discounted cash flow models, unrelated third party valuations or industry comparables, based on the various facts available to us.  As a result of these reviews, we recorded an impairment of equity investees of $4.0 million in the consolidated statement of operations for the year ended December 31, 2004.

3.PROPERTY AND EQUIPMENT:

Property and equipment are stated at cost less accumulated depreciation.  Depreciation is computed under the straight-line method over the following estimated useful lives:

Buildings and improvements	10 – 35 years
Station equipment	5 – 10 years
Office furniture and equipment	5 – 10 years
Leasehold improvements	10 –31 years
Automotive equipment	3 – 5 years
Property and equipment under capital leases	Lease term

F-15

Property and equipment consisted of the following as of December 31, 2004 and 2003 (in thousands):

	2004			2003
Land and improvements	$	15,184		$	15,133
Buildings and improvements	107,896			100,469
Station equipment	377,858			335,549
Office furniture and equipment	44,497			41,933
Leasehold improvements	12,576			11,912
Automotive equipment	10,368			9,988
Construction in progress	16,955			30,022
	585,334			545,006
Less – accumulated depreciation	(245,555		)	(206,928		)
	$	339,779		$	338,078

Depreciation related to capital leases is included in depreciation expense in the consolidated statement of operations.

In the first quarter of 2003, one of our towers in Charleston, West Virginia collapsed during a severe ice storm.  This tower was insured and we used the insurance settlement to rebuild the tower and to replace the other assets that were destroyed by the collapse.  In the fourth quarter of 2004, we completed substantially all of the construction of the new tower and placed it in service, and at that time we recognized a gain of $3.3 million, representing amounts received from insurance above the net book value of the old tower.  Of this amount, $0.1 million was related to business interruption insurance recoveries.

4.GOODWILL AND OTHER INTANGIBLE ASSETS:

In June 2001, the FASB approved SFAS No. 141, Business Combinations (SFAS 141) and SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142).  SFAS 141 prospectively prohibits the pooling of interest method of accounting for business combinations initiated after June 30, 2001.  SFAS 142 requires companies to cease amortizing goodwill and certain other intangible assets including broadcast licenses.  Effective January 1, 2002, SFAS 142 also established a method of testing goodwill and broadcast licenses for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value.  The adoption of SFAS 142 resulted in discontinuation of amortization of our goodwill and broadcast licenses commencing January 1, 2002 and we are required to test goodwill and broadcast licenses for impairment under this standard annually.

During the three months ended March 31, 2002, we tested our broadcast licenses for impairment in accordance with SFAS 142 based on the estimated fair value of such licenses in their respective markets.  We estimated the fair values of our broadcast licenses using discounted cash flow models.  The estimated fair value was compared to the book value to determine whether any impairment had occurred.  As a result of this analysis, we recorded a pretax impairment charge of $64.0 million.

SFAS 142 requires that goodwill be tested for impairment at the reporting unit level at adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires us to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. If the fair value exceeds the carrying value, no impairment loss is recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of this unit might be impaired. The amount, if any, of the impairment is then measured in the second step.  The second step requires us to calculate the fair value of goodwill by allocating the fair value of the reporting unit to each of the assets and liabilities of the reporting unit based on their fair values. This calculated goodwill is then compared to the book value of the goodwill and an impairment loss is recognized to the extent that the book value exceeds the fair value.

We determined that our designated marketing areas (DMAs) are reporting units under SFAS 142. In connection with adopting this standard during 2002, we completed step one of the test for impairment by comparing the book value of our reporting units, including goodwill, to the estimated fair value of our reporting units as of January 1, 2002. We estimated the fair value of our reporting units using a combination of quoted market prices, observed earnings multiples paid for comparable television stations and discounted cash flow models.

We performed the second step of the goodwill impairment test for those DMAs whose goodwill was found to be potentially impaired as a result of the first step. We performed the second step by allocating the estimated fair value of the reporting unit to each of the assets and liabilities of the reporting unit based on their estimated fair values. We estimated the fair values of the assets and liabilities using a combination of observed prices paid for similar assets and liabilities, discounted cash flow models and appraisals.

F-16

As a result of such testing, we recorded a pre-tax impairment charge of $532.8 million related to nine of our DMAs and our software development and consulting company during 2002. The total impairment charge of $596.8 million related to our broadcast licenses and goodwill is reflected as a cumulative effect of a change in accounting principle on our consolidated statement of operations for the twelve months ended December 31, 2002, before the related tax benefit of $30.4 million.

SFAS 142 requires goodwill and definite-lived intangible assets to be tested for impairment on an annual basis; therefore, we tested these assets for impairment as of October 1, 2004, 2003 and 2002 using the methodology discussed above.  There were no impairment charges recorded for 2003 and 2002 based on the results of such testing.  In 2004, based on first step testing, we determined that the carrying value of goodwill of one of our stations exceeded its fair value.  As required, we then conducted second step testing in order to calculate the fair value of goodwill.  As a result of second step testing, we recorded a $44.1 million charge called impairment of goodwill in our consolidated statement of operations.

Definite-lived intangible assets and other assets subject to amortization are being amortized on a straight-line basis over periods of 5 to 25 years.  These amounts result from the acquisition of certain television station non-license assets.  The following table shows the gross carrying amount and accumulated amortization of intangibles and estimated amortization (in thousands):

			For the year ended December 31, 2004					For the year ended December 31, 2003
	Amortization Period		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Network affiliation	15-25	years	$	243,865	$	(67,209	)	$	240,842	$	(57,440	)
Decaying advertiser base	15	years	113,816		(64,713		)	113,816		(57,835		)
Other	5-25	years	26,932		(14,719		)	26,932		(13,649		)
Total			$	384,613	$	(146,641	)	$	381,590	$	(128,924	)

F-17

The amortization expense of the definite-lived intangible assets and other assets for the years ended December 31, 2004, 2003 and 2002 was $18.5 million, $18.8 million and $19.0 million, respectively.  The following table shows the estimated amortization expense of the definite-lived intangible assets and other assets for the next five years (in thousands):

For the year ended December 31, 2005	$	17,845
For the year ended December 31, 2006	$	17,595
For the year ended December 31, 2007	$	17,594
For the year ended December 31, 2008	$	17,594
For the year ended December 31, 2009	$	17,268

The change in the carrying amount of network affiliation for the twelve months ended December 31, 2004 was as follows (in thousands):

Balance as of January 1, 2004	$	183,402
Consolidation of variable interest entity	3,023
2004 amortization	(9,769		)
Balance as of December 31, 2004	$	176,656

The change in the carrying amount of broadcast licenses for the twelve months ended December 31, 2004 was as follows (in thousands):

Balance as of January 1, 2004	$	392,258
Consolidation of a variable interest entity and other	14,436
Balance as of December 31, 2004	$	406,694

The change in the carrying amount of goodwill for the twelve months ended December 31, 2004 was as follows (in thousands):

Balance as of January 1, 2004	$	1,085,507
Goodwill impairment charge	(44,055		)
Balance as of December 31, 2004	$	1,041,452

5.NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement

On July 15, 2002, we closed on a new Bank Credit Agreement allowing us more operating capacity and liquidity.  The Bank Credit Agreement originally consisted of a $225.0 million Revolving Credit Facility maturing on June 30, 2008 and a $375.0 million Term Loan B Facility repayable in consecutive quarterly installments, amortizing 0.25% per quarter, commencing June 30, 2004 and continuing through its maturity on December 31, 2009.  Additionally, we are required to pay a 0.5% annual commitment fee on the unused credit facility.

The applicable interest rate on the Revolving Credit Facility is either London Interbank Offered Rate (LIBOR) plus 1.25% to 2.25% or the alternative base rate plus 0.25% to 1.25% adjusted quarterly based on the ratio of total debt, net of cash, to four quarters’ trailing earnings before interest, taxes, depreciation and amortization, as adjusted in accordance with the Bank Credit Agreement.  The applicable interest rate on the Term Loan B Facility is either LIBOR plus 2.25% or the alternative base rate plus 1.25%.

Availability under the Revolving Credit Facility does not reduce incrementally and terminates at maturity.  We are required to prepay the Term Loan Facility and reduce the Revolving Credit Facility with (i) 100% of the net proceeds of any casualty loss or condemnation and; (ii) 100% of the net proceeds of any sale or other disposition of our assets in excess of $100.0 million in the aggregate for any fiscal year, to the extent not used to acquire new assets.  The Bank Credit Agreement contains representations and warranties, and affirmative and negative covenants, including among other restrictions, limitations on additional indebtedness, customary for credit facilities of this type.

As a result of closing on the Bank Credit Agreement, we incurred debt acquisition costs of $3.2 million and recognized a loss of $4.2 million, net of tax benefit of $2.4 million.  The loss represents the write-off of certain debt acquisition costs associated with indebtedness replaced by the new facility.  The loss was computed based on the guidance of EITF No. 96-19,

F-18

Debtor’s Accounting for a Modification or Exchange of Debt Instruments (EITF 96-19) and EITF No. 98-14, Debtor’s Accounting for Change in Line-of-Credit or Revolving-Debt Arrangements (EITF 98-14).

On December 31, 2002, we closed on an additional $125.0 million Term Loan Facility repayable in consecutive quarterly installments, amortizing 0.25% per quarter, commencing June 30, 2004 and continuing through its maturity on December 31, 2009.  The proceeds from this additional borrowing, together with $125.0 million of our 8% Senior Subordinated Notes due 2012 and cash on hand was used to redeem our 8.75% Senior Subordinated Notes due 2007.

The weighted average interest rates of the Bank Credit Agreement for the year and the month ended December 31, 2004 were 3.48% and 4.17%, respectively.  The weighted average interest rates of the Bank Credit Agreement for the year and the month ended December 31, 2003 were 3.64% and 3.41%, respectively.  During 2004 and 2003, the interest expense relating to the Bank Credit Agreement was $16.0 million and $18.0 million, respectively.

On June 25, 2004, we amended and restated our Bank Credit Agreement lowering our annual interest rate.  As part of the amendment, we fully redeemed our $460.9 million Term Loan B Facility with borrowings under our revolving credit facility and with new lower priced, $150.0 million Term Loan A and $250.0 million Term Loan C Facilities.

The Term Loan A Facility is repayable in quarterly installments, amortizing as follows:

•1.25% per quarter commencing March 31, 2005 to March 31, 2007; and

•2.50% per quarter commencing March 31, 2007 and continuing through its maturity on June 30, 2009.

The Term Loan C Facility is repayable in quarterly installments, amortizing 0.25% per quarter, commencing March 31, 2005 through its maturity on December 31, 2009.  We did not make any changes to the terms of our $225.0 million Revolving Credit Facility commitment, none of which was outstanding as of December 31, 2004.

The applicable interest rate on the Term Loan A Facility is LIBOR plus 1.75% with step-downs tied to a leverage grid.  The applicable interest rate on the Term Loan C Facility is LIBOR plus 1.75%.

As a result of amending the Bank Credit Agreement, during 2004, we incurred debt acquisition costs of $1.8 million and recognized a loss of $2.5 million.  This loss represents the write-off of certain debt acquisition costs associated with indebtedness replaced by the new facilities.  The loss was computed in accordance with EITF 96-19.

8.75% Senior Subordinated Notes Due 2007 and 2002 Tender Offer

In December 1997, we completed an issuance of $250.0 million aggregate principal amount of 8.75% Senior Subordinated Notes due 2007 (8.75% Notes) pursuant to a shelf registration statement and we received net proceeds of $242.8 million.  Of the net proceeds from the issuance, $106.2 million was utilized to tender our 1993 Notes with the remainder retained for general corporate purposes.  Interest on the 8.75% Notes was payable semiannually on June 15 and December 15 of each year.  Interest expense was $20.2 million for the year ended December 31, 2002.  The 8.75% Notes were issued under an Indenture among us, our subsidiaries (the guarantors) and the trustee.  Costs associated with the offering totaled $5.8 million, including an underwriting discount of $5.0 million.  These costs were capitalized and were being amortized over the life of the debt.

During December 2002, we completed a tender offer of $213.0 million aggregate principal amount of the 8.75% Notes (2002 Tender Offer).  Total consideration per $1,000 principal amount note tendered was $1,043.74 resulting in total consideration paid to consummate the Tender Offer of $223.2 million.  Also in December 2002, we redeemed the remaining 8.75% Notes for total consideration of $39.0 million.  The Tender Offer and redemption were funded through the issuance of a $125.0 million add-on to our existing 8.0% $300.0 million Senior Subordinated Notes due 2012, a $125.0 million additional funding on our Term Loan B Facility, a draw down on our revolving line of credit of $7.0 million and cash on hand for a total consideration paid of $262.2 million.  We recognized a loss of $2.5 million, net of tax benefit of $1.4 million, representing a write-off of the previous debt acquisition costs of $3.2 million and consideration of $0.7 million.

9% Senior Subordinated Notes Due 2007

In July 1997, we completed an issuance of $200.0 million aggregate principal amount of 9% Senior Subordinated Notes due 2007 (9% Notes).  We utilized $162.5 million of approximately $195.6 million net proceeds of the issuance to repay outstanding revolving credit indebtedness and utilized the remainder to fund acquisitions.  Interest on the 9% Notes was payable semiannually on January 15 and July 15 of each year, commencing January 15, 1998.  Interest expense was $16.2

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million for the year ended December 31, 2002.  The 9% Notes were issued under an Indenture among us, our subsidiaries (the guarantors) and the trustee.  Costs associated with the offering totaled $4.8 million, including an underwriting discount of $4.0 million.  These costs were capitalized and were being amortized over the life of the debt.

On November 8, 2002, the 9% Notes were redeemed for an aggregate principal amount of $200.0 million.  The redemption occurred through the issuance of a $125.0 million add-on to our 8% $300.0 million Senior Subordinated Notes due 2012 and available cash on hand for total consideration of $218.5 million including accrued interest of $7.2 million.  We recognized a loss of $2.4 million, net of deferred taxes of $1.3 million, representing a write-off of the previous debt acquisition costs of $2.3 million and consideration of $1.4 million.

8.75% Senior Subordinated Notes Due 2011

In December 2001, we completed an issuance of $310.0 million aggregate principal amount of 8.75% Senior Subordinated Notes (the 2001 Notes), due 2011.  We received net proceeds of $306.2 million.  The net proceeds of this offering were utilized to repay the 1995 10% Notes.  Interest on the 2001 Notes is payable semiannually on June 15 and December 15 of each year.  Interest expense was $27.1 million for each of the years ended December 31, 2004, 2003 and 2002.  The 2001 Notes were issued under an Indenture among us, our subsidiaries (the guarantors) and the trustee.  Costs associated with the offering totaled $4.1 million, including an underwriting discount of $3.8 million.  These costs were capitalized and are being amortized over the life of the debt.  Based on the quoted market price, the fair value of the 2001 Notes as of December 31, 2004 and 2003 was $338.5 million and $331.9 million, respectively.

8% Senior Subordinated Notes Due 2012

In March 2002, we completed an issuance of $300.0 million aggregate principal amount of 8% Senior Subordinated Notes due 2012 (the 2002 Notes), generating gross proceeds to us of $300.0 million.  The gross proceeds of this offering were utilized to repay $300.0 million of the Term Loan Facility.  We recognized a loss of $0.7 million, net of a tax benefit of $0.4 million.  The loss represented the write-off of certain debt acquisition costs associated with indebtedness replaced by the 2002 Notes.  Interest on the 2002 Notes is payable semiannually on March 15 and September 15 of each year, beginning September 15, 2002.  Interest expense was $24.0 million and $23.9 million for the years ended December 31, 2004 and 2003, respectively.  The 2002 Notes were issued under an Indenture among us, certain of our subsidiaries (the guarantors) and the trustee.  Net costs associated with the offering totaled $3.4 million.  These costs were capitalized and are being amortized to interest expense over the term of the 2002 Notes.

On November 8, 2002, we completed an add-on issuance of $125.0 million aggregate principal amount of 8% Senior Subordinated Notes due 2012 at a price of 100.5% of par, plus accrued interest from September 15, 2002 to November 7, 2002.  Interest expense was $10.0 million for the years ended December 31, 2004 and 2003 and $1.4 million for the year ending December 31, 2002.  After deducting discount and commission and estimated expenses of the offering of $1.9 million, we received approximately $125.8 million from the sale of the notes.  We used the net proceeds together with available cash on hand and a draw down of $10.0 million on the revolving line of credit under the Bank Credit Agreement, to redeem our existing 9% Senior Subordinated Notes due 1997 including an early redemption premium of $9.0 million and accrued interest of $7.2 million.  Net costs associated with the offering totaled $1.6 million.  These costs were capitalized and are being amortized to interest expense over the term of the 2002 Notes.

On December 31, 2002, we completed an add-on issuance of $125.0 million aggregate principle amount of 8% Senior Subordinated Notes due 2012 at a premium of $3.8 million.  Interest expense was $10.0 million for the years ended December 31, 2004 and 2003.  We received net proceeds of approximately $130.4 million from the sale of the notes.  We used the net proceeds together with additional funding from our term loan of $125.0 million, a draw down of $7.0 million on the revolving line of credit under the Bank Credit Agreement and available cash on hand of $0.2 million, to redeem our existing 8.75% Senior Subordinated Notes due 2007, including an early redemption premium of $10.9 million.  Net costs associated with the offering totaled $1.7 million.  Of these costs, $1.3 million were capitalized and are being amortized to interest expense over the term of the 2002 Notes.

On May 29, 2003, we completed an add-on issuance of $100.0 million aggregate principal amount of 8% Senior Subordinated Notes, which was an add-on issuance under the Indenture relating to our 8% Senior Subordinated Notes due 2012.  Interest expense was $8.0 million and $4.7 million for the years ended December 31, 2004 and 2003, respectively.  The Notes were issued at a price of $105.3359 plus accrued interest from March 15, 2003 to May 28, 2003, yielding a rate of 7.00%.  We used the net proceeds, along with the net proceeds received in connection with our issuance of $150.0 million of Convertible Senior Subordinated Notes due 2018, to finance the redemption of the 11.625% High Yield Trust Originated

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Preferred Securities due 2009 and for general corporate purposes.  Net costs associated with the offering totaled $1.3 million.  These costs were capitalized and are being amortized to interest expense over the term of the 2002 Notes.

Based on the quoted market price, the fair market value of the 8% Senior Subordinated Notes due 2012 was $692.3 million at December 31, 2004 and $671.3 million at December 31, 2003.

4.875% Convertible Senior Subordinated Notes Due 2018

During May 2003, we completed a private placement of $150.0 million aggregate principal amount of 4.875% Convertible Senior Subordinated Notes due 2018 (Convertible Notes).  The Convertible Notes were issued at par, mature on July 15, 2018, and have the following characteristics:

•the notes are convertible into shares of our Class A Common Stock at the option of the holder upon certain circumstances.  The conversion price is $22.37 until March 31, 2011 at which time the conversion price increases quarterly until reaching $28.07 on July 15, 2018;

•the notes may be put to us at par on January 15, 2011 or called thereafter by us;

•the notes bear cash interest at an annual rate of 4.875% until January 15, 2011 and bear cash interest at an annual rate of 2.00% from January 15, 2011 through maturity.  Interest expense was $7.3 million and $4.5 million for the years ended December 31, 2004 and 2003;

•the principal amount of the notes will accrete to 125.66% of the original par amount from January 15, 2011 to maturity so that when combined with the cash interest, the yield to maturity of the notes will be 4.875% per year; and

•under certain circumstances, we will pay contingent cash interest to the holders of the Convertible Notes during any six month period from January 15 to July 14 and from July 15 to January 14, commencing with the six month period beginning January 15, 2011.  This contingent interest feature is an embedded derivative which had a negligible fair value as of December 31, 2004.

We used the net proceeds, along with the net proceeds from the issuance on May 29, 2003 of $100.0 million of 8% Senior Subordinated Notes due 2012, to finance the redemption of the 11.625% High Yield Trust Originated Preferred Securities due 2009, to repay debt outstanding under our Bank Credit Agreement and for general corporate purposes.  Net costs associated with the offering totaled $4.6 million.  These costs were capitalized and are being amortized as interest expense over the term of the Convertible Notes.

Based on the quoted market price, the fair market value of the 4.875% Convertible Senior Subordinated Notes Due 2012 was $143.7 million at December 31, 2004 and $162.2 million at December 31, 2003.

Summary

Notes payable, capital leases and the Bank Credit Agreement consisted of the following as of December 31, 2004 and 2003 (in thousands):

	2004			2003
Bank Credit Agreement, Term Loan	$	400,000		$	485,900
8.75% Senior Subordinated Notes, due 2011	310,000			310,000
Note payable of consolidated VIE entity (Cunningham)	33,500			35,000
8% Senior Subordinated Notes, due 2012	650,000			650,000
4.875% Convertible Senior Subordinated Notes due 2012	150,000			150,000
Capital leases	49,370			44,263
Installment note for certain real estate interest at 8.0%	39			51
	1,592,909			1,675,214
Plus: Premium on 8% Senior Subordinated Notes, due 2012	7,792			8,873
Plus: SFAS No. 133 derivatives, net	14,382			16,897
Less: Current portion	(43,737		)	(38,986		)
	$	1,571,346		$	1,661,998

Depreciation related to capital leases is included in depreciation expense in the consolidated statement of operations.

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Indebtedness under the notes payable, capital leases and our Bank Credit Agreement as of December 31, 2004 mature as follows (in

thousands):

	Notes and Bank Credit Agreement		Capital Leases			Total
2005	$	43,512	$	4,767		$	48,279
2006	10,013		4,841			14,854
2007	15,639		4,915			20,554
2008	17,500		4,976			22,476
2009	346,875		5,052			351,927
2010 and thereafter	1,110,000		99,780			1,209,780
Total minimum payments	1,543,539		124,331			1,667,870
Plus: Derivatives, net	14,382		—			14,382
Plus: Premium on 8% Senior Subordinated Notes due 2012	7,792		—			7,792
Less: Amount representing interest	—		(74,961		)	(74,961		)
	$	1,565,713	$	49,370		$	1,615,083

Substantially all of our stock in our wholly-owned subsidiaries has been pledged as security for the Bank Credit Agreement.

As of December 31, 2004, we had 26 capital leases with non-affiliates, including 25 tower leases and one building lease.  All of our tower leases will expire within the next 30 years and the building lease will expire within the next 11 years.  Most of our leases have 5-10 year renewal options and it is expected that these leases will be renewed or replaced within the normal course of business.

6.PROGRAM CONTRACTS PAYABLE:

Future payments required under program contracts payable as of December 31, 2004 were as follows (in thousands):

	Program Contracts Payable
	Continuing Operations			Liabilities Held for Sale			Total
2005	$	113,108		$	5,700		$	118,808
2006	34,916			2,229			37,145
2007	16,875			726			17,601
2008	8,496			542			9,038
2009	495			—			495
Total	173,890			9,197			183,087
Less: Current portion	(113,108		)	(5,700		)	(118,808		)
Long-term portion of program contracts payable	$	60,782		$	3,497		$	64,279

Included in the current portion amounts are payments due in arrears of $26.9 million, of which $1.5 million relates to KSMO-TV and KOVR-TV and have been recorded in liabilities held for sale on our balance sheet.  In addition, we have entered into non-cancelable commitments for future program rights aggregating $184.9 million, of which $17.9 million relates to KSMO-TV and KOVR-TV.

We perform a net realizable value calculation quarterly for each of our non-cancelable commitments in accordance with SFAS No. 63, Financial Reporting by Broadcasters.  We utilize sales information to estimate the future revenue of each commitment and measure that amount against the commitment.  If the estimated future revenue is less than the amount of the commitment, a loss is recorded.

We have estimated the fair value of our program contract payables and non-cancelable commitments at approximately $176.7 million and $165.1 million, respectively, as of December 31, 2004, and $204.9 million and $108.8 million, respectively, as of December 31, 2003.  These estimates were based on future cash payments discounted at our current borrowing rate and include program contract payables and non-cancelable commitments of our stations KSMO-TV and KOVR-TV that are held for sale.

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7.COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUST, COMMON STOCK AND PREFERRED STOCK:

1997 Offering of Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust

In March 1997, we completed a private placement of $200.0 million aggregate liquidation value of 11.625% High Yield Trust Offered Preferred Securities (HYTOPS) of our subsidiary trust, Sinclair Capital.  The HYTOPS were issued March 12, 1997, mature March 15, 2009, and provided for quarterly distributions to be paid in arrears beginning June 15, 1997.  The HYTOPS were sold to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended) and a limited number of institutional “accredited investors” and the offering was exempt from registration under the Securities Act of 1933, as amended (the Securities Act), pursuant to Section 4(2) of the Securities Act and Rule 144A thereunder.  We utilized $135.0 million of the approximately $192.8 million net proceeds of the private placement to repay outstanding debt and retained the remainder for general corporate purposes.  Annual preferred dividends, payable to the holders of HYTOPS, are recorded as “Subsidiary trust minority interest expense” in the accompanying financial statements and were $11.0 million and $23.3 million for the three years ended December 31, 2003 and 2002, respectively.

On June 20, 2003, we redeemed the $200.0 million aggregate principal amount of the 11.625% HYTOPS.  The redemption occurred through the issuance on May 29, 2003 of the 8% Senior Subordinated Notes due 2012 and the Convertible Notes.  We recognized a loss on debt extinguishment of $15.2 million consisting of a $9.3 million call premium, a write-off of the previous deferred financing costs of $3.7 million and other fees of $2.2 million.

Common Stock

Holders of Class A Common Stock are entitled to one vote per share and holders of Class B Common Stock are entitled to ten votes per share except for votes relating to “going private” and certain other transactions. The Class A Common Stock and the Class B Common Stock vote altogether as a single class except as otherwise may be required by Maryland law on all matters presented for a vote. Holders of Class B Common Stock may at any time convert their shares into the same number of shares of Class A Common Stock.  During 2004 and 2003, 2,062,825 and 492,025 Class B Common Stock shares were converted into Class A Common Stock shares, respectively.  For the quarters ended June 30, 2004, September 30, 2004 and December 31, 2004, we declared dividends of $0.025 per share on our common stock.  Total dividends declared in 2004 were $0.075 per share or $6.4 million in the aggregate.

Preferred Stock

During 1997, we completed a public offering of 3,450,000 shares of Series D Convertible Exchangeable Preferred Stock (1997 Preferred Stock Offering). During the year, we repurchased 112,967 shares of Series D Preferred Stock so that on  December 31, 2004, 3,337,033 were outstanding.  The Convertible Exchangeable Preferred Stock has a liquidation preference of $50 per share and a stated annual cumulative dividend of $3.00 per share payable quarterly out of legally available funds and are convertible into shares of Class A Common Stock at the option of the holders thereof at a conversion price of $22.813 per share, subject to adjustment.  The Convertible Exchangeable Preferred Stock is convertible into 7,308,102 shares of Class A Common Stock, all of which we have reserved for future issuance.  The shares of Convertible Exchangeable Preferred Stock are exchangeable at our option, for 6% Convertible Subordinated Debentures, due 2012 and are redeemable at our option on or after September 20, 2000 at specified prices plus accrued dividends.  Holders of Convertible Exchangeable Preferred Stock do not have any voting rights in ordinary circumstances.  In circumstances where holders have voting rights, each outstanding share of Series D Convertible Exchangeable Preferred Stock will be entitled to one vote.

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8.DERIVATIVE INSTRUMENTS:

We enter into derivative instruments primarily to reduce the impact of changing interest rates on our floating rate debt and to reduce the impact of changing fair market values of our fixed rate debt.

Statement of Financial Accounting Standard No. 133

On January 1, 2001, we adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities –Deferral of the Effective Date of FASB Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133 (collectively, SFAS 133).  SFAS 133, as amended, establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS 133 requires that changes in the derivative instrument’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative instrument’s gains and losses to offset related results on the hedged item in the income statement, to the extent effective, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. SFAS 133 had the following impact on our financial statements.

Our losses resulting from prior year terminations of fixed to floating interest rate agreements are reflected as a discount on our fixed rate debt and are being amortized to interest expense through December 15, 2007, the expiration date of the terminated swap agreements.  For each of the years ended December 31, 2004, 2003 and 2002, amortization of $0.5 million of the discount was recorded as interest expense for each respective period.

We experienced deferred net losses in prior years related to terminations of floating to fixed interest rate swap agreements.  These deferred net losses are reflected as other comprehensive loss, net of tax effect, and are being amortized to interest expense through June 3, 2004, the expiration dates of the terminated swap agreements.  For the years ended December 31, 2004, 2003 and 2002, we amortized $0.9 million, $1.7 million and $1.3 million, respectively, from accumulated other comprehensive loss and deferred tax asset to interest expense.

Interest Rate Derivative Instruments

During the years ended December 31, 2004 and 2003, we held the following derivative instruments:

•we hold two interest rate swap agreements with financial institutions that have notional amounts totaling $575.0 million that expire on June 5, 2006.  In June 2003, we assigned $200.0 million of the notional amount to a second financial institution.  These swap agreements require us to pay a fixed rate, which is set in the range of 6.25% to 7.00% and receive a floating rate based on the three month London Interbank Offered Rate (LIBOR). LIBOR is a measurement and settlement is performed quarterly.  These swap agreements are reflected as a derivative obligation based on their fair value of $24.7 million and $54.1 million as a component of other long-term liabilities in the accompanying consolidated balance sheets as of December 31, 2004 and December 31, 2003, respectively.  These swap agreements do not qualify for hedge accounting treatment under SFAS 133; therefore, changes in their fair market values are reflected currently in earnings as unrealized gain (loss) from derivative instruments.  We incurred an unrealized gain related to these instruments of $29.4 million and $17.4 million for the years ended December 31, 2004 and, 2003, respectively.  On December 31, 2004, the instrument with a notional amount of $375.0 million contained a European Style termination option (that is, exercisable only on the expiration date) and could be terminated partially or in full by the counterparty on June 3, 2005 at its fair market value.   The instrument was amended March 2, 2005, resulting in removal of the termination option by the counterparty.  The interest rate swap agreement with a notional amount of $200.0 million does not have an option to terminate before it expires.  We estimate the fair market value of the $375.0 million and $200.0 million agreements at December 31, 2004 to be a liability of $16.0 million and $8.7 million, respectively, based on quotations from the counterparty. These amounts are reflected as a component of other long-term liabilities on our consolidated balance sheet as of December 31, 2004;

•in March 2002, we entered into two interest rate swap agreements with notional amounts totaling $300.0 million which expire on March 15, 2012, for which we receive a fixed rate of 8% and pay a floating rate based on LIBOR (measurement and settlement is performed quarterly).  These swaps are accounted for as a hedge of our 8% Senior Subordinated Notes in accordance with SFAS 133, whereby changes in the fair market value of the swaps are reflected as adjustments to the carrying amount of the 8% Senior Subordinated Notes.  These swaps are reflected in the accompanying balance sheet as a derivative asset and as a premium on the 8% Senior Subordinated Notes based on their fair value of $15.2 million; and

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•In November 2003, we entered into two interest rate swap agreements with notional amounts totaling $100.0 million, which expire March 15, 2012, for which we receive a fixed rate of 8% and pay a floating rate based on LIBOR (measurement and settlement is performed quarterly).  These swaps are accounted for as a hedge of our 8% Senior Subordinated Notes in accordance with SFAS 133, whereby changes in the fair market value of the swaps are reflected as adjustments to the carrying amount of the 8% Senior Subordinated Notes.  These swaps are reflected on the accompanying balance sheet as a derivative asset and as a premium on the 8% Senior Subordinated Notes based on their fair value of $0.7 million.

The counterparties to these agreements are international financial institutions. We estimate the net fair value of these instruments at December 31, 2004 to be a liability of $8.8 million.  The fair value of the interest rate swap agreements is estimated by obtaining quotations from the financial institutions party to each derivative contract. The fair value is an estimate of the net amount that we would pay on December 31, 2004 if we cancelled the contracts or transferred them to other parties.

In June 2001, we entered into an interest rate swap agreement with a notional amount of $250.0 million which expires on December 15, 2007 in which we received a fixed rate of 8.75% and paid a floating rate based on LIBOR (measurement and settlement is performed quarterly).  This swap was accounted for as a hedge of our 8.75% debenture in accordance with SFAS 133, whereby changes in the fair market value of the swap were reflected as adjustments to the carrying amount of the debenture.  During December 2002, we terminated this interest rate swap agreement.  We received $10.9 million upon termination, which offset the premium that we paid on the 8.75% notes redemption.

In June 2001, we entered into an interest rate swap agreement with a notional amount of $200.0 million which expires on July 15, 2007 in which we received a fixed rate of 9% and paid a floating rate based on LIBOR (measurement and settlement is performed quarterly).  This swap was accounted for as a hedge of our 9% Notes in accordance with SFAS 133, whereby changes in the fair market value of the swap were reflected as adjustments to the carrying amount of the debenture.  During November 2002, we terminated this interest rate swap agreement and received $9.0 million, which offset the premium that we paid on the 9% notes redemption.

During May 2003, we completed an issuance of $150.0 million aggregate principal amount of 4.875% Convertible Senior Subordinated Bonds.  (See Note 5. Notes Payable and Commercial Bank Financing.)  Under certain circumstances, we will pay contingent cash interest to the holder of the convertible notes during any six month period from January 15 to July 14 and from July 15 to January 14, commencing with the six month period beginning January 15, 2011.  The contingent interest feature is an embedded derivative which had a negligible fair value as of December 31, 2004.

9.INCOME TAXES:

We file a consolidated federal income tax return and separate company state tax returns.  The provision (benefit) for the income taxes consisted of the following for the years ended December 31, 2004, 2003 and 2002 (in thousands):

	2004		2003			2002
Provision for (benefit from) income taxes – continuing operations	$	11,182	$	10,676		$	(7,591	)
Provision for income taxes – discontinued operations	6,255		3,352			3,776
Provision for income taxes – sale of discontinued operations	—		—			8,175
Benefit from income taxes – cumulative adjustment for change in accounting principle	—		—			(30,383		)
	$	17,437	$	14,028		$	(26,023	)
Current:
Federal	$	173	$	(1,176	)	$	(37,357	)
State	310		(2,046		)	3,160
	483		(3,222		)	(34,197		)
Deferred:
Federal	15,908		16,424			7,894
State	1,046		826			280
	16,954		17,250			8,174
	$	17,437	$	14,028		$	(26,023	)

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The following is a reconciliation of federal income taxes at the applicable statutory rate to the recorded provision (benefit) from continuing operations:

	2004	2003	2002
Statutory federal income taxes	35.0%	35.0%	(35.0)%
Adjustments-
State income and franchise taxes, net of federal effect	2.0%	1.4%	4.1%
Non-deductible expense items	6.7%	5.3%	4.7%
Adjustment to valuation allowance	—	—	(11.8)%
Tax return true-up items	1.0%	(0.1)%	(5.6)%
Other	(0.3)%	(1.3)%	1.2%
Provision (benefit) for income taxes	44.4%	40.3%	(42.4)%

Temporary differences between the financial reporting carrying amounts and the tax basis of assets and liabilities give rise to deferred taxes.

Our remaining federal and state net operating losses will expire during various years from 2005 to 2024 and, in certain cases, are subject to annual limitations under Internal Revenue Code Section 382 or under Treasury Regulation 1.1502-21 and similar state provisions.  The tax effects of these net operating losses are recorded in the deferred tax accounts in the accompanying consolidated balance sheets.

Total deferred tax assets and deferred tax liabilities as of December 31, 2004 and 2003 were as follows (in thousands):

	2004			2003
Current and Long-Term Deferred Tax Assets:
Net operating losses	$	143,545		$	114,837
Program contracts	10,020			13,838
Other comprehensive income net deferred tax assets	—			305
Other	23,736			20,086
	177,301			149,066
Valuation allowance for deferred tax assets	(89,131		)	(71,481		)
Total deferred tax assets	$	88,170		$	77,585
Current and Long-Term Deferred Tax Liabilities:
FCC license	$	(52,139	)	$	(48,334	)
Parent Preferred Stock	(25,833		)	(25,833		)
Fixed assets and intangibles	(199,948		)	(177,850		)
Variable interest entities’ net deferred tax liabilities	(305		)	(1,069		)
Other	(6,528		)	(5,194		)
Total deferred tax liabilities	(284,753		)	(258,280		)
Net tax liabilities	$	(196,583	)	$	(180,695	)

We establish valuation allowances in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes.  A valuation allowance has been provided for deferred tax assets relating to various federal and state net operating losses (NOL) being carried forward based on expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income.  Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that they will be realized in the future.

We adjusted the net deferred tax liabilities for changes in enacted state tax rates, where applicable.  The total amount of adjustments did not have a significant impact on the statement of financial position, results of operations, or cash flows.

Management periodically performs a comprehensive review of our tax positions and accrues amounts for tax contingencies.  Based on these reviews, the status of ongoing audits and the expiration of applicable statute of limitations, accruals are adjusted as necessary. The resolution of audits is unpredictable and could result in tax liabilities that are significantly higher or lower than that which has been provided by us.  Amounts accrued for these tax matters are included in long-term liabilities in our consolidated balance sheet.  We believe that adequate accruals have been provided for all years.

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During the year ended December 31, 2004, the statute of limitations expired for certain tax returns related to continuing operations.  As a result, our 2004 provision for income taxes reflects a $0.5 million benefit because these accruals were no longer needed.

10.COMMITMENTS AND CONTINGENCIES:

Litigation

Lawsuits and claims are filed against us from time to time in the ordinary course of business.  These actions, other than what is discussed below, are in various preliminary stages and no judgments or decisions have been rendered by hearing boards or courts.  After reviewing developments to date with legal counsel, management is of the opinion that the outcome of such matters will not have a material adverse effect on our consolidated financial position, consolidated results of operations or consolidated cash flows.

There has been some controversy surrounding the airing in 2004 of a news program, POW Story: Politics, Pressure, and the Media.  On October 19, 2004, a nominal shareholder filed a derivative suit in the Baltimore City Circuit Court against our directors and us.  The suit alleged mismanagement of our company by the directors in allowing the controlling shareholders to impose their own political and personal agendas on our news programming.  After our outside counsel filed a motion which noted that none of the claims of financial losses were realized and the speculation of significant loss of advertising revenue and eroded ratings were incorrect, this shareholder derivative suit was voluntarily dismissed on February 23, 2005.  Additionally, just before the presidential election, we received a formal letter demanding that we sue three of our directors for insider trading.  Our outside counsel responded to the letter by noting to its writer that the allegations supporting the claims of insider trading were objectively incorrect.  Outside counsel also advised the writer that the action demanded by the letter, even if based upon accurate facts, failed to support a shareholder derivative suit or any action by us on the demand.  We have received no further communication from this writer.  Lastly, certain parties filed formal complaints against us with the Federal Communications Commission (FCC) and the Federal Election Commission (FEC).  The complaint filed with the FCC was withdrawn, and we have filed a response to the complaints with the FEC.  Based on the information currently available, we have no reason to believe that the FEC complaint has merit.  We believe that we have appropriately responded to this controversy and that there will be no material adverse effect on our consolidated financial position, consolidated results of operations or consolidated cash flows.

On November 1, 2004, an organization calling itself “Free Press” filed a petition with the FCC to deny the license renewal applications of six of our stations (WXLV-TV, Winston-Salem, North Carolina; WUPN-TV, Greensboro, North Carolina; WLFL-TV, Raleigh-Durham, North Carolina; WRDC-TV, Raleigh-Durham, North Carolina; WLOS-TV, Asheville, North Carolina; and WMMP-TV, Charleston, South Carolina) and two Cunningham Broadcasting Corporation stations (WBSC-TV, Anderson, South Carolina and WTAT-TV, Charleston, South Carolina), which are programmed by us pursuant to LMAs.  The petition contains essentially the same allegations that have been brought in the past by the Rainbow/PUSH Coalition, which were dismissed or denied by the FCC, and several other allegations which we believe have no merit nor will they have a material adverse effect on our consolidated financial position, consolidated results of operations or consolidated cash flows.

Operating Leases

We have entered into operating leases for certain property and equipment under terms ranging from three to ten years.  The rent expense from continuing operations under these leases, as well as certain leases under month-to-month arrangements, for the years ended December 31, 2004, 2003 and 2002 was approximately $3.3 million, $4.2 million and $4.8 million, respectively.

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Future minimum payments under the leases are as follows (in thousands):

	FUTURE MINUMUM PAYMENTS
	Continuing Operations		Discontinued Operations		Total
2005	$	4,529	$	17	$	4,546
2006	3,655		3		3,658
2007	3,270		3		3,273
2008	2,179		1		2,180
2009	1,947		—		1,947
2010 and thereafter	10,778		—		10,778
	$	26,358	$	24	$	26,382

At December 31, 2004 and 2003, we had an outstanding letter of credit of $0.9 million and $1.0 million, respectively, under our revolving credit facility.  The letter of credit acts as a guarantee of lease payments for the property occupied by WTTA-TV in Tampa, Florida, pursuant to the terms and conditions of the lease agreement.

Network Affiliation Agreements

Sixty of the 62 television stations that we own and operate, or to which we provide programming services or sales services, currently operate as affiliates of FOX (20 stations), WB (19 stations), ABC (9 stations), NBC (3 stations), UPN (6 stations) and CBS (3 stations).  The remaining two stations are independent.  The networks produce and distribute programming in exchange for each station’s commitment to air the programming at specified times and for commercial announcement time during the programming.

During July 2004, we entered into an affiliation agreement with ABC for WKEF-TV in Dayton, Ohio.  WKEF-TV (channel 22) switched from its NBC network affiliation to the ABC Television Network beginning August 30, 2004.  WKEF-TV’s current syndicated and local news programming continues to be aired on channel 22.  As of December 31, 2004, the corresponding net book value of the affiliation agreement was $13.8 million.  We tested the affiliation agreement of WKEF-TV for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and determined that this asset was not impaired.

The NBC affiliation agreement with WICS/WICD-TV in Champaign/Springfield, Illinois expired on April 1, 2004.  We continue to program this station as an NBC affiliate without a formal agreement.  On February 25, 2004, NBC informed us that they intend to terminate our affiliation with WICS/WICD effective September 2005 in order to affiliate with another station in that market.  We have engaged in discussions with ABC Television Network regarding affiliating with ABC in that market because the station which is scheduled to acquire our NBC affiliation is currently the ABC affiliate in Champaign/Springfield.  As of December 31, 2004, the corresponding net book value of the affiliation agreement was $9.8 million.

During December 2004, we entered into renewals with CBS Broadcasting, Inc. of all of our affiliation agreements for UPN and CBS.  The UPN agreements expire in July of 2007 and two of the CBS agreements expire in December of 2007 and one expires in March of 2008.

The affiliation agreements of five ABC stations (WSYX-TV in Columbus, Ohio; WLOS-TV in Asheville, North Carolina; WCHS-TV in Charleston, West Virginia; WEAR-TV in Pensacola, Florida and WGGB in Springfield, Massachusetts) have expired; in the case of WLOS and WSYX, these agreements (including extensions thereto) expired on January 31, 2005; the other agreements expired prior to 2004.  We continue to operate these stations as ABC affiliates and we do not believe ABC has any current plans to terminate the affiliation with any of these stations, although we can make no assurance that ABC will not do so.  We are currently engaged in negotiations with ABC regarding continuing our network affiliation agreements.  The net aggregate book value of these ABC affiliate agreements was $68.6 million as of December 31, 2004.

The affiliation agreements of our twenty FOX stations will expire on June 30, 2005.  We have begun preliminary negotiations to renew our affiliation agreements.  The aggregate net book value of our FOX affiliate agreements was $39.6 million as of December 31, 2004.

The non-renewal or termination of one or more of these or any of our other network affiliation agreements would prevent us from being able to carry programming of the relevant network. This loss of programming would require us to obtain replacement programming, which may involve higher costs and which may not be as attractive to our target audiences,

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resulting in reduced revenues.  Upon the termination of any of the above affiliation agreements, we would be required to establish new affiliation agreements with other networks or operate as an independent station.  At such time, the remaining value of the network affiliation asset could become impaired and we would be required to write down the value of the asset.  At this time we cannot predict the final outcome of these negotiations and any impact they may have on our financial position, consolidated results of operations or consolidated cash flows.

Changes in the Rules on Television Ownership and Local Marketing Agreements

Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs.  One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such program segments on the other licensee’s station subject to the ultimate editorial and other controls being exercised by the latter licensee.  We believe these arrangements allow us to reduce our operating expenses and enhance profitability.  Under the new FCC ownership rules adopted in 2003, we would be allowed to continue to program most of the stations with which we have an LMA.  In the absence of a waiver, the new rules would require us to terminate or modify three of our LMAs in markets where both the station we own and the station with which we have an LMA are ranked among the top four stations in their particular designated market area.  The FCC’s new ownership rules include specific provisions permitting waivers of this “top four restriction.”  Although there can be no assurances, we have studied the application of the new rules to our markets and believe we are qualified for waivers.  The new rules have been stayed by the U.S. Court of Appeals for the Third Circuit and are on remand to the FCC.  Several parties have filed with the Supreme Court of the United States petitions for writ of certiorari (defined below) seeking review of the Third Circuit decision.  Because the new ownership rules have been remanded, it is not clear if we will be required to terminate or modify our LMAs in markets where we have such arrangements.  A petition for a writ of certiorari is a legal term that means a document filed with the U. S. Supreme Court asking the Court to review the decision of a lower court.  It includes, among other things, an argument as to why the Supreme Court should hear the appeal.  On March 3, 2005, we filed a conditional cross-petition with the Supreme Court asking the Court to consider our arguments together with the arguments contained in the petitions filed by the other parties.

When the FCC decided to attribute LMAs for ownership purposes in 1999, it grandfathered our LMAs that were entered into 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 it would conduct a case-by case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering period.  Recently, the FCC invited comments as to whether, instead of beginning the review of the grandfathered LMAs in 2004, it should do so in 2006.  We cannot predict when the FCC will begin its review of those LMAs.

Because the effectiveness of the new rules has been stayed and, in connection with the adoption of the new rules, the FCC concluded the old rules could not be justified as necessary to the public interest, we have taken the position that an issue exists regarding whether the FCC has any current legal right to enforce any rules prohibiting the acquisition of television stations.  The FCC, however, dismissed our applications to acquire certain LMA stations.  We filed an application for review of that decision, which is still pending.  We also filed a petition with the U.S. Court of Appeals for the D.C. Circuit requesting that the Court direct the FCC to take final action on our applications.

On November 15, 1999, we entered into five separate plans and agreements of merger, pursuant to which we would acquire through merger with subsidiaries of Cunningham, television broadcast stations WABM-TV, Birmingham, Alabama; KRRT-TV, San Antonio, Texas; WVTV-TV, Milwaukee, Wisconsin; WRDC-TV, Raleigh-Durham, North Carolina; and WBSC-TV (formerly WFBC-TV), Anderson, South Carolina.  The consideration for these mergers was the issuance to Cunningham, of shares of our Class A Common voting stock.  In December 2001, we received FCC approval on all the transactions except WBSC-TV.  Accordingly, on February 1, 2002, we closed on the purchase of the FCC license and related assets of WABM-TV, Birmingham, Alabama; KRRT-TV, San Antonio, Texas; WVTV-TV, Milwaukee, Wisconsin and WRDC-TV, Raleigh-Durham, North Carolina.  The total value of the shares issued in consideration for the approved mergers was $7.7 million.  We have filed a petition for reconsideration with the FCC to reconsider its denial of the acquisition of WBSC-TV and amended our application to acquire the license in light of the FCC’s new 2003 multiple ownership rules.  However, the new rules have been stayed.  We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations, WRGT-TV, Dayton, Ohio; WTAT-TV, Charleston, South Carolina; WVAH-TV, Charleston, West Virginia; WNUV-TV, Baltimore, Maryland; and WTTE-TV, Columbus, Ohio.  The Rainbow/PUSH Coalition filed a petition to deny these five applications and to revoke all of our licenses.  The FCC dismissed our applications in light of the stay of the new ownership rules, and we filed an application for review of the dismissal, which may be impacted by the remand of the FCC’s new multiple ownership rules.  We also filed a petition with the U.S. Court of Appeals for the D.C. Circuit requesting that the Court direct the FCC to take final action on our applications.  The FCC denied the Rainbow/PUSH

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petition and Rainbow filed a petition for reconsideration of that denial.  Both the applications and the associated petition to deny are still pending.  We believe the Rainbow/PUSH petition is without merit.

If we are required to terminate or modify our LMAs, our business could be affected in the following ways:

Losses on investments.  As part of our LMA arrangements, we own the non-license assets used by the stations with which we have LMAs.  If certain of these LMA arrangements are no longer permitted, we would be forced to sell these assets, restructure our agreements or find another use for them.  If this happens, the market for such assets may not be as strong as when we purchased them and, therefore, we cannot be certain that we will recoup our original investments.

Termination penalties.  If the FCC requires us to modify or terminate existing LMAs before the terms of the LMAs expire, or under certain circumstances, we elect not to extend the term of the LMAs, we may be forced to pay termination penalties under the terms of some of our LMAs.  Any such termination penalty could be material.

WNAB Options

We have entered into an agreement with an unrelated third party to purchase certain license and non-license television broadcast assets of WNAB-TV, Nashville, Tennessee at our option (the call option) and additionally, the unrelated third party may require us to purchase these license and non-license broadcast assets at the option of the unrelated third party (the put option).  On January 2, 2003, we made an $18.0 million non-refundable deposit against the purchase price of the put or call option on the non-license assets in return for a reduction of $0.1 million in our profit sharing arrangements.  Upon exercise, we may settle the call or put options entirely in cash or, at our option, we may pay up to one-half of the purchase price by issuing additional shares of our Class A Common Stock.  The call and put option exercise prices vary depending on the exercise dates and have been adjusted for the deposit.  The license asset call option exercise price is $5.0 million prior to March 31, 2005, $5.6 million from March 31, 2005 until March 31, 2006 and $6.2 million after March 31, 2006.  The non-license asset call option exercise price is $8.3 million prior to March 31, 2005, $12.6 million from March 31, 2005 to March 31, 2006 and $16.0 million after March 31, 2006.  The license asset put option price is $5.4 million from July 1, 2005 to July 31, 2005, $5.9 million from July 1, 2006 to July 31, 2006 and $6.3 million from July 1, 2007 to July 31, 2007.  The non-license asset put option price is $7.9 million from July 1, 2005 to July 31, 2005, $12.4 million from July 1, 2006 to July 31, 2006 and $16.0 million from July 1, 2007 through its expiration on July 31, 2007.

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11.RELATED PARTY TRANSACTIONS:

David, Frederick, Duncan and Robert Smith (collectively, the controlling shareholders) are brothers and hold substantially all of the Class B Common Stock.

Notes and capital leases payable to affiliates consisted of the following as of December 31, 2004 and 2003 (in thousands):

	2004			2003
Subordinated installment notes payable to former majority owners, interest at 8.75%, principal payments in varying amounts due annually beginning October 1991, with a balloon payment due at maturity in May 2005	$	2,015		$	3,133
Capital lease for building, interest at 7.93%	1,028			1,569
Capital lease for building, interest at 6.62%	5,060			5,900
Capital leases for broadcasting tower facilities, interest at 9.0%	1,552			2,030
Capital leases for broadcasting tower facilities, interest at 10.5%	3,049			3,011
Capitalization of time brokerage agreements, interest at 6.20% to 8.25%	6,087			7,387
Capital leases for building and tower, interest at 8.25%	5,741			5,907
	24,532			28,937
Less: Current portion	(5,209		)	(3,296		)
	$	19,323		$	25,641

Notes and capital leases payable to affiliates as of December 31, 2004 mature as follows (in thousands):

2005	$	8,453
2006	6,155
2007	5,422
2008	4,858
2009	2,464
2010 and thereafter	26,156
Total minimum payments due	53,508
Less: Amount representing interest	(28,976		)
	$	24,532

During the year ended December 31, 1993, we loaned Gerstell Development Limited Partnership (a partnership owned by certain controlling shareholders) $2.1 million.  The note bears interest at 6.18%, with principal payments beginning on November 1, 1994 and had a final maturity date of October 1, 2013. As of December 31, 2003, the balance outstanding was approximately $1.4 million and the note was paid in full in February 2004.

On September 30, 1990, we issued certain notes (the founders’ notes) maturing on May 31, 2005, payable to the late Julian S. Smith and Carolyn C. Smith, our former majority owners and the parents of our controlling shareholders.  The founders’ notes, which were issued in consideration for stock redemptions equal to 72.65% of our then outstanding stock, have principal amounts of $7.5 million and $6.7 million, respectively.  The founders’ notes include stated interest rates of 8.75%, which were payable annually from October 1990 until October 1992, then payable monthly commencing April 1993 to December 1996 and then semi-annually thereafter until maturity. The effective interest rate approximates 9.4%. The founders’ notes are secured by security interests in substantially all of our assets and subsidiaries and are personally guaranteed by our controlling shareholders.

Principal and interest payment on the founders’ notes are payable, in various amounts, each April and October, beginning October 1991 until October 2005, with a balloon payment due at maturity in the amount of $1.5 million.  Additionally, monthly interest payments commenced April 1993 and continued until December 1996.  The Carolyn C. Smith note was fully paid as of December 31, 2002.  Principal and interest paid on the Julian S. Smith note was $1.4 million, $1.5 million and $1.6 million for the years ended December 31, 2004, 2003 and 2002, respectively.  At December 31, 2004 and 2003, $2.0 million and $3.1 million of the Julian S. Smith note remained outstanding, respectively.

Concurrently with our initial public offering, we acquired options from trusts established by Carolyn C. Smith for the benefit of her grandchildren that will grant us the right to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock of Cunningham Broadcasting Corporation (Cunningham).  The Cunningham option exercise price is based on a formula that provides a 10% annual return to Cunningham. Cunningham is the owner-operator and FCC licensee of WNUV-TV, Baltimore, Maryland; WRGT-TV, Dayton, Ohio; WVAH-TV, Charleston, West Virginia; WTAT-TV, Charleston, South Carolina; WBSC-TV, Anderson, South Carolina; and WTTE-TV, Columbus, Ohio.  We have entered into five-year LMA

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agreements (with five-year renewal terms at our option) with Cunningham pursuant to which we provide programming to Cunningham for airing on WNUV-TV, WRGT-TV, WVAH-TV, WTAT-TV, WBSC-TV and WTTE-TV.  During the years ended December 31, 2004, 2003 and 2002, we made payments of $5.9 million, $4.7 million and $4.0 million, respectively, to Cunningham under these LMA agreements.

From time to time, we have entered into charter arrangements to lease aircraft owned by certain controlling shareholders.  During the years ended December 31, 2004, 2003 and 2002, we incurred expenses of approximately $0.1 million, $0.2 million and $0.2 million related to these arrangements, respectively.

Certain assets used by us and our operating subsidiaries are leased from Cunningham Communications Inc., Keyser Investment Group, Gerstell Development Limited Partnership and Beaver Dam, LLC (entities owned by the controlling shareholders).  Lease payments made to these entities were $4.3 million, $4.1 million and $3.6 million for the years ended December 31, 2004, 2003 and 2002, respectively.

In January 1999, we entered into a LMA with Bay Television, Inc. (Bay TV), which owns the television station WTTA-TV in Tampa, Florida.  Our controlling shareholders own a substantial portion of the equity of Bay TV.  The LMA provides that we deliver television programming to Bay TV, which broadcasts the programming in return for a monthly fee to Bay TV of $143,500.  We must also make an annual payment equal to 50% of the annual broadcast cash flow of the station, as defined in the LMA, which is in excess of $1.7 million.  The additional payment is reduced by 50% of the broadcast cash flow, (as defined in the LMA) that was below zero in prior calendar years.  During 2004 and 2003, we made payments of approximately $1.7 million related to the LMA.  An additional payment of $32,000 was made in 2004 related to the broadcast cash flow that exceeded $1.7 million for the year ended December 31, 2003.

On December 30, 2002, we invested $20.0 million in Summa Holdings, Ltd. (Summa), resulting in a 17.5% equity interest.  Summa is a holding company which owns automobile dealerships and a leasing company.  David D. Smith, our President and Chief Executive Officer, has a controlling interest in Summa and is a member of the Board of Directors.  We have significant influence by holding a board seat (in addition to the board seat held personally by David D. Smith); therefore, we account for this investment under the equity method of accounting.

We sold advertising time to Summa on WBFF-TV and WNUV-TV, both in Baltimore, Maryland, for which we received payments totaling $0.5 million, $0.4 million and $0.3 million during the years ended December 31, 2004, 2003 and 2002, respectively.  We purchased a total of $1.1 million and $0.2 million in vehicles and related vehicle services from Summa during the year ended December 31, 2004 and 2003, respectively.  Summa leases certain dealership properties from a partnership in which David D. Smith has a 50% ownership interest.  Summa made lease payments to this partnership of $4.5 million, $6.3 million, and $4.9 million for the years ended December 31, 2004, 2003 and 2002, respectively.   Aggregate future minimum lease payments due to the partnership are $24.9 million through 2013.

In August 1999, we established a small business investment company called Allegiance Capital Limited Partnership (Allegiance) with an investment of $2.4 million.  Our controlling shareholders and our Chief Financial Officer and Executive Vice President are also limited partners in Allegiance, along with Allegiance Capital Management Corporation (ACMC), the general partner.  ACMC controls all decision making, investing and management of operations of Allegiance in exchange for a monthly management fee based on actual expenses incurred which currently averages approximately $40,800 and which is paid by the limited partners.  We have invested $9.2 million and $7.5 million as of December 31, 2004 and 2003, respectively, and we are, together with the other limited partners, committed to investing up to a combined total of $15.0 million.

12.DISCONTINUED OPERATIONS:

In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Asset, we reported the results of operations of KOVR-TV, KSMO-TV and WTTV-TV as discontinued operations in the accompanying consolidated balance sheets and statements of operations.  Discontinued operations have not been segregated in the statements of consolidated cash flows and, therefore, amounts for certain captions will not agree with the accompanying consolidated balance sheets and statements of operations.  The operating results of KOVR-TV, KSMO-TV and WTTV-TV are not included in our consolidated results from continuing operations for the years ended December 31, 2004, 2003 and 2002.  In accordance with EITF No. 87-24, Allocation of Interest to Discontinued Operations, we have allocated interest expense for the Bank Credit Agreement associated with the amount of debt to be paid down with proceeds from the sale of KOVR-TV and KSMO-TV.  Interest expense related to the allocation of $7.7 million, $6.8 million and $8.1 million for the years ended December 31, 2004, 2003 and 2002, respectively, have been included in discontinued operations.

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KOVR Disposition

On December 2, 2004, we entered into an agreement to sell KOVR-TV in Sacramento, California, including the FCC license, and our investment in KOVR Joint Venture (collectively KOVR) to an unrelated third party.  The sale will be completed upon approval from the FCC for transfer of the license to the unrelated third party.  We expect closing to occur in the second quarter of 2005.  KOVR had net assets and liabilities held for sale of $83.6 million and $83.1 million as of December 31, 2004 and 2003, respectively.

Accounts receivable related to discontinued operations, which we will continue to own the rights to and collect, is included in accounts receivable, net of allowance for doubtful accounts, in the accompanying consolidated balance sheets for all periods presented.  Such amounts were $8.0 million (net of allowance of $0.3 million) and $8.0 million (net of allowance of $0.2 million) as of December 31, 2004 and 2003, respectively.  Net income from discontinued operations, net of taxes, was $9.6 million (net of $6.0 million of income tax provision), $6.4 million (net of $4.7 million of income tax provision) and $4.6 million (net of $3.6 million of income tax provision) for the years ended December 31, 2004, 2003 and 2002, respectively.  Net broadcast revenues from discontinued operations were $42.4 million, $36.5 million and $35.6 million for the years ended December 31, 2004, 2003 and 2002, respectively.

KSMO Disposition

On November 12, 2004, we entered into an agreement to sell KSMO-TV in Kansas City, Missouri, including the FCC license, (KSMO broadcast license) to an unrelated third party.  We completed the sale of KSMO-TV non-license assets for $26.8 million and recorded a deferred gain, which is stated separately on the consolidated balance sheet, of $26.1 million, net of taxes, which will be recognized upon the closing of the sale of the KSMO broadcast license to the unrelated third party.  The closing of the KSMO broadcast license, expected to occur by the end of 2005, is pending approval by the FCC for transfer of the license to the unrelated third party.  We are operating KSMO-TV under a joint sales agreement.  KSMO had net assets and liabilities held for sale of $2.2 million and $2.1 million as of December 31, 2004 and 2003, respectively.

Accounts receivable related to discontinued operations, which we will continue to own the rights to and collect, is included in accounts receivable, net of allowance for doubtful accounts, in the accompanying consolidated balance sheets for all periods presented.  Such amounts were $1.4 million (net of allowance of $62,391) and $2.4 million (net of allowance of $82,134) as of December 31, 2004 and 2003, respectively.  Net income from discontinued operations, net of taxes, was $0.4 (net of $0.3 million of income tax provision), $0.6 million (net of $0.3 million of income tax provision) and a net loss of $0.3 million (net of $0.2 million of income tax benefit) for the years ended December 31, 2004, 2003 and 2002, respectively.  Broadcast revenues from discontinued operations were $8.2 million, $10.6 million and $10.5 million for the years ended December 31, 2004, 2003 and 2002, respectively.

WTTV Disposition

On April 18, 2002, we entered into an agreement to sell WTTV-TV in Bloomington, Indiana and its satellite station, WTTK-TV in Kokomo, Indiana to an unrelated third party.  On July 24, 2002, we completed the sale of WTTV-TV for $124.5 million and recognized a gain of $7.5 million (net of $8.2 million of income tax provision).

Accounts receivable related to discontinued operations, which we will continue to own the rights to and collect, is included in accounts receivable, net of allowance for doubtful accounts, in the accompanying consolidated balance sheets for all periods presented.  Such amounts were $187,628 (net of allowance of $168,105) for the year ended December 31, 2003.  As of December 31, 2004, all accounts receivable were collected.  Net income from discontinued operations includes net broadcast revenue of $10.2 million for the year ended December 31, 2002.

Other Dispositions

During 2003, we reduced our income tax liability by $1.6 million as a result of the expiration of certain statutes of limitations related to the sale of radio stations in prior years.  This adjustment was recorded in discontinued operations.

13.EMPLOYEE BENEFIT PLAN:

The Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and Trust (the SBG Plan) covers our eligible employees.  Contributions made to the SBG Plan include an employee elected salary reduction amount, company-matching contributions and an additional discretionary amount determined each year by the Board of Directors.  Our 401(k) expense from continuing

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operations for the years ended December 31, 2004, 2003 and 2002 was $1.5 million, $1.3 million and $1.2 million, respectively.  There were no additional discretionary contributions during these periods.  During December 1997, we registered 800,000 shares of our Class A Common Stock with the SEC to be issued as a matching contribution for the 1997 plan year and subsequent plan years.  During February 2003, we registered an additional 800,000 shares of our Class A Common Stock with the SEC to be issued as matching contributions for subsequent plan years.

14.STOCK BASED COMPENSATION PLANS:

Stock Option Plans

Designated Participants Stock Option Plan.  In connection with our initial public offering in June 1995, our Board of Directors adopted an Incentive Stock Option Plan (ISOP) for Designated Participants (Designated Participants Stock Option Plan) pursuant to which options for shares of Class A Common Stock were granted to certain of our key employees.  The Designated Participants Stock Option Plan provides that the number of shares of Class A Common Stock reserved for issuance under the that plan is 136,000.  Options granted pursuant to the Designated Participants Stock Option Plan must be exercised within 10 years following the grant date.  As of December 31, 2004, 34,500 shares were available for future grants.

Long-Term Incentive Plan.  In June 1996, our Board of Directors adopted, upon approval of the shareholders by proxy, the 1996 Long-Term Incentive Plan (LTIP).  The purpose of the LTIP is to reward key individuals for making major contributions to our success and that of our subsidiaries and to attract and retain the services of qualified and capable employees.  Options granted pursuant to the LTIP must be exercised within 10 years following the grant date.  A total of 14,000,000 shares of Class A Common Stock are reserved for awards under the plan.  As of December 31, 2004, 6,862,064 shares have been granted under the LTIP and 12,869,555 shares (including forfeited shares) were available for future grants.

Incentive Stock Option Plan.  In June 1996, the Board of Directors adopted, upon approval of the shareholders by proxy, an amendment to our ISOP.  The purpose of the amendment was (i) to increase the number of shares of Class A Common Stock approved for issuance under the plan from 800,000 to 1,000,000, (ii) to lengthen the period after date of grant before options become exercisable from two years to three years and (iii) to provide immediate termination and three-year ratable vesting of options in certain circumstances.  Options granted pursuant to the ISOP must be exercised within 10 years following the grant date.  As of December 31, 2004, 714,200 shares have been granted under the ISOP and 836,334 shares (including forfeited shares) were available for future grants.

A summary of changes in outstanding stock options is as follows:

	Options		Weighted-Average Exercise Price		Exercisable	Weighted-Average Exercise Price
Outstanding at end of 2001	7,229,445		$	16.85	4,666,669	$	15.65
2002 Activity:
Granted	295,400		$	12.15	—	$	—
Exercised	(283,812	)	$	9.23	—	$	—
Forfeited	(645,275	)	$	20.67	—	$	—
Outstanding at end of 2002	6,595,758		$	16.66	5,073,533	$	16.08
2003 Activity:
Granted	428,500		$	9.45	—	$	—
Exercised	(159,162	)	$	9.24	—	$	—
Forfeited	(356,213	)	$	20.83	—	$	—
Outstanding at end of 2003	6,508,883		$	16.07	5,531,870	$	16.09
2004 Activity:
Granted	475,250		$	12.23	—	$	—
Exercised	(110,488	)	$	10.00	—	$	—
Forfeited	(297,125	)	$	20.25	—	$	—
Outstanding at end of 2004	6,576,520		$	15.73	5,950,757	$	15.73

Additional information regarding stock options outstanding at December 31, 2004 is as follows:

Outstanding	Exercise Price		Weighted-Average Remaining Contractual Life (In Years)	Exercisable	Weighted- Average Exercise Price
444,425	$	6.10 – 9.06	7.0	344,300	$	8.58
1,576,725	$	9.22 – 13.68	6.9	1,081,087	$	10.18
3,155,870	$	13.87 – 18.88	1.6	3,132,870	$	15.23
1,399,500	$	20.94 – 28.42	3.3	1,392,500	$	24.86
6,576,520	$	6.10 – 28.42	3.6	5,950,757	$	16.18

F-34

15.EARNINGS PER SHARE:

The following table reconciles income (loss) (numerator) and shares (denominator) used in our computations of earnings (loss) per share for the years ended December 31, 2004, 2003, and 2002 (in thousands):

	2004					2003					2002
Income (loss) (Numerator)
Net income (loss) from continuing operations	$	14,004				$	15,834				$			(10,294	)
Net income from discontinued operations, including gain on sale of broadcast assets related to discontinued operations	$	10,018				$	8,558				$			12,204
Cumulative adjustment for change in accounting principle	$	—				$	—				$		(566,404		)
Net income (loss)	$		24,022			$		24,392			$	(564,494			)
Preferred stock dividends payable	(10,180				)	(10,350				)	(10,350				)
Net income (loss) available to common shareholders	$			13,842		$			14,042		$	(574,844			)
Shares (Denominator)
Weighted-average number of common shares	85,590					85,651					85,337
Dilutive effect of outstanding stock options	151					142					243
Weighted-average number of common equivalent shares outstanding	85,741					85,793					85,580

Basic earnings per share (EPS) are calculated using the weighted average number of shares outstanding during the period.  Diluted earnings (loss) per share (diluted EPS) includes the potentially dilutive effect, if any, which would occur if outstanding options to purchase common stock were exercised using the treasury stock method.  Stock options to exercise 0.2 million, 0.2 million and 0.3 million incremental shares of common stock were outstanding during the years ended December 31, 2004, 2003 and 2002, respectively.  During the years ended December 31, 2004 and 2003 stock options to exercise were included in diluted EPS because we had net income.  For the year ended December 31, 2002 stock options outstanding were not included in diluted EPS as the effect would be anti-dilutive because we had a net loss.  The remaining options to purchase shares of common stock that were outstanding during the years ended December 31, 2004, 2003 and 2002 were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common shares.  The Convertible Senior Subordinated Notes were not included in our diluted EPS calculation for December 31, 2004 and 2003 because the effect was antidilutive.  The Convertible Senior Subordinated Notes were issued during May 2003 and were not available to be included in our December 31, 2002 diluted EPS calculation.  If these notes were included in our diluted EPS calculation, the shares would increase by 6.7 million shares.  The Preferred Stock was not included in our diluted EPS calculation for December 31, 2004, 2003 and 2002 because the effect was antidilutive.  If this stock was included in our diluted EPS calculation the shares would increase by 7.3 million shares.

16.CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

Sinclair Television Group, Inc. (STG) is wholly-owned subsidiary of Sinclair Broadcast Group, Inc. (SBG) and was incorporated in 2003.  On September 30, 2003, we completed the creation of a modified holding company structure, whereby we transferred substantially all of our television broadcast assets and liabilities to STG. As such, STG has become the primary obligor under our Bank Credit Agreement, the 8.75% Senior Subordinated Notes due 2011 and the 8% Senior Subordinated Notes due 2012.  Our Class A Common Stock, Class B Common Stock, Series D Convertible Exchangeable Preferred Stock and the 4.875% Convertible Senior Subordinated Notes remain at SBG and are not obligations or securities of STG.

SBG and KDSM, LLC, wholly-owned subsidiary of SBG, have fully and unconditionally guaranteed all of STG’s obligations.  Those guarantees are joint and several.  There are no significant restrictions on the ability of SBG, STG or KDSM, LLC to obtain funds from their subsidiaries in the form of dividends or loans.

Although the modified holding company structure using STG was created on September 30, 2003, we have presented balance sheets, statements of operations and cash flows as if STG was in existence in prior periods.

The following condensed consolidating financial statements present the financial position, results of operations, and cash flows of SBG, STG, KDSM, LLC, the direct and indirect non-guarantor subsidiaries of SBG and the eliminations necessary to arrive at our information on a consolidated basis.  These statements are presented in accordance with the disclosure requirements under Securities and Exchange Commission Regulation S-X, Rule 3-10.

F-35

CONDENSED CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2004

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Cash	$	—		$	7,861		$	27		$	2,603		$	—		$	10,491
Accounts receivable	179			127,327			1,482			3,074			—			132,062
Other current assets	741			83,598			866			4,692			(122		)	89,775
Assets held for sale	—			97,822			—			—			—			97,822
Total current assets	920			316,608			2,375			10,369			(122		)	330,150
Property and equipment, net	10,957			320,866			5,119			2,837			—			339,779
Investment in consolidated subsidiaries	342,874			—			—			—			(342,874		)	—
Other long-term assets	42,875			60,232			428			9,252			(3,171		)	109,616
Total other long-term assets	385,749			60,232			428			9,252			(346,045		)	109,616
Acquired intangible assets	—			1,632,766			5,749			47,603			—			1,686,118
Total assets	$	397,626		$	2,330,472		$	13,671		$	70,061		$	(346,167	)	$	2,465,663
Accounts payable and accrued liabilities	$	10,365		$	65,360		$	467		$	8,277		$	(122	)	$	84,347
Current portion of long-term debt	3,080			12,366			—			33,500			—			48,946
Other current liabilities	—			139,181			1,871			869			—			141,921
Liabilities held for sale	—			13,447			—			—			—			13,447
Total current liabilities	13,445			230,354			2,338			42,646			(122		)	288,661
Long-term debt	157,629			1,430,758			2,282			—			—			1,590,669
Other liabilities	1			355,873			997			6,082			(3,171		)	359,782
Total liabilities	171,075			2,016,985			5,617			48,728			(3,293		)	2,239,112
Preferred stock	33			—			—			—			—			33
Common stock	851			—			—			—			—			851
Additional paid-in capital	752,130			614,723			19,783			62,975			(697,481		)	752,130
Accumulated deficit	(526,463		)	(301,236		)	(11,729		)	(41,642		)	354,607			(526,463		)
Total shareholders’ equity	226,551			313,487			8,054			21,333			(342,874		)	226,551
Total liabilities and shareholders’equity	$	397,626		$	2,330,472		$	13,671		$	70,061		$	(346,167	)	$	2,465,663

F-36

PRO FORMACONDENSED CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2003

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Cash	$	—		$	25,440		$	44		$	3,246		$	—		$	28,730
Accounts receivable	521			136,300			1,502			1,438			—			139,761
Other current assets	1,605			79,924			878			6,487			(225		)	88,669
Assets held for sale	—			100,522			—			—			—			100,522
Total current assets	2,126			342,186			2,424			11,171			(225		)	357,682
Property and equipment, net	11,772			318,897			5,520			1,889			—			338,078
Investment in consolidated subsidiaries	332,374			—			—			—			(332,374		)	—
Other long-term assets	53,219			93,607			281			6,106			(12,298		)	140,915
Total other long-term assets	385,593			93,607			281			6,106			(344,672		)	140,915
Acquired intangible assets	—			1,694,241			5,913			30,277			—			1,730,431
Total assets	$	399,491		$	2,448,931		$	14,138		$	49,443		$	(344,897	)	$	2,567,106
Accounts payable and accrued liabilities	$	7,200		$	65,544		$	506		$	5,864		$	(227	)	$	78,887
Current portion of long-term debt	1,117			6,165			—			35,000			—			42,282
Other current liabilities	—			115,960			1,842			—			—			117,802
Liabilities held for sale	—			15,367			—			—			—			15,367
Total current liabilities	8,317			203,036			2,348			40,864			(227		)	254,338
Long-term debt	161,613			1,523,793			2,233			—			—			1,687,639
Other liabilities	—			403,445			1,024			3,953			(12,298		)	396,124
Total liabilities	169,930			2,130,274			5,605			44,817			(12,525		)	2,338,101
Preferred stock	35			—			—			—			—			35
Common stock	858			—			—			—			—			858
Additional paid-in capital	762,584			655,036			21,542			38,479			(715,053		)	762,588
Retained earnings	(533,916		)	(335,819		)	(13,009		)	(33,853		)	382,681			(533,916		)
Other comprehensive income	—			(560		)	—			—			—			(560		)
Total shareholders’ equity	229,561			318,657			8,533			4,626			(332,372		)	229,005
Total liabilities and shareholders’equity	$	399,491		$	2,448,931		$	14,138		$	49,443		$	(344,897	)	$	2,567,106

F-37

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2004

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	687,007		$	8,218		$	13,054		$	—		$	708,279
Program and production	—			146,786			1,622			—			—			148,408
Selling, general and administrative	15,183			155,409			2,436			2,484			—			175,512
Depreciation, amortization and other operating expenses	2,276			205,890			2,874			16,088			—			227,128
Total operating expenses	17,459			508,085			6,932			18,572			—			551,048
Operating (loss) income	(17,459		)	178,922			1,286			(5,518		)	—			157,231
Equity in earnings of subsidiaries	27,758			—			—			—			(27,758		)	—
Interest income	12			179			—			—			—			191
Interest expense	(8,660		)	(109,727		)	(259		)	(1,754		)	—			(120,400		)
Other income (expense)	20,600			(27,929		)	254			(4,761		)	—			(11,836		)
Total other income (expense)	39,710			(137,477		)	(5		)	(6,515		)	(27,758		)	(132,045		)
Income tax benefit (provision)	1,771			(17,196		)	—			4,243			—			(11,182		)
Income from discontinued operations	—			10,018			—			—			—			10,018
Net income (loss)	$	24,022		$	34,267		$	1,281		$	(7,790	)	$	(27,758	)	$	24,022

F-38

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2003

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	665,765		$	8,072		$	14,568		$	—		$	688,405
Program and production	—			140,788			1,681			—			—			142,469
Selling, general and administrative	14,536			138,945			2,363			1,972			—			157,816
Depreciation, amortization and other operating expenses	2,673			210,013			3,382			17,786			—			233,854
Total operating expenses	17,209			489,746			7,426			19,758			—			534,139
Operating (loss) income	(17,209		)	176,019			646			(5,190		)	—			154,266
Equity in earnings of subsidiaries	47,814			—			—			—			(47,814		)	—
Interest income	468			92			—			—			—			560
Interest expense	(5,187		)	(113,320		)	(582		)	(2,076		)	—			(121,165		)
Other income (expense)	3,874			17,165			(14,041		)	(1,849		)	(12,300		)	(7,151		)
Total other income (expense)	46,969			(96,063		)	(14,623		)	(3,925		)	(60,114		)	(127,756		)
Income tax benefit (provision)	6,932			(20,843		)	—			3,235			—			(10,676		)
Discontinued operations	—			8,558			—			—			—			8,558
Net income (loss)	$	36,692		$	67,671		$	(13,977	)	$	(5,880	)	$	(60,114	)	$	24,392

F-39

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2002

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	673,756		$	8,247		$	4,344		$	—		$	686,347
Program and production	—			132,213			1,753			(1,820		)	—			132,146
Selling, general and administrative	18,900			132,001			2,431			(557		)	—			152,775
Depreciation, amortization and other operating expenses	1,918			220,329			3,166			7,653			—			233,066
Total operating expenses	20,818			484,543			7,350			5,276			—			517,987
Operating income	(20,818		)	189,213			897			(932		)	—			168,360
Equity in earnings of subsidiaries	(553,207		)	—			—			—			553,207			—
Interest income	1,461			22			1			—			—			1,484
Interest expense	(30		)	(116,016		)	(248		)	(1,820		)	—			(118,114		)
Other income (expense)	41,595			(87,030		)	3,183			(1,330		)	(26,033		)	(69,615		)
Total other (expense) income	(510,181		)	(203,024		)	2,936			(3,150		)	527,174			(186,245		)
Income tax (provision) benefit	(7,462		)	13,976			—			1,077			—			7,591
Income from discontinued operations	—			4,685			—			—			—			4,685
Gain on sale of discontinued operations	—			7,519			—			—			—			7,519
Cumulative effect on change in accounting principle	—			(539,712		)	(23,178		)	(3,514		)	—			(566,404		)
Net (loss) income	$	(538,461	)	$	(527,343	)	$	(19,345	)	$	(6,519	)	$	527,174		$	(564,494	)

F-40

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2004

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations		Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	(443	)	$	128,135		$	2,042		$	(9,621	)	$	—	$	120,113
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(1,249		)	(43,349		)	(283		)	—			—		(44,881		)
Variable interest entity elimination entries				18,128						(18,128		)			—
Consolidation of variable interest entities	—			—			—			239			—		239
Additional investments	(2,465		)	(3,084		)	—			—			—		(5,549		)
Proceeds from the sale of property	—			39			—			—			—		39
Proceeds from the sale of broadcast assets	—			28,561			—			—			—		28,561
Loans to affiliates	(143		)	—			—			—			—		(143		)
Proceeds from loans to affiliates	1,511			—			—			—			—		1,511
Proceeds from insurance settlements	—			2,521			—			—			—		2,521
Net cash flows (used in) from investing activities	(2,346		)	2,816			(283		)	(17,889		)	—		(17,702		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	—			533,000			—			—			—		533,000
Repayments of notes payable, commercial bank financing and capital leases	(2,019		)	(616,881		)	—			(1,500		)	—		(620,400		)
Repurchase of Series D Preferred Stock	(4,752		)	—			—			—			—		(4,752		)
Repurchase of Class A Common Stock	(9,550		)	—			—			—			—		(9,550		)
Proceeds from exercise of stock options	1,152			—			—			—			—		1,152
Payments for deferred financing costs	(6		)	(818		)	—			(129		)	—		(953		)
Increase (decrease) in intercompany payables	32,418			(59,138		)	(1,776		)	28,496			—		—
Dividends paid on Series D Preferred Stock	(10,180		)	—			—			—			—		(10,180		)
Dividends paid on Class A Common Stock	(4,274		)	—			—			—			—		(4,274		)
Repayment of notes and capital leases to affiliates	—			(4,693		)	—			—			—		(4,693		)
Net cash flows from (used in) financing activities	2,789			(148,530		)	(1,776		)	26,867			—		(120,650		)
NET (DECREASE) IN CASH AND CASH EQUIVALENTS	—			(17,579		)	(17		)	(643		)	—		(18,239		)
CASH AND CASH EQUIVALENTS, beginning of period	—			25,440			44			3,246			—		28,730
CASH AND CASH EQUIVALENTS, end of period	$	—		$	7,861		$	27		$	2,603		$	—	$	10,491

F-41

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2003

(in thousands)

				Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	(14,201	)	$	185,378		$	(8,774	)	$	(3,648	)	$	(12,300	)	$	146,455
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(884		)	(68,494		)	(153		)	—			—			(69,531		)
Payment for acquisition of television station licenses and related assets	—			(18,000		)	—			—			—			(18,000		)
Contributions in investments	(2,361		)	(3,338		)	—			—			—			(5,699		)
Proceeds from the sale of property	—			138			—			—			—			138
Repayments of loans to affiliates	(1,115		)	—			—			—			—			(1,115		)
Proceeds from loans to affiliates	903			—			—			—			—			903
Proceeds from insurance settlement	—			3,328			—			—			—			3,328
Net cash flows (used in) investing activities	(3,457		)	(86,366		)	(153		)	—			—			(89,976		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	150,000			168,336			—			—			—			318,336
Repayments of notes payable, commercial bank financing and capital leases	(1,901		)	(127,199		)	—			—			—			(129,100		)
Redemption of High Yield Trust Originated Preferred Securities	—			—			(200,000		)	—			—			(200,000		)
Repurchase of Class A Common Stock	(1,544		)	—			—			—			—			(1,544		)
Proceeds from exercise of stock options	1,431			—			—			—			—			1,431
Payments for deferred financing costs	(4,820		)	(2,582		)	—			—			—			(7,402		)
Increase (decrease) in intercompany payables	103,342			(111,384		)	2,766			5,276			—			—
Dividends paid on Series D Preferred Stock	(10,350		)	—			—			—			—			(10,350		)
Payment of KDSM dividend	(12,300		)	—			—			—			12,300			—
Redemption of parent preferred securities	(206,200		)	—			206,200			—			—			—
Repayment of notes and capital leases to affiliates	—			(4,447		)	—			—			—			(4,447		)
Net cash flows from (used in) financing activities	17,658			(77,276		)	8,966			5,276			12,300			(33,076		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	—			21,736			39			1,628			—			23,403
CASH AND CASH EQUIVALENTS, beginning of period	—			3,704			5			1,618			—			5,327
CASH AND CASH EQUIVALENTS, end of period	$	—		$	25,440		$	44		$	3,246		$	—		$	28,730

F-42

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2002

(in thousands)

					Guarantor Subsidiaries
	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	5,891			$	162,490			$	5,370			$	3,172			$	(26,033		)	$	150,890
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(1,629			)	(60,540			)	(808			)	68				—				(62,909		)
Payment for acquisition of television station licenses and related assets	—				(20,625			)	—				(553			)	—				(21,178		)
Contributions in investments	(22,745			)	(1,992			)	—				(1,083			)	—				(25,820		)
Proceeds from sale of property	—				94				600				—				—				694
Proceeds from the sale of broadcast assets	—				124,472				—				—				—				124,472
Repayment of note receivable	—				30,257				—				—				—				30,257
Repayments of loans to affiliates	(104			)	—				—				—				—				(104		)
Proceeds from loans to affiliates	6,756				—				—				—				—				6,756
Net cash flows (used in) from investing activities	(17,722			)	71,666				(208			)	(1,568			)	—				52,168
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	—				1,263,075				—				—				—				1,263,075
Repayments of notes payable, commercial bank financing and capital leases	(1,846			)	(1,490,702			)	—				—				—				(1,492,548		)
Proceeds from exercise of stock options	2,807				—																2,807
Payments for deferred financing costs	—				(10,503			)	—				—				—				(10,503		)
Increase (decrease) in intercompany payables	47,253				(42,088			)	(5,165			)	—				—				—
Dividends paid on Series D Preferred Stock	(10,350			)	—				—				—				—				(10,350		)
Proceeds from derivative termination	—				21,849																21,849
Payment of KDSM dividend	(26,033			)	—				—				—				26,033				—
Repayment of notes and capital leases to affiliates	—				(4,124			)	—				—				—				(4,124		)
Net cash flows from (used in) financing activities	11,831				(262,493			)	(5,165			)	—				26,033				(229,794		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—				(28,337			)	(3			)	1604				—				(26,736		)
CASH AND CASH EQUIVALENTS, beginning of period	—				32,041				8				14				—				32,063
CASH AND CASH EQUIVALENTS, end of period	$		—		$		3,704		$		5		$		1,618		$		—		$	5,327

F-43

17.QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

(in thousands, except per share data)

	For the Quarter Ended (1)
	03/31/04			06/30/04		09/30/04			12/31/04
Total revenues, net	$	163,984		$	187,401	$	168,770		$	188,124
Operating income	$	25,263		$	47,319	$	33,797		$	50,852
Net (loss) income from continuing operations	$	(1,793	)	$	20,396	$	1,501		$	(6,100	)
Income from discontinued operations	$	2,082		$	2,416	$	2,007		$	3,513
Net (loss) income available to common shareholders	$	(2,299	)	$	20,225	$	1,005		$	(5,089	)
Basic (loss) earnings per share from continuing operations	$	(0.05	)	$	0.21	$	(0.01	)	$	(0.10	)
Basic earnings per share from discontinued operations	$	0.02		$	0.03	$	0.02		$	0.04
Basic additional net (loss) earnings per share	$	(0.03	)	$	0.24	$	0.01		$	(0.06	)
Diluted (loss) earnings per share from continuing operations	$	(0.05	)	$	0.21	$	(0.01	)	$	(0.10	)
Diluted earnings per share from discontinued operations	$	0.02		$	0.03	$	0.02		$	0.04
Diluted (loss) earnings per share	$	(0.03	)	$	0.24	$	0.01		$	(0.06	)

	For the Quarter Ended (1)
	03/31/03			06/30/03			09/30/03		12/31/03
Total revenues, net	$	159,726		$	182,976		$	166,477	$	179,226
Operating income	$	26,908		$	50,486		$	36,568	$	40,304
Net (loss) income from continuing operations	$	(2,072	)	$	(1,239	)	$	4,480	$	14,665
Income from discontinued operations	$	724		$	1,909		$	1,983	$	3,942
Net (loss) income available to common shareholders	$	(3,936	)	$	(1,917	)	$	3,875	$	16,020
Basic (loss) earnings per share from continuing operations	$	(0.05	)	$	(0.04	)	$	0.02	$	0.14
Basic earnings per share from discontinued operations	$	0.01		$	0.02		$	0.02	$	0.05
Basic (loss) earnings per share	$	(0.05	)	$	(0.02	)	$	0.05	$	0.19
Diluted (loss) earnings per share from continuing operations	$	(0.05	)	$	(0.04	)	$	0.02	$	0.14
Diluted earnings per share from discontinued operations	$	0.01		$	0.02		$	0.02	$	0.05
Diluted (loss) earnings per share	$	(0.05	)	$	(0.02	)	$	0.05	$	0.19

(1)Results previously reported in our Form 10-Q’s for 2003 and 2004 and our Form 10-K for the year ended December 31, 2003 have been restated to reflect discontinued operations related to the sale of KOVR-TV in Sacramento, California and KSMO-TV in Kansas City, Missouri.

F-44

SINCLAIR BROADCAST GROUP, INC.

INDEX TO SCHEDULES

All schedules except the one listed above are omitted as not applicable or not required or the required information is included in the consolidated financial statements or in the notes thereto.

S-1

SCHEDULE II

SINCLAIR BROADCAST GROUP, INC.

VALUATION ALLOWANCES

FOR THE YEARS ENDED DECEMBER 31, 2002, 2003, AND 2004

(in thousands)

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Year	Balance at beginning of period		Charged to Cost and Expenses		Charges to other Accounts (1)			Deductions		Balance at end of period
2002	$	6,261	$	2,890	$	(1,326	)	$	1,840	$	5,985
2003	5,985		110		—			1,186		4,909
2004	4,909		1,606		—			1,997		4,518

(1)Amount represents allowance for doubtful account balances related to the disposition of certain radio stations.

S-2

EX-3.2

Exhibit 3.2

(FINAL AS OF 3/31/03)

AMENDED BY-LAWS

OF

SINCLAIR BROADCAST GROUP, INC.

ARTICLE 1

Stockholders

SECTION 1Annual Meeting.The annual meeting of the stockholders of the Corporation for the purpose of electing directors to succeed those whose terms shall have expired as of the date of such annual meeting, and for the transaction of such other corporate business as may come before the meeting, shall be held on the date and at the time fixed, from time to time, by the directors, and each successive meeting shall be held on a date within thirteen months after the date of the proceeding annual meeting.

SECTION 2Special Meetings.  Special meetings of the stockholders may be called at any time for any purpose or purposes by the Chairman of the Board, the President, by a Vice President, or by a majority of the Board of Directors, and shall be called forthwith by the Chairman of the Board, the President, by a Vice President, the Secretary or any director of the Corporation upon the request in writing of the holders of a majority of all the votes entitled to be cast with regard to the business to be transacted at such meeting.  Such request shall state the purpose or purposes of the meeting.  Business transacted at all special meetings of stockholders shall be confined to the purpose or purposes in the notice of the meeting.

SECTION 3Place of Holding Meetings.  All meetings of stockholders shall be held at the principal office of the Corporation or elsewhere, inside or outside of Maryland, as designated by the Board of Directors.

SECTION 4Notice of Meetings; Waiver of Notice.Not less than ten (10) nor more than ninety (90) days before each stockholders’ meeting, the Secretary shall give written notice of the meeting to each stockholder entitled to vote at the meeting and each other stockholder entitled to notice of the meeting.  The notice shall state the time and place of the meeting and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting.  Notice is given to a stockholder when it is personally delivered to him, left at his residence or usual place of business, or mailed to him at his address as it appears on the records of the Corporation.  Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if such person before or after the meeting signs a waiver of the notice which is filed with the records of stockholders meetings, or is present at the meeting in person or by proxy.  Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

SECTION 5Quorum; Voting.

a)Unless statute or the Charter provides otherwise, at a meeting of stockholders the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum and a majority of all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting.  In the absence of a quorum, the stockholders present in person or by proxy, by majority of the votes present and entitled to be cast and without notice other than by announcement, may adjourn the meeting from time to time until a quorum shall attend.  At any such adjourned meeting at which a quorum shall be present,

any business may be transacted which might have been transacted at the meetings originally notified.  In the event that at any meeting a quorum exists for the transaction of other business, the business as to which a quorum is present may be transacted by the holders of stock present in person or by proxy who are entitled to vote thereon.

b)Shares registered in the name of another corporation, if entitled to vote, may be voted by the president or a vice-president of that corporation, or by a proxy appointed by the president or a vice-president of that corporation.  Any fiduciary may vote shares registered in such fiduciary’s name, either in person or by proxy.

c)Shares of stock of the Corporation owned either directly or indirectly by the Corporation shall not be voted unless held in a fiduciary capacity.  The President or a Vice-President of the Corporation is authorized to vote any shares of another corporation held by the Corporation.

SECTION 6General Right to Vote; Proxies.Unless the Charter provides for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one (1) vote on each matter submitted to a vote at a meeting of stockholders.  In all elections for directors, each share of stock may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted, but in no event shall a single share be entitled to cast multiple votes for the same individual.  A stockholder may vote the stock he owns of record either in person or by written proxy signed by the stockholder or by his duly authorized attorney in fact.  Such proxy shall be filed with the Secretary of the Corporation before the meeting.  Unless a proxy provides otherwise, it is not valid more than eleven (11) months after its date.

SECTION 7List of Stockholders.  At each meeting of stockholders, a full, true and complete list of all stockholders entitled to vote at such meeting, showing the number and class of shares held by each and certified by the transfer agent for such class or by the Secretary, shall be furnished by the Secretary.

SECTION 8Conduct of Voting.  At all meetings of stockholders, unless the voting is conducted by inspectors, the proxies and ballots shall be received, and all questions touching the qualification of votes and the validity of proxies and the acceptance or rejection of votes shall be decided by the chairman of the meeting.  If demanded by stockholders, present in person or by proxy, entitled to cast ten percent (10%) in number of votes entitled to be cast, or if ordered by the chairman, the vote upon any election or question shall be taken by ballot and, upon like demand or order, the voting shall be conducted by two inspectors, in which event the proxies and ballots shall be received, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes, shall be decided by such inspectors.  Unless so demanded or ordered, no vote need be by ballot and voting need not be conducted by inspectors.  The stockholders at any meeting may choose an inspector or inspectors to act at such meeting, and in default of such election the chairman of the meeting may appoint an inspector or inspectors.  No candidate for election as a director at a meeting shall serve as an inspector thereat.

SECTION 9Informal Action by Stockholders.  Any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting if there is filed with the records of stockholders meeting: (i) a written notice of the contemplated action with verification that it has been sent to all stockholders at their last known address, and (ii) a written consent which sets forth the action and which is signed by the majority of stockholders entitled to vote.

ARTICLE II

Board of Directors

SECTION 1Function of Directors.  The Corporation shall be managed under the direction of the Board of Directors.  The Board of Directors may exercise all the powers of the Corporation, except those conferred on or reserved to the stockholders by statute or by the Charter or By-Laws.

SECTION 2Number of Directors.  The Corporation shall have at least three (3) directors at all times.   The Corporation shall have the number of directors provided by a resolution passed by the Board of Directors.  A majority of the entire Board of Directors may alter the number of directors not to exceed nine (9) directors, but the action may not affect the tenure of office of any director.

SECTION 3Election and Tenure of Directors.  The Directors shall hold office for a term of one (1) year or until the first annual meeting of stockholders following their election.  Each director elected shall hold office until his successor shall be elected and shall qualify.  Notwithstanding anything contained in these By-Laws to the contrary, the affirmative vote of stockholders holding a majority of the votes entitled to be cast for the election of Directors shall be required to amend or repeal or to adopt any provisions inconsistent with this Section 3.

SECTION 4Removal of Director.  At any meeting of the stockholders held for that purpose, any director may, by a majority vote of all votes entitled to be cast, be removed from office, but only for cause.  Cause is defined as; (i) conviction of a crime effecting the Company’s reputation or which precludes the Director from performing his duties and responsibilities to the shareholders of the Corporation; (ii) a breach of fiduciary duty to the corporation and the shareholders; and (iii) repeated failure to exercise and/or undertake his duties as a Director.

SECTION 5Filing of Vacancies.  In the case of any vacancy in the Board of Directors through death, resignation, disqualification, removal or other cause, the remaining directors, by affirmative vote of the majority thereof, may elect a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the election of his successor, or until he shall be removed, prior thereto, by an affirmative vote of a majority of the votes entitled to be cast by stockholders.

Similarly and in the event of the number of directors being increased as provided in these By-Laws, the additional directors so provided for shall be elected by a majority of the entire Board of Directors already in office and shall hold office until the next annual meeting of stockholders and thereafter until his or their successors shall be elected and duly qualified.

SECTION 6Regular Meetings.  After each meeting of stockholders at which a member of the Board of Directors shall have been elected, the Board of Directors so elected shall meet as soon as practicable for the purpose of organization and the transaction of other business; and in the event that no other time is designated by the stockholders, the Board of Directors shall meet one hour after the time for such stockholders’ meeting or immediately following the close of such meeting, whichever is later, on the day of such meeting.  Such first regular meeting shall be held at any place in or out of the State of Maryland as may be designated by the Board of Directors for such first regular meeting, or in default of such designation at the place of the holding of the immediately preceding meeting of stockholders.  No notice of such first meeting shall be necessary if held as hereinabove provided.  Any other regular meeting of the Board of Directors shall be held on such date and at any place in or out of the State of Maryland as may be designated from time to time by the Board of Directors.

SECTION 7Special Meetings.  Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or a Vice President or by a majority of the Board of Directors by vote at a meeting, or in writing with or without a meeting.  A special meeting of the Board of Directors shall be held on such date and at any place in or out of the State of Maryland as may be

designated from time to time by the Board of Directors.  In the absence of such designation such meeting shall be held at such place as may be designated in the call.

SECTION 8Notice of Meeting.  Except as provided in Article II, Section 6, the Secretary shall give notice to each director of each regular and special meeting of the Board of Directors.  The notice shall state the time and place of the meeting.  Notice is given to a director when it is delivered personally to him, left at his residence or usual place of business, or sent by telegraph, at least twenty-four (24) hours before the time of the meeting or, in the alternative by mail to his address as it shall appear on the records of the Corporation, at least seventy-two (72) hours before the time of the meeting.  Unless the By-Laws or a resolution of the Board of Directors provide otherwise, the notice need not state the business to be transacted at or the purposes of any regular or special meeting of the Board of Directors.  No notice of any meeting of the Board of Directors need be given to any director who attends, or to any director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice.  Any meeting of the Board of Directors, regular or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

SECTION 9Action by Directors.  Unless statute or the Charter or By-Laws require a greater proportion, the action of a majority of the directors present at a meeting at which a quorum is present is action of the Board of Directors.  A three-fifths (3/5) majority of the entire Board of Directors shall constitute a quorum for the transaction of business.  In the absence of a quorum, the directors present by majority vote and without notice other than by announcement may adjourn the meeting from time to time until a quorum shall attend.  At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  Any action required or permitted to be taken at a meeting of the Board of Directors or of a committee of the Board may be taken without a meeting, if an unanimous written consent which sets forth the action is signed by each member of the Board or committee and filed with the minutes of proceedings of the Board or committee.

SECTION 10Meeting by Conference Telephone.  Members of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear and speak to each other at the same time.  Participation in a meeting by these means constitutes presence in person at a meeting.

SECTION 11Compensation  By resolution of the Board of Directors a fixed sum and expenses, if any, for attendance at each regular or special meeting of the Board of Directors or of committees thereof, and other compensation for their services as such or on committees of the Board of Directors, may be paid to directors.  A director who serves the Corporation in any other capacity also may receive compensation for such other services, pursuant to a resolution of the Directors.

SECTION 12Liability of Directors.  A director shall perform his duties as a director, including his duties as a member of any Committee of the Board upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interest of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.  In performing his duties, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by:

a)one or more officers or employees of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented;

b)counsel, certified public accountants, or other persons as to matters which the director reasonably believes to be within such person’s professional or expert competence; or

c)a Committee of the Board upon which he does not serve, duly designated in accordance with a provision of the Articles of Incorporation or the By-Laws, as to matters within its designated authority, which Committee the director reasonably believes to merit confidence.

A director shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance described above to be unwarranted.  A person who performs his duties in compliance with this Section shall have no liability by reason of being or having been a director of the Corporation.

ARTICLE III

Committees

The Board of Directors may appoint from among its members an Executive Committee and other committees composed of two or more directors and delegate to these committees in the intervals between meetings of the Board of Directors any of the powers of the Board of Directors, except the power to declare dividends or distributions on stock, approve any merger or share exchange which does not require stockholder approval, amend the By-Laws, issue stock or recommended to the stockholders any action which requires stockholder approval.  Each committee may fix rules of procedure for its business.  A majority of the members of a committee shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting at which a quorum is present shall be the act of the committee.  The members of a committee present at any meetings, whether or not they constitute a quorum, may appoint a director to act in place of an absent member.  The members of a committee may conduct any meeting thereof by conference telephone in accordance with the provisions of Article II, Section 10.  The Board of Directors has appointed an Executive Committee consisting of David D. Smith, Robert E. Smith, Frederick G. Smith, and J. Duncan Smith.

ARTICLE IV

Officers

SECTION 1Executive Officers.  The Corporation shall have a President, who shall be a director of the Corporation, a Secretary and a Treasurer.  It may also have a Chairman of the Board, who shall be a director of the Corporation, and one or more Vice-Presidents, one or more Assistant Vice-Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers.  A person may hold more than one office in the Corporation but may not serve concurrently as both President and Vice-President or both President and Secretary of the Corporation.

SECTION 2Chairman of the Board.  The Chairman of the Board, if one be elected, shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present.  He shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors.

SECTION 3Chief Executive Officer.  The Board of Directors may elect a chief executive officer.  The chief executive officer shall have the responsibility for implementing the policies of the Corporation, as determined by the Board of Directors, and for administering the business affairs of the Corporation.

SECTION 4Chief Operating Officer.  The Board of Directors may elect a chief operating officer.  The chief operating officer will have the duties as set forth by the Board of Directors or by the chief executive officer.

SECTION 5Chief Financial Officer.  The Board of Directors may elect a chief financial officer.  The chief financial officer will have duties as set forth by the Board of Directors or by the chief executive officer.

SECTION 6President.  In the absences of the Chairman of the Board, the President shall preside at all meetings of the stockholders and of the Board of Directors at which he shall be present; under the direction of the chief executive officer, the president shall have general charge and supervision of the assets and affairs of the Corporation; he may sign and execute, in the name of the Corporation, all authorized deeds,

mortgages, bonds, contracts or other instruments, except in cases in which the signing and execution thereof shall have been expressly delegated to some other officer or agent of the Corporation; and, in general, he shall perform all duties incident to the office of a president of a corporation, and such other duties as may from time to time be assigned to him by the Board of Directors.

SECTION 7Vice-Presidents.  The Vice-President or Vice-Presidents, at the request of the President or in his absence or during his inability to act, shall perform the duties and exercise the functions of the President, and when so acting shall have the powers of the President.  If there be more than one Vice-president, the Board of Directors may determine which one or more of the Vice-Presidents shall perform any such duties or exercise any such functions, or if such determination is not made by the Board of Directors, the President may make such determination; otherwise any of the Vice-presidents may perform any of such duties or exercise any of such functions.  The Vice-President or Vice-Presidents shall have such other powers and perform such other duties, and have such additional descriptive designations in their titles (if any), as may be assigned by the Board of Directors or the President.

SECTION 8Secretary.  The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors and of any committees, in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of the By-Laws or as required by law; he shall be custodian of the records of the Corporation; he shall witness all documents on behalf of the Corporation, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required to be under its seal, and, when so affixed, may attest the same; and in general, he shall perform all duties incident to the office of a secretary of a corporation, and such other duties as may from time to time be assigned to him by the Board of Directors or the President.

SECTION 9Treasurer.  The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; and, in general, he shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as may from time to time be assigned to him by the Board of Directors or the President.

SECTION 10Assistant Officers.  The Assistant Vice-Presidents shall have such duties as may from time to time be assigned to them by the Board of Directors or the President.  The Assistant Secretaries shall have such duties as may from time to time be assigned to them by the Board of Directors or the Secretary.  The Assistant Treasurers shall have such duties as may from time to time be assigned to them by the Board of Directors or the Treasurer.

SECTION 11Subordinate Officers.  The Corporation may have such subordinate officers as the Board of Directors may from time to time deem desirable.  Each such officer shall hold office for such period and perform such duties as the Board of Directors, the President or the committee or officer designated pursuant to Article IV, Section 10 may prescribe.

SECTION 12Compensation.  The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation.  It may authorize any committee or officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such subordinate officers.

SECTION 13Election, Tenure and Removal of Officers.  The Board of Directors shall elect the officers.  The Board of Directors may from time to time authorize any committee or officer to appoint subordinate officers.  An officer serves for one year or for such longer term as the Board of Directors may fix, and until his successor is elected and qualifies.  The Board of Directors may remove any officer or agent of the Corporation, but only for cause.  Cause is defined as; (i) conviction of a crime effecting the Company’s reputation or which precludes the officer or agent from performing his duties and responsibilities to the shareholders of the Corporation; (ii) a breach of fiduciary duty to the corporation and

the shareholders and; (iii) repeated failure to exercise and/or undertake his duties as an officer or agent.  The removal of an officer or agent does not prejudice any of such person’s contract rights.  The Board of Directors (or any committee or officer authorized by the Board of Directors) may fill a vacancy which occurs in any office for the unexpired portion of the term of that office, or for any shorter period if such unexpired term is greater than one (1) year.

ARTICLE V

Stock

SECTION 1Certificates for Stock.  Each stockholder is entitled to certificates which represent and certify the shares of stock he holds in the Corporation.  Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder and the class of stock and number of shares represented by the certificate and be in such form, not inconsistent with law or with the Charter, as shall be approved by the Board of Directors.  Each stock certificate shall be signed by the President, a Vice President, or the Chairman of the Board and countersigned by the Secretary, and Assistant Secretary, the Treasurer, or an Assistant Treasurer.  Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signature may be either manual or facsimile signatures.  A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued.

SECTION 2Transfers.  The Board of Directors shall have power and authority to make such results and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock; and may appoint transfer agents and registrars thereof.  The duties of transfer agent and registrar may be combined.

SECTION 3Record Date and Closing of Transfer Books.  The Board of Directors may set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights.  The record date may not be more than ninety (90) days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than twenty (20) days; and, in the case of a meeting of stockholders, the record date of the closing of the transfer books shall be at least ten (10) days before the date of the meeting.

SECTION 4Stock Ledger.  The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds.  The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection.  The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, within or without the State of Maryland, or, if none, at the principal office or the principal executive offices of the Corporation in the State of Maryland.

SECTION 5Lost Stock Certificate.  The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation.  In its discretion, the Board of Directors or such officer or officers may refuse to issue such new certificates save upon the order of some court having jurisdiction in the premises.

ARTICLE VI

Finance

SECTION 1Checks, Drafts, Etc.  All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the President, a Vice-president or an Assistant Vice-President and countersigned by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.

SECTION 2Annual Statement of Affairs.  There shall be prepared annually a full and correct statement of the affairs of the Corporation, to include a balance sheet and a financial statement of operations for the preceding fiscal year.  The statement of affairs shall be submitted at the annual meeting of the stockholders and, within twenty (20) days after the meeting, placed on file at the Corporation’s principal office.  Such statement shall be prepared or caused to be prepared by such executive officer of the Corporation as may be designated in an additional or supplementary By-Law adopted by the Board of Directors.  If no other executive officer is so designated, it shall be the duty of the President to prepare or cause to be prepared such statement.

SECTION 3Fiscal Year.  The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.  In the absence of any such resolution, the fiscal year of the Corporation shall end on the last day of December in each year.

ARITCLE VII

Sundry Provisions

SECTION 1Books and Records.  The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any executive or other committee when exercising any of the powers of the Board of Directors.  The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection.  Minutes shall be recorded in written form but may be maintained in the form of a reproduction.

SECTION 2Corporate Seal.  The Board of Directors shall provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary.  The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

SECTION 3Bonds.  The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors.

SECTION 4Voting Upon Shares in Other Corporations.Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the President, a Vice-President, or a proxy appointed by either of them.  The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

SECTION 5Mail.  Any notice or other document which is required by these By-Laws to be mailed shall be deposited in the United States mails, postage prepaid.

SECTION 6Execution of Documents.  A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

SECTION 7Amendment of By-Laws.  Except as otherwise herein provided, the Board of Directors shall have the power and authority to amend, alter or repeal these By-Laws or any provision thereof, and may from time to time make additional By-Laws without the approval or consent of the stockholders, but subject to the limitation that any modification to the By-Laws made by the directors shall be subject to repeal by the affirmative vote of a majority of the votes entitled to be cast at any duly constituted meeting of stockholders.  The stockholders shall also have the power to adopt, alter, or repeal any By-Laws of the Corporation and to make new By-Laws by the affirmative vote of a majority of votes entitled to be cast at any duly constituted meeting of stockholders.

ARTICLE VIII

Indemnification

SECTION 1Definitions.  As used in this Article VIII, any word or words that are defined in Section 2-418 of the Corporations and Associations Article of the Annotated Code of Maryland, as amended from time to time, (the “Indemnification Section”) shall have the same meaning as provided in the Indemnification Section.

SECTION 2Indemnification.  The Corporation shall indemnity and advance expenses to a director or officer of the Corporation in connection with a proceeding to the fullest extent permitted by and in accordance with the Indemnification Section.  With respect to other employees or agents of the Corporation, the Corporation may, as determined in the discretion of the Board of Directors, indemnify and advance expenses to such employees or agents in connection with a proceeding to the extent permitted by and in accordance with the Indemnification Section.

EX-10.2

Exhibit 10.2

Amendment No. 1

To

Lease Agreement

AMENDMENT dated this 8^th day of June, 2000 to the Lease Agreement, dated September 23, 1993 (the “Lease”) between Gerstell Development Limited Partnership and WPGH, Inc., as changed to Sinclair Media I, Inc.

WITNESSETH

WHEREAS, the parties hereto wish to extend the term of the Lease for an additional term of Seven (7) years, beginning September 1, 2000.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, in accordance with Section 1 of the lease, the parties hereto agree as follows:

1.The parties acknowledge that the Lease is currently in full force and effect.

2.The definition of “Tenant” in the preamble of the Lease is hereby amended by deleting the reference to “WPGH” and replacing it with a reference to “Sinclair Media I, Inc.”.

3.Section 1 of the Lease, is hereby amended by replacing it with the following:

“Term.  The Lease shall have an Extension Term expiring on August 31, 2007, with three options for an additional seven (7) year renewal term (the “Extension Term”).  That said lease will have an annual rental of $251,167.20 payable in advance in equal monthly installments of $20,930.60 for the period of 9/1/00 – 8/31/01.  And on each subsequent Anniversary of the lease, the rent will increase 5%.

4.Section 18 of the Lease is hereby amended by insertion of the following notice of address for Landlord: “Gerstell Development Limited Partnership, 10706 Beaver Dam Road, Cockeysville, MD 21030” and by insertion of the following notice for Tenant: “Sinclair Media I, Inc., 10706 Beaver Dam Road, Cockeysville, MD 21030”.

5.Each of the other terms of the Lease shall remain in full force and effect be unaffected by this Amendment No. 1.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 as of the date first above written.

Gerstell-Development Limited Partnership

/s/ J. Duncan Smith

By:

Name: J. Duncan Smith

Title: Secretary

Sinclair Media I, Inc.

/s/ Robin Smith

By: Robin Smith

Name:

Title: VP of Finance

EX-10.3

Exhibit 10.3

Amendment No. 2

To

Lease Agreement

AMENDMENT dated this 15^th day of September, 2000 to the Lease Agreement, dated September 23, 1993 (the “Lease”) between Gerstell Development Limited Partnership and WPGH, Inc., as changed to Sinclair Media I, Inc.

WITNESSETH

WHEREAS, Lessor and Lessee, Gerstell Development Limited Partnership and WPGH, Inc. as changed to Sinclair Media I, Inc., entered into that certain Lease Agreement dated September 23, 1993, which Lease Agreement was amended on June 8, 2000, said Lease Agreement as so amended being hereinafter referred to as “the Lease”, and

WHEREAS, Lessor and Lessee desire to correct certain provisions of the Lease as amended:

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, in accordance with Section 1 of the lease, the parties hereto agree as follows:

1.The parties acknowledge that the Lease is currently in full force and effect.

2.The present term will begin on October 1, 2000.

3.The present term will expire on October 1, 2007.

4.The anniversary date of the lease is October 1.

5.Each of the other terms of the Lease shall remain in full force and effect and shall be unaffected by this Amendment No. 2.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 as of the date first above written.

Gerstell-Development Limited Partnership

/s/ J. Duncan Smith

By:

Name: J. Duncan Smith

Title: Secretary

Sinclair Media I, Inc.

/s/ Robin Smith

By: Robin Smith

Name:

Title: VP of Finance

EX-10.4

Exhibit 10.4

Amendment No. 3

To

Lease Agreement

Amendment No. 3 dated this 26^th day of December, 2001 to the Lease Agreement dated September 23, 1993 between Gerstell Development Limited Partnership (“Gerstell”) and Sinclair Media I, Inc., whose name was changed from WPGH, Inc., as amended (“Sinclair”) (the “Lease”)

WITNESSETH

WHEREAS, Gerstell and Sinclair entered into the Lease, as amended; and

WHEREAS, the parties desire to correct and to update additional information that is relevant to the Lease;

NOW THEREFORE, in consideration of the foregoing and the mutual covenants contained in the Lease, and herein, the parties hereby agree as follows:

1.In 1997, Sinclair improved the Property by building a 13,000 square foot building adjacent to the existing Building (the “New Building”).  The New Building is a stand-alone building which is and continues to be owned by Sinclair.  Gerstell continues to own, and to lease to Sinclair, the land on which the New Building was built.  Attached hereto as Exhibit A is a legal description of the New Building.

2.Amendment No. 1 is hereby amended by replacing Section 1 of the Lease (see paragraph three of Amendment No. 1) with the following:

“Term.  The Lease shall have an Extension Term expiring on August 31, 2007.  Provided that Tenant is not in material default and provided that Tenant gives written notice exercising the option within ninety (90) days before the then current term expires, Tenant shall have four (4) options to extend this Lease, each for a period of seven (7) years (each period of extension is hereinafter called an “Extension Term” and the Original Term together with any Extension Term (s) is hereinafter called the “Term”).  The Lease will have an annual rent of $251,167.20 payable in advance in equal monthly installments of $20,930.60 for the period of September 1, 2000-August 30, 2001.  On each subsequent anniversary of the Lease, the rent shall increase by five (5) percent.”

In addition, there shall be an additional monthly installment of $9,456.23 which shall be rent due from Sinclair for Sinclair’s rental of the land on which the New Building has been built.

3.Right of First Refusal.  If, during the term of this Agreement, Gerstell receives a bona fide offer for (i) the sale of all or substantially all of its assets; (ii) the sale of all or any of the assets associated with the Lease; (iii) the merger of a Party with another entity, after which Gerstell is not the survivor; (iv) consolidation of Gerstell with another entity, after which Gerstell owners no longer control more than fifty percent (50%) or more of the consolidated entity; or (v) the sale by Gerstell’s owners of more than fifty percent (50%) of the company, Gerstell (the “First Refusal Offer”) shall provide promptly and without delay to Sinclair a right of first refusal in accordance with this Section Three.  Before any such sale or transfer by Gerstell or its partners/members, the identity of the party to whom the assets are to be transferred (the “Third Party Acquirer”), the terms of such transfer and copies of all written agreements which Gerstell has entered into, subject to the terms of this First Refusal Right, or which Gerstell has indicated it will enter into if Sinclair does not exercise its rights hereunder.  Sinclair, who

shall receive the First Refusal Notice shall have a period of thirty (30) days after receipt of such notice to exercise its rights to purchase the assets (or stock) according to the terms and conditions which Gerstell (or its partners/members) has negotiated with the Third Party Acquirer.  Sinclair, upon receiving the First Refusal Notice may, at any time prior to the expiration of its rights under this Section Three, including after receipt of the First Refusal Notice, transfer its rights of First Refusal to any third party upon the consent of the Party receiving the offer, which consent shall not be unreasonably withheld.  If, at the end of the thirty (30) day period, Sinclair (or its assignee) has not exercised its right of first refusal, then Gerstell or its stockholders may complete the proposed transaction with the Third Party Acquirer on the terms and conditions set forth in the First Refusal Notice; provided however, if Gerstell or its partners does not enter into a binding agreement with the Third Party Acquirer with respect to such transaction within sixty (60) days of the end of the thirty (30) day right of first refusal period, then Gerstell or its partners shall no longer be permitted to enter into such transaction without first complying again with the provision of this Section.

If any of the property subject to the Lease is proposed for sale, and part of the property proposed for sale is the New Building, then Gerstell, and/or its partners, hereby agrees that Sinclair shall share in the profits of the sale of the New Building, and shall be allocated all money related to the New Building, which allocation shall be done within 30 days of the close of the sale of the property, if such property includes the New Building, by taking the average of two written appraisals given by two mutually agreed upon third party appraisers.

4.Sinclair shall pay Gerstell a total of Ten Thousand Dollars ($10,000) for the Rights of First Refusal, which payment shall be made within 30 days of the signing of this Amendment.

5.The parties agree that if the bank proposes devaluing the property because of the right of first refusal, the parties hereby agree to negotiate in good faith to resolve the issue to the satisfaction of each of the parties.

6.All of the terms shall have the meaning as defined in the original Lease, if not otherwise defined herein.

7.Each of the other Lease terms shall remain in full force and affect and shall be not be changed by this Amendment No. 3.

Signature page follows

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 4 as of the date first above written.

Sinclair Media I, Inc.

/s/ Robin Smith

By: Robin Smith

Name:

Title: VP of Finance

Gerstell-Development Limited Partnership

/s/ J. Duncan Smith

By:

Name: J. Duncan Smith

Title: Limited Partner

EX-10.8

Exhibit 10.8

THIS LEASE is made this first day of February, 1996, by and between Keyser Investment Group, Inc. a Maryland corporation (herein called “Landlord”), and Sinclair Broadcast Group, Inc., a Maryland corporation (herein called “Tenant”).

W I T N E S S E T H:

The Landlord hereby leases unto the Tenant the following: 2000-2008 West 41st Street, City of Baltimore, State of Maryland, 21211 consisting of certain buildings and structures, the adjacent and service areas.  The aforesaid commercial property subject to this Lease is hereinafter called the “Demised Premises” or “Premises” for an initial term of ten (10) years, beginning on the 1st day of February 1996, and ending on the 31st day of January 2006, at rent payable in equal and successive monthly payments as outlined on Schedule A (attached) on the first (1st) day of each and every month in advance, plus the annual increase as defined following.

Said rent shall be paid to the Landlord at such place as the Landlord may from time to time designate in writing.

The term of this Lease shall automatically be renewed for two additional and consecutive terms of five (5) years each, unless notice of cancellation is given by Lessee as set forth in this paragraph.  If Lessee gives written notice of cancellation to Lessor not less that ninety (90) days prior to the expiration of the initial term of this lease (or of the first additional five year term, as the case may be) to the effect that Lessee does not wish to extend the terms of this Lease for any additional period, then this Lease shall terminate and expire at the end of the then existing Lease term (either the initial term, or the first additional five-year term, as the case may be).  In the event Lessee, for whatever reason, fails to give such written notice of cancellation not less than ninety (90) days prior to the end of this initial term of this Lease (or not less than ninety (90) days prior to the end of the first additional five-year term, as the case may be), the term of this Lease shall be automatically extended for the next additional and consecutive term of five (5) years.

THE TENANT AGREES WITH THE LANDLORD, as follows:

1.Rent.  To pay the rent when due.

2.Use.  To use and occupy the leased premises solely for the following purposes: television station, offices, studios and related facilities as permitted by applicable zoning.  Further, the Tenant agrees not to load the lease Premises beyond its carrying capacity, and it agrees not to use said premises, whole or in part, for any other purpose without the written consent of the Landlord.

3.Occupancy.  Tenant further agrees to occupy the leased premises and conduct business therein continuously during the term or any renewal thereof.  If the Tenant shall fail to take possession of the Demised Premises within thirty (30) days after the commencement of the term of this Lease or, if at any time during the term of this Lease or any renewal thereof, the Tenant shall vacate, abandon, or cease to use or occupy said Demised Premises, Landlord, in addition to any other right or rights granted to it under this Lease or by law, may reenter the Demised Premises and remove the Tenant or its legal representatives or other occupant by summary proceeding or otherwise; and in such event, Tenant waives the service of notice of intention to reenter or to institute lease proceedings to that end.  In such event, Landlord may without notice or demand enter the Demised Premises, breaking open locked doors, if necessary to obtain entrance, without liability to action for prosecution or damages for such entry or the

manner thereof.

4.Water Rent.  To pay all the water rent and sewerage charges chargeable to the said Premises.

5.Federal, State, and Local Laws, Etc.  To observe, comply with, and execute at its, the Tenant’s, expense all laws valid and lawful rules, requirements, and regulations of the United States, State of Maryland, and of the City or County in which the lease Premises are situate, and of any and all governmental authorities or agencies and of any board of fire underwriters or other similar organization respecting the leased Premises and the manner in which said Premises are and should be used by it.

6.Assignment and Sublease.  That the written consent of the Landlord shall be required to each assignment or sublease of the leased Premises, or any part thereof, whether such assignment or sublease be made by it or by anyone claiming by, through, or under it.

7.Alterations and Improvements.  Tenants shall not make any additions, alterations, or improvements in or to the Demise Premises without Landlord’s written consent.  All additions, alterations, and improvements made in or to the Demised Premises by either Landlord or Tenant shall become property of the Landlord and shall be surrendered with the Premises at the termination of this lease.  Tenant shall have the right to remove or replace its moveable trade fixtures; provided, however, Tenant repairs any damages caused by such removal.  The failure of Tenant to remove trade fixtures or any of its property at the termination of the term of this Lease shall be deemed abandonment of such property at the option of the Landlord.

8.Tenant’s Obligation to Repair and Replace/Landlord’s Right on Tenant’s Default.  The Tenant shall, at its own expense, make all necessary repairs and replacements to the leased property and to the pipes, heating system, plumbing system, window glass, fixtures, and all other appliances and their appurtenances, all equipment used in connection with the leased property, and the sidewalks, curbs, and vaults adjoining or appurtenant to the lease property. Such repairs and replacements, interior and exterior, ordinary as well as extraordinary, and structural as well as nonstructural, shall be made promptly, as and when necessary.  All repairs and replacements shall be in quality and class at least equal to the original work.  On default of the Tenant in making such repairs and replacements, the Landlord may, but shall not be required to, make such repairs and replacements for the Tenant’s account, and the expense thereof shall constitute and be collectible as additional rent.

9.Utilities.  The Tenant shall, upon occupancy, procure and pay for all air conditioning, gas, light, power, heat, and hot water used by the Tenant upon said Premises as the same shall become due and payable, and the Tenant agrees that the Landlord shall not be required to furnish any janitor service.

10.Taxes/Special Assessments.  The Tenant shall pay to the Landlord, as additional rent, all taxes payable to the State of Maryland and to the City or County in which the leased Premises are situate, of whatever character or description, levied upon, or assessed against said Premises for any tax year in which this Lease shall be in effect, in whole or in part.  Said taxes shall include, but not by way of limitation, all paving taxes, special paving taxes, and any and all benefits of assessments which may be levied on the Premises hereby leased, but shall not include United States income tax or any state or other income tax upon the income or rent payable hereunder.  The Tenant shall pay any sum due hereunder to the Landlord prior to the first (1st) day of September of the tax year in which any such taxes, charges, benefits, or assessments shall become due,  If the Tenant should fail to pay any sum due hereunder on or before the first (1st) day of September, as hereinabove provided, together with all accrued interest and penalties there on, in that event, the Landlord shall be entitled to distrain for said sum, together with such interest and penalties, and the Tenant agrees with the Landlord to pay to the Landlord that sum, including interest and penalties as set forth above, in addition to said rental, in the manner and at the times above set

forth, free and clear of all deductions whatsoever.

11.Condemnation.  In the event of condemnation by any public or private authority of any portion of the Premises, this Lease shall continue, and the rent shall not abate unless condemnation renders the Premises completely unusable for the conduct of any portion of the Tenant’s business thereon; then, upon Tenant giving forty-five (45) days advance written notice to the Landlord, this Lease will terminate.  All proceeds of condemnation belong to the Landlord, and the Landlord has the sole right to contest, settle, or litigate condemnation.

12.Force Majeure.  Anything to the contrary hereinabove contained notwithstanding, if it shall appear that the Premises hereby leased, or any part thereof, were destroyed, injured, or damaged to any extent whatsoever (a) as a result of actual warfare, whether such war be declared or not, or (b) as the result of the negligence of the Tenant, then, at the option of the Landlord, this Lease may, upon ten (10) days notice in writing by the Landlord to the Tenant, cease and terminate.  If it shall appear that such destruction, injury, or damage was the result of the negligence of the Tenant, then there shall be no abatement of rent until after the date of such termination.

13.Bankruptcy, Receivership, Etc.  If, any time, during the term of this Lease or any extension or renewal thereof, there shall be filed by or against Tenant in any Court pursuant to any statute, either of the United States or of any reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant’s property, and within thirty (30) days thereafter Tenant fails to secure a discharge thereof, or if the Tenant makes an assignment for the benefit of creditors or petitions for or enters into an arrangement, this Lease, at the option of the Landlord, exercised within a reasonable time after notice of the happening of any one or more of such events, may be canceled and terminated; in which event, neither Tenant nor any person claiming through or under Tenant by virtue of any statute or of any Order of any Court shall be entitled to possession or to remain in possession of the Demised Premises, but shall forthwith quit and surrender the Premises; and Landlord, in addition to other rights and remedies Landlord has by virtue of any stature or rule of law, may retain as liquidated damages any rent, security, or deposit of monies received by Landlord from Tenant or others on behalf of Tenant.

In the event of the termination of this Lease, as provided for in this paragraph, Landlord shall forthwith, notwithstanding any other provision of this Lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the rent reserved hereunder for the unexpired portion of the term demised.  If such Premises, or any part thereof, be relet by Landlord for the unexpired term of this Lease, the amount of rent reserved upon such relating shall be deemed to be the fair and reasonable rental value during the term of the reletting.

14.Signs, Etc. by Tenant.  The Tenant agrees that it will not place or permit any signs, lights, awnings, or poles in or about said Premises without the permission, in writing, of the Landlord; and in the event that such consent is given, the Tenant agrees to pay any minor privileges or other tax therefor.  The Tenant agrees that it will not paint or make any changes in or on the outside of said Premises without the written permission of the Landlord.

15.Operation of Premises.  The Tenant agrees to keep the sidewalks and curbs in front of said Premises free of snow, ice, dirt, and rubbish, and not to pile any goods on the sidewalk in front of said building or block said sidewalk, and not to do anything that directly or indirectly will take away the access to the Premises from any other tenant of the Landlord or which, in any manner, will obstruct the entrance, halls, or sidewalks of any part of the building of which the leased Premises is a part.

16.For Sale or Rent Signs.  It is agreed between the parties hereto that the Landlord shall have the right to place a “For Sale” or “For Rent” sign on any portion of said Premises for ninety (90) days

prior to the termination of this Lease and to show said Premises to prospective tenants or purchasers.

17.Limitation of Liability. The Landlord shall not be held responsible for and is relieved from all liability by reason of any damage to any person, persons or property in the Demised Premises, whether belonging to the Tenant or to any other person, from water, rain, snow, gas, or electricity not matter how caused (including from any pipes or plumbing) that may leak onto, issue or flow from any part of the Demised Premises or from the building of which the Demised Premises is a part or from any place or quarter.

18.Indemnification by Tenant/Personal Injury and Property Damage.  The Tenant hereby relieves the Landlord from any and all responsibility, and the Tenant covenants and agrees to assume all liability, including counsel and attorney’s fees, in any action for damages which may arise from any kind of injury to person or property in or upon or adjacent to the Premises or that may arise from any cause other than from the intentional acts of the Landlord.

19.Liability of Tenant for Injury to Premises.  The Tenant shall be liable to the Landlord for any injury done to the Premises by itself, its agents, servants, employees, or patrons, whether said injury be caused by negligence, default, or willful act.

20.Indemnification by Tenant/Costs Incurred for Breach.  The Tenant shall indemnify the Landlord against and save it harmless from any expense, loss, or liability paid, suffered or incurred, including counsel and attorney’s fees, arising out of any breach by the Tenant, Tenant’s agents, servants employees, visitors, or licensees of any covenant or condition of this Lease or arising out of Tenant’s use or occupancy of the leased Premises or arising out of the carelessness, negligence, or improper conduct of Tenant, Tenant’s agents, employees, patrons, or licensees.

21.Liability Insurance by Tenant.  Tenant will keep in force at its own expense so long as this Lease remains in effect a policy of public liability insurance with respect to the leased Premises in companies acceptable to Landlord in form satisfactory to Landlord covering Landlord and Tenant, with minimum limits of $500,000.00 on account of bodily injuries to or death of one person, and $1,000,000.00 on account of bodily injuries to or death of more than one person as the result of any one accident or disaster, and property damage insurance with minimum limits of $100,000.00; and Tenant will further deposit the policy or policies of such insurance or certificates thereof with Landlord.  If Tenant shall not comply with its covenants made in this Paragraph 22, Landlord may, at its option, cause insurance as aforesaid to be issued; and in such event, Tenant agrees to pay the premium of such insurance promptly upon Landlord’s demand.

22.Fire Insurance by Tenant.  Tenant, at its expense, will carry fie extended coverage insurance on the leased Premises, as well as any additional improvements Tenant may make, to the full one hundred percent (100%) replacement value thereof, with the proceeds payable to the Landlord.  It is further agreed that all recoveries for loss shall, unless Landlord waived this requirement in writing after said recovery is received, be applied to the repair or restoration of the damage or destruction for which said recoveries are received; and that, if the insurance proceeds received on said policies are not sufficient to restore the damage properly to the same condition in which the same was prior to the damage thereto, Tenant shall supply the additional cost therefor from its own funds without any claim against the Landlord for reimbursement of the same or for any part thereof,  All policies of insurance, pursuant to the provisions of this paragraph and certificates thereof, shall be furnished to and held by the Landlord.  Should Tenant fail to carry the aforesaid insurance, Landlord may (but not be required to) cause same to be issued; in which event, all premiums paid by the Landlord shall be due and payable to the Landlord by the Tenant on the date the next installment of rent becomes due under this Lease, and shall be subject to the provisions of this Lease referring to rent and nonpayment thereof.

23.Waiver of Notice.  Tenant hereby waives notice to vacate the Premises upon expiration of this Lease (or at the end of the renewal period, if renewed).  If the Tenant shall occupy said Premises after such expiration, it is understood that, in the absence of any written agreement to the contrary, said Tenant shall hold said Premises as a Tenant from month-to-month, subject to all other terms and conditions of this Lease at the highest monthly rental reserved in this lease; provided, however, that the Landlord shall, upon such expiration, be entitled to the benefit of all public general or public local laws relating to the speedy recovery of the possession of lands and tenements held over by Tenant that may be now in force or may hereafter be enacted to the same extent as if statutory notice had been given.

24.Remedies Cumulative.  It is agreed that for the purpose of any suit brought or based on this Agreement, this Agreement shall be construed to be a divisible contract to the end that successive actions may be maintained on said Agreement as successive periodic sums shall mature under said Agreement, and it is further agreed that failure to include in any suit or action any sum or sums then matured shall not be a bar to the maintenance of any suit or action for the recovery of said sum or sums so omitted, and the Tenant agrees that it will not in any suit or suits brought on this Lease for a matured sum for which judgment has not previously been received, plead, rely on, or urge as bar to said suit or suits, the defense of res adjudicata, former recovery, extinguishment, merger, election of remedies, or other similar defense.

25.Waiver.  No assent, expressed or implied, by Landlord to any breach by the Tenant of any of the clauses, provisions, or covenants of this Lease shall be deemed or taken to be a waiver or assent to any succeeding breach of the same clause or provision or covenant or any preceding or succeeding breach of any other clause, provision, or covenant.  No remedy conferred upon Landlord shall be considered exclusive of any other remedy, but shall be in addition to every other remedy available to the Landlord under this Lease or as matter of law.  Every remedy herein conferred upon Landlord may be exercised from time to time and as often as the occasion may arise of Landlord deems desirable.

26.Use of Language and Captions.  Any word contained in the text of this Lease Shall be read as the singular or plural and as the masculine, feminine, or neuter gender, as may be applicable in the particular context; and any subheadings used herein are for convenience only and for no other purpose.  All headings used herein are for convenience only and may not convey or effect the meaning of this Agreement.

27.Successors in Interest.  This Lease and the covenants, agreements, conditions, and undertakings herein contained are binding upon and shall inure to the benefit of the Landlord, its successors and assigns, and shall be binding upon the Tenant and only such assigns of Tenant to whom the assignment by Tenant has been consented to by Landlord.

28.Complete Agreement.  Tenant acknowledges that Landlord and its agents have made no representations or promises with respect to the leased Premises or the making or entry into this Lease except as herein expressly set forth.  This Lease contains all the agreements and representations between the parties.  None of the terms of this Lease shall be waived or modified to any extent except by a written instrument signed and delivered by all parties to this Agreement.

29.Waiver of Jury Trial.  Landlord and Tenant hereby waive, to the extent such waiver is not prohibited by law, the right to a jury trial in any action, summary proceeding, or legal proceeding between or among the parties hereto or their successors arising out of this Lease or Tenant’s occupancy of the Demised Premises or Tenant’s rights to occupy the Demised Premises.

30.Cost of Living Adjustment in Rent.  The parties hereto further mutually agree that a records shall be made at the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index, all items, for the United States, State of Maryland (the “Index”) for the month ending January 31, 1995 (the “Base Month”), which records shall serve as a base or beginning point of computing whether there shall be any additional rent paid by the Tenant to the Landlord during the renewal term hereof.  If the Index for the first (1st) day of February 1996 shows an increase in the Index, the Tenant shall pay the Landlord additional rent during the following lease year period of said Lease an amount equivalent to the percentage increase in the Cost of Living Index.  For example, if, on the first (1st) day of May 1996, it is determined that the cost in the Index increased eleven percent over the Index as of the 31st day on January 1995, the Tenant shall pay to the Landlord as additional rental for the next year of this Lease beginning on the 1st day of February 1996, to the 31st day of January 1997, eleven percent (11%) more than the fixed annual rental provided herein.  The rent shall continue to increase annually thereafter during each and every year hereof based upon the annual increase in the Cost of Living Index calculated in the same manner hereinabove.  In no event shall any annual increase in rent ever be less than five percent (5%) over the year.

In the event that the index is discontinued, the parties agree to accept comparable statistics on the cost of living for all items for the City of Baltimore which may be issued in lieu thereof by the Bureau of Labor or any successor of same or to an Index mutually acceptable by the parties as a substitute therefor.  If the parties do not mutually agree on a Substitute Index, such Substitute Index shall be selected by arbitration.  Landlord and Tenant shall each appoint an arbitrator; and if the arbitrators so appointed are unable to agree, this matter will be determined by a third arbitrator, to be selected by the two arbitrators chosen by the Landlord and Tenant.  If there is no agreement as to a third arbitrator, such arbitrator shall be appointed by a judge sitting in the Circuit Court for Baltimore City, acting in a non-judicial capacity.  Landlord and Tenant shall pay the expense of such arbitrator selected by them; and if a third arbitrator is required, jointly for the expense of such third arbitrator.

31.Governing Law.  This Lease shall be interpreted, construed, and enforced under the laws of the State of Maryland applicable to agreements made and to be performed entirely herein.

32.Counterparts.  This Lease may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

33.Notices.  All notices, request consents, and other communications required or permitted to be given hereunder shall be in writing and shall have been deemed to have been given if delivered personally or mailed first class by registered or certified mail, return-receipt requested, as follows (or to such other address as either party may designate in writing to the other in accordance herewith):

IF TO THE LANDLORD:	Keyser Investment Group, Inc.
	2000 W. 41st Street
	Baltimore, MD 21211
WITH A COPY TO:	Steven A. Thomas, Esquire
	Thomas & Libowitz
	USF&G Tower, Suite 1100
	100 Pratt Street
	Baltimore, MD 21202-1053

IF TO THE TENANT:	Sinclair Broadcast Group, Inc.
	2000 W. 41st Street
	Baltimore, MD 21211
WITH A COPY TO:	Steven A. Thomas, Esquire
	Thomas & Libowitz
	USF&G Tower, Suite 1100
	100 Pratt Street
	Baltimore, MD 21202-1053

IN WITNESS WHEREOF, the parties hereto affix their hands and seals on the day and year first above written.

ATTEST:	LANDLORD:
	KEYSER INVESTMETNT GROUP, INC.
/s/ J. Duncan Smith	By: /s/ David D. Smith			(SEAL)
Secretary			President
	TENANT:
	SINCLAIR BROADCAST GROUP, INC.
/s/ J. Duncan Smith	By: /s/ David D. Smith			(SEAL)
Secretary		President

SHEDULE A

The “Premises” shall consist of the whole of the new addition to the existing building at 2000 W. 41st Street. The new addition consists of three floors of office space, rent for which will be paid as follows:

2nd floor -	$5,000 per month
	($12.00 per sq. ft. x 5,000 sq. ft. = $60,000 per year) Completed
*1st floor -	$1,666.66 per month
	($6.00 per sq. ft. x 3,333 sq. ft. = $20,000 per year) Unfinished
**3rd floor -	$2,500 per month
	($6.00 per sq. ft. x 5,000 sq. ft. = $30,000 per year) Unfinished

Rent for the 1st and 3rd floors will increase to $12.00 per sq. ft. as areas are completed and occupied as useable office space.

* Occupied July 23, 1996

** Occupied August 16, 1996 (but not fully furnished)

EX-10.48

Exhibit 10.48

ASSET PURCHASE AGREEMENT

DATED NOVEMBER 12, 2004

AMONG

KSMO, INC.,

KSMO LICENSEE, INC.

AND

MEREDITH CORPORATION

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of November 12, 2004, by and among KSMO, Inc., a Maryland corporation (the “Non-License Seller”), KSMO Licensee, Inc., a Delaware corporation (the “License Seller”) (each a “Seller” and collectively “Sellers”), and Meredith Corporation, an Iowa corporation (“Buyer”).

R E C I T A L S

A.            The License Seller owns those licenses, permits, and authorizations issued by the FCC, together with certain related assets relating to television broadcast station KSMO-TV in Kansas City, Missouri, including digital television station KSMO-DT (collectively, the “Station”).

B.            The Non-License Seller owns all of the assets of the Station, other than the assets owned by License Seller.

C.            Sellers desire to sell, and Buyer desires to purchase, substantially all of the assets of the Station other than the Excluded Assets on the terms and conditions hereinafter set forth.

AGREEMENTS

IN CONSIDERATION OF THE ABOVE RECITALS and of the mutual agreements and covenants contained in this Agreement, the parties to this Agreement, intending to be bound legally, agree as follows:

SECTION 1
CERTAIN DEFINITIONS

1.1.          Terms Defined in this Section.  The following terms, as used in this Agreement, have the meanings set forth in this Section.

“Accounts Receivable” means the rights of Sellers as of the First Closing Date to payment for the sale of advertising time and other goods and services provided by the Station prior to the First Closing Date.

“Action” means for any Person, any action, counterclaim, suit, litigation, arbitration, governmental investigation, or other legal, administrative, or Tax proceeding, Judgment, complaint, or claim by or against such Person, excluding any litigation affecting the television broadcasting industry generally in which such Person is not a named party, and any rule-making proceedings.

“Affiliate” means, with respect to any Person, (a) any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, or (b) an officer or director of such Person or of an Affiliate of such

Person within the meaning of clause (a) of this definition.  For purposes of clause (a) of this definition, (i) a Person shall be deemed to control another Person if such Person (A) has sufficient power to enable such Person to elect a majority of the board of directors of such Person, or (B) owns a majority of the beneficial interests in income and capital of such Person, and (ii) a Person shall be deemed to control any partnership of which such Person is a general partner.

“Assets” means the assets to be transferred or otherwise conveyed by Sellers to Buyer under this Agreement as specified in Section 2.1.

“Assumed Contracts” means (a) all Contracts listed on Schedule 3.5 and/or Schedule 3.7; (b) Contracts entered into prior to the date of this Agreement with advertisers for the sale of advertising time or production services for cash at rates consistent with past practices; (c) Contracts entered into prior to the date of this Agreement which are not required to be included on Schedule 3.7 hereto; and (d) any Contracts entered into by Sellers between the date of this Agreement and the License Closing Date (i) as permitted by Section 5.2(g) hereof and/or (ii) that Buyer agrees in writing to assume.

“Business Day” means any day of the year on which banks are not required or authorized to be closed in the State of New York.

“Code” means the Internal Revenue Code of 1986, as amended.

“Communications Act” means the Communications Act of 1934, as amended.

“Consents” means the consents, permits, or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transactions contemplated by this Agreement.

“Consent-Pending Contract” means a Contract designated to be (i) a FC Assumed Contract by Buyer regarding which Sellers shall be unable to obtain a necessary third-party Consent to the assignment thereof to Buyer within sixty (60) days after the designation of such Contract as a FC Assumed Contract; or (ii) a LC Assumed Contract regarding which Sellers shall be unable to obtain on or prior to the License Closing Date a necessary third-party Consent to the assignment thereof to Buyer upon the License Closing.

“Contracts” means all contracts, consulting agreements, leases, non-governmental licenses, and other agreements (including leases for personal or real property and employment agreements), written or oral (including any amendments and other modifications thereto), to which either Seller is a party or that are binding upon either Seller that relate to or affect the Assets or the business or operations of the Station and that are in effect on the date of this Agreement or are entered into by either Seller subsequent to the date hereof pursuant to the terms hereof.

“Effective Time” means 12:01 a.m., Eastern Standard Time, on the date of this Agreement.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Excluded Assets” means those items set forth in Sections 2.2(a) through 2.2(n).

“FC Assumed Contracts” means the Assumed Contracts assigned by Sellers to Buyer, subject to the receipt of any necessary third-party Consents, pursuant to the Assignment and Assumptions Agreement entered into between Buyer and Sellers at the First Closing.

“FCC” means the Federal Communications Commission.

“FCC Consent” means action by the FCC granting its consent to the assignment of the FCC Licenses by License Seller to Buyer as contemplated by this Agreement.

“FCC Effective Time” means 12:01 a.m. Eastern Standard Time on the License Closing Date.

“FCC Licenses” means those licenses, permits, and authorizations issued by the FCC to License Seller in connection with the business and operations of the Station.

“Final Order” means FCC Consent that has not been reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal, or stay, and the time for filing any such request and the time for the FCC to set aside the action on its own motion have expired.

“First Closing” means the consummation of the sale and acquisition of the Assets (other than the License Assets) pursuant to this Agreement in accordance with the provisions of Section 7.1.

“Governmental Authority” means any court or any federal, state, county, local or foreign governmental, legislative, or regulatory body, agency, department, authority, instrumentality, or other subdivision thereof, including the FCC.

“Hazardous Material” means any pollutant, contaminant, hazardous or toxic substance, material, constituent or waste or any pollutant that is labeled or regulated as such by any Governmental Authority pursuant to any Legal Requirements concerning the environment, public health and safety, and employee health and safety.

“Intangibles” means all copyrights, trademarks, trade names, service marks, service names, licenses, patents, permits, jingles, proprietary information, technical information and data, machinery and equipment warranties, trade secrets, and other similar intangible property rights and interests (and any goodwill associated with any of the foregoing) applied for, issued to, or owned by Sellers or under which Sellers are licensed or franchised and that are used in the business and operations of the Station, together with any additions thereto between the date of this Agreement and the License Closing Date.

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“Judgment” means any judgment, writ, order, injunction, determination, award, or decree of or by any court, judge, justice, or magistrate, including any bankruptcy court or judge, and any order by any Governmental Authority.

“Knowledge” or any derivative thereof with respect to the Sellers means the actual knowledge of the President, the Chief Financial Officer or the General Counsel of SBG, or the general manager or main engineer of the Station, after reasonable inquiry by each person within his area of responsibility.

“LC Assumed Contracts” means all of the Assumed Contracts that are not FC Assumed Contracts, excluding any Assumed Contract that between the date hereof and the License Closing (i) shall have expired in accordance with its terms upon the expiration of the full term thereof, and (ii) shall be excluded from FC Assumed Contracts with the mutual agreement of Buyer and Sellers (such consent to be given or withheld by either party in such party’s sole discretion).

“Legal Requirement” means any statute, ordinance, code, law, rule, regulation, permit or permit condition, Judgment, or any other requirement, standard, or procedure enacted, adopted, or applied by any Governmental Authority.

“License Assets” means the assets described in Section 2.1(b), but excluding the Excluded Assets.

“License Closing” means the consummation of the sale and acquisition of the License Assets pursuant to this Agreement in accordance with the provisions of Section 7.1(b).

“License Closing Date” means the date on which the License Closing occurs as determined pursuant to Section 7.1(b).

“Licenses” means all licenses, permits, construction permits, and other authorizations issued by the FCC, the Federal Aviation Administration, or any other federal, state, or local governmental authorities to Sellers currently in effect and used in connection with the conduct of the business or operations of the Station, together with any additions thereto, between the date of this Agreement and the License Closing Date.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge, or security interest in or on such asset, and (b) the title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

“Material Adverse Effect” means a material adverse effect on the business, assets, or condition (financial or otherwise) of the Station taken as a whole, except for any such material adverse effect resulting from (a) general economic conditions applicable to the television broadcast industry, (b) general conditions in the markets in which the Station operates, or (c) circumstances that are not likely to recur and which circumstances (as well as any consequences thereof) have been substantially remedied.

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“Material Contract” means each Assumed Contract (i) that is designated on Schedules 3.5 or 3.7, as a “Material Contract,” or (ii) that is entered into by Sellers between the date of this Agreement and the License Closing Date that requires a third-party Consent for Sellers to assign to Buyer if the failure to obtain such Consent could reasonably be expected to have a Material Adverse Effect.

“Non-License Assets” means the assets described in Section 2.1(a), but excluding the Excluded Assets.

“Permitted Encumbrances” means (a) encumbrances of a landlord or other statutory lien not yet due and payable or a landlord’s liens arising in the ordinary course of business; (b) encumbrances arising in connection with equipment or maintenance financing or leasing under the terms of Assumed Contracts; (c) encumbrances for taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on Sellers’ books in accordance with generally accepted accounting principles; (d) encumbrances that do not materially detract from the value of any of the Assets or materially interfere with the use thereof as currently used; or (e) encumbrances for borrowed money which will be removed prior to the First Closing Date.

“Person” means an individual, corporation, association, partnership, joint venture, trust, estate, limited liability company, limited liability partnership, or other entity or organization.

“Real Property Interests” means all interests in real property, including leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereto, owned or held by Sellers that are used or held for use in the business or operations of the Station.

“SBG” means Sinclair Broadcast Group, Inc.

“Tangible Personal Property” means all machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, inventory, spare parts, and other tangible personal property owned or held by Sellers that is used or held for use in the business or operations of the Station.

“Tax” means any federal, state, local, or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, capital, transfer, employment, withholding, or other tax or governmental assessment, together with any interest, additions, or penalties with respect thereto, and any interest in respect of such additions or penalties.

“Tax Return” means any tax return, declaration of estimated tax, tax report, or other tax statement, or any other similar filing required to be submitted to any governmental authority with respect to any Tax.

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“WB” means The WB Television Network Partners, L.P., d/b/a The WB Television Network.

1.2.          Terms Defined Elsewhere in this Agreement.  For purposes of this Agreement, the following terms have the meanings set forth in the sections indicated:

Term	Section
Benefit Arrangement	Section 3.14(a)
Benefit Plans	Section 3.14(a)
Buyer	Preamble
Claimant	Section 9.4
Damages	Section 9.2
Employees	Section 3.14(a)
Environmental Laws	Section 3.16
Estimated Purchase Price	Section 2.4(a)
FCC Application	Section 5.1(d)
FCC Employees	Section 5.7(a)
Financial Statements	Section 3.10
First Closing Date	Section 2.1(a)
Indemnifying Party	Section 9.4
Station	Recitals
Lease	Section 5.10
License Price	Section 2.4(b)
License Seller	Preamble
JSA	Section 5.8
Multiemployer Plan	Section 3.14(a)
Non-License Seller	Preamble
Pension Plan	Section 3.14(a)
Purchase Price	Section 2.3
Sellers	Preamble
Station	Recitals
Transferred Employees	Section 5.7
Welfare Plan	Section 3.14(a)

1.3.          Rules of Construction.  Words used in this Agreement, regardless of the gender and number specifically used, shall be deemed and construed to include any other gender and any other number as the context requires.  As used in this Agreement, the word “including” is

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not limiting, and the word “or” is not exclusive.  Except as specifically otherwise provided in this Agreement in a particular instance, a reference to a Section or Schedule is a reference to a Section of this Agreement or a Schedule hereto, and the terms “hereof,” “herein,” and other like terms refer to this Agreement as a whole, including the Schedules to this Agreement, and not solely to any particular part of this Agreement.  The descriptive headings in this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

SECTION 2
PURCHASE AND SALE OF ASSETS

2.1.          Agreement to Purchase and Sell.  The purchase and sale of the Assets hereunder shall occur as set forth below:

(a)           Subject to the terms and conditions set forth in this Agreement, the Sellers hereby agree to sell, transfer, convey, assign, and deliver to Buyer on the date hereof (the “First Closing Date”), and Buyer agrees to acquire all of Sellers’ right, title, and interest in the tangible and intangible assets used in connection with the conduct of the business or operations of the Station, but excluding the License Assets listed in Sections 2.1(b)(i) through 2.1(b)(ix) and the Excluded Assets, free and clear of any Liens (except for Permitted Encumbrances), including the following:

(i)            the Tangible Personal Property;

(ii)           the FC Assumed Contracts;

(iii)          the Intangibles, including any goodwill of the Station related to the Non-License Assets;

(iv)          all of the Sellers’ proprietary information, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints, and schematics, but excluding filings with the FCC, in each case, to the extent relating to the business and operation of the Station;

(v)           all choses in action of the Sellers relating to the Station to the extent they relate to the period after the Effective Time and do not relate to the License Assets; and

(vi)          all books and records relating to the business or operations of the Station, but excluding all records required by the FCC to be kept by the Station.

(b)           Subject to the terms and conditions set forth in this Agreement, the Sellers hereby agree to sell, transfer, convey, assign, and deliver to Buyer on the License Closing Date, and Buyer agrees to acquire, all of Sellers’ right, title, and interests in the tangible and intangible assets used in connection with the conduct of the business or operations of the Station, together with any additions thereto (as permitted hereby), between the date of this Agreement and the

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License Closing Date, but excluding the Non-License Assets and the Excluded Assets, free and clear of any Liens (except for Permitted Encumbrances), including the following:

(i)the Licenses;

(ii)all filings with the FCC to the extent relating to the business and operation of the Station;

(iii)all records required by the FCC to be kept by the Station;

(iv)all antennas, transmission lines, and transmission equipment;

(v)the Real Property Interests;

(vi)the LC Assumed Contracts;

(vii)the Intangibles “KSMO,” “KSMO-TV” and “The WB 62”;

(viii)any goodwill related to the License Assets; and

(ix)all choses in action of the Sellers relating to the Station to the extent they relate to the period after the FCC Effective Time and relate to the License Assets; and

2.2.          Excluded Assets.  The Assets shall exclude the following:

(a)           Sellers’ cash, investments, cash equivalents and deposits, all interest payable in connection with any such items and rights in and to bank accounts marketable, and other securities of Sellers;

(b)           any insurance policies, promissory notes, amounts due from employees, bonds, letters of credit, certificates of deposit, or other similar items, and any cash surrender value in regard thereto;

(c)           any pension, profit-sharing, or employee benefit plans, including all of Seller’s interest in any Welfare Plan, Pension Plan, or Benefit Arrangement (each as defined in Section 3.14(a));

(d)           all Tangible Personal Property disposed of or consumed in the ordinary course of business as permitted by this Agreement;

(e)           all tax returns and supporting materials, all original financial statements and supporting materials, all books and records that Sellers are required by law to retain, all of Sellers’ organizational documents, corporate books, and records (including minute books and stock ledgers) and originals of account books of original entry, all records of Sellers relating to

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the sale of the Assets, and all records and documents related to any assets excluded pursuant to this Section 2.2;

(f)            any interest in and to any refunds of federal, state, or local franchise, income, or other taxes for periods prior to the License Closing Date;

(g)           all Accounts Receivable;

(h)           all rights and claims of Sellers whether mature, contingent, or otherwise, whether in tort, contract, or otherwise, against third parties relating to the Assets or the operation of the Station prior to the First Closing Date, or the License Assets prior to the License Closing Date;

(i)            any Contracts which are not Assumed Contracts;

(j)            all of each Sellers’ deposits and prepaid expenses; provided any deposits and prepaid expenses shall be included in the Assets to the extent that Sellers receive a credit therefor in the proration of the Purchase Price pursuant to Section 2.3(a);

(k)           all rights of Sellers under or pursuant to this Agreement (or any other agreements contemplated hereby);

(l)            all rights to the names “Sinclair,” “Sinclair Broadcast Group,” “Sinclair Communications,” “Sinclair Television,” and any logo or variation thereof and goodwill associated therewith;

(m)          any and all assets related to any television broadcast station other than Station owned or operated by SBG or its direct or indirect subsidiaries as described on Schedule 2.2(m); and

(n)           network compensation paid to SBG by WB following the date hereof solely in return for the agreement entered into on July 4, 1997, between SBG and WB pursuant to which SBG agreed to affiliate the Station and certain of its other television broadcast stations with WB.

2.3.          Purchase Price.  The purchase price of the Assets (the “Purchase Price”) shall be Thirty Three Million Five Hundred Thousand Dollars ($33,500,000.00) adjusted as provided below:

(a)           Prorations.  The Purchase Price shall be prorated and adjusted pursuant to this Section 2.3 after each of the First Closing and the License Asset Closing.  The Purchase Price shall be increased or decreased as required to effectuate the proration of revenues and expenses.  All revenues and all expenses arising from the operation of the Station relating to the Non-License Assets or the License Assets, as applicable, including tower rental, business and license fees, utility charges, real and personal property taxes and assessments levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service

9

charges, payments due under film or programming license agreements, taxes (except for taxes arising from the transfer of the Assets under this Agreement), and vacation and personal leave pay shall be prorated between Buyer and Sellers as of the First Closing or the License Assets Closing, as applicable, in accordance with the principle that Sellers shall receive all revenues and shall be responsible for all expenses, costs, and liabilities allocable to the operation of the Station for the period prior to the Effective Time, Buyer shall receive all revenues and shall be responsible for all expenses, costs, and obligations allocable to the operation of the Station for the period after the FCC Effective Time, and all revenues and all expenses, costs, and liabilities arising with respect to the operation of the Station during the period between the Effective Time and the FCC Effective Time shall be allocated between Buyer and Sellers in accordance with the terms of the JSA, subject to the following:

(i)            There shall be no adjustment for, and Sellers shall remain solely liable with respect to, any Contracts not included in the Assumed Contracts and any other obligation or liability not being assumed by Buyer in accordance with Section 2.5.  An adjustment and proration shall be made in favor of Buyer to the extent that Buyer assumes any liability under any Assumed Contract to refund (or to credit against payments otherwise due) any security deposit or similar prepayment paid to Sellers by any lessee or other third party.  An adjustment and proration shall be made in favor of Sellers to the extent Buyer receives the right to receive a refund (or to a credit against payments otherwise due) under any Assumed Contract to any security deposit or similar prepayment paid by or on behalf of Sellers.

(ii)           An adjustment and proration shall be made in favor of Sellers for the amount, if any, by which the value of the goods or services to be received by the Station under its trade or barter agreements as of the Effective Time or the FCC Effective Time, as applicable, for the Station exceeds by more than Fifty Thousand Dollars ($50,000) the value of any advertising time remaining to be run by the Station as of the Effective Time or the FCC Effective Time, as applicable.  An adjustment and proration shall be made in favor of Buyer to the extent that the amount of any advertising time remaining to be run by the Station under its trade or barter agreements as of the Effective Time or the FCC Effective Time, as applicable, exceeds by more than Fifty Thousand Dollars ($50,000) the value of the goods or services to be received by the Station as of the Effective Time or the FCC Effective Time, as applicable.

(iii)          There shall be no proration for program barter.

(iv)          An adjustment and proration shall be made in favor of Sellers for the amount, if any, of prepaid expenses and other current assets which are paid by Sellers to the extent such prepaid expenses and other current assets relate to the period after the Effective Time or the FCC Effective Time, as applicable.

(v)           There shall be no adjustment for, and Sellers shall remain solely liable with respect to, any employee benefits or compensation, including wages (including bonuses which constitute wages), salaries and accrued vacation due to any employee of Sellers, except that an adjustment and proration in favor of the Buyer shall be made for vacation pay and personal leave pay liabilities accrued but unused as of Closing by the Transferred Employees.

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(b)           Manner of Determining Adjustments.  The Purchase Price, taking into account the adjustments and prorations pursuant to Section 2.3(a), will be determined in accordance with the following procedures:

(i)            Sellers shall prepare and deliver to Buyer on the First Closing Date and the License Closing Date, as applicable, a preliminary settlement statement which shall set forth Sellers’ good faith estimate of the adjustments to the Purchase Price under Section 2.3(a).  Such preliminary settlement statement shall (A) contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(a), to the extent such adjustments can be determined or estimated as of the date of the preliminary settlement statement, and such other information as may be reasonably requested by Buyer, and (B) be certified by Sellers to be true and complete to Sellers’ Knowledge as of the date thereof.

(ii)           Not later than ninety (90) days after the First Closing Date or the License Closing Date, as applicable, Buyer will deliver to Sellers a statement setting forth Buyer’s determination of the Purchase Price which was due on such date and the calculation thereof pursuant to Section 2.3(a).  Buyer’s statement (A) shall contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(a), and such other information as may be reasonably requested by Sellers, and (B) shall be certified by Buyer to be true and complete to Buyer’s Knowledge as of the date thereof.  If Sellers dispute the amount of the Purchase Price determined by Buyer, they shall deliver to Buyer within thirty (30) days after receipt of Buyer’s statement a statement setting forth their determination of the amount of the Purchase Price.  If Sellers notify Buyer of its acceptance of Buyer’s statement or if Sellers fail to deliver their statement within the thirty (30) day period specified in the preceding sentence, Buyer’s determination of the Purchase Price shall be conclusive and binding on the parties as of the last day of the thirty (30) day period.

(iii)          Buyer and Sellers shall use good faith efforts to resolve any dispute involving the determination of the Purchase Price.  If the parties are unable to resolve the dispute within forty five (45) days following the delivery of Buyer’s statement pursuant to Section 2.3(b)(ii), Buyer and Sellers shall jointly designate an independent certified public accountant not regularly servicing either Sellers or Buyer within the last five (5) years who shall be knowledgeable and experienced in the operation of television broadcasting stations to resolve the dispute.  If the parties are unable to agree on the designation of an independent certified public accountant, the selection of the accountant to resolve the dispute shall be submitted to arbitration to be held in Baltimore, Maryland in accordance with the commercial arbitration rules of the American Arbitration Association.  The accountant’s resolution of the dispute shall be final and binding on the parties, and a judgment may be entered thereon in any court of competent jurisdiction.  Any fees of this accountant and, if necessary, for arbitration to select such accountant shall be divided equally between the parties.

2.4.          Payment of Purchase Price.  The Purchase Price shall be paid by Buyer to Sellers as follows:

(a)           Payment of Estimated Purchase Price at First Closing.  The sum of Twenty Six Million Eight Hundred Thousand Dollars ($26,800,000), adjusted by the estimated

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adjustments pursuant to Section 2.3(a), as set forth in Sellers’ preliminary settlement statement pursuant to Section 2.3(b)(i), is referred to as the “Estimated Purchase Price”.  At the First Closing, Buyer shall pay or cause to be paid to Sellers the Estimated Purchase Price by wire transfer of same-day funds pursuant to wire transfer instructions, furnished by Non License Seller to Buyer.

(b)           Payments of Purchase Price with Respect to License Assets.  The portion of the Purchase Price allocated to the License Assets shall be Six Million Seven Hundred Thousand Dollars ($6,700,000) (the “License Price”), provided, however, if Buyer shall exercise its option to extend the termination date of this Agreement to the tenth (10th) anniversary of the date hereof pursuant to Section 8.1 and shall pay or caused to be paid to Sellers the amount of Three Million Three Hundred Fifty Thousand Dollars ($3,350,000) as required thereunder, then such extension payment shall be credited to the payment of the License Price, and the balance of the License Price due at the License Closing shall be Three Million Three Hundred Fifty Thousand Dollars ($3,350,000).  At the License Closing, Buyer shall pay or cause to be paid to the License Seller the License Price (or if applicable the balance thereof) by wire transfer of same-day funds pursuant to wire transfer instructions furnished by License Seller to Buyer.

(c)           Payments to Reflect Adjustments.  The Purchase Price, as finally determined pursuant to Section 2.3(b), shall be paid as follows:

(i)            If the Purchase Price, as finally determined pursuant to Section 2.3(b), exceeds the Estimated Purchase Price and the License Price, Buyer shall pay to Sellers in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(b) the difference between the Purchase Price and the sum of the Estimated Purchase Price and the License Price.

(ii)           If the Purchase Price, as finally determined pursuant to Section 2.3(b), is less than the sum of the Estimated Purchase Price and the License Price, Sellers shall pay to Buyer in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(b) the difference between the Purchase Price and the sum of the Estimated Purchase Price and the License Price.

2.5.          Assumption of Liabilities and Obligations.  Buyer shall assume and undertake to pay, discharge, and perform all obligations and liabilities of the Sellers with respect to (a) the Non-License Assets, including the FC Assumed Contracts (subject to Section 5.9 hereof), as of the First Closing Date to the extent that either (i) the obligations and liabilities relate to the time after the Effective Time, or (ii) the Purchase Price was reduced pursuant to Section 2.3(a) as a result of the proration of such obligations and liabilities, and (b) the License Assets, including the LC Assumed Contracts (subject to Section 5.9 hereof) and the FCC Licenses, as of the License Closing Date to the extent that either (i) the obligations and liabilities relate to the time after the FCC Effective Time, or (ii) the Purchase Price was reduced pursuant to Section 2.3(a) as a result of the proration of such obligations and liabilities.  Buyer shall not assume any other obligations or liabilities of Sellers, including (1) any obligations or liabilities with respect to any Excluded Asset, including any obligations or liabilities under any Contract not included in the Assumed Contracts, (2) any obligations or liabilities under the FC Assumed Contracts relating to

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the period prior to the Effective Time or under the LC Assumed Contracts relating to the period prior to the FCC Effective Time, subject to Section 5.9 hereof, except insofar as an adjustment therefor is made in favor of Buyer under Section 2.3(a), (3) any claims or pending litigation or proceedings relating to the operation of the Station prior to the First Closing Date, (4) any obligations or liabilities of Sellers under any employee pension, retirement, or other benefit plans, or (5) all taxes in connection with the operation of the Station prior to the Effective Time or the FCC Effective Time (as appropriate).  The foregoing provisions of this Section 2.5 shall be subject to the terms of the JSA with respect to the payment, discharge, and performance of all obligations and liabilities that arise with respect to the operation of the Station during the period between the Effective Time and the FCC Effective Time.

SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS

Each Seller represents and warrants to Buyer as follows:

3.1.          Organization and Authority of Sellers.  License Seller and Non-License Seller are corporations formed under the laws and qualified to do business in the states listed in Schedule 3.1, in each case duly organized, in good standing, and validly existing under the laws of each such state.  Each Seller has the requisite corporate power and authority to own, lease, and operate its properties, to carry on its business in the places where such properties are now owned, leased, or operated and such business is now conducted, and to execute, deliver, and perform this Agreement and the documents contemplated hereby according to their respective terms.  Each Seller is duly qualified and in good standing in the jurisdiction of incorporation disclosed above.  Neither Seller is a participant in any joint venture or partnership with any other Person with respect to any part of the operations of the Station or any of the Assets.

3.2.          Authorization and Binding Obligation.  The execution, delivery, and performance of this Agreement by each Seller have been duly authorized by all necessary corporate action on the part of each Seller.  This Agreement has been duly executed and delivered by each Seller and constitutes its legal, valid, and binding obligation, enforceable against it in accordance with its terms, except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial discretion in the enforcement of equitable remedies.

3.3.          Absence of Conflicting Agreements; Consents.  Subject to obtaining the Consents listed on Schedule 3.3, the execution, delivery, and performance by each Seller of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not and will not require the consent of any third party; (b) does not and will not conflict with any provision of the Articles of Incorporation of either Seller; (c) does not and will not conflict with, result in a breach of, or constitute a default under any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; (d) does not and will not conflict with, constitute grounds for termination of, result in a material breach of, by the terms of any material agreement, instrument, license, or permit to which either Seller is a party or by which either Seller may be bound legally; and (e) does not and will not create any Lien upon any of the Assets.  Except for the

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FCC Consent provided for in Section 5.1 and the other Consents described in Schedule 3.3, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Sellers to transfer and convey the Assets to Buyer.  (For purposes of the making of the representations and warranties in this Section as of the License Closing, the term “Assets” shall refer to the “License Assets.”)

3.4.          Governmental Licenses.

(a)           Schedule 3.4(a) includes a true and complete list of the Licenses.  Sellers have provided to Buyer true and complete copies of the Licenses (including any amendments and other modifications thereto).  The Licenses have been validly issued, and the License Seller is the authorized legal holder of the Licenses.  The Licenses listed on Schedule 3.4(a) comprise all of the material licenses, permits, and other authorizations required from any governmental or regulatory authority for the lawful conduct in all material respects of the business and operations of the Station in the manner and to the full extent they are now conducted, and none of the Licenses is subject to any unusual or special restriction or condition that could reasonably be expected to limit the full operation of the Station as now operated.  The Licenses are in full force and effect, and the conduct of the business and operations of the Station is, in all material respects, in accordance therewith.  Sellers have no reason to believe that, under existing law, rules, regulations, policies, and procedures of the FCC, any of the FCC Licenses would not be renewed by the FCC or other granting authority in the ordinary course.

(b)           Except as described on Schedule 3.4(b), no action or proceeding is pending or, to the Knowledge of the Sellers, threatened before the FCC or any other governmental authority to revoke, refuse to renew or modify the FCC Licenses, or other authorizations of the Station and, to Sellers’ Knowledge, no event has occurred which permits, or after notice or lapse of time or both would permit, the revocation, cancellation, or recission of any of the FCC Licenses.  There is not now issued, outstanding or pending, or to the Knowledge of Sellers, threatened, by or before the FCC, any order to show cause, notice of violation, notice of apparent liability, or notice of forfeiture or complaint against Sellers with respect to the Station.

3.5.          Real Property.  Sellers do not own any fee interests in real property.  Schedule 3.5 contains a complete and accurate description of all Real Property Interests (including street address, legal description, where known, owner, and Sellers’ use thereof).  The Real Property Interests listed on Schedule 3.5 comprise all interests in real property necessary to conduct the business and operations of the Station as now conducted.  Except as described on Schedule 3.5, Non-License Seller owns and has good leasehold title to each Real Property Interest, and none of the Real Property Interests held by Non-Licensee Seller is subject to any Lien, except for Permitted Encumbrances.  With respect to each leasehold or subleasehold interest included in the Real Property Interests, so long as Sellers fulfill their obligations under the lease therefor, Sellers have enforceable rights to nondisturbance and quiet enjoyment against its lessor or sublessor and, to the Knowledge of Sellers, except as set forth in Schedule 3.5, no third party holds any interest in the leased premises with the right to foreclose upon Sellers’ leasehold or subleasehold interest.  Sellers have legal and practical access to all of the Real

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Property Interests.  All towers, guy anchors, buildings, and other improvements included in the Assets are located entirely on the Real Property Interests listed in Schedule 3.5.  All Real Property Interests (a) are in good condition and repair consistent with its present use, (b) available for immediate use in the conduct of the business and operations of the Station, and (c) comply in all material respects with all applicable material building or zoning codes and the laws and regulations of any governmental authority having jurisdiction except to the extent that the current use by Sellers, while permitted, constitutes or would constitute a “nonconforming use” under current zoning or land use regulations.

3.6.          Tangible Personal Property.  Schedule 3.6 lists all material items of Tangible Personal Property with those items marked with an asterisk on Schedule 3.6 consisting of the Tangible Personal Property which is part of the License Assets.  The Tangible Personal Property listed on Schedule 3.6 comprises all material items of tangible personal property necessary to conduct the business and operations of the Station as now conducted.  Except as described in Schedule 3.6, Sellers own and have good title to each item of Tangible Personal Property, and none of the Tangible Personal Property owned by Sellers is subject to any Lien, except for Permitted Encumbrances.  With allowance for normal repairs, maintenance, wear, and obsolescence, each material item of Tangible Personal Property is in good operation, condition, and repair and is available for immediate use in the business and operations of the Station.  All material items of transmitting and studio equipment included in the Tangible Personal Property have been maintained in a manner consistent with generally accepted standards of good engineering practice and will permit the Station and any unit auxiliaries thereto to operate in accordance with the terms of the FCC Licenses and the rules and regulations of the FCC and in all material respects with all other applicable federal, state, and local statutes, ordinances, rules, and regulations.

3.7.          Contracts.  Schedule 3.7 is a true and complete list of all Contracts which either (a) have a remaining term of more than one year after the date hereof, or (b) require expenditures in excess of Ten Thousand Dollars ($10,000.00) individually in any calendar year after the Effective Time, except contracts with advertisers for production or the sale of advertising time on the Station for cash that may be canceled by Sellers without penalty on not more than ninety (90) days’ notice.  Sellers have delivered to Buyer true and complete copies of all written Assumed Contracts (including any amendments and other modifications to such Contracts).  Other than the Contracts listed on Schedule 3.7, Sellers require no contract, lease, or other agreement to enable them to carry on their business in all material respects as now conducted.  All of the Contracts are in full force and effect and are valid, binding, and enforceable in accordance with their terms and, with respect to each Contract, there exists no material default on the part of Sellers or, to the Knowledge of Sellers, the other parties thereto.  Except as disclosed on Schedule 3.7, other than in the ordinary course of business, Sellers do not have Knowledge of any intention by any party to any Contract (a) to terminate such Contract or amend the terms thereof, (b) to refuse to renew the Contract upon expiration of its term, or (c) to renew the Contract upon expiration only on terms and conditions that are more onerous than those now existing.  Except for the need to obtain the Consents listed on Schedule 3.3, the sale and transfer of the Assets in accordance with this Agreement will not affect the validity, enforceability, or continuation of any of the Contracts.

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3.8.          Intangibles.  Schedule 3.8 is a true and complete list of all Intangibles (exclusive of Licenses listed in Schedule 3.4(a)) that are required to conduct the business and operations of the Station as now conducted.  Sellers have provided to Buyer copies of all documents establishing or evidencing the Intangibles listed on Schedule 3.8.  Other than with respect to matters generally affecting the television broadcasting industry and not particular to Sellers, to Sellers’ Knowledge, Sellers are not, nor have Sellers received any notice or demand alleging that Sellers are infringing upon or otherwise acting adversely to any trademarks, trade names, service marks, service names, copyrights, patents, patent applications, know-how, methods, or processes owned by any other Person, and there is no claim or action pending or, to the Knowledge of Sellers, threatened with respect thereto.

3.9.          Title to Properties.  Except as disclosed in Schedules 3.5 or 3.6, Sellers have good and marketable title to or have valid leasehold interest in the Assets subject to no Liens, except for Permitted Encumbrances.  (For purposes of the making of the representations and warranties in this Section as of the License Closing, the term “Assets” shall refer to the “License Assets.”)

3.10.        Financial Statements.  Sellers have furnished Buyer with true and complete copies of unaudited financial statements of the Station containing a balance sheet, statement of income, and statement of cash flows as at and for the fiscal year ended December 31, 2003, and an unaudited balance sheet and statement of income as at and for the nine (9) months ended September 30, 2004 (collectively, the “Financial Statements”).  The Financial Statements have been prepared from the books and records of Sellers and have been prepared in a manner consistent with generally accepted accounting principles (except for the absence of footnotes and certain year-end adjustments, none of which are material).  Except as indicated on Schedule 3.10, the Financial Statements accurately reflect the books, records, and accounts of Sellers, present fairly the financial condition of the Station as at its respective dates and the results of operations for the periods then ended, and none of the Financial Statements understates in any material respect the true costs and expenses of conducting business or operations of the Station as currently conducted by Sellers or otherwise materially inaccurately reflects the operations of the Station.

3.11.        Taxes.  Except as set forth in Schedule 3.11, Sellers have filed or caused to be filed all Tax Returns that are required to be filed with respect to their ownership and operation of the Station, and have paid or caused to be paid all taxes shown on those returns or on any tax assessment received by it to the extent that such Taxes have become due, or have set aside on their books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto.  Such Tax Returns are true and complete in all material respects.  There are no legal, administrative, or tax proceedings pursuant to which Sellers are or could be made liable for any Taxes, penalties, interest, or other charges, the liability for which could extend to Buyer as transferee of the business of the Station, and no event has occurred that could impose on Buyer any transferee liability for any Taxes, penalties, or interest due or to become due from Sellers.

3.12.        Insurance.  Schedule 3.12 is a true and complete list of all insurance policies of or covering the Assets.  All policies of insurance listed in Schedule 3.12 are in full force and

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effect.  During the past three (3) years, no insurance policy of Sellers or the Station has been cancelled by the insurer, and no application of Sellers for insurance has been rejected by any insurer.

3.13.        Reports.  All material returns, reports, and statements that the Station is currently required to file with the FCC or Federal Aviation Administration have been filed, all reporting requirements of the FCC and Federal Aviation Administration have been complied with in all material respects, including, without limitation, items required to be placed in the Station’s public inspection file.  All of such returns, reports, and statements, as filed, which relate to the Station, to Sellers’ Knowledge, satisfy all applicable legal requirements.

3.14.        Personal and Employee Benefits.

(a)           Employees and Compensation.  Schedule 3.14 contains a true and complete list of all employees of Sellers or their Affiliates who are employed at the Station as of the date hereof (collectively, the “Employees”) and indicates the salary or hourly wage to which each such Employee is currently entitled (limited in the case of Employees who are compensated on a commission basis to a general description of the manner in which such commissions are determined), any bonus for which the Employee may be eligible, the date of hire, and Employee’s title.  Schedule 3.14 includes all Employees of Sellers who are on leave pursuant to the Family Medical Leave Act of 1993 or otherwise and indicates whether such leave is paid or unpaid and when such leave commenced.  Schedule 3.14 also contains a true and complete list of all employee benefit plans or arrangements covering any of the Employees, including any:

(i)  “employee welfare benefit plan,” as defined in Section 3(1) of ERISA, that is maintained or administered by Sellers or any Affiliate for the benefit of, or to which Sellers or any Affiliate contribute or are required to contribute on behalf of, any Employees (a “Welfare Plan”);

(ii)  “multiemployer pension plan,” as defined in Section 3(37) of ERISA, that is maintained or administered by Sellers or any Affiliate for the benefit of, or to which Sellers or any Affiliate contribute or are required to contribute on behalf of, any Employees (a “Multiemployer Plan”);

(iii)  “employee pension benefit plan,” as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), that is maintained or administered by Sellers or any Affiliate for the benefit of, or to which Sellers or any Affiliate contribute or are required to contribute on behalf of, any Employees (a “Pension Plan”);

(iv)  employee plan that is maintained in connection with any trust described in Section 501(c)(9) of the Code, as amended,which benefits any Employee or any Employee’s dependents or beneficiaries (together with the Welfare Plans, Multiemployer Plans and Pension Plans, the “Benefit Plans”); and

(v)  employment, severance, or other similar contract, arrangement, or policy and each plan or arrangement (written or oral) providing for insurance coverage

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(including any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, sick pay benefits, personal leave benefits, or retirement benefits or for deferred compensation, profit sharing, bonuses, stock options, stock appreciation rights, stock purchases, or other forms of incentive compensation or post-retirement insurance, compensation or benefits that (A) is not a Benefit Plan, and (B) is entered into, maintained, contributed to, or required to be contributed to by either Seller or any Affiliate, or under which either Seller or any Affiliate has any liability (collectively, “Benefit Arrangements”).

(b)           Pension Plans.  Sellers do not sponsor, maintain, or contribute to any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing Plan which is a defined contribution profit sharing plan under the terms of Section 412(h)(1) of the Code.  Such Pension Plan is currently, and has been, maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all statutes, orders, rules, and regulations that are applicable to such plans, including ERISA and the Code.

(c)           Welfare Plans.  Each Welfare Plan is currently, and has been, maintained in substantial compliance with its terms and both as to form and in operation with all material requirements prescribed by any and all statutes, orders, rules, and regulations that are applicable to such plans, including ERISA and the Code.  Sellers do not sponsor, maintain, or contribute to any Welfare Plan that provides health or death benefits to former employees of the Station other than as required by Section 4980B of the Code.

(d)           Compliance.  No Pension Plan has been terminated; and there have been no reportable events (within the meaning of § 4043 of Subtitle C of ERISA) with respect to any Pension Plan or Benefit Plan.  Neither Sellers, nor to Sellers’ Knowledge, any plan fiduciary has engaged in any non-exempt “prohibited transactions” as defined in Section 406 of ERISA or Section 4975 of the Code with respect to any Benefit Plan.

(e)           Benefit Arrangements.  Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the material requirements prescribed by all statutes, orders, rules, and regulations that are applicable to such Benefit Arrangement.  Except for those employment agreements listed on Schedule 3.7, Sellers have no written or oral contract prohibiting Seller from terminating any Employee without prior notice and without liability for any penalty or continuing obligation to such Employee (including, for example, severance pay).

(f)            Multiemployer Plans.  Neither Sellers nor any Affiliates have at any time contributed to, or been required to contribute to, any Multiemployer Plan on behalf of any Employees.

(g)           Delivery of Copies of Relevant Documents and Other Information.  Sellers have delivered or made available to Buyer true and complete copies of each of the following documents:

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(i)            each Welfare Plan and Pension Plan, including any amendments thereto (and, if applicable, related insurance agreements, trust agreements, annuity contracts, or other funding instruments), and any written descriptions thereof that have been distributed to Employees, including the current summary plan description, any summary of material modifications, and any enrollment forms; and

(ii)           each Benefit Arrangement, including any amendments thereto (and if applicable, any funding instruments), and any written descriptions thereof that have been distributed to Employees and complete descriptions of any Benefit Arrangement that is not in writing.

(h)           Labor Relations.  Except as set forth in Schedule 3.14, no Seller is a party to or subject to any collective bargaining agreement or written or oral agreement with respect to the employment of any Employee, and no Seller is a party to any oral or written consulting or other agreement with respect to the personal services of any person who would be an Employee but for the fact that his status is that of an independent contractor.  With respect to the Employees, Sellers have complied in all material respects with all laws, rules, and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and have not received any notice alleging that any Seller has failed to comply with any such laws, rules, or regulations.  Except as set forth in Schedule 3.14, no controversies, disputes or proceedings are pending or, to the Knowledge of Sellers, threatened between any Seller and Employee (singly or collectively).  Except as set forth on Schedule 3.14, no labor union or other collective bargaining unit represents or claims to represent any of the Employees.  To the Knowledge of the Sellers, there is no union campaign being conducted to solicit cards from any Employees to authorize a union to represent any of the Employees or to request a National Labor Relations Board certification election with respect to any Employees.

3.15.        Claims and Legal Actions.  Except as disclosed on Schedule 3.15 and except for any FCC rulemaking proceedings generally affecting the television broadcasting industry and not particular to Sellers, as of the First Closing, and if, and only if, the License Closing occurs on or prior to the first anniversary of the First Closing, as of the License Closing, there is no claim, legal action, counterclaim, suit, arbitration, or other legal, administrative, or tax proceeding, nor any order, decree, or judgment, in equity or at law, in progress or pending or, to the Knowledge of Sellers, threatened against or relating to the Assets or the business or operations of the Station, or which seeks to enjoin or obtain damages in respect to the transactions completed hereby, nor does any Seller know of any basis for the same.  Neither Seller has received any Judgment against or affecting either Seller for the operation of such Seller’s business except (i) for FCC and other governmental orders, decrees and actions which apply to the television broadcasting industry generally, or (ii) as set forth on Schedule 3.15 hereto.

3.16.        Environmental Matters.

(a)           Sellers are in compliance in all material respects, and to Sellers’ Knowledge, the Real Property Interests are in compliance, with all laws, rules, and regulations of all federal, state, and local governments (and all agencies thereof) concerning the environment,

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public health and safety, and employee health and safety (“Environmental Laws”), and no charge, complaint, action, suit, proceeding, hearing, claim, demand, or notice has been filed or commenced against either Seller alleging any failure to comply with any such law, rule, or regulation.

(b)           Sellers have obtained and currently maintain all material permits, licenses, and other authorizations that are required under all Environmental Laws.

(c)           With respect to the period during which Sellers have occupied the Real Property Interests and, to the Knowledge of Sellers, with respect to the time before Sellers occupied any Real Property Interests, no person has caused or permitted Hazardous Materials to be stored, deposited, treated, recycled, or disposed of, on, under, or at any Real Property Interests leased, used, or occupied by Sellers which Hazardous Materials, if known to be present, would require cleanup, removal, or some other remedial action under any Environmental Laws.

(d)           To the Knowledge of Sellers, there are not now, nor have there previously been, tanks, or other facilities on, under or at the Real Property Interests which contained any Hazardous Materials which, if known to be present in soils or ground water, would require cleanup, removal, or some other remedial action under Environmental Laws.

(e)           To the Knowledge of Sellers, there are no conditions existing currently at the Real Property leased, used, or occupied by Sellers which would subject Sellers to damages, penalties, injunctive relief, or cleanup costs under any Environmental Laws or which require cleanup, removal, remedial action, or other response pursuant to Environmental Laws by Sellers.

(f)            To the Knowledge of Sellers, the operation of the Station does not exceed the permissible levels of exposure to RF radiation specified in the FCC’s current rules, regulations, and policies concerning RF radiation.

3.17.        Compliance with Laws.  Sellers comply and have complied in all material respects with the Licenses and all federal, state and local laws, rules, regulations and ordinances applicable or relating to the ownership and operation of the Station, and to Sellers’ knowledge, neither Seller has received any written notice of any Action pending or threatened alleging non-compliance therewith.

3.18.        Conduct of Business in Ordinary Course.  Since September 30, 2004, Sellers have conducted their business and operations consistent in all material respects with past practices and, except as disclosed in Schedule 3.18, have not:

(a)           made any material increase in compensation payable or to become payable to any of its employees other than those in the normal and usual course of business or in connection with any change in an employee’s responsibilities or any bonus payment made or promised to any of its Employees or any material change in personnel policies, employee benefits, or other compensation arrangements affecting its Employees;

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(b)           made any sale, assignment, lease or other transfer of assets other than in the normal and usual course of business;

(c)           canceled any debts owed to or claims held by Sellers except in the normal and usual course of business;

(d)           made any changes in Sellers’ accounting practices;

(e)           suffered any write-down of the value of any Assets or any material write-off as uncollectable of any accounts receivable which individually or in the aggregate is material;

(f)            transferred or granted any right under or entered into any settlement regarding the breach or infringement of any license, patent, copyright, trademark, trade name, franchise or similar right, or modified any existing rights;

(g)           amended or terminated any Contract or License to which any Seller is a party except in the ordinary course of business;

(h)           lowered in any material respects the advertising rates of the Station in a manner not consistent with past practices or not reflective of current market conditions;

(i)            received notice from any sponsor or any customer as to the sponsor’s or customer’s intention not to conduct business with the Station, the result of which loss or losses of business, individually, or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect;

(j)            suffered any Material Adverse Effect.

3.19.        Transactions with Affiliates.  Except as disclosed in the Financial Statements or as described herein, neither Seller has been involved in any business arrangement or relationship with any Affiliate of Sellers, and no Affiliate of Sellers owns any property or right, tangible or intangible, relating to or that is used in the business of the Station.

3.20.        Broker.  Neither Sellers nor any Person acting on their behalf has incurred any liability for any finders’ or brokers’ fees or commissions in connection with the transactions contemplated by this Agreement.

SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Sellers as follows:

4.1.          Organization, Standing, and Authority.  Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Iowa and has the requisite corporate power and authority to execute, deliver, and perform this agreement and the documents contemplated hereby according to their respective terms and to own the Assets.

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4.2.          Authorization and Binding Obligation.  The execution, delivery, and performance of this Agreement by Buyer have been duly authorized by all necessary corporate action on the part of Buyer.  This Agreement has been duly executed and delivered by Buyer and constitutes a legal, valid, and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial discretion in the enforcement of equitable remedies.

4.3.          Absence of Conflicting Agreements and Required Consents.  Subject to obtaining the Consents listed on Schedule 3.3, the execution, delivery, and performance by Buyer of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both):  (a) do not require the consent of any third party that has not been obtained; (b) will not conflict with the Certificate or Articles of Incorporation or Bylaws of Buyer; (c) will not conflict with, result in a breach of, constitute a default under, any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; and (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of any agreement, instrument, license, or permit to which Buyer is a party or by which Buyer may be bound.  Except for the FCC Consent provided for in Section 5.1, or such consents, approvals, permits or authorizations that have been obtained, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (i) to consummate this Agreement and the transactions contemplated hereby, or (ii) to permit Buyer to acquire the Assets from Sellers or to assume certain liabilities and obligations of Sellers in accordance with Section 2.5.  (For purposes of the making of the representations and warranties in this Section as of the License Closing, the term “Assets” shall refer to the “License Assets.”)

4.4.          Brokers.  Neither Buyer nor any person or entity acting on its behalf has incurred any liability for any finders’ or brokers’ fees or commissions in connection with the transactions contemplated by this Agreement.

4.5.          Qualifications of Buyer.  Except as disclosed in Schedule 4.5, Buyer is and, pending the License Closing, will remain legally, financially, and otherwise qualified under the Communications Act and all rules, regulations, and polices of the FCC to acquire and operate the Station.  Except as disclosed in Schedule 4.5, there are no facts or proceedings which would reasonably be expected to disqualify Buyer under the Communications Act or otherwise from acquiring or operating the Station or would cause the FCC not to approve the assignment of the FCC Licenses to Buyer.  Except as disclosed in Schedule 4.5, Buyer has no knowledge of any fact or circumstances relating to Buyer or any of Buyer’s Affiliates that would reasonably be expected to (a) cause the filing of any objection to the assignment of the FCC License to Buyer, or (b) lead to a delay in the processing by the FCC of the applications for such assignment.  Except as disclosed in Schedule 4.5, no waiver of any FCC rule or policy is necessary to be obtained for the grant of the applications for the assignment of the FCC Licenses to Buyer, nor will processing pursuant to any exception or rule of general applicability be requested or required in connection with the consummation of the transactions herein; however, in the event such a

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waiver is necessary, Buyer makes no representation or warranty that the FCC would grant such a waiver.

4.6.          Compliance with Laws.  Except (i) as set forth in Schedule 4.6 hereto, or (ii) for such other non-compliance matters that, individually or in the aggregate, would not reasonably be expected to interfere in any material respect with Buyer’s ability to consummate the transactions contemplated by this Agreement, on the License Closing Date Buyer shall be in compliance with all applicable federal, state and local laws, rules, and regulations and, to Buyer’s knowledge, Buyer has received no written notice of any Action pending or threatened alleging non-compliance therewith.

4.7.          Claims and Legal Actions.  Except (i) for any FCC rulemaking proceedings generally affecting the television broadcasting industry and not particular to Buyer, (ii) as set forth on Schedule 4.7 hereto, or (iii) for such other Actions that, individually or in the aggregate, would not reasonably be expected to interfere in any material respect with Buyer’s ability to consummate the transactions contemplated by this Agreement, on the License Closing Date there shall be no pending or, to Buyer’s knowledge, threatened suit, claim, action, proceeding, or arbitration relating to the business or operations of the Buyer or which seeks to enjoin or obtain damages in respect to the transactions completed hereby.  Buyer has received no Judgment against or affecting Buyer for the operation of its business except (i) for FCC and other governmental orders, decrees and actions which apply to the television broadcasting industry generally, (ii) as set forth on Schedule 4.7 hereto, or (iii) for such other Judgments that, individually or in the aggregate, would not reasonably be expected to interfere in any material respect with Buyer’s ability of Buyer to consummate the transactions contemplated by this Agreement.

SECTION 5
SPECIAL COVENANTS AND AGREEMENTS

5.1.          FCC Consent.

(a)           The purchase and sale of the License Assets as contemplated by this Agreement is subject to the receipt of the FCC Consent prior to the License Closing, including the grant of any waiver or determination of the FCC that may be necessary under rules and policies of the FCC in effect as of the date of the grant of such FCC Consent to permit Buyer to hold the FCC Licenses for the Station, together with the license for KCTV(TV), Kansas, City Missouri, without time limitation or any condition requiring the future divestiture of either station (the “Ownership Waiver”).  Buyer and Sellers acknowledge that under rules and policies of the FCC in effect as of the date of this Agreement, the grant of an Ownership Waiver is required to obtain the FCC Consent for Buyer’s purchase and sale of the License Assets.

(b)           Buyer shall provide Sellers written notices regarding the financial and other information reasonably needed by Buyer to prepare a request for an Ownership Waiver as soon as practicable.  Sellers shall use their commercially reasonable efforts to provide such requested information to Buyer no later than the later of fifteen (15) Business Days after the First Closing Date or ten (10) Business Days after Sellers’ receipt of the last of such written notices.  Sellers shall cooperate fully with Buyer in the preparation of the Ownership Waiver.  Unless

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Seller is notified in writing by Buyer that it requires additional time to consider the basis for the Ownership Waiver, within ten (10) Business Days after Buyer receives all such information from Sellers, Sellers and Buyer shall prepare and file with the FCC an appropriate application for FCC Consent (the “FCC Application”), which application shall include the Ownership Waiver.

(c)           If the FCC Application is not submitted to the FCC as provided in Section 5.1(b), Buyer and Sellers agree to submit the FCC Application for FCC Consent within ten (10) Business Days after Sellers receive written notice from Buyer requesting that an appropriate FCC Application be prepared, which written notice will be promptly provided by Buyer upon receiving advice of its FCC counsel that it is more likely than not that such FCC Application would be approved.  Such FCC Application may or may not include the Ownership Waiver, as Buyer may determine to be necessary or appropriate under the circumstances.

(d)           Following the filing of the FCC Application, the parties shall prosecute the FCC Application with all reasonable diligence and otherwise use their respective reasonable best efforts to obtain a grant of the FCC Application as expeditiously as practicable.  Each party agrees to comply with any condition imposed on it by the FCC Consent, except that no party shall be required to comply with a condition if (i) the condition was imposed on it as the result of a circumstance, the existence of which does not constitute a breach by that party of any of its representations, warranties, or covenants hereunder, and (ii) compliance with the condition would have a material adverse effect upon it.  Buyer and Sellers agree that any condition requiring the present or future divestiture of any rights of Buyer or the Sales Agent (as defined in the JSA) in the Station or KCTV shall constitute a condition materially adverse to Buyer and also a condition imposed as the result of a circumstance, the existence of which does not constitute a breach by Buyer of any of its representations, warranties, or covenants under this Agreement.  Buyer and Sellers shall oppose any petitions to deny or other objections filed with respect to the FCC Application and any requests for reconsideration or judicial review of the FCC Consent.

(e)           If the License Closing shall not have occurred for any reason within the original effective period of the FCC Consent and neither party shall have terminated this Agreement under Section 8, the parties shall jointly request one or more extensions of the effective period of the FCC Consent.  No extension of the effective period of the FCC Consent shall limit the exercise by either party of its right to terminate the Agreement under Section 8.

(f)            In the event the FCC Application is denied or dismissed by the FCC, Buyer agrees to resubmit its application for FCC Consent promptly upon receiving advice of its FCC counsel that it is more likely than not that such resubmitted application would be approved.  In the event Buyer elects to seek reconsideration or judicial review of any such denial or dismissal, Sellers shall cooperate fully in the prosecution of such reconsideration or review.

5.2.          Covenants of Sellers.  Sellers covenant and agree from and after the execution and delivery of this Agreement to and including the License Closing Date, unless Buyer shall have otherwise given its prior written consent, as follows:

(a)           Commercially Reasonable Efforts.  Sellers will use their commercially reasonable efforts to cause the transactions contemplated by this Agreement to be consummated in accordance with the terms hereof.

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(b)           Ordinary Course.  Subject to the provisions of the JSA, each Seller shall operate the Station and maintain the License Assets, including equipment relating to the transmission of a digital broadcast signal, in the ordinary course of business consistent with past practice, including maintaining appropriate insurance for the License Assets, and maintaining and repairing the Tangible Personal Property (with suitable replacements being obtained as necessary with respect thereto).  Each Seller shall use commercially reasonable efforts to keep its organization intact, preserve and maintain the License Assets and the properties of the Station, preserve the business and goodwill of suppliers, customers, Governmental Authorities, and others dealing with such Seller.  Neither Seller shall create, assume, consent to, or suffer to exist any Lien on any of the License Assets (other than Permitted Encumbrances).  Each Sellers’ financial books and records shall be maintained in accordance with generally accepted accounting principles, in the usual manner on a consistent basis with prior years.

(c)           Compliance with Laws.  Each Seller shall comply in all material respects with all Legal Requirements and Licenses applicable to such Seller, the Station, or the conduct of the business.

(d)           Access.  Sellers shall give to Buyer and its agents reasonable access during normal business hours to all of Sellers’ personnel, premises, properties, assets, financial statements and records, books, contracts, documents, and commitments of or relating to the Station that are in Sellers’ possession or control, and shall furnish Buyer with all such information concerning the affairs of the Station as Buyer may reasonably request.  This shall specifically include access to billing, customer service, and maintenance personnel and records.

(e)           No Inconsistent Action.  Sellers shall take no action that is inconsistent with their obligations under this Agreement in any material respect or that could be reasonably expected to hinder or delay the consummation of the transactions contemplated by this Agreement.  Sellers shall not (i) sell, transfer, lease, assign, or otherwise dispose of or distribute any of the License Assets except in the ordinary course of business with suitable replacements being obtained therefor; (ii) knowingly solicit, encourage, entertain, negotiate, or enter into any such transaction or agreement of the nature described in clause (i) above; or (iii) provide any non-public information about the Station to any third party except as required by applicable Legal Requirements.

(f)            Update of Sellers’ Schedules.  Prior to the License Closing, Sellers shall provide an updated set of Schedules to Buyer to disclose any information of the nature of that set forth in the Schedules that relate to Sections 3.1, 3.3, 3.9, 3.11 and 3.15 and that arise after the date hereof and that would have been required to be included in the Schedules with respect to such License Assets if such information had existed on the date hereof; provided, however, that the foregoing list of Sections shall exclude Section 3.15 in the event that the License Closing shall occur following the first anniversary of the First Closing Date.  Representations and Warranties of Sellers required to be made in connection with the License Closing shall be qualified by the additional disclosures in the updated Schedules only to the extent that, prior to the License Closing, Buyer shall state in writing that such additional disclosures are acceptable.

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(g)           Contracts.  Each Seller shall comply in all material respects with the terms of the Contracts to which such Seller is a party.  Sellers will not renew, extend, amend, terminate, or waive any material right under any Assumed Contract, or enter into any new Contract or incur any obligation (including obligations arising from the amendment of any existing Contract) that will be an Assumed Contract or be otherwise binding on Buyer after the License Closing, except for (i) production agreements made in the ordinary course of business consistent with Sellers’ past practices; or (ii) other Contracts (excluding film and programming Contracts) entered into in the ordinary course of business consistent with Sellers’ past practices that do not involve consideration under any one Contract in excess of Twenty-Five Thousand Dollars ($25,000), and in the aggregate under all such Contracts, in excess of One Hundred Thousand Dollars ($100,000), in each case measured at the License Closing (with in determining such consideration, Sellers’ termination rights under each such Contracts being taken into consideration, together with any penalties or fees payable upon exercise of such termination rights).

(i)            Prior to the License Closing License Seller may enter into such film and programming Contracts as it shall determine to be appropriate in fulfillment of its responsibility as the holder of the FCC Licenses; provided, however, that without Buyer’s written consent, no such Contract shall comprise an Assumed Contract unless such Contract (w) is on such terms as are customary within the television industry and with the Station’s past practice, (x) complies with the terms of the JSA, including with respect to the Policy Statement adopted pursuant thereto and the then applicable budget thereunder, (y) does not result in an increase in the Station’s average cost of film and programming as projected for the years to which such film or programming Contract pertains, and (z) on an aggregate basis with all other film and programming Contracts obtained for subsequent years, is consistent with the film and programming budgets for such years, factoring in a 5% annual increase in film and programming costs for such years based on the then applicable budget.  Sellers shall provide written notice to Buyer at least five (5) Business Days prior to their execution of any film or programming Contract unless such Contract is not intended to be an Assumed Contract.

(ii)           Prior to the License Closing Date, Sellers shall deliver to Buyer a list of all Contracts entered into between the First Closing Date and the License Closing Date, and shall provide Buyer copies of such Contracts.

(h)           Copies of Notices regarding Contracts.  Sellers shall, as soon as practicable following receipt, provide Buyer a copy of any notices of default and other material notices or correspondence that either Seller receives from a third party with respect to any Material Contract.  Each Seller shall provide Buyer written notice if any party to any Contract that shall comprise an Assumed Contract indicates in writing to such Seller the intention of such party (a) to terminate such Contract or amend the terms thereof in any material respect, (b) to refuse to renew the Contract upon expiration of its term, or (c) to renew the Contract upon expiration only on terms and conditions that are materially more onerous than those now existing.  Furthermore, Sellers shall use their commercially reasonable efforts to obtain as soon as practicable following the First Closing WB’s agreement (i) to send directly to Buyer written notice of the occurrence of any defaults under the Station’s affiliation agreement with WB, and (ii) to permit Buyer the reasonable opportunity to cure any such default (subject to License

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Seller’s control as the Station licensee) or to work with Sellers to effect such cure, although Buyer shall not be under any obligation to effect such cure.

(i)            Licenses.  License Seller will not renew, extend, amend, terminate, or waive any material right under any License, except for renewals or extensions of such Licenses in the ordinary course of business on customary terms without any adverse amendment or modification.  License Seller shall not take any action that shall cause (i) the License Seller not to be the authorized legal holder of the Licenses, or (ii) the FCC or any other Governmental Authority to revoke, refuse to renew or modify the FCC Licenses, or other authorizations of the Station.  Prior to the License Closing Date, Sellers shall deliver to Buyer a list of all Licenses issued to either Seller or modified or renewed between the First Closing Date and the License Closing Date, and shall provide Buyer copies of such Licenses and any such modifications or renewals.

(j)            Reports.  License Seller shall (i) submit on a timely basis all material returns, reports and statements that as holder of the Licenses, License Seller is required to file with the FCC or Federal Aviation Administration, which returns, reports and statements shall to Sellers’ knowledge satisfy all applicable legal requirements, and (ii) comply to Sellers’ knowledge with all reporting requirements of the FCC and Federal Aviation Administration, including items required to be placed in the Station’s public inspection file.

(k)           Notice of Legal Actions.  Each Seller shall give written notice to Buyer within five (5) Business Days of such Seller being notified in writing of the initiation of any Action against such Seller if such Action relates to the Assets or the business or operations of the Station, or seeks to enjoin or obtain damages in respect to the transactions completed hereby, excluding any FCC rulemaking proceedings generally affecting the television broadcasting industry and not particular to Sellers.  Such notice shall provide reasonable details describing such Action.

(l)            Transactions with Affiliates.  Neither Seller shall enter into any Contract with any Affiliate of Sellers with respect to the business or operation of the Station or which shall be an LC Assumed Contract, and no Affiliate of Sellers shall own any property or right, tangible or intangible, that is used in the business or operations of the Station.

5.3.          Confidentiality.

(a)           Except as necessary for the consummation of the transaction contemplated by this Agreement and except as and to the extent required by law, each party will keep confidential any information obtained from the other party in connection with the transactions contemplated by this Agreement (unless such information is or thereafter becomes generally available to the public, is otherwise available to it on a non-confidential basis from another source, or has been developed independently by it).  If this Agreement is terminated pursuant to its terms, each party will return to the other party all information obtained by such party from the other party in connection with the transactions contemplated by this Agreement.

(b)           Sellers agree at all times during and after the term of the JSA, to hold in confidence and not to use, and to cause the FCC Employees to hold in confidence and not to use,

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except (i) as and to the extent required by law, or (ii) for the benefit of the Station and Buyer as necessary in performing their duties at the Station, or to disclose to any Person without written authorization of Buyer, any Confidential Information of the Station or Buyer.  “Confidential Information” means any Station or Buyer proprietary information, marketing and product plans, services, technical data, customer lists and customers, software, developments, processes, products, technology, designs, drawings, employee information, financial or other business information regarding the Station in either Seller’s possession or disclosed to either Seller or the FCC Employees by Buyer or its employees, either directly or indirectly, in writing or orally.  Confidential Information excludes any of the foregoing items that have become publicly known and made generally available through no wrongful act of either Seller or any FCC Employee, or of others who, to Sellers’ knowledge, were under confidentiality obligations with respect to the item or items involved.

5.4.          Cooperation.  Buyer and Sellers shall reasonably cooperate with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement and in connection with any litigation after the First Closing Date which relates to the Station for periods prior to the Effective Time.  Buyer and Sellers shall execute such other documents as may be reasonably necessary and desirable to the implementation and consummation of this Agreement and otherwise use their commercially reasonable efforts to consummate the transaction contemplated hereby and to fulfill their obligations under this Agreement.  Notwithstanding the foregoing, neither Buyer nor Sellers shall have any obligation (a) to expend funds to obtain any of the Consents, other than FCC Consents or as set forth in Section 5.9 hereof, or (b) to agree to any adverse change in any License or Assumed Contract in order to obtain a Consent required with respect thereto.

5.5.          Allocation of Purchase Price.  Buyer and Sellers shall retain the appraisal firm of Bond & Pecaro, Inc., or another mutually acceptable firm, to determine the allocation of the Purchase Price among the Assets for purposes of Section 1060 of the Code and Temporary Treasury Regulation Section 1.1060-1T, with Buyer and Sellers each paying one-half (1/2) of the fees for such valuation.  No filings made by Buyer or either Seller with any taxing or other authority shall reflect an allocation other than in the manner established pursuant to the foregoing, and Buyer and Sellers shall each timely make all filings required by any taxing authority, including the filing of Internal Revenue Service Form 8594.

5.6.          Access to Books and Records.  To the extent reasonably requested by Buyer, Sellers shall provide Buyer access and the right to copy from and after the First Closing Date any books and records relating to the Assets, but not included in the Assets.  To the extent reasonably requested by Sellers, Buyer shall provide Sellers access and the right to copy from and after the First Closing Date any books and records relating to the Assets that are included in the Assets.

5.7.          Employee Matters.

(a)           On the First Closing Date, Sellers shall terminate the employment of all Employees (as defined in Section 3.14(a)) except those designated by Sellers on Schedule 5.7, which designation shall include two (2) Employees at the Station who shall remain employed by Sellers to meet their FCC obligation until the License Closing Date (the “FCC Employees”) and

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the general manager of the Station who shall remain employed by Sellers.  On the First Closing Date, Buyer shall offer employment to each of the Employees, other than the Employees designated on Schedule 5.7.  On the License Closing Date, Sellers shall terminate the employment of the FCC Employees and Buyer shall offer employment to each such FCC Employee.  The Buyer’s offers of employment will be at a comparable base pay, position, and place of employment as held by each such Employee immediately prior to the First Closing Date or License Closing Date, as applicable.  Any such Employees who accept such offers of employment are referred to herein as the “Transferred Employees”).  Buyer shall be responsible for paying severance benefits to any Transferred Employees whose employment with Buyer is terminated on or after the applicable closing (which shall be payable in accordance with the terms of Buyer’s severance pay policy).  Buyer also shall be responsible for paying severance benefits, if any, to any Employee who does not accept the offer of employment made by Buyer in accordance with the terms of this paragraph and who would be entitled to receive benefits under the terms of Sellers’ severance pay practice, as disclosed in Schedule 3.14.

(b)           Sellers shall pay, discharge, and be responsible for (i) all salary, wages and liabilities arising out of or relating to the employment of the Employees by Sellers, and (ii) any liabilities arising under the Benefit Plans or Benefit Arrangements, provided that Buyer shall pay, discharge and be responsible for (x) the vacation pay, personal leave pay, severance pay and COBRA obligations of Seller which have been assumed by Buyer in accordance with this Section 5.7, and (y) any liabilities arising out of or relating to the decision to terminate the Employees pursuant to Section 5.7(a) to effectuate the transaction contemplated by this Agreement, including, for example, any claim that the decision to terminate such Employees constituted a wrongful termination.   Buyer shall pay, discharge, and be responsible for all salary, wages, and liabilities arising out of or relating to the employment or termination of employment of the Transferred Employees by Buyer.

(c)           Buyer shall cause each Transferred Employee to be eligible to participate in the “employee welfare benefit plans” and “employee pension benefit plans” (as defined in Section 3(1) and 3(2) of ERISA, respectively) of Buyer in which similarly situated employees of Buyer are generally eligible to participate.  In this connection:

(i) Each Transferred Employee and his or her spouse and dependents shall be eligible for immediate coverage under Buyer’s group health plan (i.e., without regard to any waiting periods or length of service requirements that may otherwise apply) as of their date of hire with Buyer to the extent that such individual was participating in Sellers’ group health plan immediately prior to becoming a Transferred Employee (or the spouse or dependent of a Transferred Employee), and Buyer’s group health plan shall not apply any preexisting condition limitations with respect to such Transferred Employee (or his or her spouse and dependents) except to the extent such limitations applied to such individual under the Welfare Plans.  In addition, Buyer shall ensure that each Transferred Employee receives credit under Buyer’s group health plan for any deductibles or co-payments paid by such Transferred Employee (and his or her spouse and dependents) under the Welfare Plans for the plan year that includes the Transferred Employee’s first day of employment with Buyer.  For purposes of this clause (i), “group health plan” shall have the meaning set forth in Section 4980B(g)(2) of the Code.

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(ii)           Each Transferred Employee shall receive past service credit under Buyer’s applicable vacation and sick leave practices, severance pay and other health and welfare benefit plans (excluding any retiree medical plans) and tax-qualified 401(k) plan (collectively, “Buyer’s Applicable Plans”), except that Buyer is not obligated to offer a Transferred Employee any past service credit under its defined benefit retirement plan or its retiree medical plan.  For this purpose, “past service credit” means credit under Buyer’s Applicable Plans for any service with Sellers or their Affiliates (or any prior owner thereof) for eligibility, waiting period, vesting, benefit accrual, benefit differential and all other purposes as if such service had been service with Buyer, but only to the extent such service was credited by Sellers and their Affiliates for such purposes effective as of the First Closing Date or the License Closing Date, as applicable.

(iii)          To the extent taken into account in determining prorations pursuant to Section 2.3 hereof, Buyer shall assume and discharge Sellers’ liabilities for the payment of all unused vacation leave and personal leave accrued by Transferred Employees as of the First Closing Date or License Closing Date, as applicable, and to the extent any Transferred Employee asserts a claim against Sellers with respect to the payment of the accrued vacation leave and personal leave liability assumed by Buyer, then Buyer shall indemnify, defend, and hold harmless Sellers from and against any and all liability for the payment of such accrued vacation leave and personal leave.

(d)           Buyer shall assume Sellers’ obligation to provide “continuation coverage” as defined in Section 4980B of the Code and Section 601 et. seq. of ERISA (“COBRA”) to each Employee to whom Buyer makes an offer of employment under the terms of Section 5.7(a) (and to any spouse or children of such Employee carried as dependents on such Employee’s “group health plan” coverage from Sellers), regardless of whether or not such Employee accepts Buyer’s offer of employment.  Buyer shall hold Sellers and any entity required to be combined with the Sellers under Section 414 of the Code (“Sellers Affected Parties”) harmless from and fully indemnify such Sellers Affected Parties against any costs, expenses, losses, damages and liabilities incurred or suffered by such Sellers Affected Parties directly or indirectly, including, but not limited to, reasonable attorneys fees and expenses, which arise as a result of any failure of Buyer on or after the First Closing Date or the License Closing Date, as applicable, to provide such COBRA benefits to such Employees (and their spouses and dependents).  Except with respect to those “covered employees” and “qualified beneficiaries” identified in the first sentence of this Section 5.7(d), Sellers shall retain the obligation to provide “continuation coverage” under its “group health plan” to any other “covered employee” or “qualified beneficiary” related to the Station who experiences a “qualified event” under the terms of COBRA, whether the qualified event occurred prior to, on or after the transaction contemplated by this Agreement.  The terms “group health plan,” “qualified beneficiary,” “covered employee” and “qualified event” shall have the meanings set forth in COBRA.  Sellers shall hold Buyer and any entity required to be combined with the Buyer under Section 414 of the Code (“Buyer Affected Parties”) harmless from and fully indemnify such Buyer Affected Parties against any costs, expenses, losses, damages and liabilities incurred or suffered by such Buyer Affected Parties directly or indirectly, including, but not limited to, reasonable attorneys fees and expenses, which arise as a result of any failure of Sellers to provide such COBRA benefits.

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(e)           As of (or, in Sellers’ discretion, prior to) the First Closing Date or License Closing Date, as applicable, Sellers shall cause each Transferred Employee to become fully vested in his or her account balance under the Pension Plan (the “Sellers 401(k) Plan”).  Seller shall furnish to the Buyer as soon as practicable on or prior to the First Closing Date (or License Closing Date, if applicable), but not later than the First Closing Date (or License Closing Date, if applicable), a list, calculated as of the First Closing Date (or License Closing Date, if applicable), of the amounts of compensation each Transferred Employee participating in the Sellers 401(k) Plan contributed to such plan (separately reporting any pre-tax and after-tax contributions) during the calendar year in which the First Closing Date (or License Closing Date, if applicable) occurs.  To the extent permitted by law and the terms of the Sellers’ 401(k) Plan, Sellers shall not require any Transferred Employee to accept a distribution (including a cash-out distribution) from the Sellers 401(k) Plan sooner than 90 days following the applicable closing date.

(f)            Buyer acknowledges and agrees that Buyer’s obligations pursuant to this Section 5.7 are in addition to, and not in limitation of, Buyer’s obligation to assume the written employment contracts included in the Assumed Contracts.

(g)           This Section 5.7 shall operate exclusively for the benefit of the parties to this Agreement and not for the benefit of any other Person, including, without limitation, any current, future, former or retired employee of the Sellers, Buyer or their respective Affiliates.

5.8.          Joint Sales Agreement.  The License Seller and Buyer agree to enter into a Joint Sales Agreement (the “JSA”), effective as of the First Closing Date, substantially in the form of Schedule 5.8 hereto, and providing Buyer with the right to sell advertising time and provide other non-programming services to the Station during the period between the First Closing and the License Closing.

5.9.          Consents.

(a)           Sellers shall use commercially reasonable efforts to obtain all necessary Consents required in connection with this Agreement and the transactions contemplated hereby, including any required Consents of any Governmental Authorities, with lawful jurisdiction over Sellers.  Sellers shall make all filings with and give all notices to third parties that may be reasonably necessary of Sellers in order to consummate the transactions contemplated hereby.  Except as expressly provided by this Agreement, neither Sellers nor Buyer shall be required to make any payments to persons or parties to the Contracts in order to obtain their Consents, except that Sellers agree to pay any administrative or application fees customarily payable to such persons or parties in connection with requests for their Consent, or costs or fees (including reimbursement of legal fees) expressly required by the terms of any such Contract.  No such consent of a third party shall comprise an effective “Consent,” as such term is used herein, if such consent shall effect any adverse change in the terms or conditions of the License or Assumed Contract to which such consent pertains unless Buyer shall give its consent (which shall not be unreasonably withheld) in writing to such change.  Nothing in this Section 5.9 shall be construed to require any Consent as a condition to Closing, other than the Consents required by Section 6.3(e) of this Agreement.

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(b)           Regarding each Contract that Buyer shall request in writing to be a FC Assumed Contract on or following the date hereof, to the extent permitted by applicable Legal Requirements or by the terms of such Contract, without material breach of the terms thereof, Buyer shall receive the benefits of such Contract on and after the date of Buyer’s request and shall be responsible for and timely perform all obligations under such Contract to the extent arising on and after such date.  Sellers shall not assign any such Contact to Buyer unless and until the Consent from the third party to such Contract is actually received.  In the event that Sellers are able to obtain such Consent, such Contract shall comprise a FC Assumed Contract hereunder and shall be assigned to and assumed by Buyer effective as of the date of the third party’s Consent to the assignment thereof (or effective as of such other date agreed to with such third party).  In the event that Sellers are unable to obtain a necessary Consent from a third party to the assignment of a FC Assumed Contract to Buyer within sixty (60) days following Buyer’s request that such Contract be a FC Assumed Contract, Sellers shall so advise Buyer and such Contract shall comprise a Consent-Pending Contract hereunder.  Buyer and Sellers shall cooperate with one another to provide to Buyer the benefits of such Consent-Pending Contract until such time of the actual assignment thereof by Sellers to Buyer following receipt of the necessary third-party Consent.  If, at any time, Buyer is not able to receive substantially all of the material benefits under any Consent-Pending Contract, such Consent-Pending Contract shall be treated as a Contract not to be assumed by Buyer, and Sellers shall remain responsible for the obligations thereunder.  If at any time any necessary third-party Consent shall be received by Sellers, such Consent-Pending Contact shall be assigned to and assumed by Buyer effective as of the date of the third party’s Consent to the assignment thereof (or effective as of such other date agreed to with such third party).

(c)           In the event that Sellers are unable to obtain on or prior to the License Closing Date a necessary Consent from a third party to the assignment of a LC Assumed Contract to Buyer, Sellers shall so advise Buyer and such Contract shall comprise a Consent-Pending Contract hereunder.  Following the License Closing, to the extent permitted by applicable Legal Requirements or by the terms of each such Consent-Pending Contract without material breach of the terms thereof, Buyer shall receive the benefits of such Consent-Pending Contract on and after the License Closing Date and shall be responsible for and timely perform all obligations under such Consent-Pending Contract to the extent arising on and after the License Closing Date.  Sellers shall not assign any such Consent-Pending Contact to Buyer unless and until the Consent from the third party to such Consent-Pending Contract is actually received.  Buyer and Sellers shall cooperate with one another to provide to Buyer the benefits of such Consent-Pending Contract until such time of the actual assignment thereof by Sellers to Buyer following receipt of the necessary third-party Consent.  If, at any time, Buyer is not able to receive substantially all of the material benefits under any Consent-Pending Contract, such Consent-Pending Contract shall be treated as a Contract not to be assumed by Buyer, and Sellers shall remain responsible for the obligations thereunder.  If at any time after the License Closing Date any necessary third-party Consent shall be received by Sellers (other than with respect to a Consent-Pending Contract referred to in the immediately preceding sentence), such Consent-Pending Contact shall be assigned to and assumed by Buyer effective as of the date of the third party’s Consent to the assignment thereof (or effective as of such other date agreed to with such third party).

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(d)           Sellers shall, at their expense, use commercially reasonable efforts to attempt to obtain any Consents of their landlords for the Station’s current studio facilities and transmitter site that are necessary with respect to the Transferred Employees’ provision of services and the ongoing operation of certain of the Non-License Assets at such locations pursuant to the terms of the JSA prior to the License Closing.  In the event that Buyer shall determine that the Station’s current studio facilities should be relocated, Sellers shall cooperate with Buyer, at Buyer’s expense, in obtaining any consents that shall be requested by Buyer from the landlord for such facilities to assign the lease for such facilities, or to sublease such facilities, to third parties identified by Buyer.

5.10.        Lease Agreement.  The License Seller and Buyer agree to enter in a lease agreement (the “Lease”), effective as of the First Closing Date, substantially in the form of Schedule 5.10 hereto, and providing the License Seller with certain rights to use the Assets during the pendency of the JSA.

5.11.        No Control.  Notwithstanding any provision of this Agreement to the contrary, pending the Closing, Sellers shall maintain actual (de facto) and legal (de jure) control over the Licenses and the Station until the License Closing.  Specifically, Sellers shall retain responsibility for the operation of the business and the Station pending the License Closing, including responsibility for the operation of the business and the Station pending the License Closing, including responsibility for the following matters:  access to and use of the facilities of and equipment owned by Sellers; control of the daily operation of the Station; creation and implementation of policy decisions; employment and supervision of their Employees; payment of financing obligations and expenses incurred in the operation of the Station prior to the Closing; and execution and approval of all applications prepared and filed before the FCC or any other Governmental Authority.

5.12.        Insurance.  Except to the extent that insurance is required under the terms of the JSA, in which case, the parties agree that comparable insurance is not required pursuant to this Section 5.12, Sellers shall (i) maintain in full force and effect with respect to events occurring during the period between the First Closing and the License Closing policies of insurance of the same type, character, and coverage of the policies currently carried with respect to the License Assets of the Station, (ii) submit and prosecute insurance claims in good faith against such insurance policies in the event of the occurrence of a loss or other covered event under the terms of such policies, and (iii) apply any proceeds received on such insurance policies, or remit such proceeds to Buyer to be applied for such purpose, to restore or replace the Tangible Personal Property to the extent such claims relate to damage thereto, or to reimburse the Station, Sellers and Buyer with respect to other expenses, losses, liabilities and damages sustained if such claims relate to matters other than damage to Tangible Personal Property.  Sellers shall fulfill their obligations set forth in the preceding sentence with regard to events occurring during the period between the First Closing and the License Closing even though claims may be made by third parties against the Station, Sellers or Buyer, or proceeds may be received by Sellers from their insurance carriers, subsequent to the License Closing.

5.13.        Compliance with the JSA.  Sellers and Buyer shall comply in all material respects with the provisions of the JSA.

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5.14         Update of Buyer’s Schedules.  Prior to the License Closing, Buyer shall provide an updated set of Schedules to Sellers to disclose any information with respect to Sections 4.6 and 4.7 that arise after the date hereof and that would have been required to be included in the Schedules for those Sections if such information had existed on the date hereof.  Any Schedules of Buyer so updated shall be deemed to be made as of the License Closing Date and shall be qualified by the additional disclosures and updated Schedules only to the extent that, prior to the License Closing, Sellers shall state in writing that such additional disclosures are acceptable.

5.15         SBG Guaranty.  By its execution hereof with respect to this Section 5.15, SBG irrevocably and unconditionally guarantees to Buyer the full, complete and timely performance by Sellers of any and all obligations of Sellers under this Agreement.  This guaranty shall remain in full force and effect so long as Sellers shall have any obligations or liabilities hereunder.  This guaranty shall be deemed a continuing guaranty and the waivers of SBG herein shall remain in full force and effect until the satisfaction in full of all of Sellers’ obligations hereunder.  If any default shall occur by either Seller in its performance or satisfaction of any of its obligations hereunder, then SBG will itself perform or satisfy, or cause to be performed or satisfied, such obligations immediately upon notice from Buyer specifying in summary form the default.  This guaranty is an absolute, unconditional and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law.  SBG agrees that its obligations hereunder shall not be contingent upon the exercise or enforcement by Buyer of whatever remedies it may have against Sellers.  To the maximum extent permitted by law, SBG hereby waives: (i) notice of acceptance hereof; (ii) notice of any adverse change in the financial condition of either Seller or of any other fact that might increase SBG’s risk hereunder; and (iii) presentment, protest, demand, action or delinquency in respect of any of Sellers’ obligations hereunder.

5.16         Nonsolicitation Covenant.  SBG covenants and agrees, on behalf of itself and its Affiliates, including Sellers, as follows:

(a)           For two (2) years following the date hereof, neither it nor any Affiliate will, without prior written consent of Buyer, directly or indirectly, for itself or on behalf of any other Person, hire or solicit any of Buyer’s employees who at the time of solicitation is known by SBG or such Affiliate to be an employee of Buyer at the Station, or induce or attempt to induce through any form of direct communication any such employee to leave his or her employment with Buyer; provided, however, that this provision shall not prohibit SBG or any Affiliate from making a general, public solicitation or a general, industry-wide solicitation for employment, or from hiring any of Buyer’s employees who respond to such a solicitation.

(b)           In the event that SBG or any Affiliate commits a breach of any of the provisions of this Section 5.16, Buyer shall have the right and remedy to have the provisions of this Section 5.16 specifically enforced, without posting bond or other security to the extent permitted by law, by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause immediate irreparable injury to Buyer and that money damages will not provide an adequate remedy at law for any such breach or threatened

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breach.  Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to Buyer at law or in equity.

(c)           In the event that despite the express agreement of SBG, on behalf of itself and its Affiliates, any provision of this Section 5.16 shall be determined by any court or other tribunal of competent jurisdiction to be unenforceable for any reason whatsoever, the parties agree that this Section 5.16 shall be interpreted to extend only during the maximum period of time for which it may be enforceable and/or to the maximum extent in any and all other respects as to which it may be enforceable, all as determined by such court or tribunal.

SECTION 6
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER

6.1.          Conditions to Obligations of Buyer at the First Closing.  All obligations of Buyer at the First Closing hereunder are subject at Buyer’s option to the fulfillment prior to or at the First Closing Date of each of the following conditions:

(a)           Obligations, Covenants and Agreements.  Sellers have performed and complied with all obligations, covenants and agreements required by this Agreement to be performed or complied with by it prior to or on the First Closing Date, except where the failure to have performed and complied does not have a Material Adverse Effect.

(b)           Governmental Licenses.  The License Seller is the holder of all FCC Licenses.  No proceedings are pending, the effect of which could be to revoke, cancel, fail to renew, suspend, or modify materially and adversely any FCC License.

(c)           Legal Proceedings.  No injunction, restraining order, or decree of any nature of any court or governmental authority of competent jurisdiction is in effect that restrains or prohibits the transactions contemplated by this Agreement.

(d)           Deliveries.  Sellers have made or stand willing to make all the deliveries to Buyer described in Section 7.2.

6.2.          Conditions to Obligations of Sellers at the First Closing.  All obligations of Sellers at the First Closing hereunder are subject at Sellers’ option to the fulfillment prior to or at the First Closing Date of each of the following conditions:

(a)           Obligations, Covenants and Agreements.  Buyer has performed and complied with all obligations, covenants and agreements required by this Agreement to be performed or complied with by it prior to or on the First Closing Date.

(b)           Legal Proceedings.  No injunction, restraining order, or decree of any nature of any court or governmental authority of competent jurisdiction is in effect that restrains or prohibits the transactions contemplated by this Agreement.

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(c)           Deliveries.  Buyer has made or stands willing to make all the deliveries described in Section 7.3.

6.3.          Conditions to Obligation of Buyer at the License Closing.  All obligations of Buyer at the License Closing hereunder are subject at Buyer’s option to the fulfillment prior to or at the License Closing Date of each of the following conditions:

(a)           Representations and Warranties.  The representations and warranties of Sellers in Sections 3.1, 3.2, 3.3, 3.9, 3.11, 3.15 and 3.20 shall be true and complete (without any qualifications by materiality) at and as of the License Closing Date as though made at and as of that time (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time), except where the failure to be true and complete would not reasonably be expected to have a Material Adverse Effect, or shall have been caused by Buyer’s failure to fulfill its obligations under the JSA; provided, however, that the foregoing list of sections shall exclude Section 3.15 if the License Closing shall occur following the first anniversary of the First Closing Date.

(b)           Obligations, Covenants and Agreements.  Sellers shall have performed and complied with all obligations, covenants and agreements required by this Agreement to be performed or complied with by them prior to or on the License Closing Date, except where the failure to have performed and complied would not reasonably be expected to have a Material Adverse Effect, or shall have been caused by Buyer’s failure to fulfill its obligations under the JSA.

(c)           FCC Consent.  The FCC Consent shall have become a Final Order and shall not contain any condition or qualification that requires Buyer to dispose of television station KCTV or is otherwise materially adverse to Buyer, except any condition or qualification that is imposed by reason of circumstances or actions constituting a material breach by Buyer of its representations, warranties or covenants hereunder.  No action shall have been taken by the FCC or other Governmental Authority that is pending as of the License Closing Date with respect to the FCC Consent that makes illegal, restrains, or prohibits the consummation of the transactions contemplated hereby.

(d)           Governmental Licenses.  The License Seller shall be the holder of all FCC Licenses, and there shall not have been any material modification, revocation, or non-renewal of any material License.  No proceeding shall be pending, the effect of which could be to revoke, cancel, fail to renew, suspend, or modify materially and adversely any FCC License.

(e)           Required Consents.  The Consents for the Material Contracts shall have been obtained without any adverse change in the terms or conditions of each such Assumed Contract from those in effect under such Contract at such time that Buyer shall have agreed to assume such Contract.

(f)            Deliveries.  The Sellers shall have made or stands willing to make all deliveries to Buyer described in Section 7.4.

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6.4.          Conditions to Obligations of Sellers at the License Closing.  All obligations of Sellers at the License Closing hereunder are subject at Sellers’ option to the fulfillment prior to or at the License Closing Date of each of the following conditions:

(a)           Representations and Warranties.  All representations and warranties of Buyer in Sections 4.1, 4.2, 4.3, 4.4, 4.6 and 4.7 shall be true and complete in all material respects at and as of the License Closing Date as though made at and as of that time (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time), except where the failure to be true and complete shall have been caused by either Seller’s failure to fulfill its obligations under the JSA.

(b)           Obligations, Covenants and Agreements.  Buyer shall have performed and complied with in all material respects all obligations, covenants and agreements required by this Agreement to be performed and complied with by Buyer prior to or on the License Closing Date, except where the failure to perform or comply shall have been caused by either Seller’s failure to fulfill its obligations under the JSA.

(c)           FCC Consent.  The FCC Consent shall have been obtained and shall not contain any condition or qualification that is materially adverse to Sellers, except any condition or qualification that is imposed by reason of circumstances or actions constituting a material breach by Sellers of their representations, warranties or covenants hereunder.

(d)           Deliveries.  Buyer shall have made or stands willing to make all the deliveries described in Section 7.5.

SECTION 7
CLOSING AND CLOSING DELIVERIES

7.1.          Closings.

(a)           First Closing Date.  Except as otherwise agreed to by Buyer and Sellers, the First Closing shall take place at 10:00 a.m. on the date hereof.

(b)           License Closing Date.  Except as provided below in this Section 7.1 or as otherwise agreed to by Buyer and Sellers, the License Closing shall take place at 10:00 a.m. on a date to be set by Buyer on at least five (5) days’ written notice to Sellers which shall not be earlier than the first Business Day after the FCC Consent shall have been issued or later than ten (10) Business Days after the FCC Consent shall have become a Final Order.

(c)           Postponement of Closing.

(i)            If any event occurs that prevents signal transmission by the Station in the normal and usual manner and Sellers cannot restore the normal and usual transmission before the date on which the License Closing would otherwise occur pursuant to this Section 7.1 and this Agreement has not been terminated under Section 8, the License Closing shall be postponed to such date as is necessary (but only until a date within the effective period of the

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FCC Consent (as it may be extended pursuant to Section 5.1 (c)) to allow Sellers to restore the normal and usual transmission; provided, that the foregoing shall not apply to postpone the License Closing to the extent any such signal transmission is not caused by any action of the Sellers.  If the License Closing is postponed pursuant to this paragraph, the date of the License Closing shall be mutually agreed to by Sellers and Buyer.

(ii)           If there is in effect on the date on which the License Closing would otherwise occur pursuant to this Section 7.1 any judgment, decree, or order that would prevent or make unlawful the License Closing on that date, the License Closing shall be postponed until a date (but only within the effective period of the FCC Consent (as it may be extended pursuant to Section 5.1(c)), to be agreed upon by Buyer and Sellers, which such judgment, decree, or order no longer prevents or makes unlawful the License Closing.  If the License Closing is postponed pursuant to this paragraph, the date of the License Closing shall be mutually agreed to by the Sellers and Buyer.

(d)           Closing Place.  Each of the First Closing and the License Closing shall be held at the offices of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, Maryland 21202, or any other place that is mutually agreed upon by Buyer and Sellers.

7.2.          Deliveries by Sellers at First Closing.  On the First Closing Date, Sellers shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel:

(a)           Conveyancing Documents.  Duly executed bills of sale, motor vehicle titles, assignments, and other transfer documents that are sufficient to vest good and marketable title to the Assets, other than the License Assets and the Excluded Assets, in the name of Buyer, free and clear of all Liens, except for Permitted Encumbrances.

(b)           Officer’s Certificate.  A certificate, dated as of the First Closing Date, executed on behalf of one of the Sellers by an officer of such Seller, certifying that Sellers have performed and complied with all of its obligations, covenants, and agreements in this Agreement to be performed and complied with on or prior to the First Closing Date, except to the extent that the failure to perform or comply with such covenants shall not have had a Material Adverse Effect.

(c)           Secretary’s Certificate.  A certificate, dated as of the First Closing Date, executed by each Seller’s Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller’s Board of Directors and shareholders (if required), authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as attachments thereto, the Articles of Incorporation and Bylaws of Sellers.

(d)           Good Standing Certificates.  To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of each Seller issued by the appropriate governmental authorities in the states of organization and each jurisdiction in which

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such Seller is qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the First Closing Date.

(e)           Opinions of Counsel.  Opinion of Sellers’ counsel dated as of the First Closing Date, substantially in the form of Schedule 7.2(e) hereto.

(f)            JSA.  The JSA, duly executed by Sellers.

(g)           Lease.  The Lease duly executed by Sellers.

7.3.          Deliveries by Buyer at First Closing.  On the First Closing Date, Buyer shall deliver to Sellers the following, in form and substance reasonably satisfactory to Sellers and their counsel:

(a)           Closing Payment.  The payment described in Section 2.4(a).

(b)           Officer’s Certificate.  A certificate, dated as of the First Closing Date, executed on behalf of Buyer by an officer of Buyer, certifying that Buyer has in all material respects performed and complied with all of its obligations, covenants, and agreements in this Agreement to be performed and complied with on or prior to the First Closing Date.

(c)           Secretary’s Certificate.  A certificate, dated as of the First Closing Date, executed by Buyer’s Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer’s Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as an attachment thereto, Buyer’s Certificate of Incorporation.

(d)           Assumption Agreements.  Appropriate assumption agreements pursuant to which Buyer shall assume and undertake to perform, subject to receipt of any necessary third-party Consents, Sellers’ obligations under the FC Assumed Contracts and to the extent provided in Section 2.5.

(e)           Good Standing Certificates.  To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of Buyer issued by the appropriate governmental authorities in the states of organization and each jurisdiction in which Buyer needs to be qualified in order to operate the Station, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the First Closing Date.

(f)            Opinion of Counsel.  An opinion of Buyer’s counsel dated as of the First Closing Date, substantially in the form of Schedule 7.3(f) hereto.

(g)           JSA.  The JSA duly executed by Buyer.

(h)           Lease.  The Lease duly executed by Buyer.

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7.4.          Deliveries by Sellers at License Closing.  Prior to or on the License Closing Date, Sellers shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel:

(a)           Conveyancing Documents.  Duly executed assignments and other transfer documents that are sufficient to vest good and marketable title to the License Assets in the name of Buyer, free and clear of all Liens and obligations except for Permitted Encumbrances.

(b)           Officer’s Certificate.  A certificate, dated as of the License Closing Date, executed on behalf of one of the Sellers by an officer of such Seller, certifying: (i) that the representations and warranties of Sellers in Sections 3.1, 3.2, 3.3, 3.9, 3.11, 3.15 and 3.20, are true and complete (without any qualifications by materiality) at and as of the License Closing Date as though made at and as of that time (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time); and (ii) that Sellers have performed and complied with all obligations, covenants and agreements required by this Agreement to be performed or complied with by them prior to or on the License Closing Date, except to the extent that the failure of such representations and warranties to be true and correct and the failure to perform or comply with such covenants shall not have had a Material Adverse Effect or shall have been caused by Buyer’s failure to fulfill its obligations under the JSA; provided, however, that the foregoing list of sections shall exclude Section 3.15 if the License Closing shall occur following the first anniversary of the First Closing Date.

(c)           Secretary’s Certificate.  A certificate, dated as of the License Closing Date, executed by each Seller’s Secretary certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller’s Board of Directors and shareholders (if required), authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect.

(d)           Good Standing Certificates.  To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of each Seller issued by the appropriate governmental authorities in the state of organization and each jurisdiction in which such Seller is qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the License Closing Date.

(e)           Opinions of Counsel.  Opinion of Sellers’ counsel and communications counsel dated as of the License Closing Date, substantially in the form of Schedule 7.4(e) hereto.

(f)            Consents.  Execution copies of any instrument evidencing receipt of any Consent which has been received by Sellers.

7.5.          Deliveries by Buyer at License Closing.  Prior to or on the License Closing Date, Buyer shall deliver to Sellers the following, in form and substance reasonably satisfactory to Sellers and their counsel:

(a)           Closing Payment.  The payment described in Section 2.4(b).

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(b)           Officer’s Certificate.  A certificate, dated as of the License Closing Date, executed on behalf of Buyer by an officer of Buyer, certifying: (i) that the representations and warranties of Buyer in Sections 4.1, 4.2, 4.3, 4.4, 4.6 and 4.7 are true and complete in all material respects at and as of the License Closing Date as though made at and as of that time (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time), and (ii) that Buyer shall have performed and complied with in all material respects all obligations, covenants and agreements required by this Agreement to be performed and complied with by Buyer prior to or on the License Closing Date, except to the extent that the failure of such representations and warranties to be true and correct and the failure to perform or comply with such covenants shall have been caused by either Seller’s failure to fulfill its obligations under the JSA.

(c)           Secretary’s Certificate.  A certificate, dated as of the License Closing Date, executed by Buyer’s Secretary, certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer’s Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect.

(d)           Assumption Agreements.  Appropriate assumption agreements pursuant to which Buyer shall assume and undertake to perform Seller’s obligations under the Licenses and the LC Assumed Contracts.

(e)           Good Standing Certificates.  To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of Buyer issued by the appropriate governmental authorities in the states of organization and each jurisdiction in which Buyer needs to be qualified in order to operate the Station, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the License Closing Date.

(f)            Opinion of Counsel.  An opinion of Buyer’s counsel dated as of the License Closing Date substantially in the form of Schedule 7.5(f) hereto.

SECTION 8
TERMINATION

8.1.          Termination by Seller.  This Agreement may be terminated by Sellers and the purchase and sale of the Station abandoned if Sellers are not then in material default hereunder upon written notice to Buyer if the License Closing shall not have occurred on or prior to the fifth (5th) anniversary of the date hereof, provided, however, that on or prior to the fifth (5th) anniversary of the date hereof, Buyer may, at its option, extend such termination date to the tenth (10th) anniversary of the date hereof by paying or causing to be paid to the License Seller the amount of Three Million Three Hundred Fifty Thousand Dollars ($3,350,000) by wire transfer of same-day funds pursuant to wire transfer instructions furnished by License Seller to Buyer (which instructions shall be provided by License Seller to Buyer in writing within two Business Days of Buyer’s written notice to License Seller requesting such instructions).

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8.2.          Termination by Buyer.  This Agreement may be terminated by Buyer and the purchase and sale of the Station abandoned if Buyer is not then in material default with respect to its obligations hereunder upon written notice to Sellers upon the occurrence of any of the following:

(a)           Failure to Obtain FCC Consent.  If the License Closing shall not have occurred on or prior to the fifth (5th) anniversary of the date hereof, subject to extension to the tenth (10th) anniversary of the date hereof pursuant to Section 8.1.

(b)           Sellers’ Default.  If, following the First Closing, Sellers shall be in material default with respect to their obligations hereunder and such default shall not have been cured within thirty (30) days following written notice from Buyer of such default (or within such longer period as may reasonably be required to cure such default if not reasonably capable of being cured within such thirty (30) days and Sellers shall have diligently begun working to cure such default within such thirty (30) day period).

8.3.          Rights on Termination.  If this Agreement is terminated by Buyer in accordance with the provisions of Section 8.2 above, Buyer shall have all rights and remedies available at law or equity, including its rights to indemnification pursuant to Section 9 hereof and the remedy of specific performance described in Section 8.4 below.  If this Agreement is terminated by Sellers in accordance with the provisions of Section 8.1 above, Sellers shall have all rights and remedies available at law or equity, including their rights to indemnification pursuant to Section 9 hereof.

8.4.          Specific Performance.  The parties recognize that if Sellers breach this Agreement and refuse to perform under the provisions of this Agreement, monetary damages alone would not be adequate to compensate Buyer for its injury.  Buyer shall therefor be entitled, in addition to any other remedies that may be available, to obtain specific performance of the terms of this Agreement.  If any action is brought by Buyer to enforce this Agreement, Sellers shall waive the defense that there is an adequate remedy at law.

SECTION 9
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES

9.1.          Survival.  Without prejudice to representations and warranties in other agreements delivered hereunder, all representations and warranties of Buyer and Sellers herein shall be deemed continuing representations and warranties and shall survive the First Closing or the License Closing, as set forth below, and shall remain in full force and effect for the applicable survival period set forth below (or until the final resolution of any claim or dispute which is asserted in reasonably detailed writing prior to the expiration of such period):

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	Representation and Warranties in Sections:	Made as of the following Closing:	Shall survive for the following period after the date of such Closing:
A	3 and 4 (excluding those in categories B and C)	First Closing	One (1) Year
B	3.16	First Closing	Two (2) Years
C	3.2, 3.9, 3.11, 4.2	First Closing	Applicable Statute of Limitations
D	3.1, 3.3, 3.15, 3.20, 4.1, 4.3, 4.4, 4.6, 4.7 (provided, 3.15 shall be excluded if the License Closing shall occur following the first anniversary of the First Closing)	License Closing	One (1) Year
E	3.2, 3.9, 3.11, 4.2	License Closing	Applicable Statute of Limitations

9.2.          Indemnification by Sellers.  After the First Closing, subject to Section 9.5, Sellers hereby agree to indemnify and hold Buyer harmless against and with respect to and shall reimburse Buyer for any and all losses, liabilities, costs, expenses, claims, or damages, including reasonable legal fees and expenses (collectively “Damages”), arising out of or resulting from:

(a)           any untrue representation, breach of warranty, or nonfulfillment of any covenant by Sellers contained in this Agreement or in any certificate, document, or instrument delivered by Buyer under this Agreement;

(b)           any obligations or liabilities of Sellers not assumed by Buyer pursuant to the terms of Section 2.5 hereof;

(c)           any failure of the parties to comply with the provisions of any bulk sales law applicable to the transfer of the Assets;

(d)           the operation or ownership of the Station and the Assets prior to the First Closing;

(e)           any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof or in enforcing this indemnity.

9.3.          Indemnification by Buyer.  After the First Closing, but subject to Section 9.5, Buyer hereby agrees to indemnify and hold Sellers harmless against and with respect to, and shall reimburse Sellers for any and all Damages arising out of or resulting from:

43

(a)           any untrue representation, breach of warranty, or nonfulfillment of any covenant by Buyer contained in this Agreement or in any certificate, document, or instrument delivered to Sellers under this Agreement;

(b)           any obligations or liabilities of Sellers assumed by Buyer pursuant to the terms of Section 2.5 hereof;

(c)           the operation or ownership of the Station and the Assets after the License Closing;

(d)           any violations of the so-called WARN Act resulting solely from Buyer’s actions in connection with the transactions contemplated by this Agreement; and

(e)           any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof or in enforcing this indemnity.

9.4.          Procedure for Indemnification.  The procedure for indemnification shall be as follows:

(a)           The party claiming indemnification (the “Claimant”) shall promptly give notice to the party from which indemnification is claimed (the “Indemnifying Party”) of any claim, whether between the parties or brought by a third party, specifying in reasonable detail the factual basis for the claim.  If the claim relates to an action, suit, or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five (5) business days after written notice of such action, suit, or proceeding was given to Claimant.

(b)           With respect to claims solely between the parties, following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty (30) days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable.  For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and its authorized representatives the information relied upon by the Claimant to substantiate the claim.  If the Claimant and the Indemnifying Party agree at or prior to the expiration of the thirty (30) day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim.  If the Claimant and the Indemnifying Party do not agree within the thirty (30) day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate remedy at law or equity.

(c)           With respect to any claim by a third party as to which the Claimant is entitled to indemnification under this Agreement, the Indemnifying Party shall have the right at its own expense to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying Party subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifying Party, provided, however, that the Indemnifying Party may not assume control of the defense unless it affirms in writing its obligation to indemnify Claimant for any damages incurred by

44

Claimant with respect to such third-party claim.  If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense.  So long as the Indemnifying Party is defending in good faith any third-party claim, the Claimant shall not settle or compromise such claim.  If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third-party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim.

(d)           If a claim, whether between the parties or by a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible.

(e)           The indemnification rights provided in Section 9.2 and Section 9.3 shall extend to the members, partners, shareholders, officers, directors, employees, representatives, and affiliated entities of any Claimant; although for the purpose of the procedures set forth in this Section 9.4, any indemnification claims by such parties shall be made by and through the Claimant.

9.5.          Certain Limitations.  Notwithstanding anything in this Agreement to the contrary:

(a)           Neither Sellers nor Buyer, as Indemnifying Party, shall be liable to the other party as Claimant with respect to any indemnification hereunder except to the extent that the aggregate amount of Damages of such party as Claimant exceeds One Hundred Thousand Dollars ($100,000.00) (the “Threshold Amount”) (and then only to the extent such Damages exceed the Threshold Amount); provided that all materiality qualifications in the representations and warranties of an Indemnifying Party with respect to which the other party as Claimant shall claim Damages shall be disregarded solely for purposes of determining the occurrence of an untrue representation or breach of warranty and the amount of Damages to be counted towards the Threshold Amount; and provided, further, that the foregoing shall not apply to any amounts owed in connection with the Purchase Price or the proration adjustment thereof.

(b)           Sellers shall be liable to indemnify Buyer hereunder only for Damages up to an aggregate amount of Five Million Dollars ($5,000,000.00); provided, however, that the foregoing limitation shall not apply but shall be replaced by a limitation in the aggregate amount of all payments that shall have been made by Buyer to Sellers pursuant to Sections 2.4 and 8.1, with respect to the aggregate amount of Damages for which Buyer shall be entitled to indemnity from Sellers pursuant to Section 9.2 arising out of or relating to any loss or impairment of the FCC Licenses.

(c)           Subject to subsection (d) below, in no event shall a Claimant be entitled to indemnification from the Indemnifying Party for incidental, consequential, or punitive damages regardless of the theory of recovery.  Each party hereto agrees to use reasonable efforts to mitigate any Damages which form the basis for any claim for indemnification hereunder.

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(d)           In the event that Buyer, as Indemnifying Party, shall be obligated to pay any Damages hereunder with respect to any indemnity claim by Sellers, as Claimant, and Buyer shall be obligated to pay or shall have paid a Performance Penalty pursuant to the JSA (and as defined therein) with respect to the events giving rise to such Damages, then the amount of such Damages payable by Buyer shall be reduced by and to the extent of the amount of the Performance Penalty paid to Sellers less any separate damages payable to Sellers with respect to such events pursuant to the JSA.

(e)           Neither Buyer nor Sellers as Claimant shall be entitled to indemnity pursuant to Section 9.2 or 9.3, as the case may be, from the other party as Indemnifying Party with respect to such Indemnifying Party’s breach of any of its representations, warranties, covenants or agreements contained herein to the extent that the inaccuracy of any such representation, or the breach of any such warranty, covenant or agreement is caused by any breach by or failure of Claimant or its employees or agents in performing or complying with Claimant’s obligations, covenants and agreements set forth in the JSA.

SECTION 10
MISCELLANEOUS

10.1.        Fees and Expenses.

(a)           Buyer and Sellers shall each pay one-half (1/2) of (i) any fees charged by the FCC in connection with the filing of the application for FCC Consent contemplated by Section 5.1(a), and (ii) any filing fees, transfer taxes, document stamps, or other charges levied by any governmental entity on account of the transfer of the Assets from Sellers to Buyer; provided, however, that any fees charged by the FCC in the event Buyer resubmits its application as provided by Section 5.1(d) shall be Buyer’s sole responsibility; and provided, further, that Sellers shall use its commercially reasonable efforts to attempt to obtain from the state tax authorities in Missouri and Kansas promptly after the date hereof (and thereafter to provide to Buyer) a certificate indicating that Sellers have no outstanding sales and use tax liability with respect to the consummation of the transactions contemplated hereby.

(b)           Except as otherwise provided in this Agreement, each party shall pay its own expenses incurred in connection with the authorization, preparation, execution and performance of this Agreement, including all fees and expenses of counsel, accountants, agents and representatives, and each party shall be responsible for all fees or commissions payable to any finder, broker, advisor, or similar person retained by or on behalf of such party.

10.2.        Notices.  All notices, demands, and requests required or permitted to be given under the provisions of this Agreement shall be (i) in writing; (ii) sent by telecopy (with receipt personally confirmed by telephone), delivered by personal delivery, or sent by commercial delivery service or certified mail, return-receipt requested; (iii) deemed to have been given on the date telecopied with receipt confirmed, the date of personal delivery, or the date set forth in the records of the delivery service or on the return-receipt; and (iv) addressed as follows:

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To Buyer:	Meredith Corporation
	1716 Locust Street
	Des Moines, IA 50309-3203
	Attn: John S. Zieser, Esquire, Vice President,
		General Counsel & Secretary
	Telecopy: (515) 284-3933
	Telephone: (515) 284-2895
With a copy (which shall not constitute notice) to:	Dow, Lohnes & Albertson PLLC
	1200 New Hampshire Avenue
	Washington, DC 20036-6802
	Attn: John R. Feore, Esquire
	Telecopy: (202) 776-2222
	Telephone: (202) 776-2000
To Sellers:	KSMO, Inc. and KSMO Licensee, Inc.
	c/o Sinclair Television Group
	10706 Beaver Dam Road
	Cockeysville, Maryland 21030
	Attn: David D. Smith
	Telecopy: (410) 568-1533
	Telephone: (410) 568-1507
With a copy (which shall not constitute notice) to:	Sinclair Broadcast Group, Inc.
	10706 Beaver Dam Road
	Cockeysville, Maryland 21030
	Attn: General Counsel
	Telecopy: (410) 568-1537
	Telephone: (410) 568-1524
With a copy (which shall not constitute notice) to:	Steven A. Thomas, Esquire
	Thomas & Libowitz, P.A.
	100 Light Street, Suite 1100
	Baltimore, Maryland 21202
	Telecopy: (410) 752-2046
	Telephone: (410) 752-2468

or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in accordance with this Section 10.2.

10.3.        Benefit and Binding Effect.  No party hereto may assign this Agreement without the prior written consent of the other parties hereto; provided, such consent shall not be required in the event Buyer desires to assign its rights hereunder to a wholly-owned subsidiary of Buyer, or solely with respect to the acquisition of the License Assets, to any other Person; provided further, Buyer may, without the consent of Sellers, collaterally assign its rights hereunder to its lenders; provided finally, no such assignment to any subsidiary, other Person or lender shall

47

relieve Buyer of any of its obligations hereunder.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

10.4.        Further Assurances.  The parties shall take any actions and execute any other documents that may be necessary or desirable to the implementation and consummation of this Agreement.

10.5.        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).

10.6.        Entire Agreement.  This Agreement, the Schedules hereto, and all documents, certificates, and other documents to be delivered by the parties pursuant hereto collectively represent the entire understanding and agreement between Buyer and Sellers with respect to the subject matter of this Agreement.  This Agreement supersedes all prior negotiations between the parties and cannot be amended, supplemented, or changed except by an agreement in writing that makes specific reference to this Agreement and that is signed by the party against which enforcement of any such amendment, supplement, or modification is sought.

10.7.        Waiver of Compliance; Consents.  Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement, or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver of failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement, or condition shall not operate as a waiver of or estoppel with respect to any subsequent or other failure.  Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 10.7.

10.8.        Counterparts.  This Agreement may be signed in counterparts with the same effect as if the signature on each counterpart were upon the same instrument.

10.9.        Severability.  In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement or any other instrument, and this Agreement shall be construed in a manner that, as nearly as possible, reflects the original intent of the parties.

[REST OF PAGE LEFT INTENTIONALLY BLANK

— SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized officers of Buyer and Sellers as of the date first written above.

WITNESS/ATTEST:	KSMO, INC.
/s/ Rachel Castranova	By:	/s/ David B. Amy		(SEAL)
	Name:	David B. Amy
	Title:	Secretary
	KSMO LICENSEE, INC.
/s/ Rachel Castranova	By:	/s/ David B. Amy	(SEAL)
	Name:	David B. Amy
	Title:	Secretary
	MEREDITH CORPORATION
/s/ Vicki J. Glenn	By:	/s/ Suku V. Radia		(SEAL)
	Name:	Suku V. Radia
	Title:	VP - CFO

Joinder as a Party with respect to Sections 5.15 and 5.16:

	SINCLAIR BROADCAST GROUP, INC.
/s/ Rachel Castranova	By:	/s/ David B. Amy	(SEAL)
	Name:	David B. Amy
	Title:	Executive Vice President

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TABLE OF CONTENTS

SECTION 1 CERTAIN DEFINITIONS

1.1. Terms Defined in this Section.

1.2. Terms Defined Elsewhere in this Agreement.

1.3. Rules of Construction.

SECTION 2 PURCHASE AND SALE OF ASSETS

2.1. Agreement to Purchase and Sell.

2.2. Excluded Assets.

2.3. Purchase Price.

(a) Prorations.

(b) Manner of Determining Adjustments.

2.4. Payment of Purchase Price.

(a) Payment of Estimated Purchase Price at First Closing.

(b) Payments of Purchase Price with Respect to License Assets.

(c) Payments to Reflect Adjustments.

2.5. Assumption of Liabilities and Obligations.

SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS

3.1. Organization and Authority of Sellers.

3.2. Authorization and Binding Obligation.

3.3. Absence of Conflicting Agreements; Consents.

3.4. Governmental Licenses.

3.5. Real Property.

3.6. Tangible Personal Property.

3.7. Contracts.

3.8. Intangibles.

3.9. Title to Properties.

3.10. Financial Statements.

3.11. Taxes.

3.12. Insurance.

3.13. Reports.

3.14. Personal and Employee Benefits.

i

(a) Employees and Compensation.

(b) Pension Plans.

(c) Welfare Plans.

(d) Compliance.

(e) Benefit Arrangements.

(f) Multiemployer Plans.

(g) Delivery of Copies of Relevant Documents and Other Information.

(h) Labor Relations.

3.15. Claims and Legal Actions.

3.16. Environmental Matters.

3.17. Compliance with Laws.

3.18. Conduct of Business in Ordinary Course.

3.19. Transactions with Affiliates.

3.20. Broker.

SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER

4.1. Organization, Standing, and Authority.

4.2. Authorization and Binding Obligation.

4.3. Absence of Conflicting Agreements and Required Consents.

4.4. Brokers.

4.5. Qualifications of Buyer.

4.6. Compliance with Laws.

4.7. Claims and Legal Actions.

SECTION 5 SPECIAL COVENANTS AND AGREEMENTS

5.1. FCC Consent.

5.2. Covenants of Sellers.

(a) Commercially Reasonable Efforts.

(b) Ordinary Course.

(c) Compliance with Laws.

(d) Access.

(e) No Inconsistent Action.

ii

(f) Update of Sellers’ Schedules.

iii

iv

v

vi

SELLERS’ SCHEDULES

Schedule 2.2(m)	–	Excluded Assets
Schedule 3.1	–	Organization and Authority of Sellers
Schedule 3.3	–	Conflicts
Schedule 3.4(a)	–	Governmental Licenses
Schedule 3.4(b)	–	Disclosures re Governmental Licenses
Schedule 3.5	–	Real Property
Schedule 3.6	–	Tangible Personal Property
Schedule 3.7	–	Contracts
Schedule 3.8	–	Intangibles
Schedule 3.10	–	Disclosures re Financial Statements
Schedule 3.11	–	Taxes
Schedule 3.12	–	Insurance
Schedule 3.14	–	Personnel and Employee Benefits
Schedule 3.15	–	Claims and Legal Actions
Schedule 3.18	–	Conduct of Business in the Ordinary Course
Schedule 5.7	–	Retained Employees

BUYER’S SCHEDULES

Schedule 4.5	–	FCC Qualifications of Buyer
Schedule 4.6	–	Buyer’s Compliance with Laws
Schedule 4.7	–	Claims and Legal Actions re Buyer

JOINT SCHEDULES

Schedule 5.8	–	Form of Joint Sales Agreement
Schedule 5.10	–	Form of Lease Agreement
Schedule 7.2(e)	–	Opinion of Sellers’ Counsels at First Closing
Schedule 7.3(f)	–	Opinion of Buyer’s Counsel at First Closing
Schedule 7.4(e)	–	Opinion of Sellers’ Counsels at License Closing
Schedule 7.5(f)	–	Opinion of Buyer’s Counsel at License Closing

vii

EX-10.49

Exhibit 10.49

JOINT SALES AND SHARED SERVICES AGREEMENT

This JOINT SALES AND SHARED SERVICES AGREEMENT (this “Agreement”) is dated as of November 12, 2004, by and among KSMO Licensee, Inc., a Delaware corporation (“Licensee”), KSMO, Inc., a Maryland corporation (“KSMO-Sub”), and Meredith Corporation, an Iowa corporation (“Sales Agent”).

RECITALS

A.Licensee and KSMO-Sub (collectively, the “KSMO Parties”) have entered into an Asset Purchase Agreement dated as of November 12, 2004, by and among the KSMO Parties (as sellers) and Sales Agent (as buyer) (the “Purchase Agreement”) pursuant to which, subject to the consent of the Federal Communications Commission (“FCC”) and the terms and conditions of the Purchase Agreement, Sales Agent intends to acquire the assets and licenses of, and to own and operate, Television Station KSMO(TV), Kansas City, Missouri, including the digital television facilities authorized for the operation of KSMO-DT (collectively referred to as the “Station”);

B.Sales Agent owns and operates Television Station KCTV(TV), Kansas City, Missouri (“KCTV”), pursuant to licenses, permits, and authorizations issued by the FCC;

C.The KSMO Parties currently broadcast on the Station a combination of programming supplied by The WB Television Network (“The WB”) and syndicated programming;

D.In order to support and promote the economic viability and development of the Station, the KSMO Parties desire to retain Sales Agent to sell advertising on the Station and to provide related sales and other services to the KSMO Parties with respect to the operation of the Station, to utilize certain facilities of Sales Agent and to provide to the KSMO Parties certain news and public interest programming for broadcast on the Station, in each case in conformity with all rules, regulations, and policies of the FCC; and

E.It is the parties’ expectation that Sales Agent, with its experience and operating infrastructure, will improve the overall efficiency of the Station’s sales and operating processes and reduce costs, thereby helping to ensure that the Station remains a viable alternative for both television viewers and advertisers.

AGREEMENTS

In consideration of the above recitals and of the mutual agreements and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, Licensee, KSMO-Sub and Sales Agent, intending to be bound legally, agree as follows:

SECTION 1.  DEFINITIONS

1.1  Terms Defined in this Section.  The following terms, as used in this Agreement, shall have the meanings set forth in this Section:

“Affiliate” means, with respect to any Person, (a) any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, or (b) an officer or director of such Person or of an Affiliate of such Person within the meaning of clause (a) of this definition.  For purposes of clause (a) of this definition, (i) a Person shall be deemed to control another Person if such Person (A) has sufficient power to enable such Person to elect a majority of the board of directors of such Person, or (B) owns a majority of the beneficial interests in income and capital of such Person, and (ii) a Person shall be deemed to control any partnership of which such Person is a general partner.

“Base Date” means November 12, 2004.

“Communications Act” means the Communications Act of 1934, as amended, together with the rules, regulations, and policies promulgated thereunder by the FCC, as in effect from time to time.

“Market” means the Kansas City, Missouri, Designated Market Area.

“Person” includes natural persons, corporations, business trusts, associations, companies, joint ventures, and partnerships.

“To the best of Sales Agent’s knowledge” or any similar formulation thereof means the actual knowledge of the Executive Vice President of the Meredith Broadcast Group or the General Counsel of Sales Agent, after reasonable inquiry by each such person within his area of responsibility.

“To the best of the KSMO Parties’ knowledge” or any similar formulation thereof means the actual knowledge of the President, the Chief Financial Officer or the General Counsel of Sinclair Broadcast Group, Inc., or the general manager or main engineer of the Station, after reasonable inquiry by each such person within his area of responsibility.

1.2  Additional Defined Terms.  In addition to the defined terms in the preamble, recitals and Section 1.1 hereof, the following is a list of terms used in this Agreement and a reference to the section or schedule hereof in which such term is defined:

Term	Section/Schedule
Advertisements	Section 4.1
Automatic Increase	Schedule 3.1
Broadcast Material	Section 4.5
Cash Flow Payment Date	Schedule 3.1
Delivered Programming	Section 4.2
Disclosure Statement	Section 5.2(c)
Excluded Services	Section 4.4
Independent Accounting Firm	Schedule 3.1
Initial Term	Section 2.1(a)
JSA Fee	Schedule 3.1

2

Term	Section/Schedule
Katz	Schedule 3.1
Katz Rep Agreement	Schedule 3.1
Licensee Accounts Receivable	Section 4.8
Licensee Revenue Share	Schedule 3.1
Licensee’s Expense Schedule	Schedule 3.1
Lost Revenue	Schedule 3.1
Net Sales Revenue	Schedule 3.1
Objection Notice	Schedule 3.1
Performance Penalty	Section 2.3(a)
Policy Statement	Section 4.5
Premises	Section 5.4
PSAs	Section 4.6
Ratings Agencies	Section 5.1(l)
Reimbursable Station Expenses	Schedule 3.1
Sinclair	Section 5.1(g)
Station Broadcast Cash Flow	Schedule 3.1
Studio Building	Section 4.3(a)(i)
Trade Agreements	Section 4.7
Uncured Material Breach	Section 2.3(a)

SECTION 2.  TERM

2.1  Term.

(a)  Initial Term.  The initial term of this Agreement shall be from the date hereof until the date that is five (5) years after the Base Date (the “Initial Term”), unless terminated in accordance with Section 2.2 below.

(b)  Renewal Term.  This Agreement shall be renewed automatically for an additional term of five (5) years commencing on the day following the expiration of the Initial Term if Sales Agent shall have paid to Licensee Three Million Three Hundred Fifty Thousand Dollars ($3,350,000) in accordance with the proviso in Section 8.1 of the Purchase Agreement.

2.2  Termination.

(a)  Mutual Agreement.  This Agreement may be terminated at any time by mutual agreement of the parties.  This Agreement shall terminate upon the consummation of any assignment or transfer of control of the FCC licenses for the Station to Sales Agent or any Affiliate of Sales Agent, subject to the payment by Sales Agent and the KSMO Parties of all payments owed to the other as of the consummation date of such assignment or transfer.

(b)  Termination by Licensee or Sales Agent.  This Agreement may be terminated by Licensee or Sales Agent, by written notice to the other, upon the occurrence of any of the following events:

3

(i)  this Agreement has been declared invalid or illegal in whole or substantial part by an order or decree of an administrative agency or court of competent jurisdiction which is not subject to appeal or further administrative or judicial review, and the parties, acting in good faith, are unable to agree upon a reform of the Agreement so as to cause the Agreement to comply with applicable law; or

(ii)  there has been a change in the Communications Act that causes this Agreement in its entirety to be in violation thereof and the applicability of such change is not subject to appeal or further administrative review; and the parties, acting in good faith, are unable to agree upon a reform of the Agreement so as to cause the Agreement to comply with applicable law.

(c)  Termination by Sales Agent.  This Agreement may be terminated by Sales Agent, by written notice to Licensee, upon the occurrence of any of the following events:

(i)  if Sales Agent is not then in material breach and the KSMO Parties are in material breach under this Agreement and the KSMO Parties have failed to cure such breach within thirty (30) days after receiving written notice of breach from Sales Agent; or

(ii)  if the KSMO Parties or any Affiliate of the KSMO Parties makes a general assignment for the benefit of creditors, files, or has filed against it a petition for bankruptcy, reorganization or an arrangement for the benefit of creditors, or for the appointment of a receiver, trustee, or similar creditor’s representative for the property or assets of the KSMO Parties or any Affiliate of the KSMO Parties under any federal or state insolvency law which, if filed against KSMO Parties or any Affiliate of the KSMO Parties, has not been dismissed within thirty (30) days thereof.

(d)  Termination by Licensee.  This Agreement may be terminated by Licensee, by written notice to Sales Agent,

(i)  if Sales Agent breaches its obligations hereunder and such breach reasonably could be expected to result in the revocation or non-renewal of the Station’s FCC licenses; or

(ii)  if Sales Agent or any Affiliate of Sales Agent makes a general assignment for the benefit of creditors, files, or has filed against it a petition for bankruptcy, reorganization or an arrangement for the benefit of creditors, or for the appointment of a receiver, trustee, or similar creditor’s representative for the property or assets of Sales Agent or any Affiliate of Sales Agent under any federal or state insolvency law which, if filed against Sales Agent or any Affiliate of Sales Agent, has not been dismissed within thirty (30) days thereof.

2.3  Performance Penalty.

(a)  If Sales Agent is in material breach of its obligations under either the Purchase Agreement or this Agreement and the KSMO Parties are not then in material default under the Purchase Agreement or this Agreement, and such default by Sales Agent shall not have been cured within twenty-five (25) days following written notice from the KSMO Parties of such default (or within such longer period as may reasonably be required to cure such default if not reasonably

4

capable of being cured within twenty-five (25) days and Sales Agent shall have diligently begun working to cure such default within such twenty-five (25) day period) (an “Uncured Material Breach”), in lieu of any right by Licensee to terminate the Purchase Agreement or this Agreement as a result of an Uncured Material Breach, Sales Agent shall owe to the KSMO Parties a performance penalty calculated as follows (the “Performance Penalty”):

(i)  If an Uncured Material Breach exists on a day Sales Agent is required to pay Licensee the Licensee Revenue Share as provided in Schedule 3.1, the Performance Penalty shall be the amount of the monthly JSA Fee (which shall be paid in addition to the Licensee Revenue Share).

(ii)  If such Uncured Material Breach continues to exist on the next succeeding day Sales Agent is required to pay Licensee the Licensee Revenue Share as provided in Schedule 3.1, the Performance Penalty shall be two times the amount of the JSA Fee and the Performance Penalty shall be increased in such manner for each succeeding month that the Uncured Material Breach remains uncured as of the day Sales Agent is required to pay Licensee the Licensee Revenue Share as provided in Schedule 3.1.

(b)  In the event that Sales Agent shall be obligated to pay any damages hereunder with respect to any indemnity claim by the KSMO Parties (other than with respect to a claim concerning a failure to pay the Licensee Revenue Share in accordance with Schedule 3.1) and Sales Agent shall be obligated to pay or shall have paid a Performance Penalty with respect to the events giving rise to such damages, then the amount of such damages payable by Sales Agent shall be reduced by, and to the extent of, the amount of the Performance Penalty paid to the KSMO Parties less any separate damages payable to the KSMO Parties with respect to such events pursuant to the Purchase Agreement.

2.4  Certain Matters Upon Termination.  If this Agreement is terminated by either party under Section 2.2, no expiration or termination of this Agreement shall terminate the obligations of either party hereto, including, without limitation, to indemnify the other for claims of third parties under Section 8 of this Agreement, or limit or impair any party’s rights to receive payments due and owing hereunder on or before the effective date of such termination.

SECTION 3.  CONSIDERATION

As consideration for the right of Sales Agent to market and sell air time made available under this Agreement, Licensee shall be entitled to receive from the Station’s revenue the amounts set forth in Schedule 3.1 hereto, and Sales Agent shall provide services to the KSMO Parties as set forth in this Agreement.

SECTION 4.  SCOPE OF SERVICES

4.1  Sales and Related Services.  Except as expressly provided to the contrary herein, the KSMO Parties retain Sales Agent on an exclusive basis for the Initial Term and each succeeding renewal term of this Agreement to market and sell all forms of regional, and local spot advertising, sponsorships, direct response advertising, paid programming, including infomercials, and all long-form advertising broadcast on the Station and all advertising on any Internet site maintained by or on behalf of the Station during the Initial Term and any renewal term (the “Advertisements”).

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Subject to the terms of Schedule 3.1, national spot advertising broadcast on the Station shall continue to be sold by the Station’s existing national rep firm.  The KSMO Parties shall promptly provide to Sales Agent and its employees such information as Sales Agent may request to support the marketing and sale of the Advertisements and the collection of accounts receivable with respect thereto.  Sales Agent also shall be responsible for the promotion of the Station and for the Station’s traffic, billing and collection functions for the Advertisements.  Sales Agent shall designate an adequate number of its personnel to perform such services for the Station. Sales Agent shall conduct the sales, traffic and promotion functions for the Station in accordance with standard practice in the industry.  Sales Agent and the KSMO Parties shall periodically review the personnel needs and job functions of the persons designated by Sales Agent to perform its obligations under this Agreement and implement such changes as they mutually agree are appropriate.  Revenues from the sale of the Advertisements shall be allocated between Sales Agent and Licensee as set forth in Schedule 3.1.  Sales Agent may sell the Advertisements in combination with any other broadcast stations of its choosing, including KCTV; provided, however, that under no circumstances will advertisers be required to purchase time on the Station and KCTV together.  Subject to Section 4.5, the placement, duration and rates of the Advertisements shall be determined by Sales Agent.  The value of commercial time bartered in exchange for programming shall be excluded from the definition of Net Sales Revenue.

4.2  Delivered Programming.  Commencing on the Base Date, Sales Agent shall provide to Licensee for broadcast, simulcast or rebroadcast on the Station, as applicable, local news and other programming as described more particularly in Schedule 4.2 hereof (the “Delivered Programming”).  The total duration of all Delivered Programming supplied by Sales Agent for broadcast on the Station shall in no event exceed the lesser of 25 hours per week or 15% of the Station’s broadcast hours for any week.  Sales Agent shall be responsible for obtaining the rights to broadcast the Delivered Programming on the Station and for paying all costs incurred in obtaining such rights.  To the extent permission is required to rebroadcast any Delivered Programming under Section 325 of the Communications Act, Sales Agent hereby grants Licensee such permission.  The Delivered Programming shall be subject to Sales Agent’s editorial judgment and the requirements of Section 4.5, including but not limited to the Licensee’s right of rejection or preemption.  All Delivered Programming shall be in conformity in all material respects with standards established by Licensee and consistent with similar programming broadcast on Sales Agent’s own television broadcast stations.  Apart from its obligation to provide the Delivered Programming as set forth herein, Sales Agent shall have no involvement with respect to the programming to be aired on the Station, the selection of which shall be entirely within the discretion of Licensee.  Sales Agent shall retain all revenue from the sale of Advertisements that are adjacent to or in the Delivered Programming.

4.3  Shared Services.  Sales Agent agrees to provide to the KSMO Parties the following additional facilities, equipment and services to support the operation of the Station, subject to the KSMO Parties’ right to modify, upon reasonable prior notice to Sales Agent, any such service, provided that no such modification shall expand in any material respect the obligations of Sales Agent, or require Sales Agent to incur any material additional obligation or liability, hereunder:

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(a)Office and Studio Space.

(i)If and to the extent Sales Agent elects, in its sole discretion, to provide some or all of the services to be provided by Sales Agent hereunder from the studio facility used by Sales Agent for KCTV (the “Studio Building”), Sales Agent shall provide to the KSMO Parties’ employees and agents the right to access and use sufficient office space, including furnishings and office equipment for the Station’s main studio operations, including sufficient space to permit Licensee to maintain and make available to the public the Station’s public inspection file in accordance with applicable requirements of the Communications Act, at such locations in or near the Studio Building, in each case as may be mutually acceptable to Licensee and Sales Agent and as Licensee reasonably requires for the conduct of the business of the Station as contemplated by the terms hereof and in accordance with applicable requirements of the FCC, so long as the provision of such space and the use of such equipment do not unreasonably interfere with the conduct of Sales Agent’s business or operations.

(ii)Sales Agent shall give Licensee and its agents a nonexclusive and unrestricted right of access to the Studio Building at all times, subject only to Sales Agent’s reasonable security procedures applicable to its own employees, for the purpose of fulfilling Licensee’s obligations as an FCC licensee.  The right granted under this Section shall include the incidental benefit and reasonable right of use of utilities (heat, water, electricity) provided for purposes of Sales Agent’s own operations.  Sales Agent shall provide separate, lockable office facilities for use by Licensee’s general manager or other managerial employee(s) and shall permit Licensee to install appropriate signs on the inside and outside of the Studio Building (consistent with applicable local requirements or agreements, if any, governing such signage and with the overall appearance of the Studio Building) identifying Licensee as the owner and licensee of the Station.

(iii)If, at the time of termination of this Agreement, some or all of the Station’s operations are co-located in the Studio Building as contemplated by Section 4.3(a)(i) hereof, Licensee shall be given a transition period of not less than six (6) months following such termination in which to relocate such operations.  During such transition period, Licensee shall have access to the Studio Building in the same manner as during the term of this Agreement.  Such transition period may be lengthened upon such terms and conditions as may be mutually agreeable to the parties.

(b)Technical Services.

(i)Beginning as soon as reasonably practicable following the Base Date, Sales Agent shall perform monitoring and maintenance of the Station’s technical equipment and facilities and, upon Licensee’s request, shall assist Licensee with the installation, repair, maintenance and replacement of the Station’s equipment and facilities; provided, however, subject to reimbursement to the extent provided in Schedule 3.1, Licensee shall be responsible for all Station capital and equipment replacement expenditures.

(ii)Beginning as soon as reasonably practicable following the Base Date, Sales Agent shall make available to Licensee, on an independent contractor basis, a staff

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engineer employed by Sales Agent to assist the Licensee’s Chief Operator for the Station in fulfilling his duties as specified by the rules and regulations of the FCC.

4.4  Excluded Services.  (a) Licensee retains all rights with respect to the sale of supplementary or ancillary non-broadcast services on the Station not included within the definition of “Advertisements” in Section 4.1 hereof (collectively, “Excluded Services”), and (b) the commercial inventory and marketing and advertising rights with respect to Excluded Services are not conveyed to Sales Agent under this Agreement, provided that the Excluded Services shall not reduce or limit the number or duration of the Advertisements made available to Sales Agent under this Agreement.

4.5  Content Policies.  All material furnished by Sales Agent for broadcast on the Station (“Broadcast Material”) shall comply with applicable federal, state and local regulations and policies, including commercial limits in children’s programming.  Licensee shall have the right to preempt any Broadcast Material to present program material of greater local or national importance.  Licensee may reject any Broadcast Material if Licensee reasonably determines that the broadcast of such material would violate applicable laws or would otherwise be contrary to the public interest.  Licensee shall promptly notify Sales Agent of any such rejection, preemption, or rescheduling and shall cooperate with Sales Agent in efforts to fulfill commitments to advertisers and syndicators.  Licensee is familiar with the operating standards followed by Sales Agent in the operation of KCTV, which standards are consistent with those employed by Licensee in the operation of the Station.  Schedule 4.5 sets forth Licensee’s statement of policy (the “Policy Statement”) with regard to the Delivered Programming and the Advertisements.  Sales Agent shall ensure that the Advertisements and Delivered Programming are in accordance with this Agreement and Licensee’s Policy Statement.

4.6  Public Service Announcements.  Sales Agent acknowledges that Licensee has in the past provided time on the Station for the promotion of public service organizations in the form of public service announcements (“PSAs”), and agrees that it will release spot time to Licensee for the broadcast of PSAs at times and in amounts consistent with Licensee’s past practices and consistent with Sales Agent’s operating policies applicable to the broadcast of PSAs on KCTV.  Licensee and Sales Agent shall cooperate in good faith concerning the placement of the PSAs to be broadcast on the Station; provided, however, that Licensee shall be ultimately responsible for selecting and obtaining PSAs for broadcast on the Station.

4.7  Trade and Barter Spots.  To the best of the KSMO Parties’ knowledge, Schedule 4.7 hereto is an accurate and complete list in all material respects as of November 8, 2004, of all Station contracts for the sale of advertising time on the Station for non-cash consideration that are in effect as of and will extend beyond the Base Date (“Trade Agreements”).  Sales Agent shall comply with and honor all such Trade Agreements, if and to the extent that Trade Agreement spots may be broadcast on a preemptible basis.  The dollar value of advertising time on the Station provided to advertisers pursuant to Trade Agreements shall not be included in the computation and determination of Net Sales Revenue for purposes of this Agreement.  After the Base Date, Sales Agent and the KSMO Parties shall have the right to enter into new contracts for the sale of Advertisements for non-cash consideration, provided that both parties agree to each such Trade Agreement and provided further that the dollar value of such advertising time on the Station for such Trade Agreements is not included in the computation and determination of Net Sales

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Revenue for purposes of this Agreement.  The parties shall mutually agree as to the use of the non-cash consideration received for each new Trade Agreement.  For purposes of this Section 4.7, the term Trade Agreement applies only to the bartering of advertising in return for goods and services other than programming.

4.8  Accounts Receivable.  The KSMO Parties or their agent shall retain all revenues from advertising broadcast by the Station prior to the Base Date (“Licensee Accounts Receivable”).  All revenues from the Advertisements broadcast by the Station on or after the Base Date, including revenues derived from advertising sold by the KSMO Parties or their agent prior to the Base Date that has not been aired as of the Base Date, shall be allocated between Sales Agent and Licensee as set forth in Schedule 3.1.  Licensee shall use its best efforts to deliver to Sales Agent a schedule of Licensee Accounts Receivable, within seven (7) days of the Base Date.  For a period of 120 days following the Base Date, Sales Agent shall issue invoices in accordance with the Station’s standard billing procedures for time sold and provided by the Station prior to the Base Date and not invoiced prior to the Base Date and remit to Licensee all amounts collected during the period in respect of the Licensee Accounts Receivable as follows: (a) on or before the eighteenth (18th) day of the second complete calendar month after the Base Date, pay all amounts collected up to the end of the prior month; and (b) on or before the eighteenth (18th) day of each succeeding month, remit all amounts collected during the month prior thereto.  With each remittance, Sales Agent shall furnish a statement of the amounts collected and the persons from whom such amounts were collected.  Sales Agent shall, unless the remittance or an account receivable debtor specified otherwise, apply all amounts it receives from or for the benefit of any account receivable debtor first to pay the oldest undisputed Licensee Accounts Receivable of such debtor before applying any of such amounts to pay any obligation of such debtor to Sales Agent arising during, or otherwise attributable to, the period after the Base Date.  Licensee Accounts Receivable shall not be included in Net Sales Revenue.  Sales Agent shall collect Licensee Accounts Receivable using commercially reasonable efforts that are consistent in all material respects with the efforts Sales Agent uses to collect accounts receivable from the sale of advertising on KCTV; provided, however, Sales Agent shall not be required to refer any Licensee Accounts Receivable to an attorney for collection, institute legal proceedings or take other extraordinary measures to collect any Licensee Accounts Receivable.

4.9  Monthly Reports; Books and Records.  The following obligations shall begin on the first day of the first full calendar month beginning after the Base Date:

(a)  On or before the twentieth day of each calendar month during the Initial Term and any renewal term of this Agreement, Sales Agent shall furnish Licensee with a report regarding Sales Agent’s sales by advertiser of the Advertisements, other than Advertisements in or adjacent to Delivered Programming, for the previous calendar month.  Licensee shall have the right to review only those books and records of Sales Agent that pertain to the revenues from the sale of such Advertisements.

(b)  On or before the twentieth day of each calendar month during the Initial Term and any renewal term of this Agreement, the KSMO Parties shall furnish Sales Agent with such financial statements and reports as the KSMO Parties prepare in the ordinary course of business as of the Base Date that reflect the costs and expenses incurred by the KSMO Parties in operating and maintaining the Station.  Sales Agent shall have the right to review only those books and records

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of the KSMO Parties that pertain to the costs and expenses of the Station, including any administrative charges, fees, or other amounts payable to any Affiliate of the KSMO Parties.

4.10  Control.  Notwithstanding anything to the contrary in this Agreement, the KSMO Parties and Sales Agent acknowledge and agree that during the Initial Term and any renewal term of this Agreement, Licensee will maintain ultimate control and authority over the facilities of the Station, including specifically control and authority over the Station’s operations, including finances, personnel, and programming.  Without limiting the generality of the foregoing, Licensee shall retain sole responsibility for the selection, development, and acquisition of any and all programming to be broadcast over the Station, as well as the payment therefor, other than those payments associated with the Delivered Programming, subject to the KSMO Parties’ right to reimbursement in accordance with the terms of Schedule 3.1.  To that end, Licensee shall (a) have exclusive authority for the negotiation, preparation, execution and implementation of any and all programming agreements for the Station, and (b) retain and hire or utilize whatever employees Licensee reasonably deems appropriate or necessary to fulfill those programming functions.  Sales Agent shall not represent, warrant or hold itself out as the Station’s licensee, and all sales material prepared by Sales Agent for the sale of advertising time on the Station shall identify Licensee as the licensee of the Station using mutually agreeable wording and references.  Sales Agent shall sell advertising time and enter into all agreements for the sale of time on the Station and for the Delivered Programming in its own name.

SECTION 5.  OTHER OBLIGATIONS OF THE PARTIES

5.1  Responsibilities of the KSMO Parties.  The KSMO Parties, at their expense and subject to reimbursement to the extent provided by Schedule 3.1, shall be responsible for and perform the following obligations with respect to the business and operations of the Station during the Initial Term and any renewal term of this Agreement, in accordance with and subject to the following:

(a)  Licensee shall bear all responsibility for the Station’s compliance with all applicable provisions of the Communications Act and all other applicable laws.  Licensee shall file in a timely and complete manner all reports and applications required to be filed with the FCC or any other governmental body.  All programming aired on the Station that is produced in whole or in part by the KSMO Parties or any Affiliate of the KSMO Parties shall comply in all material respects with Licensee’s Policy Statement.

(b)  The KSMO Parties shall maintain in effect policies of insurance insuring the assets and the business of the Station in accordance with good industry practices and, at the least consistent with the coverage provided under such policies as were in existence on the day prior to the Base Date.

(c)  The KSMO Parties shall cause each Station transmitting facility to be maintained at all times in accordance with good engineering practice and with all engineering requirements set forth in the Station’s FCC authorizations (except at such time where reduction of power is required for routine or emergency maintenance) and in accordance with the Communications Act.  The KSMO Parties shall use, operate, and maintain all of the assets of the Station in a reasonable manner.  If any loss, damage, impairment, confiscation or condemnation of

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any of such assets occurs, the KSMO Parties shall repair, replace, or restore the assets to their prior condition as soon thereafter as possible, and the KSMO Parties shall use the proceeds of any claim under any insurance policy to repair, replace or restore any of the assets that are lost, damaged, impaired or destroyed.

(d)  The KSMO Parties shall be solely responsible for and shall pay in a timely manner all operating costs of the Station (excluding those costs to be borne by Sales Agent in accordance with Section 5.2 or in connection with these shared services to be provided by Sales Agent to the KSMO Parties pursuant to Section 4.3), including the cost of electricity, other utilities and rental or other payments with respect to real property leased by the KSMO Parties, taxes, and the salaries, insurance, and other costs for all personnel employed by the KSMO Parties.

(e)  The KSMO Parties shall promptly pay when due, all music rights payments (including, without limitation, music performance rights, synchronization rights, and master use rights), if any, in connection with the broadcast and/or transmission of all announcements, including the Advertisements, and programming on the Station, other than the Delivered Programming.

(f)  The KSMO Parties shall, consistent with their past practice, make any and all capital expenditures necessary to (i) maintain the Station’s current level of technical operation, which shall in no event be lower than generally accepted industry standards and (ii) complete the construction of the Station’s digital television facilities in accordance with all FCC rules and policies concerning such construction

(g)  The KSMO Parties shall be solely responsible for all costs and expenditures associated with the procuring of programming to be aired on the Station, other than those associated with the Delivered Programming.  The KSMO Parties shall pay over to Sales Agent all funds received by the KSMO Parties each year from The WB and any other program syndicator or supplier for promotion of The WB and other programming on other stations or media, and Sales Agent shall use all such funds solely for their intended purposes; provided, however, that the KSMO Parties shall retain any network compensation paid to the KSMO Parties after the Base Date by The WB solely in return for the agreement entered into on July 4, 1997, by Sinclair Broadcast Group, Inc. (“Sinclair”) and The WB pursuant to which Sinclair agreed to affiliate the Station and certain of Sinclair’s other television broadcast stations with The WB.  The KSMO Parties shall cooperate with Sales Agent in filing any necessary forms or reports required to obtain co-op reimbursement or other funds to which Sales Agent is entitled under this Section 5.1(g).  For the purposes of Schedule 3.1 hereof, Sales Agent’s receipt of promotional or co-op payments identified in this Section 5.1(g) shall not be considered a part of Net Sales Revenue and its expenditures of such promotional or co-op payments shall not be considered an expense for purposes of calculating Station Broadcast Cash Flow.  To the extent that any network or program service agreement of the KSMO Parties provides that, in exchange for cash payment, additional spot time that otherwise would be used by such network or program service may be released for local sales by the Station, the KSMO Parties, upon request by the Sales Agent, will obtain the release of such commercial spot inventory for the placement of Advertisements by the Sales Agent, subject to Sales Agent paying to the KSMO Parties the cash amount required for such release.

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(h)  The KSMO Parties shall have the right to supplement the promotional efforts undertaken by Sales Agent, but subject to coordinating such efforts with Sales Agent in order to maintain image consistency with Sales Agent’s promotional efforts.

(i)  Subject to the provisions of any network affiliation or other programming agreement, Licensee shall consult and cooperate with Sales Agent in the negotiation, maintenance, and enforcement of retransmission consent agreements with cable, satellite and other multichannel video providers.  Licensee, in consultation with Sales Agent, shall exercise Licensee’s rights to mandatory carriage and retransmission consent for cable television and other multichannel video providers in a manner that ensures the maximum possible distribution of the Station’s signal on cable, direct-broadcast-satellite, and other multichannel video programming distributors serving communities located in the Market.

(j)  Except as otherwise permitted by this Agreement, the KSMO Parties shall not take any action or unreasonably omit to take any action which results in or causes a (i) revocation, non-renewal or material impairment of the Station’s FCC licenses, (ii) material adverse effect upon the Station’s transmitter, antenna and other material assets included in the Station’s transmission facility, (iii) material breach or default under the terms of the Lease Agreement dated as of July 5, 2001, between American Tower L.P. and Sinclair Communications, Inc.

(k)  The KSMO Parties shall list Sales Agent as the exclusive sales representative for the Advertisements in all applicable trade listings and advertising and promotional material if and when such listings and material are published by the KSMO Parties.

(l)  To the extent permitted under the terms of any applicable agreement, the KSMO Parties shall provide to Sales Agent such routine ratings information and ratings reports with respect to the Station as are customarily prepared or obtained by the KSMO Parties in the ordinary course of business.  Except as otherwise agreed by the KSMO Parties and Sales Agent, the KSMO Parties shall maintain (including timely payment of all fees) any agreements with A.C. Nielsen Company or its affiliates or other ratings information providers customarily used by the KSMO Parties as a source of local station research information for the Station (collectively, the “Ratings Agencies”).  At Sales Agent’s request, the KSMO Parties shall use their commercially reasonable efforts to assist Sales Agent in obtaining from the Ratings Agencies permission to use the Station’s ratings information and reports in connection with the sale of the Advertisements.

5.2  Responsibilities of Sales Agent.  Sales Agent, at its expense and subject to the provisions of Schedule 3.1, shall be responsible for and perform the following obligations with respect to the marketing and sale of the Advertisements during the Initial Term and any renewal term of this Agreement in accordance with and subject to the following provisions:

(a)  Sales Agent shall be solely responsible for (i) all commissions to employees, agencies or representatives and other expenses incurred in its marketing and sale of the Advertisements; (ii) all expenses incurred in its performance of traffic, billing, and collections functions with respect to the Advertisements;  (iii) any publicity or promotional expenses and other fees it incurred in performing its obligations under this Agreement; and (iv) all fees related to the software used for sales, traffic, billing and similar functions including any fees charged by the

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provider to make Sales Agent’s software interface in the most efficient manner with Licensee’s master control equipment.

(b)  Sales Agent shall be solely responsible for the salaries, taxes, and related costs for all personnel employed by Sales Agent who are used by Sales Agent in the sale of the Advertisements and the collection of accounts receivable (including salespeople, billing personnel and traffic personnel).

(c)  Sales Agent shall cooperate with Licensee to assist Licensee in complying with the provisions of the Communications Act regarding political advertising, including compliance with Licensee’s statement disclosing political advertising rates and practices for purchasers of political advertising consistent with applicable FCC rules and policies (“Disclosure Statement”).  Sales Agent shall supply such information promptly to Licensee as may be necessary to comply with the public inspection file, lowest unit rate, equal opportunities, and reasonable access requirements of the Communications Act.  If the Station fails to meet its political time obligations under the Communications Act based on the advertising sold by Sales Agent, then to the extent reasonably necessary to enable Licensee to cause the Station to comply with its political time obligations, Sales Agent shall release advertising availabilities to Licensee; provided, however, that all revenues realized by Licensee from the sale of such advertising time shall be immediately paid to Sales Agent and shall be considered a part of its Net Sales Revenue.

(d)  Sales agent shall assist Licensee with the negotiation, maintenance, and enforcement of retransmission consent agreements with cable, satellite, and other multichannel video providers.

5.3  Delivery of Material for Broadcast.  All Broadcast Material shall be delivered to the Station in a format to be agreed upon by Sales Agent and Licensee, in a form ready for broadcast on the Station’s existing playback equipment, and with quality suitable for broadcast.  The KSMO Parties shall not be required to provide production services or to copy, reformat, or otherwise manipulate material furnished by Sales Agent other than inserting tape cartridges or similar broadcast-ready media into machinery or computers for broadcast.

5.4  Provision of Office Space.  The KSMO Parties shall provide to employees and agents of Sales Agent and its affiliates the right to access and use space designated by the KSMO Parties for Sales Agent’s use in the KSMO Parties’ studio building (the “Premises”) as reasonably necessary for Sales Agent’s performance of its obligations under this Agreement, so long as the provision of such space does not unreasonably interfere with the conduct of the KSMO Parties’ business or operations.  When on the Premises, Sales Agent’s personnel shall be subject to the reasonable direction and control of Licensee’s management personnel.  The KSMO Parties shall make available to Sales Agent for use without fee or charge all facilities and equipment of the Station.

5.5  Access to Information.  In order to ensure compliance with the Communications Act and other applicable laws, Licensee shall be entitled to review at its reasonable discretion from time to time any Advertisement or Delivered Programming that Licensee may reasonably request.  Sales Agent also shall maintain and deliver to the Station such records and information required by the FCC to be placed in the public inspection file of each Station pertaining to the sale of political

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programming and advertisements, in accordance with the provisions of Sections 73.1940 and 73.3526 of the FCC’s rules, and to the sale of sponsored programming addressing political issues or controversial issues of public importance, in accordance with the provisions of Section 73.1212 of the FCC’s rules.  Sales Agent shall furnish to Licensee upon request any other information that is reasonably necessary to enable Licensee to prepare any records or reports required by the FCC or other governmental entities.  Nothing in this section shall entitle Licensee to review the internal corporate or financial records of Sales Agent.  The KSMO Parties shall keep confidential any information obtained from Sales Agent in connection with this Agreement, except as and to the extent required by law.  If this Agreement is terminated, the KSMO Parties shall return to Sales Agent all information obtained by the KSMO Parties from Sales Agent in connection with this Agreement.

5.6  Noncompete.  SBG covenants and agrees, on behalf of itself and its Affiliates, including the KSMO Parties, that during the Initial Term and any renewal term hereof, neither it nor any Affiliate will, without prior written consent of Sales Agent, directly or indirectly, own, manage, operate, control, or engage or participate in the ownership, management, operation, or control of, or be connected as a shareholder, partner, or joint venturer with, any business or organization which engages in the business of television broadcasting within the Grade B contour of the analog broadcast signal of the Station or the 42 dBu noise-limited contour of the DTV signal of the Station.  Notwithstanding the foregoing, the ownership of an equity interest of five percent (5%) or less of a publicly traded company that does not otherwise constitute control over such company shall not be prohibited.

SECTION 6.  REPRESENTATIONS AND WARRANTIES OF THE KSMO PARTIES

The KSMO Parties represent and warrant to Sales Agent as follows:

6.1  Authorization and Binding Obligation.  The execution, delivery, and performance of this Agreement by the KSMO Parties have been duly authorized by all necessary corporate action on the part of the KSMO Parties.  This Agreement has been duly executed and delivered by the KSMO Parties and constitutes the legal, valid, and binding obligation of the KSMO Parties, enforceable against the KSMO Parties in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial discretion in the enforcement of equitable remedies.

6.2  Absence of Conflicting Agreements or Consents.  The execution, delivery, and performance by the KSMO Parties of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not require the consent of any governmental or regulatory authority or any other Person; (b) will not conflict with the organizational documents of the KSMO Parties; (c) to the best of the KSMO Parties’ knowledge, does not conflict with, result in a breach of, or constitute a default under any law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality applicable to the KSMO Parties; (d) does not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of any agreement, instrument, license, or permit to which either Licensee or KSMO-Sub is a party or by which either of Licensee or KSMO-Sub

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is bound; and (e) will not create any claim, lien, charge, or encumbrance upon any of the assets of the Station.

6.3  Authorizations.  On and after the Base Date, Licensee will hold all material licenses, permits, and other authorizations required by the FCC for the lawful operation of the Station and the conduct of the business of the Station in the manner and to the full extent it is currently conducted.  All such licenses, permits, and other authorizations have been validly issued and are in full force and effect, and none of the licenses, permits, and other authorizations is subject to any restriction or condition that would limit the operations of the Station as they are currently conducted.  Except as set forth in Schedule 6.3, there is not now pending, or to the best of the KSMO Parties’ knowledge, threatened, any action by the FCC or by any other Person to revoke, cancel, suspend, refuse to renew, or modify any of those licenses, permits, and other authorizations.  Licensee is in compliance in all material respects with the FCC licenses and the Communications Act.  Notwithstanding any other provision of this Agreement, Sales Agent acknowledges the obligation of Licensee to complete the construction of the digital facilities of the Station in accordance with the Communications Act and Licensee agrees, subject to reimbursement to the extent provided by Schedule 3.1, to complete such construction within the time periods provided by the FCC’s rules.

SECTION 7.  REPRESENTATIONS AND WARRANTIES OF SALES AGENT

Sales Agent represents and warrants to the KSMO Parties as follows:

7.1  Authorization and Binding Obligation.  The execution, delivery, and performance of this Agreement by Sales Agent have been duly authorized by all necessary corporate action on the part of Sales Agent.  This Agreement has been duly executed and delivered by Sales Agent and constitutes the legal, valid, and binding obligation of Sales Agent, enforceable against Sales Agent in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally and by judicial discretion in the enforcement of equitable remedies.

7.2  Absence of Conflicting Agreements and Required Consents.  The execution, delivery, and performance by Sales Agent of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both):  (a) do not require the consent of any governmental or regulatory authority or any other Person; (b) will not conflict with the Certificate of Incorporation or By-Laws of Sales Agent; (c) to the best of Sales Agent’s knowledge, does not conflict with, result in a breach of, or constitute a default under, any law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality applicable to Sales Agent; and (d) does not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, instrument, license or permit to which Sales Agent is a party or by which Sales Agent is bound.

SECTION 8.  INDEMNIFICATION AND REMEDIES

8.1  Representations and Warranties.  Any investigations by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation, warranty, or covenant

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contained herein.  No notice or information delivered by the KSMO Parties shall affect Sales Agent’s right to rely on any representation or warranty made by the KSMO Parties or relieve the KSMO Parties of any obligations hereunder as the result of a breach of any of its representations and warranties.

8.2  By Sales Agent.  Sales Agent shall indemnify and hold the KSMO Parties and their officers, directors, stockholders, agents and employees harmless against any and all liability for libel, slander, illegal competition or trade practice, infringement of trademarks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights resulting from or relating to the Advertisements, the Delivered Programming, or other material furnished by Sales Agent for broadcast on the Station, along with any fine or forfeiture imposed by the FCC because of the content of such material, and for the actions of Sales Agent’s employees and representatives in performing their duties under this Agreement.

8.3  By the KSMO Parties.  The KSMO Parties shall indemnify and hold Sales Agent and its officers, directors, stockholders, agents and employees harmless against any and all liability for libel, slander, illegal competition or trade practice, infringement of trademarks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights resulting from or relating to all material broadcast on the Station that is produced in whole or in part by the KSMO Parties or any Affiliate of the KSMO Parties, along with any fine or forfeiture imposed by the FCC because of the content of such material, and for the actions of the KSMO Parties’ employees and representatives in performing their duties under this Agreement.  If Sales Agent incurs any liability as a result of programming broadcast on the Station that is not furnished by Sales Agent and for which Sales Agent does not have recourse against the KSMO Parties under this Section 8.3, the KSMO Parties shall cooperate with Sales Agent and take such actions as Sales Agent shall reasonably request to enable Sales Agent to pursue, at Sales Agent’s sole expense, such claims as may be available to Sales Agent against the supplier of such programming; provided, however, that Sales Agent acknowledges that the KSMO Parties make no representation or warranty regarding the availability of any such claim.

8.4  General.  Indemnification shall include all liability, costs and expenses, including counsel fees (at trial and on appeal).  The indemnification obligations under this Section shall survive any termination of this Agreement.  The obligation of each party to indemnify is conditioned on the receipt of notice from the party making the claim for indemnification in time to allow the defending party to timely defend against the claim and upon the reasonable cooperation of the claiming party in defending against the claim.  The party responsible for indemnification shall select counsel and control the defense, subject to the indemnified party’s reasonable approval; provided, however, that no claim may be settled by an indemnifying party without the consent of the indemnified party, and provided further that, if an indemnifying party and a claimant agree on a settlement and the indemnified party rejects the settlement unreasonably, the indemnifying party’s liability will be limited to the amount the claimant agreed to accept in settlement.

8.5  Services and Facilities Unique.  The parties hereto agree that the services to be provided by each party to the other under this Agreement are unique and that substitutes therefor cannot be purchased or acquired in the open market.  For that reason, either party would be irreparably damaged in the event of a material breach of this Agreement by the other party.

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Accordingly, to the extent permitted by the Communications Act and the rules, regulations and policies of the FCC then in effect, either party may request that a decree of specific performance be issued by a court of competent jurisdiction, enjoining the other party to observe and to perform such other party’s covenants, conditions, agreements and obligations hereunder, and each party hereby agrees neither to oppose nor to resist the issuance of such a decree on the grounds that there may exist an adequate remedy at law for any material breach of this Agreement.

8.6  Attorneys’ Fees.  In the event of a default by either party, which results in a lawsuit, or other proceeding for any remedy available under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its reasonable legal fees and expenses.

SECTION 9.  MISCELLANEOUS

9.1  No Partnership or Joint Venture.  This Agreement is not intended to be, and shall not be construed as, an agreement to form a partnership or a joint venture between the parties.  Except as otherwise specifically provided in this Agreement, neither party shall be authorized to act as an agent of or otherwise to represent the other party.

9.2  Confidentiality.  Each party hereto agrees that it will not at any time during or after the termination of this Agreement disclose to others or use, except as duly authorized in connection with the conduct of the business or the rendering of services hereunder, any secret or confidential information of the other party.  To the extent required by the Communications Act, each party shall place a copy of this Agreement in its public inspection file and shall consult with and agree upon the confidential and proprietary information herein that shall be redacted from such copy.

9.3  Assignment; Benefit; Binding Effect.  Neither party may assign this Agreement or delegate its obligations under this Agreement without the prior written consent of the other, except that Sales Agent may assign its rights and obligations under this Agreement to any successor in interest as the operator or licensee of television station KCTV(TV), Kansas City, Missouri, or to any party to whom Sales Agent assigns its rights and interests under the Purchase Agreement in accordance with Section 10.3 of the Purchase Agreement (a “Sales Agent Assignee”), upon written notice to Licensee.  In the event that Sales Agent assigns its rights and interests under the Purchase Agreement to a Sales Agent Assignee, the KSMO Parties shall, at Sales Agent’s request, assign their rights and interests under this Agreement to such Sales Agent Assignee, effective upon the consummation of the assignment of the FCC licenses for the Station to such Sales Agent Assignee, subject to the payment by Sales Agent of all payments owed to the KSMO Parties as of the consummation date of such assignment  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

9.4  Force Majeure.  Any delay or interruption in the broadcast operation of the Licensee Station, in whole or in part, due to Acts of God, strikes, lockouts, material or labor restrictions, governmental action, riots, natural disasters or any other cause not reasonably within the control of either party shall not constitute a breach of this Agreement, and neither party shall be liable to the other for any liability or obligation with respect thereto.

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9.5  Further Assurances.  The parties shall take any actions and execute any other documents that may be necessary or desirable to the implementation and consummation of this Agreement.

9.6  Press Release.  Neither party shall publish any press release, make any other public announcement or otherwise communicate with any news media concerning this Agreement or the transactions contemplated hereby without the prior written consent of the other party; provided, however, that nothing contained herein shall prevent either party from promptly making all filings with governmental authorities as may, in its judgment, be required or advisable in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

9.7  Unenforceability.  If one or more provisions of this Agreement or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law, except that, if such invalidity or unenforceability should change the basic economic positions of the parties, they shall negotiate in good faith such changes in other terms as shall be practicable in order to restore them to their prior positions.  In the event that the FCC alters or modifies its rules or policies in a fashion which would raise substantial and material questions as to the validity of any provision of this Agreement, the parties shall negotiate in good faith to revise any such provision of this Agreement in an effort to comply with all applicable FCC rules and policies while attempting to preserve the intent of the parties as embodied in the provisions of this Agreement.  The parties hereto agree that, upon the request of either of them, they will join in requesting the view of the staff of the FCC, to the extent necessary, with respect to the revision of any provision of this Agreement in accordance with the foregoing.

9.8  Notices.  All notices, demands, and requests required or permitted to be given under the provisions of this Agreement shall be (a) in writing, (b) delivered by personal delivery, or sent by commercial delivery service or registered or certified mail, return receipt requested, (c) deemed to have been given on the date of personal delivery or the date set forth in the records of the delivery service or on the return receipt, and (d) addressed as follows:

If to the KSMO Parties:	c/o Sinclair Television Group
	10706 Beaver Dam Road
	Cockeysville, MD 21030
	Attn: David D. Smith
	Phone:	410-568-1507
	Fax:	410-568-1533

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	With a copy (which shall not constitute notice) to:
		Sinclair Broadcast Group, Inc.
		10706 Beaver Dam Road
		Cockeysville, MD 21030
		Attn: General Counsel
		Phone:			410-568-1524
		Fax:			410-568-1537
		-and-
		Steven A. Thomas, Esquire
		Thomas & Libowitz, P.A.
		100 Light Street, Suite 1100
		Baltimore, MD 21202
		Phone:		410-752-2046
		Fax:		410-752-2468
If to Sales Agent:		Meredith Corporation
		1716 Locust Street
		Des Moines, IA 50309-3203
		Attn:	John S. Zieser, Esquire,
			Vice President, General Counsel & Secretary
		Phone:			515-284-2895
		Fax:			515-284-3933
	With copy to (which shall not constitute notice) to:
		John R. Feore, Esquire
		Dow, Lohnes & Albertson, PLLC
		1200 New Hampshire Avenue, N.W.
		Suite 800
		Washington, DC 20036
		Phone:			202-776-2768
		Fax:			202-776-2222

9.9  Governing Law.  This Agreement shall be construed and governed in accordance with the laws of New York without reference to the conflict of laws principles thereof.

9.10  Captions.  The captions in this Agreement are for convenience only and shall not be considered a part of, or effect the construction or interpretation of any provision of, this Agreement.

9.11  Gender and Number.  Words used herein, regardless of the gender and number specifically used, shall be deemed and construed to include any other gender, masculine, feminine, or neuter, and any other number, singular or plural, as the context requires.

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9.12  Counterparts and Facsimile Signatures.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  This Agreement shall be legally binding and effective upon delivery of facsimile signatures.

9.13  Entire Agreement.  This Agreement and the attachments and schedules hereto collectively represent the entire understanding and agreement among the parties hereto with respect to the subject matter hereof.  No term or provisions hereof may be changed, modified, terminated or discharged (other than in accordance with its terms), in whole or in part, except by a writing which is dated and signed by all parties hereto.  No waiver of any of the provisions or conditions of this Agreement or of any of the rights, powers or privileges of a party hereto shall be effective or binding unless in writing and signed by the party claimed to have given or consented to such waiver.

9.14  Guaranty.  By its execution hereof with respect to this Section 9.14, Sinclair irrevocably and unconditionally guarantees to Sales Agent the full, complete and timely performance by the KSMO Parties of any and all obligations of the KSMO Parties under this Agreement.  This guaranty shall remain in full force and effect so long as the KSMO Parties shall have any obligations or liabilities hereunder.  This guaranty shall be deemed a continuing guaranty, and the waivers of Sinclair herein shall remain in full force and effect until the satisfaction in full of all of the KSMO Parties’ obligations hereunder.  If any default shall occur by either Licensee or the KSMO-Sub in its performance or satisfaction of any of its obligations hereunder, then Sinclair will itself perform or satisfy, or cause to be performed or satisfied, such obligations immediately upon notice from Sales Agent specifying in summary form the default.  This guaranty is an absolute, unconditional and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law.  Sinclair agrees that its obligations hereunder shall not be contingent upon the exercise or enforcement by Sales Agent of whatever remedies it may have against the KSMO Parties.  To the maximum extent permitted by law, Sinclair hereby waives: (i) notice of acceptance hereof; (ii) notice of any adverse change in the financial condition of either Licensee or KSMO-Sub or of any other fact that might increase Sinclair’s risk hereunder; and (iii) presentment, protest, demand, action or delinquency in respect of any of the KSMO Parties’ obligations hereunder.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, this Agreement has been executed by Licensee, KSMO-Sub and Sales Agent effective as of the date first written above.

LICENSEE:
KSMO LICENSEE, INC.
By:	/s/ David B. Amy
	Name:  David B. Amy
	Title:  Secretary
KSMO-SUB:
KSMO, INC.
By:	/s/ David B. Amy
	Name:  David B. Amy
	Title:  Secretary
SALES AGENT:
MEREDITH CORPORATION
By:	/s/ Suku V. Radia
	Name:  Suku V. Radia
	Title:  VP - CFO
JOINDER AS A PARTY WITH RESPECT TO SECTIONS 5.6 AND 9.14:
SINCLAIR BROADCAST GROUP, INC.
By:	/s/ David B. Amy
	Name:  David B. Amy
	Title:  Executive Vice President

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SCHEDULE 3.1

1.Definitions.  The following terms, as used in this Schedule 3.1, shall have the meanings set forth in this section:

(a)“Net Sales Revenue” means all gross revenue received by Sales Agent or the KSMO Parties for the Advertisements, other than Advertisements that are adjacent to or in the Delivered Programming, less agency, buying service or other sales commissions paid to or withheld by an advertiser, agency or service, as the case may be, but excluding any network compensation paid to the KSMO Parties following the Base Date by The WB solely in return for the agreement entered into on July 4, 1997, by Sinclair and The WB pursuant to which Sinclair agreed to affiliate the Station and certain of its other television broadcast stations with The WB.

(b)“Reimbursable Station Expenses” means the out-of-pocket costs and expenses actually incurred by the KSMO Parties during the period following the Base Date in operating the Station and performing its obligations under this Agreement.  Without limiting the generality of the foregoing, Reimbursable Station Expenses shall include, to the extent not otherwise included in Licensee’s Expense Schedule:

(i)  the entire out of pocket costs and expenses actually incurred by the KSMO Parties in order to complete the construction of the digital facilities of the Station in accordance with the Communication Act;

(ii)  reasonable capital and operating expenses actually incurred by the KSMO Parties that are necessary to enable the Station to continue broadcast operations in accordance with the terms of the Station’s FCC licenses and the Communications Act;

(iii)  reasonable operating expenses actually incurred by the KSMO Parties that are necessary to enable the KSMO Parties to conduct the business and operations of the Station in accordance with the terms of this Agreement and the Purchase Agreement (including, without limitation, any liability incurred as a result of any programming broadcast on the Station, other than programming produced in whole or in part by the KSMO Parties or any Affiliate of the KSMO Parties, subject to the rights of Sales Agent set forth in Section 8 below);

(iv)  any reasonable operating expense actually incurred by the KSMO Parties that conforms in character to an expense line item or category expressly set forth in the Licensee’s Expense Schedule, notwithstanding that the amount of such expense exceeds the applicable amount specified for such line item or category in the Licensee’s Expense Schedule, if the amount of such excess is reasonable and the sole reason for such excess is an increase in a cost or expense owed by the KSMO Parties to a third party that occurs following the adoption of the applicable Licensee’s Expense Schedule; and

(v)  any costs or expenses actually incurred by the KSMO Parties as a result of complying with the obligation to broadcast the Delivered Programming.

(c)“JSA Fee” means Forty-Four Thousand Six Hundred Sixty-Six Dollars ($44,666) per month, payable by Sales Agent to the KSMO Parties in consideration for the right to sell the Advertisements.

(d)“Licensee’s Expense Schedule” means the out-of-pocket costs and expenses the KSMO Parties expects to incur in operating the Station and performing its obligations under this Agreement, a copy of which is attached as Exhibit A hereto.  Licensee’s Expense Schedule shall cover the period commencing on the Base Date and ending on December 31, 2005.

(e)“Station Broadcast Cash Flow” means broadcast operating income of the Station, determined in accordance with generally accepted accounting principles consistently applied, adjusted as follows:

(1)plus the sum of (i) depreciation and amortization (including film amortization and amortization of deferred and stock based compensation) relating to the Station (to the extent such depreciation and amortization were deducted in calculating operating income of the Station), and (ii) any trade/barter expenses; and

(2)less the sum of (i) any amounts paid by Sales Agent to Licensee pursuant to Section 2(a) below; (ii) cash payments made or scheduled to be made for program contract rights relating to the Station; (iii) payments made by Sales Agent to the KSMO Parties to the extent not otherwise taken into account in calculating operating income; (iv) any rental income earned by Sales Agent from real property leased to the extent taken into account in calculating broadcast operating income; (v) any rent paid with respect to any capital leases of the Station; (vi) the allocable portion, to the extent taken into account in calculating operating income, of any fees received by any Affiliate of Licensee for entering into any arrangement with a third party that relates to the Station and any other television station owned and/or programmed by Licensee or any Affiliate; (vii) any trade/barter revenue; (viii) any income attributable to any “group deals” which include the Station and any other television station owned and operated by any Affiliate of Licensee, to the extent taken into account in calculating broadcast operating income and (ix) any revenue attributable to Delivered Programming.

(f)“Licensee Revenue Share” means the payment to be made to Licensee each month from Net Sales Revenue in accordance with Section 2(a) below.

2.Allocation of Revenue.  Beginning on the Base Date, Net Sales Revenue shall be allocated and paid on a monthly basis as follows:

(a)For each calendar month during the period following the Base Date, Licensee shall receive from Net Sales Revenue a payment equal to the sum of (i) Reimbursable Station Expenses for such month to the extent such Reimbursable Station Expenses are consistent, in character and amount, with Licensee’s Expense Schedule, (ii) the JSA Fee, and (iii) 25% of Station Broadcast Cash Flow for such month; provided that no amount shall be due under this clause (iii) of Section 2(a) unless and until the cumulative Broadcast Cash Flow for the period commencing on the Base Date exceeds $2,000,000, and provided further, however, that

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the percentage of Station Broadcast Cash Flow payable to Licensee pursuant to this clause (iii) of Section 2(a) shall be reduced from 25% to 10% for the excess, in any month, of Broadcast Cash Flow over $2,500,000.  The foregoing notwithstanding, Licensee shall not be entitled to receive any amount pursuant to clause (iii) of this Section 2(a) if, at the time such amount is due (the “Cash Flow Payment Date”), the aggregate amount of Net Sales Revenue during the period from the Base Date until the Cash Flow Payment Date is less than the sum of the Reimbursable Station Expenses and JSA Fees paid to the KSMO Parties during the period from the Base Date until the Cash Flow Payment Date.

(b)For each calendar month during the period following the Base Date, Sales Agent shall receive from Net Sales Revenue an amount equal to the Net Sales Revenue for such month less the Licensee Revenue Share for such month.

3.Payment of Licensee Revenue Share.

(a)On or before the fifth business day of each calendar month during the Initial Term, Licensee shall deliver to Sales Agent a statement setting forth in reasonable detail the amount of Reimbursable Station Expenses paid by Licensee and KSMO-Sub during the prior calendar month.  The statement shall include invoice copies and other documentation reasonably satisfactory to Sales Agent evidencing Licensee’s and KSMO-Sub’s payment of such Reimbursable Station Expenses.  Licensee shall deliver promptly to Sales Agent such additional documentation concerning the amounts shown on Licensee’s statement as Sales Agent shall reasonably request.

(b)On or before the tenth business day of each calendar month during the Initial Term, Sales Agent shall pay to Licensee the Licensee Revenue Share for such month.

(c)If Licensee elects to preempt any previously scheduled commercial programming in favor of replacement commercial programming from which Licensee will receive revenue or non-cash consideration, then, to the extent that Sales Agent suffers a loss of revenue (“Lost Revenue”) from its inability to broadcast advertising spots that were sold for broadcast on such preempted programming, a cash amount equal to the amount of the Lost Revenue shall be deducted from the payment of Licensee Revenue Share.  This provision shall not apply to the reasonable, good faith exercise by Licensee of its rights under Section 4.5 to preempt Broadcast Material (i) to present alternative program material of greater local or national importance or (ii) that Licensee determines to violate applicable laws or to be contrary to the public interest or the terms of this Agreement.  Licensee represents and covenants that preemption pursuant to Section 4.5 shall only occur to the extent that Licensee deems such action necessary to carry out its obligations as an FCC licensee, and expressly agrees that such right of preemption shall not be exercised in an arbitrary manner or for the commercial advantage of Licensee or others.

(d)Any payment made hereunder that covers a partial calendar month shall be prorated on the basis of the actual number of days in such month to which such payment applies.

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4.Rights of Audit and Objection.

(a)Rights of Audit.  At all times during the Initial Term and for six (6) months following the termination of this Agreement, each party, shall have the right, at its own expense and upon prior written request to the other party, to review and audit the books and records of such party relating to Net Sales Revenue, Reimbursable Station Expenses and Station Broadcast Cash Flow.  Any such review must take place during normal business hours Monday through Friday.

(b)Right of Objection.  On or prior to the 30th day after Licensee’s receipt of a Licensee Revenue Share payment, Licensee may give Sales Agent a written notice (an “Objection Notice”) indicating its objections to the applicable payment.  If Licensee fails to deliver an Objection Notice within such thirty (30) day period, then the applicable Licensee Revenue Share payment will be conclusive and binding upon the parties hereto.  If Licensee gives a timely Objection Notice, Licensee and Sales Agent will negotiate in good faith to resolve their disputes regarding the disputed Licensee Revenue Share payment.  If the Parties are unable to resolve all disputes regarding such Licensee Revenue Share payment on or prior to the thirtieth (30th) day after an Objection Notice is given, the Parties shall retain a qualified accounting firm (either by mutual agreement or by random choice after eliminating any such firm which is conflicted or otherwise unable to participate) (the “Independent Accounting Firm”) to resolve the dispute as soon as practicable, and in any event within thirty (30) days.  The Licensee Revenue Share payment for the applicable period determined by the Independent Accounting Firm will be conclusive and binding upon the parties hereto and will constitute the Licensee Revenue Share payment for such applicable period for all purposes of this Schedule 3.1.  The fees and expenses of the Independent Accounting Firm in connection with its review of any Licensee Revenue Share payment shall be paid one-half (1/2) by Sales Agent and one-half (1/2) by the KSMO Parties.

5.National Rep Contract.  Except as provided in this Section 5, national spot advertising broadcast on the Station shall be sold by Katz Millennium Sales and Marketing, Inc. (“Katz”) pursuant to the terms of the Representation Agreement dated August 13, 2001 between Katz and KSMO, Inc. (the “Katz Rep Agreement”).  All proceeds from the sale of such advertising shall be considered Net Sales Revenue for purposes of this Agreement and any commissions payable to Katz pursuant to the Katz Rep Agreement applicable to the period following the Base Date shall be Reimbursable Station Expenses.  Notwithstanding the foregoing, Sales Agent may, at its option and expense, obtain a termination of the Katz Rep Agreement and enter into a representation agreement with such other national rep firm as Sales Agent may select and such other firm shall have the right to sell the Station’s national spot advertising.

6.Licensee Expenditures.  Nothing in this Schedule 3.1 shall restrict Licensee or KSMO-Sub from entering into any contract or commitment or incurring any obligation or liability in connection with the acquisition of programming for broadcast on the Station or the employment of such personnel as Licensee or KSMO-Sub deems to be necessary or appropriate for the operation of the Station.

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7.Changes to Licensee’s Expense Schedule.  If and to the extent that the KSMO Parties assign to Sales Agent one or more Assumed Contracts (as defined in the Purchase Agreement) in accordance with the terms of the Purchase Agreement or this Agreement, Sales Agent and Licensee shall cooperate in good faith and use commercially reasonable efforts to agree upon such changes to the Licensee’s Expense Schedule as are necessary to give effect to such assignment.  Commencing in 2005 and annually thereafter during the Initial Term, Licensee and Sales Agent shall cooperate in good faith to agree upon in writing no later than October 1 of the applicable year such changes, if any, to the Licensee’s Expense Schedule as are reasonably required to accurately reflect actual Reimbursable Station Expenses incurred during such year (or, in the case of Licensee’s Expense Schedule attached hereto as Exhibit A, during the period commencing on the Base Date and ending on December 31, 2005).  In the event that Licensee and Sales Agent are unable to resolve any dispute regarding any proposed changes to a Licensee’s Expense Schedule by October 1 of any year, either party may notify the other party in writing of its objection to Licensee’s Expense Schedule for the prior year.  In the event such a notice is provided, until such time as the parties agree upon a new Licensee’s Expense Schedule in writing, this Agreement shall remain in full force and effect in accordance with its terms, except that the Licensee’s Expense Schedule for the succeeding year shall be the Licensee’s Expense Schedule for the prior year subject to an automatic increase of each expense item set forth in the Licensee’s Expense Schedule for such prior year in an amount equal to the greater of five percent (5%) or the increase in the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100 (the “Automatic Increase”).  If neither party has provided to the other a written notification of a dispute regarding changes to a Licensee’s Expense Schedule prior to October 1 of the applicable year, the Licensee’s Expense Schedule for the succeeding year shall be the Licensee’s Expense Schedule for the prior year subject to the Automatic Increase.

8.Programming Liability Claims.  If the KSMO Parties have the right under Section 1(b)(iii) of this Schedule 3.1 to seek reimbursement from Sales Agent for any liability that may be incurred by the KSMO Parties as a result of programming broadcast on the Station, the KSMO Parties shall not settle any claim regarding any such liability without Sales Agent’s consent (such consent not to be unreasonably withheld), and Sales Agent shall have the right to participate (at Sales Agent’s cost) in the of defense of any action involving a claim for any such liability.

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SCHEDULE 4.2

SCHEDULE OF DELIVERED PROGRAMMING

Commencing on the Base Date, Sales Agent shall be permitted to provide Delivered Programming constituting in the aggregate up to 22 hours and 12 minutes of the weekly programming time on the Station, but in no event shall the aggregate duration of such programming exceed 15% of the Station’s broadcast hours for any week.  Notwithstanding anything herein to the contrary, the obligations of Licensee set forth in this Schedule 4.2 shall be subject to Licensee’s rights under Sections 4.2, 4.5 and 4.10 of this Agreement.

At any time and from time to time following the Base Date, Sales Agent may designate by written notice to Licensee the days and times during which Licensee shall broadcast Delivered Programming on the Station, and Licensee shall commence the broadcast of such Delivered Programming no later than 14 days following its receipt of such notice, so long as (i) the duration of such Delivered Programming, together with the duration of all other Delivered Programming broadcast on the Station, does not exceed 15% of the Station’s weekly broadcast schedule and (ii) the broadcast of such Delivered Programming during the days and times specified by Sales Agent shall not conflict with the contractual obligations of the KSMO Parties.

At any time and from time to time following the Base Date, Sales Agent may designate by written notice to Licensee existing programming broadcast on the Station by Licensee that, effective upon Licensee’s receipt of such notice, shall constitute Delivered Programming for all purposes under this Agreement (any existing programming so designated by Sales Agent is “Converted Programming”).  At Sales Agent’s election, such notice may specify changes to the days and times during which Licensee shall broadcast such Converted Programming on the Station, and Licensee shall broadcast such Converted Programming during the days and times specified by Sales Agent no later than 14 days following its receipt of such notice, so long as (i) the duration of such Converted Programming, together with the duration of all other Delivered Programming broadcast on the Station, does not exceed 15% of the Station’s weekly broadcast schedule and (ii) the broadcast of such Converted Programming during the days and times specified by Sales Agent shall not conflict with the contractual obligations of the KSMO Parties.  Subject to receipt of any required consent, the KSMO Parties shall assign to Sales Agent as promptly as practicable following receipt of Sales Agent’s written notice their rights and interests in the Converted Programming in accordance with the terms and conditions set forth in the Purchase Agreement that are applicable to Assumed Contracts.

If the FCC changes its rules or policies in a manner that allows Sales Agent to provide Delivered Programming that exceeds 15% of the Station’s broadcast hours for any week, at the request of Sales Agent, Licensee shall cooperate in good faith with Sales Agent to agree upon one or more additional time periods during which Sales Agent shall be permitted to provide additional Delivered Programming for broadcast on the Station, but in no event shall the aggregate duration of all Delivered Programming, including such additional time periods, exceed the total amount of Delivered Programming as may be permitted by the FCC after giving effect to such change in the FCC’s rules or policies.

Upon no less than 14 days prior written notice from Sales Agent to Licensee, Sales Agent may change the date and times that the Delivered Programming shall be broadcast on the Station and Licensee agrees to broadcast the Delivered Programming in accordance with such revised schedule.

SCHEDULE 4.5

POLICY STATEMENT FOR BROADCAST MATERIAL

Sales Agent agrees to cooperate with Licensee in the broadcasting of programs of high quality and, for this purpose, to observe the following policies in the preparation, writing and production of Broadcast Material.

1.CONTROVERSIAL ISSUE.  Any discussion of controversial issues of public importance shall be reasonably balanced with the presentation of contrasting viewpoints in the course of overall programming; no attacks on the honesty, integrity, or like personal qualities of any person or group of persons shall be made; and Station programs (other than public forum or talk features) are not to be used as a forum for editorializing about individual candidates.  If such events occur, Licensee may require that responsive programming be aired.

2.NO PLUGOLA OR PAYOLA.  The mention of any business activity or “plug” for any commercial, professional, or other related endeavor, except where contained in an actual commercial message of a sponsor, is prohibited.

3.ELECTION PROCEDURES.  At least ninety (90) days before the start of any primary or regular election campaign, Sales Agent will clear with the Licensee the rate Sales Agent will charge for the time to be sold to candidates for public office and/or their supporters to make certain that the rate charged is in conformance with the applicable law and the Licensee’s policy.

4.PROGRAMMING PROHIBITIONS.  Sales Agent shall not knowingly broadcast any of the following programs or announcements:

(a)   False Claims.  False or unwarranted claims for any product or service.

(b)   Unfair Imitation.  Infringements of another advertiser’s rights through plagiarism or unfair imitation of either program idea or copy, or any other unfair competition.

(c)   Commercial Disparagement.  Any unlawful disparagement of competitors or competitive goods.

(d)   Obscenity/Indecency/Profanity.  Any programs or announcements that are obscene or indecent, as those terms are interpreted and applied by the FCC.  Any programs or announcements that are slanderous, obscene, profane, vulgar, repulsive or offensive, either in theme or treatment.

(e)   Price Disclosure.  Any price mentions except as permitted by Licensee’s policies current at the time.

(f)   Unauthorized Testimonials.  Any testimonials which cannot be authenticated.

(g)   Descriptions of Bodily Functions.  Any continuity which describes in a repellent manner internal bodily functions or symptomatic results or internal disturbances, and no reference to matters which are not considered acceptable topics in social groups.

(h)   Conflict Advertising.  Any advertising matter or announcement which may, in the reasonable opinion of Licensee, be injurious or prejudicial to the interest of the public, the Station, or honest advertising and reputable business in general.

(i)   Fraudulent or Misleading Advertisement.  Any advertisement matter, announcement, or claim which Sales Agent knows to be fraudulent, misleading, or untrue.

5.LOTTERIES.  Announcements giving any information about lotteries or games prohibited by federal or state law or regulation are prohibited.

6.RELIGIOUS PROGRAMMING RESTRICTIONS.  The subject of religion and references to particular faiths, tenants, and customs shall be treated with respect at all times.  Broadcast Material shall not be used as medium for attack on any faith, denomination, or sect or upon any individual or organization.

7.CREDIT TERMS ADVERTISING.  Any advertising of credit terms shall be made over the Station in accordance with all applicable federal and state laws or regulations.

8.NO ILLEGAL ANNOUNCEMENTS.  No announcements or promotion prohibited by federal or state law or regulation shall be made over the Station.  At Licensee’s request, any game, contest, or promotion relating to or to be presented over the Station must be fully stated and explained in advance to Licensee, which reserves the right in its sole discretion to reject any game, contest, or promotion.

9.LICENSEE DISCRETION PARAMOUNT.  In accordance with the Licensee’s responsibility under the Communications Act of 1934, as amended, and the rules and regulations of the FCC, Licensee reserves the right to reject or terminate any Broadcast Material proposed to be presented or being presented over the Station which is in conflict with the Licensee’s policy or which in the reasonable judgment of Licensee would not serve the public interest.

10.PROGRAMMING IN WHICH SALES AGENT HAS A FINANCIAL INTEREST.  Sales Agent shall advise Licensee with respect to any Broadcast Material concerning goods or services in which Sales Agent has a material financial interest.  Any announcements for such goods and services for which Sales Agent charges less than its regular rate shall clearly identify Sales Agent’s financial interest.

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11.MISCELLANEOUS.

(a)  Waiver.  To the extent legally permissible, the parties may jointly waive any of the foregoing policies in specific instances if, in their opinion, good broadcasting in the public interest is served.

(b)  Prior Consent.  In any case where questions of policy or interpretation arise, Sales Agent will attempt in good faith to submit the same to Licensee for decision before making any commitments in connection therewith.

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SCHEDULE 4.7

BARTER SCHEDULE

SCHEDULE 6.3

In November 2003, Sinclair filed applications with the FCC to acquire the license assets of five television stations, WRGT-TV, Dayton, Ohio, WTAT-TV, Charleston, South Carolina, WVAH-TV, Charleston, West Virginia, WNUV-TV, Baltimore, Maryland, and WTTE-TV, Columbus, Ohio.  The Rainbow/PUSH Coalition filed a petition to deny these five applications and in this context asked the FCC to revoke all of Sinclair’s FCC licenses.  The Chief of the Media Bureau of the FCC denied Rainbow’s request, and Rainbow filed a petition for reconsideration, which is pending.

The KSMO Parties are aware of threats that have been made publicly that various entities may file actions at the FCC against Sinclair Broadcast Group, Inc., which could include a filing against the Station.  None of these threats relate specifically to the Station except insofar as the Station acted in a manner consistent with a number of other Sinclair television stations.  On November 1, 2004, an organization calling itself “Free Press” filed a petition to deny the license renewal applications of six Sinclair stations (WXLV-TV, Winston-Salem, North Carolina, WUPN-TV, Greensboro, North Carolina, WLFL(TV), Raleigh, North Carolina, WRDC(TV), Durham, North Carolina, WLOS(TV), Asheville, North Carolina, and WMMP(TV), Charleston, South Carolina) and two Cunningham Broadcasting Corporation stations (WBSC-TV, Anderson, South Carolina and WTAT-TV, Charleston, South Carolina), which are programmed by Sinclair pursuant to LMAs.

EX-10.50

Exhibit 10.50

The following exhibit is a form of the agreement between The WB Television Network Partners, L.P. d.b.a. The WB Television Network, the licensee and the licensee television stations.  Similar agreements exist for the following stations and their licensees:

                WTTA-TV, KMWB-TV, WCWB-TV, WNUV-TV, WLFL-TV, WNAB-TV, KSMO-TV, WVTV-TV, WSTR-TV, WBSC-TV, KRRT-TV, WTTO-TV, WDBB-TV, WTVZ-TV, KOCB-TV, KVWB-TV.

WB TELEVISION NETWORK

STATION AFFILIATION AGREEMENT

Dated as of April 1, 1998

_____________

______-TV

c/o Sinclair Communications, Inc.

10706 Beaver Dam Road

Cockeysville, MD  21030

Attention:  David Smith

The following shall comprise the agreement between The WB Television Network Partners, L.P. d.b.a. The WB Television Network (“WB,” “we,” or “us”), and                    (“Affiliate” or “you”) for the affiliation of television station                (“Station”) with WB for carriage of WB programming. The Federal Communications Commission (“FCC”) has issued a broadcast license (“License”)                 to                    ,       . (“Licensee”) as the Licensee to operate Station in                    ,                    , the community in which Station is licensed by the FCC (“Community of License”). You represent that you have the right to program the Station and to enter into this Network Affiliation Agreement. All references in this Agreement to “WB program(s)” and “WB programming” and any variations thereof shall mean the programming made available by WB under this Agreement

1.   WB Programming:

(a)  WB will make available to Affiliate WB programs for free over-the-air broadcast by Station in the                    ,              Designated Market Area (the “DMA”) during the term of this Agreement.  During such term, except as otherwise provided herein, WB grants Affiliate the exclusive right to have Station broadcast the WB programming in the DMA only as scheduled by WB over free over-the-air television and by such other technological means as are available to Affiliate for over-the-air broadcast in the DMA so long as Station broadcasts the WB programming for over-the-air television.  Notwithstanding the foregoing, from the

commencement date of this Agreement until such time that exclusivity is offered to any affiliate against the duplication of WB programming on              , WB may allow the signal of              with duplicated WB programming to be imported into the DMA.  Station shall have “Most Favored Nations” protection in this regard, and Station shall have exclusivity against the duplication of WB programming on              in the DMA at such time that such exclusivity is provided to any other WB affiliate. WB will exercise reasonable commercial efforts to provide Station with exclusivity against the importation of duplicated WB programming on              as soon as it is practicable for WB to do so.  WB shall have the sole discretion to select, schedule, substitute and/or withdraw WB programming or any portion(s) thereof. WB shall also have the right to authorize any television broadcasting station, regardless of the community in which it is licensed by the FCC, to broadcast any presentation of a subject we deem to be of immediate national significance including, but not limited to, a Presidential address; however this right is subject to the first right of refusal of Station to broadcast the programming that WB deems to be of immediate national significance.  Except as provided herein, during the term of this Agreement WB will not distribute, nor grant permission to any third party to distribute, WB programming over any means of over-the-air distribution within the DMA other than by over-the-air broadcast by Station, which shall be the sole over-the-air distributor of WB programming in the DMA. In the event that WB provides any other affiliate with broader exclusivity protection, Station will be entitled to such broader protection also.  Station shall have the right to allow for the simultaneous broadcast with Station’s main transmitter (only in the DMA) of WB programming by translator stations, which are regularly used by Station for the carriage of its broadcast signal. Station may also allow Station’s signal to be carried by cable systems and other multi-channel video program providers located in the DMA. It is the intent of this Agreement to provide Station with over-the-air broadcast rights in the entire DMA to the extent that such is allowed by prevailing rules and regulations of the FCC.

(b)Additional Rights:  Subject to the terms of this Agreement, WB hereby grants to Affiliate a royalty free non-exclusive license during the license term (as defended below) to use all trademarks and service marks owned by WB, including the “WB logo” and artwork used by WB to depict such marks.  Affiliate may use such marks in the licensed DMA only in connection with Affiliate’s broadcasting on Station and the advertising and promotion of such broadcasting.

(c)Reserved Right:  Except as expressly licensed to Affiliate hereunder, WB expressly reserves all other rights which WB may hold in the WB programming, and its marks which are not expressly licensed to Affiliate hereunder.

2.Program Carriage:

(a)  We agree to make available for over-the-air broadcast by Station WB programming for the hours programmed by WB at the times and dates scheduled by WB throughout the term of this Agreement.  You acknowledge that the times and roll-out dates set forth in this Agreement are approximate only and you agree to have Station broadcast WB programs irrespective of whether WB meets, fails to meet or otherwise varies from the anticipated program schedule set forth herein; provided, however, that WB hereby agrees not to accelerate such anticipated program schedule, neither will WB schedule materially less prime time programming than is offered to Station as of the date of this Agreement.  To the extent WB makes available such WB programming for broadcast, this Agreement both obligates

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us to make available such WB programs to Station and obligates Station to broadcast such WB programs over-the-air pursuant to the terms of this Agreement.

(b)Subject to the exceptions set forth in subparagraph 2(e) and the right of preemption set forth in subparagraph 2(f), Station shall broadcast WB programs on the dates and at the times scheduled by WB.  Station shall broadcast WB programs in their entirety, including but not limited to WB commercial announcements, WB identifications, program promotional material, and credit announcements contained in such programs, without interruption or deletion or addition of any kind, except for the commercial announcements that Station is allowed to add pursuant to Paragraph 5.  Notwithstanding the foregoing, you may substitute other WB promotional announcements in lieu of program promotional material that is inaccurate as it pertains to Station’s schedule.  No commercial announcement, promotional announcement or public service announcement will be broadcast by Station during any interval within a WB program, which interval is designated by WB as being for the sole purpose of making a station identification announcement.

(c)The initial Scheduled Program Times of WB programming and the anticipated roll-out dates of that programming are set forth as follows (the specified times apply for the Eastern and Pacific Time Zones; the Mountain and Central Time Zones are one hour earlier for Prime Time and Latenight programming only, except as otherwise agreed by us):

Prime Time:	7:00 p.m. — 10:00 p.m. Sunday
	8:00 p.m. — 10:00 p.m. Monday through Saturday. Two nights were designated by us during the 1994/1995 broadcast year (one night was designated in January 1995 with the second night designated commencing during the third quarter of 1995); one additional night was designated during the 1995/1996 broadcast year; and one additional night may be designated during each broadcast year thereafter until seven nights of programming are made available.  As of the date of this Agreement WB prime time programming is broadcast on three nights of the week (Sunday, Monday, and Wednesday). During the First Quarter of 1998 the fourth night of WB prime time programming will commence, it is currently anticipated that such fourth night of programming will be on Tuesday night.
Children’s:	7:00 a.m. — 8:00 a.m.; 7:30 a.m. — 8:30 a.m.; or 8:00 — 9:00 a.m. (at WB’s election) Monday through Friday;
	3:00 p.m. — 5:00 p.m. Monday through Friday; 8:00 a.m. — 12:00 noon Saturday; Weekday mornings (one hour) and Saturday mornings (three hours) commenced in September 1995; One additional Saturday hour commenced in September 1996; Monday through Friday afternoons (two hours) commenced in September 1997. It is acknowledged that once the in-pattern broadcast time for Children’s programming is established on Station, that such cannot change without the mutual agreement between the parties.  As of the date of this Agreement WB provides Station with 19 hours per week of Children’s programming.
Latenight:	11:00 p.m. — 12:00 midnight Monday through Friday, commencing not earlier than 1998 and subject to the approval of the WB Affiliate’s

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Council (as defined in Paragraph 13 below).  In the event that WB exercises its call on the late night time period, and such notice is not provided to Station prior to the NATPE convention preceding the applicable broadcast season, then any such call shall be subject to the then existing programming commitments that Station may have contractually committed to in such time period.

(d)Notwithstanding the roll-out schedule for Children’s afternoon programming in subparagraph (c) above, WB’ s supply of Children’s afternoon programming shall be subject to the expiration of the Agreements in effect as of July 1, 1997 between Affiliate and suppliers of Children’s afternoon programming.  Station agrees not to extend or renew any agreement it may have with such suppliers for such programming during the term of this Agreement if such renewal or extension would interfere with the broadcast of the WB Children’s afternoon programming.

As of the date of this Agreement, WB is programming three (3) nights per week of Prime Time. If during the term of this Agreement WB programs fewer than two (2) nights of Prime Time programming, then you may terminate this Agreement upon sixty (60) days written notice.

(e) You confirm that as of the date of this Agreement you have no commitments, except those listed in Schedule 1 hereto, which would impede Station’s broadcasting all WB programming made available during the term of this Agreement.  If any WB programming is not broadcast by you because of any such commitment expressly described in Schedule 1 (but excluding extensions by exercise of options by Affiliate not otherwise permitted hereunder [but not by the programming licensor] or otherwise), then such programming shall be broadcast in a time period upon which you and we shall mutually agree and which shall be of quality and rating value reasonably comparable to that of the Scheduled Program Times. These programs will not be considered preempted for purposes of subparagraph 2(f) In the event that Station has sports or syndicated programming commitments which would interfere with the in-pattern broadcast of current WB Programming, Station will provide WB with a list of such programming which will be attached to this Agreement as “Schedule 1”.  Syndicated and sports programming on such list shall be an exception to any requirement in this Agreement that the WB programming be broadcast in pattern.  Station is hereby advised that the fourth night of WB prime time programming will roll-out in January 1998, and then one additional night of prime time programming will be rolled-out during each year thereafter.  During each year prior to NATPE, WB will confirm its roll-out schedule for that year and, subject to such confirmation, Station may not enter into new Syndicated or sports programming agreements that will interfere with the in-pattern broadcast of WB programming that is either current or prospective in accordance with the stated roll-out schedule.  Syndicated Programming shall not be subject to renewal, except to the extent that such renewed syndicated programming does not conflict with the in-pattern broadcast of WB programming for the scheduled roll-out schedule.  Sports programming may be renewed by Station, on a case by case basis, provided that any such renewed sports programming may not cause pre-emptions of more than 20% of the in pattern broadcasts of WB prime-time programming.  All such pre-empted WB prime time programming will run in pattern in prime time during the same week on an alternative night. (i.e. when WB is at 5 nights of programming, WB programs will run on one of the remaining two nights of the week, at six nights WB programming will run on the seventh night, unless in pattern clearance on the alternative night is in conflict with sports programming contracts, in which event the programming will run in the same week adjacent to prime or adjacent to the sport program causing the conflict or in a time period otherwise

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agreed by WB).  It is the strong preference of WB that such alternative night be consistently the same night of the week, and Affiliate will exercise reasonable efforts to satisfy WB’s preference in this regard.

(f)  Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to prevent or hinder Affiliate from: (i) rejecting or refusing any WB program which Affiliate reasonably believes to be unsatisfactory or unsuitable or contrary to the public interest or (ii) substituting a program which, in Affiliate’s opinion, is of greater local or national importance.  In such an event, you shall provide us with advance written notice of any such rejection, refusal or substitution, no later than 14 days prior to the air date of such programming, except where the nature of the substitute program makes such notice impracticable (e.g., coverage of breaking news or other unscheduled events) or the programming has not been made available to you by such date, in which cases you agree to give us as much advance notice as the circumstances permit.  Such notice shall include a statement of the reasons you believe that the rejected WB programming is unsatisfactory or unsuitable or contrary to the public interest, and/or that a substituted program is of greater local or national importance.  In view of the limited amount of WB programming to be supplied pursuant to this Agreement (at least until such time as the full WB programming schedule has been rolled out) you acknowledge that you do not foresee any need to substitute programming of greater local or national importance for WB programming, except in those circumstances requiring live coverage of fast-breaking news events or very infrequent special events.

To the extent you substitute another program for a WB program as permitted under subparagraph 2(f)(ii), then you will broadcast such omitted program and the commercial announcements contained therein (or any replacement programming provided by WB and the commercial announcements contained therein) during a time period upon which you and we shall promptly and mutually agree and which shall be of quality and rating value reasonably comparable to that of the preempted program’s Scheduled Program Time.  In the event that the parties do not promptly agree upon such a time period after reasonable consultation in good faith and after taking into account the practical alternatives under the circumstances, then, without limiting any other rights of WB under this Agreement or otherwise, we shall have the right to license the broadcast rights to the applicable omitted programming (or replacement programming) to another television station located in the Community of License.

In addition, if three or more episodes of a program series are preempted by you as permitted hereunder in any thirteen-week period, for any reasons other than force majeure as provided in Paragraph 6, we shall have the right, upon 60 days prior written notice, to terminate your right to broadcast that program series and to withdraw all future episodes of that series.  Such thirteen-week periods shall be measured consecutively from the first broadcast date of the program series in question.  If we subsequently place such a series on another station in the Community of License, we reserve the right not to offer you the broadcast rights to that series for subsequent broadcast seasons.  It is acknowledged that the pre-emption penalties set forth in this paragraph shall not apply to those programs listed on Schedule 1.

In addition to all other remedies, to the extent one or more episodes of a program series is preempted by you in violation of (i.e., other than as permitted under) this Paragraph 2, we shall have the right, upon 60 days prior written notice, to terminate your right to broadcast the remainder of the program series and withdraw all future episodes of that series from you.  However, any right of WB to terminate Station’s right to broadcast the remainder of the

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program series shall be subject to a 30 day cure period by Station and no such termination may take place before Station and WB have engaged in good faith discussions.

(g)  Subject to paragraphs 2(a) and 2(d) nothing in this Agreement shall be construed to prevent or hinder WB from: (i) substituting one or more WB programs for previously scheduled WB programs, in which event WB will make the substituted programs available to Station pursuant to the provisions of Paragraph 1 and Paragraph 3; (ii) canceling one or more WB programs; or (iii) postponing any scheduled roll-out dates of WB programming.  Further, subject to paragraphs 2(a) and 2(d), nothing in this Agreement shall be construed to obligate WB (x) to provide a minimum or specific number of WB programs; (y) to commence providing WB programming on any particular date; or (z) to expand the amount of WB programming pursuant to a specified timetable.

3.Delivery:  WB agrees to make available the WB programming for satellite transmission.  WB shall incur no costs regarding the satellite downlink and broadcast by Station; Station shall incur no up-link costs with regard to the delivery of the WB programming.

4.Promotion:

(a)  We will provide you with on-air promotional announcements (“WB Promos”) for WB programming, which WB Promos are intended for broadcast during Station’s broadcast of non-WB programming.  Station will employ reasonable efforts to provide an on-air promotional schedule consistent with the manner in which Station promotes similar programs of similar importance to Station, and after giving due weight to WB recommendations with regard to such promotion. We will consult together in good faith regarding the promotional schedule.  You shall maintain complete and accurate records of all WB Promos that are broadcast. Upon request by WB for those records, you shall provide copies of all such records to WB within two weeks of such request.

(b)You shall budget Station’s advertising availabilities in such a manner as to enable Station to broadcast additional WB Promos during periods in which Station is deemed a “Subperformer” Station shall be deemed to be a “Subperformer”“ from the time its “sweeps rating” is below the average prime time rating for all WB affiliated broadcast stations until such time as Station’s sweeps rating is no longer below the average prime time rating for all WB affiliated broadcast stations.  The Station’s sweeps rating means the Station’s average A.C. Nielsen rating for the most recently completed sweeps period for adults 18-49 for all prime time hours programmed by WB. For such time as Station remains a Subperformer, Station shall: (i) broadcast, during each one-half hour of all periods of each day that Station is broadcasting non-WB programming, at least one (1) 30-second Promo (or Promos aggregating 30 seconds, to the extent we so elect) for Station’s local, syndicated or WB programming; and (ii) broadcast during all periods when Station is broadcasting non-WB programming WB Promos for not less than:

Prime Time Hours Programmed by WB

2	hours	—	20%	of	100%
4	hours	—	25%	of	“
6	hours	—	30%	of	“
8	hours	—	35%	of	“
10	hours	—	40%	of	“
12	hours*	—	45%	of	“
	(* 12 or more hours)

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(the “Applicable Percentage”) of the total, aggregate gross ratings points (“GRPs”) for all the promotional announcements broadcast by Station (“Aggregate Promotional GRPs”) within the periods in which non-WB programming is being broadcast.  The specific WB Promos broadcast by Station and the number of broadcasts of each WB Promo may be specified by WB and the broadcast of the WB Promos shall be made so that the Aggregate Promotional GRPs allocated to WB Promos are distributed fairly and reasonably across the periods when non-WB programming is being broadcast.  For such time as Station’s sweeps rating ranks Station within the bottom 50% (ranked highest to lowest) of those WB affiliated broadcast stations that are Subperformers, then the Applicable Percentage for Station shall be not less than 55% of 100% of the Aggregate Promotional GRPs. The WB Promos broadcast during each half-hour of non-WB programming, as required by this subparagraph 4(b), may be counted toward Station’s Applicable Percentage. Station shall continue to air WB Promos under this schedule until Station is no longer a Subperformer, as defined above.  It is agreed that if Station determines in its exclusive judgment that this sub-performing station formula is not workable then you and WB will engage in good faith negotiations to arrive at another subperforming station formula that is acceptable to Station.

(c)  In addition to providing WB Promos, WB, in its sole judgement, will provide Station with such print and other advertising materials that WB generally provides to its affiliate body.  Such will be provided at no cost to Affiliate provided that such materials be provided by to all affiliates at no cost.  Additionally, we shall make available for your use, at reasonable cost, such other promotional and sales materials as we and you may mutually consider appropriate.  You shall not delete any copyright, trademark, logo or other notice, or any credit included in any such materials relating to WB, and you shall not exhibit, display, distribute or otherwise use any trademark, logo or other material or item delivered pursuant to this Paragraph 4 or otherwise, except as instructed by us at the time.

(d) Commencing on the first date that WB programming is aired by Station and for the remaining term of this Agreement, Station shall identify itself as a WB affiliate, both on and off-the-air.  In this regard, Station has the right to utilize marks and logos that belong to WB.

(e)  Station shall be eligible to participate in WB’s co-op advertising in accordance with WB’s written co-op guidelines as such may be in effect.  The level of funding available for co-op advertising shall be market specific, and Affiliate shall be treated as all other affiliates with regard to its eligibility for co-ops.

5.Commercial Announcements:

(a)With respect to WB programming, the parties to this Agreement shall be entitled to insert the following number of commercial announcements (Station’s allotment includes station breaks but excludes 5-second prime time station identification breaks at the beginning of each hour):

(1)Prime Time (as defined in subparagraph 2 (c)) hour (pro-rated for half-hour programs):

You shall have the right to insert six 30-second commercial announcements.  WB shall have the right to insert eighteen 30-second commercial announcements.

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(2)Children’s:

Weekday half-hour:

You shall have the right to insert six 30-second commercial announcements (or other material constituting “commercial matter” under the FCC’s regulations). WB shall have the right to insert six 30-second commercial announcements.

Weekend half-hour:

You shall have the right to insert five 30-second commercial announcements (or other material constituting “commercial matter” under the FCC’s regulations).  WB shall have the right to insert five 30-second commercial announcements and one 15-second commercial.

(3)Latenight (as defined in subparagraph 2(c)):

You will receive half the total number of commercial announcements as specified by WB or less as mutually agreed to.

(b)If because of the imposition of any law or regulation the amount of commercial advertising, commercial matter or other non-program time included in WB programming is reduced for any reason (including but not limited to the adoption or modification of statutes or regulations or any other governmental action), then the number of commercial announcements available to you and us shall be reduced to the extent necessary to provide WB and Affiliate with the same proportionate amount of commercial time (inclusive of station breaks with respect to Affiliate) that each party is entitled to under this Agreement.

(c)Your broadcast over Station of the commercial announcements included by us in WB programming is of the essence to this Agreement, and nothing contained in this Agreement (other than in subparagraph 2(f)) shall limit our rights or remedies related to your failure to so broadcast said commercial announcements. You shall maintain complete and accurate records of all commercial announcements broadcast as provided herein.  Within two weeks following each request by us therefore, you will submit copies of all such records to WB.

6.Force Majeure;  WB shall not be liable for failure to make available any programming or any portion(s) thereof, and Station shall not be liable for failure to broadcast any such programming or any portion(s) thereof, by reason of any act of God, equipment failure, action or claims by any third person, labor dispute, law, governmental regulation or order, or other cause beyond either party’s reasonable control (“force majeure event”).  If due to any force majeure event, we substantially fail to make available all of the programming to be delivered to Affiliate under the terms of this Agreement, or you substantially fail to broadcast such programming as scheduled by WB for four consecutive weeks, or for six weeks in the aggregate during any 12-month period, then the “non-failing” party may terminate this Agreement upon thirty 30 days prior written notice to the “failing” party so long as such notice is given at any time prior to the “non-failing” party’s receipt of actual notice that the force majeure event(s) has ended; provided further, however, that notwithstanding the above provisions, you shall not have any right to so terminate this Agreement, upon a force majeure event or otherwise, if we: (i) fail to make available a minimum or specific number of WB programs; (ii) fail to commence making available WB programming on any particular date; (iii) fail to expand the amount of WB programming pursuant to a specified timetable; (iv) substitute one or more WB

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programs for previously scheduled WB programs (v) cancel one or more WB programs; or (vi) postpone the roll-out of any WB programming.

7.Assignment or Transfer of Affiliate Agreement and/or Station License:

(a)Assignment or Transfer of Affiliation Agreement:  This Agreement shall not be assigned by Affiliate without the prior written consent of WB.  Any purported assignment by Affiliate without such consent shall be null and void, shall not be enforceable against WB, and shall not relieve Affiliate of all its obligations hereunder.  Notwithstanding the foregoing, any assignment from Affiliate, to a subsidiary or affiliate of Sinclair Broadcast Group (“SBG”), Sinclair Communications, Inc. (“SCI”), or a subsidiary or affiliate of Sinclair Broadcast Group or Sinclair Communications, Inc., or any assignment from         ,                     or          , Inc. to SBG, SCI or a subsidiary or affiliate of SBG or SCI is expressly permitted.  Further: (i) If, during the term. Affiliate assigns this Agreement to a third party or Licensee transfers its interest in the Station to a third party, other than as expressly permitted above, (the “Transferee”), absolute conditions of the transfer must be: (a) that the Transferee’s interest in Station is subject to the full remaining term of this Agreement, and the Transferee must agree in writing to assume and fully perform each obligation to be performed by Affiliate or Licensee under this Agreement; an, (b) WB’s approval of the transfer will not be unreasonably withheld if the Transferee is a recognized and reputable broadcaster.  In the event that there is a dispute between WB and Affiliate or Licensee with regard to the reasonableness of WB withholding of consent, then the issue will be resolved by binding expedited arbitration pursuant to the rules of the American Arbitration Association.

(b)Assignment or Transfer of Station License; Subject to paragraph 7(a), above, if any application is made to the Federal Communications Commission (FCC) for consent to the transfer of control or assignment of the Station license, Licensee shall notify us in writing within ten (10) days of the filing of such application. Subject to Paragraph 7(a) above, unless the transfer of control or assignment is one provided for by Section 73.3540 (f) of the FCC’s current rules and regulations (a “short form” assignment or transfer of control that does not involve a material assignment or transfer of control), we shall have the right, within thirty (30) days of WB’s receipt of notice as provided in this paragraph, to notify Licensee (in writing) of WB’s decision to terminate this Agreement effective as of the consummation of such assignment or transfer of control.  If WB does not provide notice of its decision to terminate this Agreement within such 30 day period, this Agreement shall be deemed to have been fully assigned to the transferee or assignee of Station’s license upon the consummation of such transfer of control or assignment and such transferee or assignee will assume and perform all of the obligations and duties contained in this Agreement without limitation of any kind, as of the effective date of such transfer of control or assignment.  In addition, if Licensee fails, prior to the effective date of such transfer of control or assignment, to procure in a written form reasonably satisfactory to WB the agreement of the assignee or transferee to assume and perform this Agreement in its entirety without limitation of any kind, or fails to notify WB of the application to transfer control or assign the Station license, then Licensee shall remain fully responsible for the full performance of all provisions of the Agreement during the full term of the Agreement as set forth in Paragraph 9, and in the event of non-performance, Licensee shall be considered in material breach of this Agreement and WB shall have all rights and remedies available for such breach, including but not limited to specific performance and damages.

8.Unauthorized Copying;  You shall not, and shall not cause or authorize others to record, copy or duplicate any programming or other material we furnish pursuant to this Agreement, in whole or in

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part, and you shall take all reasonable precautions to prevent any such recording, copying or duplication. Notwithstanding the foregoing, if Station is located in the Mountain Time Zone you may pre-record WB programming for later broadcast at the times scheduled by us.  You shall erase all such pre-recorded programming promptly after its scheduled broadcast.  Notwithstanding the above provisions, Station may make a non-broadcast quality recording of its entire broadcast day for archival, file and reference purposes and uses only, which copy shall be kept in Station’s possession at all times.

9.Term;

(a)The term of this Agreement shall be deemed to have commenced April 1, 1998 (the “Launch Date”) and shall continue until January 15, 2008 (“Term”)

(b)The “Launch Date” shall be the date on which WB first makes WB programming available to Affiliate for broadcast by Station on a regularly scheduled basis.

(c) Each “Contract Year” hereunder shall be an annual period during the term of this Agreement.  The First Contract Year is the annual period beginning on the Launch Date; the Second Contract Year is the annual period commencing one year after the Launch Date, etc.

(d)WB shall, within its sole discretion, but subject to any other obligations that WB may owe to you, have the right to terminate this Agreement so long as we provide sixty days prior written notice to you and are ceasing operation as a television network.

(e)Notwithstanding anything to the contrary contained in this Agreement, upon the termination or expiration of the term of this Agreement, all of your rights to broadcast or otherwise use any WB program or any trademark, logo or other material or item hereunder shall immediately cease and neither you nor Station shall have any further rights whatsoever with respect to any such program, trademark, logo, material or item.

10.Applicable Law:  The obligations of you and WB under this Agreement are subject to all applicable federal, state, and local laws, rules and regulations (including, but not limited to, the Communications Act of 1934, as amended, and the rules, regulations and policies of the FCC) and this Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California without regard to California’s conflict of law rules.

11.Station Acquisition by WB:  During the term of this Agreement, WB agrees that neither we nor Time Warner Inc. nor any Subsidiary or “Affiliate” of WB or Time Warner, Inc. will acquire, as defined by the attribution rules of the FCC, all or a substantial interest in a television broadcast station licensed in the same Designated Market Area (“DMA”) as Station.  The Affiliate of, or a person affiliated with, a specified person or entity means a person or entity who, directly or indirectly, through one or more intermediaries controls, is controlled by, or is under common control with, the person or entity specified.

12.Change in Operations:  In the event that Station’s transmitter location, power, frequency, programming format or hours of operation are materially changed at any time during the term of this Agreement so that Station is of materially less value to us as a broadcaster of WB programming than at the date of this Agreement, then we shall have the right to terminate this Agreement upon 30 days prior written notice.  Licensee shall notify WB within ten (10) days in writing if application is made to the FCC to modify in a material manner the transmitter location, power or frequency of Station or if Licensee plans to modify in a material manner the hours of operation of Station.  If Licensee or

10

Affiliate fails to notify us as required herein, then we shall have the right to terminate this Agreement by giving you and Licensee sixty (60) days prior written notice.

At any time during the term if, due to other than an event of force majeure, Station is off the air, or operating at less than fifty percent (50%) of its licensed power, for a period of 24 hours or longer, Station must immediately notify WB.  WB may terminate this agreement on sixty (60) days prior written notice in the event that station is off the air for a period exceeding fourteen (14) days.  Affiliate will install a satellite antenna and receiver of sufficient quality, in the reasonable judgment of WB, to receive a network quality signal from WB.  Affiliate and Licensee shall also use switches, microwaves and all other transmission equipment necessary to telecast a network quality picture.  If, in the exclusive judgment of WB, the picture or sound quality of Station’s transmission is insufficient, WB will provide station with notice of the deficiency, and station shall have thirty (30) days to cure.  In the event that station should fail to cure then WB may cancel this agreement upon sixty (60) days written notice.

13.WB Affiliates Council:  You, with the other affiliates of WB, shall form a WB Affiliates Council (the “Council”), which shall be comprised of representatives from five different affiliates of WB.

14.Non-Liability of Council Members:  To the extent the Council and its members are acting in their capacity as such, then the Council and each member so acting shall not have any obligation or other liability whatsoever to you in connection with this Agreement, including without limitation, with respect to the Council’s or such member’s approval or non-approval of any matter, exercise or non-exercise of any right or taking of or failing to take any other action in connection therewith.

15.Warranties and Indemnities:

(a)WB represents and warrants that Station’s broadcast, in accordance with the terms and conditions of this Agreement, of any WB programming, including WB’s commercial announcements, shall not violate any applicable rules, regulations, or written policies of the Federal Communications Commission nor any other governmental authority, nor violate or infringe upon the trade name, trademark, copyright, literary or dramatic right, or right or privacy or publicity of any third party.  WB agrees to indemnify, defend and hold Affiliate and Licensee harmless against and from all claims, damages, liabilities, costs and expenses arising out of WB’s breach of its representations and warranties set forth in this Agreement or the use by Station under this Agreement of any WB program or other material furnished by WB under this Agreement, provided that Affiliate and/or Licensee promptly notifies WB of any claim or litigation to which this indemnity shall apply, and provided further that Affiliate and/or Licensee cooperates fully with WB in the defense or settlement of such claim or litigation.  Affiliate agrees to indemnify, defend and hold WB harmless against and from all claims, damages, liabilities, costs and expenses with respect to any material furnished, added or deleted to or from WB programming by Affiliate.  This indemnity shall not apply to litigation expenses, including attorneys’ fees, that the indemnified party elects to incur on its own behalf.  Except as otherwise provided in this Agreement, neither Affiliate nor WB shall have any rights against the other for claims by third persons, or for the failure to operate facilities or to furnish WB programs if such failure is the result of a force majeure event as defined in Paragraph 6.  Furthermore, notwithstanding any other provisions of this Agreement, Affiliate shall not have any rights against WB for claims by third parties or Affiliate arising out of any actions or omissions of WB permitted under subparagraph 2(g).

(b)  You agree to maintain for Station such licenses, including performing rights licenses as now are or hereafter may be in general use by television broadcasting stations and are

11

necessary for you to broadcast the television programs which we furnish to you hereunder.  We will clear all music in the repertory of SESAC, ASCAP and BMI used in our programs, thereby licensing the broadcasting of such music in such programs over Station by obtaining any necessary music synchronization licensee.  You will be responsible for all music license requirements specifically including the payment of music performance royalties (and all other permissions) for any commercial or other material inserted by you within or adjacent to WB programs in accordance with this Agreement.

(c)Licensee warrants that it has the right to enter into this Agreement and that the License is in good standing and agrees to comply with all relevant statutes and FCC rules and requirements so as to maintain the License in good standing.  In the event you are found to have materially violated any laws or FCC rules or requirements (after the exhaustion of all appeals so long as Station retains the License during the pendency of such appeal), the effect of which is that Station is of materially less value to us as a broadcaster of WB programming than as of the date of this Agreement, then we shall have the right to terminate this Agreement upon 30 days prior written notice.  Licensee shall notify us within ten (10) days of any action by the FCC imposing any forfeitures or other sanction(s) on Station or you including but not limited to short-term renewals, revocation or denial of renewal.

(d)You warrant that all information delivered by you to us in connection with this Agreement shall be true and correct in all material respects.

(e)WB and You warrant that execution of this Agreement and performance of its obligations will not violate or result in a default under (i) any material agreement or instrument to which WB or You are party or (ii) any statute, ordinance, governmental rule or regulation in any material respect, or order, judgment, injunction, decree or ruling of any court or administrative agency applicable to WB or to You, which default would materially interfere with the performance of WB’s or Your obligations hereunder.

16.Retransmission Consent;  If any law, governmental regulation or other action permits Licensee to elect to require any cable television system or other multichannel video program distributor to obtain your consent to such system’s or distributor’s retransmission of Station’s broadcast of either Station’s signal as a whole or any WB programming included therein, then Licensee and Affiliate agree to consult with WB regarding whether such consent is to be given and, if so, the terms under which such consent is to be given (including without limitation, the amount and type of compensation, if any, to be paid by the system or distributor for such consent and whether any of that compensation shall be shared between you and us).  Notwithstanding the foregoing, Licensee and Affiliate shall have the right, within their sole and exclusive judgment, to make all determinations concerning must carry,  and retransmission consent approval and the compensation, if any, to be paid to Station for such approval and the sharing, if any, of such compensation.  However, nothing contained herein provides Station with the right to have WB programming carried by any distribution instrumentality (specifically including, but not limited to satellite or cable) outside of the DMA licensed by this Agreement.

17.Network Non-Duplication Protection;  During the term of this Agreement, Licensee and Affiliate shall be entitled to network non-duplication protection, as provided by Sections 76.92 through 76.97 of the FCC’s rules, against the presentation of any WB program by a cable system during the period commencing one day before and ending fourteen (14) days after receipt of such WB program by Station, The geographic zone of network non-duplication protection shall be the Designated Market Area (“DMA”) (as defined by Nielsen) in which your Station is located or any lesser zone mandated by Sections 76.92 and 73.658(m) of the FCC’s rules as those rules exist as of

12

the date of this Agreement.  Network non-duplication protection shall extend only to WB programs that Station is carrying in accordance with the terms of this Agreement and such protection shall be subject to the terms and provisions of subparagraph 2(f).  You and Licensee are under no obligation to exercise in whole or in part the network non-duplication rights granted herein.  Notwithstanding anything to the contrary in this paragraph, no non-duplication protection is provided against the signal of        until such time that exclusivity is offered to any other affiliate.

18.Affiliation Ratings Payments;  Affiliate agrees to pay to WB an annual payment, based on the Station’s television market ratings, for WB prime time programming, commencing with the initial broadcast by Station of such programming, all as defined and set forth in the “Annual Ratings Payment” Exhibit attached hereto.  These payments are intended to compensate WB for the WB programming and are in no way intended to, nor do they, confer on WB any ownership or other equity interest in Station.

19.Notices and Reports;

(a)In addition to any other reports or forms requested herein, you will provide to us in writing, in the manner reasonably requested by WB, such reports covering WB programs broadcast by Station as we may request from time to time.  To the extent we provide you forms for such purpose, you shall provide such reports on these forms, to the extent that it is reasonably practicable for you to do so.

(b)All notices, reports or forms required or permitted hereunder to be in writing shall be deemed given when personally delivered (including, without limitation, by overnight courier or other messenger or upon confirmed receipt of facsimile copy) or on the date of mailing postage prepaid, addressed as specified below, or addressed to such other address as such party may hereafter specify in a written notice.  Notice to Affiliate shall be to the address set forth for Affiliate on page 1 of this Agreement, with a copy to its General Counsel.  Notice to WB shall be to The WB Television Network, 4000 Warner Boulevard, Burbank, California, 91522, Attention: General Counsel.

20.Miscellaneous:

(a)Nothing contained in this Agreement shall create any partnership, association, joint venture, fiduciary or agency relationship between the parties hereto.

(b)Nothing contained in this Agreement nor the conduct of any officer, director, agent or employee of either WB Affiliate, or Licensee shall be deemed to create or to constitute ownership by WB, in whole or in part, of Affiliate, Licensee, Station or the License or in any way constitute a derogation of the rights, duties and responsibilities imposed upon Affiliate.  Nothing in this Agreement shall be deemed to delegate to WB, directly or indirectly, any right to control the operations of Station.

(c)You and Licensee shall at all times permit us, in connection with WB programming, without charge, to place on, maintain and use at Station’s premises, at our expense, such equipment as WB shall reasonably require to perform its obligations under this Agreement.  Station shall operate such equipment for us, to the extent we reasonably request, and no fee shall be charged by Station therefor.

(d)No waiver of any failure of any condition or of the breach of any obligation hereunder shall be deemed to be a waiver of any preceding or succeeding failure of the same or any other

13

condition, or a waiver of any preceding or succeeding breach of the same or any other obligation.

(e)Each and all of the rights and remedies of WB and Affiliate under this Agreement shall be cumulative, and the exercise of one or more of said rights or remedies shall not preclude the exercise of any other right or remedy under this Agreement, at law or in equity.  Notwithstanding anything to the contrary contained in this Agreement, in no event shall either party hereto be entitled to recover any lost profits or consequential damages because of a breach or failure by the other party, and except as expressly provided in this Agreement to the contrary, neither WB nor Affiliate shall have any right against the other with respect to claims by any third person or other third entity.

(f)Paragraph headings are included in this Agreement for convenience only and shall not be used to interpret this Agreement or any of the provisions hereof, nor shall they be given any legal or other effect.

(g)This Agreement may be executed in counterparts, with the Agreement being effective when each party hereto has executed a copy and delivered that copy to the other party hereto.

(h)The parties hereto agree that Station will be granted the benefit of any terms that are more favorable, or treated in a manner which is as least as well, or better than other WB affiliates with respect to the following terms and conditions of this Agreement: Station’s allotment of commercial announcements, promotion announcement procedures, WB program carriage (except as to items identified in each Station’s Schedule 1), delivery requirements, assignment restrictions and retransmission consent. The parties hereto acknowledge that the “most favored” protection that is granted to Station in this subparagraph (i) relates only to the Affiliation Agreement and not to any agreements of any other nature that may exist between WB and any third party. Notwithstanding the provisions of this subparagraph (i) Station acknowledges that the Affiliation Agreement for “                  ”                     may contain terms in addition to and different from the terms contained in this Affiliation Agreement. The premises and rationale for preparation of the Annual Ratings Payment will be the same for all WB affiliates, however it is acknowledged that each affiliate will have a different schedule of payment amounts based on each station’s base year calculation. Additionally, guarantee payments will only be required of stations in the top 15 markets.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first written above.

THE WB TELEVISION NETWORK PARTNERS
L. P. d.b.a. THE WB TELEVISION NETWORK
(“WB”)		(“Affiliate”)
By:		By:
Title:		Title:
Date:		Date:
	(“Licensee”)
	By:
	Schedule “1”

14

ANNUAL RATINGS PAYMENT EXHIBIT

As part of the consideration to WB for the WB programming, Licensee agrees to make annual payments to WB based on Station’s television market ratings (the “TMR Payments”) for adults 18-49 for the prime time broadcast periods of WB programming commencing with the initial broadcast by Station of WB programming.  Such payments shall partially compensate WB for the WB programming by calculating the value and/or profitability added to Station as a result of its affiliation with WB and pay to WB      of such added value and/or profitability.  Such payments are not intended to, nor do they, confer in WB any ownership interest in Station.  All defined terms used herein shall have the same meaning as set forth in the Agreement unless otherwise defined herein.  The TMR Payments shall be calculated and paid as follows:

A.Calculation of TMR Payment Amount:  At the end of each successive Contract Year commencing on the Launch Date, the “Average Rating” for each such Contract Year shall be determined by taking the average of Station’s television ratings (adults 18-49) for the prior November, February, and May sweeps periods of such Contract Year as reported on the Nielsen Station Index (“NSI”), as processed, refined, re-formatted or re-configured by that application commonly known as the “SNAP System,” but only with respect to those prime time hours programmed by WB under the Agreement.  Based on the Station’s Average Rating for each Contract Year and the number of hours programmed by WB in that Year, Station shall owe WB the amount (the “TMR Amount”) set forth in the table attached hereto as the Annual Ratings Payment Exhibit-Table (omitted due to sensitive nature of information).  For example, in the particular case of Station, if the adults 18-49 rating for WB programmed hours is       for a particular Contract Year, and WB is programming      hours per week during such Year, then the TMR payment that will be due and owing for such Year is $              .  In the event that either Station or WB contends that the TMR Payment for any particular Contract Year, as set forth in the Annual Ratings Payment Exhibit Table (omitted due to sensitive nature of information), is not an accurate statement of the      share of the added value and/or profitability during WB-programmed prime time hours that Station owes to WB, or if the TMR Payment for any particular Contract Year has increased or decreased from the prior year’s TMR Payment disproportionately in comparison to the increase or decrease over such period in the profitability of Station’s WB furnished prime time programming (after giving effect to any increase in the number of WB prime time programming hours-between the two periods), then either WB or Station may request that the Station’s financial results and operational information be audited and reviewed by WB and the result of such audit shall determine the level of the TMR payment for the given period.  Promptly after such audit and review, WB and Station shall meet to discuss such financial results and operational information of Station and in good faith seek to adjust the then currently due TMR Payment to reflect the result of the audit and the intent of these Payments as set forth in the introductory paragraph to this Exhibit.

B.TMR Payment:  The TMR Amount for each Contract Year shall be payable by Licensee to WB within 15 days following WB’s delivery to Licensee of an invoice for the TMR Amount, which invoice shall be delivered by WB not earlier than the release by NSI or any successor ratings index of the ratings for the fourth and final sweeps period of such Contract Year.

C.No NSI Ratings:  In the event there are no NSI ratings available, then Licensee and WB shall use those standard television market ratings which are generally available and used by national and/or regional advertisers for purposes of calculating advertising payments to television stations..

15

D.Continuing Obligation: Licensee’s obligation to make the above TMR Payments on the basis set forth herein shall survive any termination of this Agreement by WB, any sale or transfer of any Station assets and/or any ownership interest in the Station and shall remain binding on any successor Station owner, which successor remains an affiliate and is approved by WB in its discretion as otherwise set forth in the Agreement.

16

EX-10.51

Exhibit 10.51

Director Compensation

Non-employee directors are entitled to receive the following compensation and stock options:

Base Compensation.  Sinclair directors who are also Sinclair employees serve without additional compensation. Non-employee directors receive $27,000 annually. The audit committee chairman receives an additional $4,500 annually and the compensation and stock option committee chairman receives an additional $3,000 annually. Non-employee directors also receive $1,250 for each meeting of the board of directors attended, $1,000 for each audit committee meeting attended and $800 for each compensation and stock option committee meeting attended.

Stock Options.  Each non-employee director receives a grant of non-qualified stock options on the date of our annual meeting date to purchase 5,000 shares of class A common stock pursuant to our non-qualified stock option long-term incentive plan. Each stock option grant is immediately vested with respect to 25% of the shares with the remaining shares vesting in equal installments over a three year period. The exercise price of each option grant is equal to the closing price of our class A common stock on the date of our annual stockholders meeting.

EX-12

EXHIBIT 12

SINCLAIR BROADCAST GROUP, INC AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, 2002, 2001, and 2000
(DOLLARS IN THOUSANDS)

	2004		2003		2002			2001			2000
Income (loss) before provision (benefit) for income taxes from continuing operations	$	25,186	$	26,510	$	(17,885	)	$	(185,305	)	$	(30,314	)
Fixed charges (a)	120,400		121,165		118,115			130,794			133,240
Earnings available for fixed charges	145,586		147,675		100,230			(54,511		)	102,926
Fixed charges (a)	120,400		121,165		118,115			130,794			133,240
Excess of earnings over fixed charges (b)	$	25,186	$	26,510	$	(17,885	)	$	(185,305	)	$	(30,314	)
Ratio of earnings to fixed charges	1.21		1.22		—			—			—
Earnings available for combined fixed charges and preferred stock dividends	$	161,248	$	163,598	$	116,153		$	(38,588	)	$	120,048
Combined fixed charges and preferred stock dividends (c)	136,062		137,088		134,038			146,717			150,362
Excess of earnings over combined fixed charges and preferred stock dividends (d)	$	25,186	$	26,510	$	(17,885	)	$	(185,305	)	$	(30,314	)
Ratio of earnings to combined fixed charges and preferred stock dividends	1.19		1.19		—			—			—

(a)	Fixed charges consist of interest expense, which includes interest on all debt and amortization of debt discount, capitalized interest and amortization of deferred financing costs.
(b)	Earnings were inadequate to cover fixed charges for the years ended December 31, 2002, 2001 and 2000. Additional earnings of $17,885, $185,305 and $30,315 would have been required to cover fixed charges in the years ended December 31, 2002, 2001 and 2000, respectively.
(c)	Combined fixed charges and preferred stock dividends consist of interest expense, which includes interest on all debt and amortization of debt discount and premium, capitalized interest and deferred financing costs and preferred stock dividends. Preferred stock dividends are divided by (1 — effective tax rate) with the tax rate being 35.00% for the years ended December 31, 2004, 2003, 2002 and 2001. The tax rate for years ended December 31, 2000 was 39.55%.
(d)	Earnings were inadequate to cover combined fixed charges and preferred stock dividends for the years ended December 31, 2002, 2001 and 2000. Additional earnings of $17,885, $185,305 and $30,315 would have been required to cover fixed charges in the years ended December 31, 2002, 2001 and 2000, respectively.

EX-21

Exhibit 21

SINCLAIR BROADCAST GROUP, INC.
List of Subsidiaries as of March 7, 2005

Acrodyne Communications, Inc. (Delaware Corporation) 82.4%
	Acrodyne Industries, Inc. (Pennsylvania Corporation)
Allegiance Capital L.P. (Maryland Limited Partnership) 87.8%
KDSM, LLC (Maryland LLC)
		KDSM Licensee, LLC (Maryland LLC)
Sinclair Acquisition XI, Inc. (no subsidiaries) (Maryland Corporation)
Sinclair Acquisition XII, Inc. (no subsidiaries) (Delaware Corporation)
Sinclair Acquisition XIII, Inc. (no subsidiaries) (Maryland Corporation)
Sinclair Acquisition XIV, Inc. (no subsidiaries) (Maryland Corporation)
Sinclair Acquisition XV, Inc. (no subsidiaries) (Maryland Corporation)
Sinclair Ventures, Inc. (Maryland Corporation)
	G1440 Holdings, Inc. (Maryland Corporation) 93.95%
		Builder 1440, LLC (Maryland LLC)
		G1440, LLC (Maryland LLC)
		I1440, LLC (Maryland LLC)
Sinclair Television Group, Inc. (Maryland Corporation)
	Sinclair Television Company II, Inc. (Delaware Corporation)
	Sinclair Programming Company, LLC (Maryland, LLC)
	Sinclair Communications, LLC (Maryland LLC)
		WLFL, Inc. (Maryland Corporation)
			WLFL Licensee, LLC (Maryland LLC)
			WRDC, LLC (Nevada LLC)
				Highwoods Joint Venture (North Carolina Partnership) 60%
		Sinclair Media I, Inc. (Maryland Corporation)
			WPGH Licensee, LLC (Maryland LLC)
			KDNL Licensee, LLC (Maryland LLC)
			WCWB Licensee, LLC (Maryland LLC)
		Sinclair Media III, Inc. (Maryland Corporation)
			WSTR Licensee, Inc. (Maryland Corporation)
			Sinclair Radio of Kansas City Licensee, LLC (Maryland LLC)
			WCHS Licensee, LLC (Maryland LLC)
		KSMO, Inc. (Maryland Corporation)

	KSMO Licensee, Inc. (Delaware Corporation)
WYZZ, Inc. (Maryland Corporation)
	WYZZ Licensee, Inc. (Delaware Corporation)
WSMH, Inc. (Maryland Corporation)
	WSMH Licensee, LLC (Maryland LLC)
WTVZ, Inc. (Maryland Corporation)
	WTVZ Licensee, LLC (Maryland LLC)
KLGT, Inc. (Minnesota Corporation)
	KLGT Licensee, LLC (Maryland LLC)
	Sinclair Finance Holdings, LLC (Minnesota LLC)
	Sinclair Finance, LLC (Minnesota LLC)
WGME, Inc. (Maryland Corporation)
	WGME Licensee, LLC (Maryland LLC)
Sinclair Acquisition IV, Inc. (Maryland Corporation)
	KGAN Licensee, LLC (Maryland LLC)
	WICD Licensee, LLC (Maryland LLC)
	WICS Licensee, LLC (Maryland LLC)
WTTO, Inc. (Maryland Corporation)
	WTTO Licensee, LLC (Maryland LLC)
WCGV, Inc. (Maryland Corporation)
	WCGV Licensee, LLC (Maryland LLC)
Sinclair Media II, Inc. (Maryland Corporation)
	SCI-Indiana Licensee, LLC (Maryland LLC)
	KUPN Licensee, LLC (Maryland LLC)
	WEAR Licensee, LLC (Maryland LLC)
	WSYX Licensee, Inc. (Maryland Corporation)
San Antonio Television, LLC (Delaware LLC)
Chesapeake Television Licensee, LLC (Maryland LLC)
SCI-Sacramento Licensee, LLC (Maryland LLC)
KABB Licensee, LLC (Maryland LLC)
WLOS Licensee, LLC (Maryland LLC)
Sacramento Tower Joint Venture (California Partnership) 50%
Sinclair Radio of St. Louis, Inc. (Maryland Corporation)
	Sinclair Radio of St. Louis Licensee, LLC (Maryland LLC)
WGGB, Inc. (Maryland Corporation)
	WGGB Licensee, LLC (Maryland LLC)
KOCB, Inc. (Oklahoma Corporation)
	KOCB Licensee, LLC (Maryland LLC)
Tuscaloosa Broadcasting, Inc. (Maryland Corporation)
	Sinclair Radio of Memphis Licensee, Inc. (Delaware Corporation)
WTWC, Inc. (Maryland Corporation)
	WTWC Licensee, LLC (Maryland LLC)
Sinclair Holdings I, Inc. (Virginia Corporation)
Sinclair Holdings II, Inc. (Virginia Corporation)
Sinclair Holdings III, Inc. (Virginia Corporation)
Sinclair Properties, LLC (Virginia LLC)

		KBSI Licensee L.P. (Virginia Limited Partnership)
		KETK Licensee L.P. (Virginia Limited Partnership)
		WMMP Licensee L.P. (Virginia Limited Partnership)
		WSYT Licensee L.P. (Virginia Limited Partnership)
	Sinclair Properties II, LLC (Virginia LLC)
		WKEF Licensee, L.P. (Virginia Limited Partnership)
		WEMT Licensee, L.P. (Virginia Limited Partnership)
	New York Television, Inc. (Maryland Corporation)
	Montecito Broadcasting Corporation (Delaware Corporation)
		Channel 33, Inc. (Nevada Corporation)
	WNYO, Inc. (Delaware Corporation)
	Sinclair News Central, LLC (Maryland LLC)
Sinclair Communications II, INC. (Delaware Corporation)
	Sinclair Television Company, Inc. (Delaware Corporation)
		WMSN Licensee, LLC (Nevada LLC)
		WUHF Licensee, LLC (Nevada LLC)
		Sinclair Television of Nevada, Inc. (Nevada Corporation)
			Sinclair Television License Holder, Inc. (Nevada Corporation)
			Sinclair Television of Dayton, Inc. (Delaware Corporation)
				WRGT Licensee, LLC (Nevada LLC)
			Sinclair Television of Charleston, Inc. (Delaware Corporation)
				WRLH Licensee, LLC (Nevada LLC)
				WTAT Licensee, LLC (Nevada LLC)
			Sinclair Television of Nashville, Inc. (Tennessee Corporation)
				WZTV Licensee, LLC (Nevada LLC)
				WVAH Licensee, LLC (Nevada LLC)
				Sinclair Television of Tennessee, Inc. (Delaware Corporation)
					WUXP Licensee, LLC (Maryland LLC)
			Sinclair Television of Buffalo, Inc. (Delaware Corporation)
				WUPN Licensee, LLC (Maryland LLC)
				WUTV Licensee, LLC (Nevada LLC)
				WXLV Licensee, LLC (Nevada LLC)
			WDKY, Inc. (Delaware Corporation)
				WDKY Licensee, LLC (Maryland LLC)
				KOKH LLC, (Nevada LLC)
					KOKH Licensee, LLC (Maryland LLC)
	Sinclair Acquisition VII, Inc. (Maryland Corporation)
		WVTV Licensee, Inc. (Maryland Corporation)
	Sinclair Acquisition VIII, Inc. (Maryland Corporation)
		Raleigh (WRDC-TV) Licensee, Inc. (Maryland Corporation)
	Sinclair Acquisition IX, Inc. (Maryland Corporation)
		Birmingham (WABM-TV) Licensee, Inc. (Maryland Corporation)
	Sinclair Acquisition X, Inc. (Maryland Corporation)
		San Antonio (KRRT-TV) Licensee, Inc. (Maryland Corporation)

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We consent to the inclusion in this Annual Report (Form 10-K) of Sinclair Broadcast Group, Inc. and Subsidiaries of our report dated February 8, 2005, with respect to the consolidated financial statements of Sinclair Broadcast Group, Inc. and Subsidiaries, included in the 2004 Annual Report to Shareholders of Sinclair Broadcast Group, Inc. and Subsidiaries.

Our audits also included the financial statement schedule of Sinclair Broadcast Group, Inc. and Subsidiaries listed in Item 15(a). This schedule is the responsibility of Sinclair Broadcast Group, Inc.’s management. Our responsibility is to express an opinion based on our audits. In our opinion, as to which the date is February 8, 2005, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We consent to the incorporation by reference in the following Registration Statements (File No. 333-58135, File No. 333-12257, File No. 333-12255, File No. 333-43047, File No. 333-31569, File No. 333-31571, File No. 333-26427, and File No. 333-103528), of our report dated February 8, 2005, with respect to the consolidated financial statements of Sinclair Broadcast Group, Inc. and Subsidiaries incorporated herein by reference and our report included in the preceding paragraph with respect to the financial statement schedule of Sinclair Broadcast Group, Inc. and Subsidiaries included in this Annual Report (Form 10-K) of Sinclair Broadcast Group, Inc. and Subsidiaries.

	/s/ Ernst & Young LLP
March 15, 2005
Baltimore, Maryland

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, David D. Smith, certify that:

1.I have reviewed this annual report on Form 10-K of Sinclair Broadcast Group, Inc.;

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

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

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we 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)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

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

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

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

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

Date:	March 16, 2005
			/s/ David D. Smith
		Signature:	David D. Smith
			Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David B. Amy, certify that:

1.I have reviewed this annual report on Form 10-K of Sinclair Broadcast Group, Inc.;

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

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

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we 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)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

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

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

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

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

Date:	March 16, 2005
			/s/ David B. Amy
		Signature:	David B. Amy
			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 Sinclair Broadcast Group, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David D. Smith, 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 Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

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

/s/ David D. Smith

David D. Smith

Chief Executive Officer

March 16, 2005

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 Sinclair Broadcast Group, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David B. Amy, 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 Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

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

/s/ David B. Amy

David B. Amy

Chief Financial Officer

March 16, 2005