Lin Television 10K/A 2003 Annual report (amended)

UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/ A

Amendment No. 1


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

		For the fiscal year ended December 31, 2003

or

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

		For the transition period from to


Commission file number 001-31311 LIN TV Corp. (Exact name of registrant as specified in its charter)		Commission file number 000-25206 LIN Television Corporation (Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 05-0501252 (I.R.S. Employer Identification No.)		Delaware (State or other jurisdiction of incorporation or organization) 13-3581627 (I.R.S. Employer Identification No.)

Four Richmond Square, Suite 200, Providence, Rhode Island 02906

(Address of principal executive offices)

Registrant’s telephone number, including area code:

(401) 454-2880

Securities Registered Pursuant to Section 12(b) of the Exchange Act:


Title of Each Class		Name of Each Exchange on Which Registered

Common stock, par value $0.01 per share		New York Stock Exchange

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 þ 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. þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes þ No o

The aggregate market value of the voting and non-voting common equity held by non-affiliates (based on the last reported sale price of the registrant’s class A common stock on June 30, 2003 on the New York Stock Exchange) was approximately $623.5 million.

NOTE:

This combined Form 10-K is separately filed by LIN TV Corp. and LIN Television Corporation. LIN Television Corporation meets the conditions set forth in general instruction I(1) (a) and (b) of Form 10-K and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.

LIN TV Corp. Class A common stock, $0.01 par value, issued and outstanding at March 3, 2004: 26,721,532 shares.

LIN TV Corp. Class B common stock, $0.01 par value, issued and outstanding at March 3, 2004: 23,510,137 shares.

LIN TV Corp. Class C common stock, $0.01 par value, issued and outstanding at March 3, 2004: 2 shares.

LIN Television Corporation common stock, $0.01 par value, issued and outstanding at March 3, 2004; 1,000 shares.

EXPLANATORY NOTE

In accordance with SEC Rule 3-09 of Regulation S-X, LIN TV Corp. and LIN Television Corporation are filing this Amendment No. 1 on Form 10-K/ A (“Form 10-K/ A”) to their combined annual report on Form 10-K for the fiscal year ended December 31, 2003 that was filed with the Securities and Exchange Commission on March 15, 2004 (“Form 10-K”) for the purpose of including the audited financial statements of Station Venture Holdings, LLC, of which 20.38% is owned by LIN Television, and Station Venture Operations, LP’s, which is 99.75% owned by Station Venture Holdings, LLC. Accordingly, Items 8 and 15 of the Form 10-K are hereby amended to include such financial statements and the exhibits required in connection therewith.

TABLE OF CONTENTS


Part II
Item 8.	Financial Statements and Supplementary Data	2
Part IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	2
Schedule I.	Condensed Financial Information of the Registrant	2
EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-23.2 CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-23.3 CONSENT FOR KPMG LLP
EX-23.4 CONSENT OF KPMG LLP
EX-31.1 CERTIFICATION OF CEO
EX-31.2 CERTIFICATION OF THE CONTROLLER
EX-31.3 CERTIFICATION OF THE TREASURER
EX-31.4 CERTIFICATION OF THE VP OF FINANCE
EX-31.5 CERTIFICATION OF CEO
EX-31.6 CERTIFICATION OF THE CONTROLLER
EX-31.7 CERTIFICATION OF THE TREASURER
EX-31.8 CERTIFICATION OF THE VP OF FINANCE
EX-32.1 CERTIFICATION OF THE CEO AND PFO
EX-32.2 CERTIFICATION OF THE CFO AND PFO

Part II


Item 8.	*Financial Statements and Supplementary Data*

See index on page F-1

Part IV


Item 15.	*Exhibits, Financial Statement Schedules and Reports on Form 8-K:*

(a) See Index to Financial Statements on page F-1.

(b) Reports on Form 8-K.

On October 30, 2003, the Company furnished a Current Report on Form 8-K under Item 12 (Results of Operations and Financial Condition) containing a copy of its earnings release for the quarter ended September 30, 2003.


Exhibits
No.		Description

	3.1	Second Amended and Restated Certificate of Incorporation of LIN TV Corp. (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	3.2	Amended and Restated Bylaws of LIN TV Corp. (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	3.3	Restated Certificate of Incorporation of LIN Television Corporation (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q of LIN TV Corp. and LIN Television Corporation for the fiscal quarter ended June 30, 2003 (File No. 000-25206) and incorporated by reference herein).
	3.4	Restated By-laws of LIN Television Corporation (filed as Exhibit 3.4 to the Registration Statement on Form S-1 of LIN Television Corporation and LIN Holding Corp. (Registration No. 333-54003) and incorporated by reference herein).
	4.1	Specimen of stock certificate representing LIN TV Corp. Class A Common stock, par value $.01 per share (filed as Exhibit 4.1 to LIN TV Corp.’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	4.2	Registration Rights Agreement by and among LIN TV Corp. (f/k/a Ranger Equity Holdings Corporation) and the stockholders named therein (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	4.3	Registration Rights Agreement, dated as of May 12, 2003, by and among LIN Television Corporation, the guarantors named therein, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Fleet Securities, Inc. and Scotia Capital (USA) Inc. (filed as Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.1	Indenture, dated as of June 14, 2001, among LIN Television Corp. and the Bank of New York, successor to United States Trust Company of New York, as Trustee, relating to the 8% Senior Notes (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q of LIN Holdings Corp. and LIN Television Corporation for the fiscal quarter ended June 30, 2001 (File No. 000-25206) and incorporated by reference herein).
	10.2	Indenture, dated as of May 12, 2003, among LIN Television Corporation, the guarantors named therein and the Bank of New York, as Trustee, relating to the 61/2% Senior Subordinated Notes (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed as of May 14, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).


Exhibits
No.			Description

	10.3		Indenture, dated as of May 12, 2003, among LIN Television Corporation, the guarantors named therein and the Bank of New York, as Trustee, relating to the 2.50% Senior Subordinated Debentures (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed as of May 14, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.4	+	Amendment, Assumption and Waiver to the Amended and Restated Credit Agreement, dated as of February 7, 2003, among LIN Holdings Corp., LIN Television Corporation, as Borrower, Televicentro of Puerto Rico, LLC as the Permitted Borrower, the Lenders Party Hereto, JP Morgan Chase Bank, as Administrative Agent, as Issuing Lender and as Swingline Lender, J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. as Joint Lead Arrangers and Joint Bookrunners, Deutsche Bank Trust Company Americas as Syndication Agent, and The Bank of Nova Scotia, Fleet National Bank, and Morgan Stanley Senior Funding, as Co-Documentation Agents.
	10.5	+	Form of Stock Pledge Agreement to the Amended and Restated Credit Agreement, dated as of February 7, 2003, among LIN Holdings Corp., LIN Television Corporation, as Borrower, Televicentro of Puerto Rico, LLC as the Permitted Borrower, the Lenders Party Hereto, JP Morgan Chase Bank, as Administrative Agent, as Issuing Lender and as Swingline Lender, J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. as Joint Lead Arrangers and Joint Bookrunners, Deutsche Bank Trust Company Americas as Syndication Agent, and The Bank of Nova Scotia, Fleet National Bank, and Morgan Stanley Senior Funding, as Co-Documentation Agents.
	10.6		Amended and Restated Credit Agreement, dated as of February 7, 2003, among LIN Holdings Corp., LIN Television Corporation, as Borrower, Televicentro of Puerto Rico, LLC as the Permitted Borrower, the Lenders Party Hereto, JP Morgan Chase Bank, as Administrative Agent, as Issuing Lender and as Swingline Lender, J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. as Joint Lead Arrangers and Joint Bookrunners, Deutsche Bank Trust Company Americas as Syndication Agent, and The Bank of Nova Scotia, Fleet National Bank, and Morgan Stanley Senior Funding, as Co-Documentation Agents (filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.7		Guarantee and Collateral Agreement, dated as of March 3, 1998, made by LIN Holdings Corp., LIN Acquisition Company, LIN Television Corporation and the Guarantors named herein, in favor of The Chase Manhattan Bank, as Administrative Agent (filed as Exhibit 10.2 to the Registration Statement on Form S-1 of LIN Holdings Corp. and LIN Television Corporation (Registration No. 333-54003) and incorporated by reference herein).
	10.8		Amended and Restated Financial Advisory Agreement, dated as of February 20, 2002, among LIN Television Corporation, LIN Holdings Corp., LIN TV Corp. and Hicks, Muse & Co. Partners, L.P. (filed as Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	10.9		First Amendment to Amended and Restated Financial Advisory Agreement, dated as of April 30, 2002, by and among LIN Television Corporation, LIN Holdings Corp., LIN TV Corp., Ranger Equity Holdings A Corp., Ranger Equity Holdings B Corp., and Hicks, Muse & Co. Partners, L.P. (filed as Exhibit 10.7.1 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	10.1	0*	Employment Agreement dated as of January 1, 2002, by and among LIN TV Corp. and Gary R. Chapman (filed as Exhibit 10.13 to the Annual Report on Form 10-K of LIN Holdings Corp. and LIN Television Corporation for the fiscal year ended December 31, 2001 (File No. 000-25206) and incorporated by reference herein).
	10.1	1*	Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gary R. Chapman (incorporated herein by reference to the Quarterly Report on Form 10-Q of LIN Television Corporation for the fiscal quarter ended March 31, 1995 (File Number 000-25206)).
	10.1	2*	Amendment, dated October 1, 1999, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gary R. Chapman (filed as Exhibit 99.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).


Exhibits
No.			Description

	10.1	3*	Second Amendment, dated August 30, 2000, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gary R. Chapman (filed as Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.1	4*	Third Amendment, dated October 1, 2002, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gary R. Chapman (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.1	5*	Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Paul Karpowicz (filed as Exhibit 10.27 to the Quarterly Report on Form 10-Q of LIN Television Corporation for the fiscal quarter ended September 30, 1996 (File No. 000-25206) and incorporated by reference herein).
	10.1	6*	Amendment, dated October 1, 1999, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Paul Karpowicz (filed as Exhibit 99.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.1	7*	Second Amendment, dated August 30, 2000, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Paul Karpowicz (filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File Nos. 001- 31311 and 000-25206) and incorporated by reference herein).
	10.1	8*	Third Amendment, dated October 1, 2002, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Paul Karpowicz. (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.1	9*	Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gregory M. Schmidt (filed as Exhibit 10.29 to the Quarterly Report on Form 10-Q of LIN Television Corporation for the fiscal quarter ended September 30, 1996 (File No. 000-25206) and incorporated by reference herein).
	10.2	0*	Amendment, dated October 1, 1999, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gregory M. Schmidt (filed as Exhibit 99.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.2	1*	Second Amendment, dated August 30, 2000, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gregory M. Schmidt (filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.2	2*	Third Amendment, dated October 1, 2002, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Gregory M. Schmidt (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.2	3*	Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Peter E. Maloney (filed as Exhibit 10.22 to the Registration Statement on Form S-1 of LIN Holdings Corp. and LIN Television Corporation (Registration No. 333-54003) and incorporated by reference herein).
	10.2	4*	Amendment, dated October 1, 1999, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Peter E. Maloney (filed as Exhibit 99.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.2	5*	Second Amendment, dated August 30, 2000, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Peter E. Maloney (filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).


Exhibits
No.			Description

	10.2	6*	Third Amendment, dated October 1, 2002, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Peter E. Maloney (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.2	7*	Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Deborah R. Jacobson (filed as Exhibit 10.26 to the Quarterly Report on Form 10-Q of LIN Television Corporation for the fiscal quarter ended September 30, 1996 (File No. 000-25206) and incorporated by reference herein).
	10.2	8*	Amendment, dated October 1, 1999, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Deborah R. Jacobson (filed as Exhibit 99.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2003 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.2	9*	Second Amendment, dated August 30, 2000, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Deborah R. Jacobson (filed as Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.3	0*	Third Amendment, dated October 1, 2002, to the Severance Compensation Agreement dated as of September 5, 1996, between LIN Television Corporation and Deborah R. Jacobson (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 (File Nos. 001-31311 and 000-25206) and incorporated by reference herein).
	10.3	1*	LIN Television Corporation Retirement Plan, as amended and restated (incorporated herein by reference to the Registration Statement on Form S-1 of LIN Broadcasting Corporation (Registration No. 33-84718)).
	10.3	2*	LIN Television Corporation 401(k) Plan and Trust (incorporated herein by reference to the Registration Statement on Form S-1 of LIN Broadcasting Corporation (Registration No. 33-84718)).
	10.3	3*	LIN TV Corp. (formerly known as Ranger Equity Holdings Corporation) 1998 Stock Option Plan (filed as Exhibit 10.26 to the Annual Report on Form 10-K of LIN Holdings Corp. and LIN Television Corporation for the fiscal year ended December 31, 1998 (File No. 333-54003-06) and incorporated by reference herein).
	10.3	4*	LIN TV Corp. (formerly known as Ranger Equity Holdings Corporation) 1998 Phantom Stock Plan (filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q of LIN Holdings Corp. and LIN Television Corporation for the fiscal quarter ended June 30, 2001 (File No. 000-25206) and incorporated by reference herein).
	10.3	5*	LIN TV Corp. 2002 Stock Plan (filed as Exhibit 10.22 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	10.3	6*	LIN TV Corp. 2002 Non-Employee Director Stock Option Plan (filed as Exhibit 10.23 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	10.3	7*	LIN TV Corp. 2002 Employee Stock Purchase Plan (filed as Exhibit 10.24 to the Company’s Registration Statement on Form S-1 (Registration No. 333-83068) and incorporated by reference herein).
	21+		Subsidiaries of the Registrant.
	23.1		Consent of PricewaterhouseCoopers LLP for LIN TV Corp.
	23.2		Consent of PricewaterhouseCoopers LLP for LIN Television Corporation.
	23.3		Consent of KPMG LLP for Station Venture Operations, LP.
	23.4		Consent of KPMG LLP for Station Venture Holdings, LLC.
	31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer of LIN TV Corp.


Exhibits
No.		Description

	31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Controller of LIN TV Corp.
	31.3	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Treasurer of LIN TV Corp.
	31.4	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Vice President of Finance of LIN TV Corp.
	31.5	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer of LIN Television Corporation.
	31.6	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Controller of LIN Television Corporation.
	31.7	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Treasurer of LIN Television Corporation.
	31.8	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Vice President of Finance of LIN Television Corporation.
	32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer and Principal Financial Officers of LIN TV Corp.
	32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer and Principal Financial Officers of LIN Television Corporation.


*	Management contracts and compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 15(c) of Form 10-K.


+	Previously filed.

(d) Financial Statement Schedule

The following financial statement schedule is filed herewith:

Schedule I — Condensed Financial Information of the Registrant

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each of LIN TV Corp. and LIN Television Corporation, has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	LIN TV CORP.
	LIN TELEVISION CORPORATION


	By:	/s/ GARY R. CHAPMAN



	Gary R. Chapman
	Chairman, President and Chief Executive Officer

Date: March 30, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of each of LIN TV Corp. and LIN Television Corporation in the capacities and on the dates indicated.



Signature	Title	Date

/s/ GARY R. CHAPMAN Gary R. Chapman	Chairman, President, and Chief Executive Officer (Principal Executive Officer)	March 30, 2004

/s/ PAUL KARPOWICZ Paul Karpowicz	Vice President of Television, and Director (Principal Operating Officer)	March 30, 2004

/s/ WILLIAM A. CUNNINGHAM William A. Cunningham	Vice President and Controller (Principal Accounting Officer)	March 30, 2004

/s/ DEBORAH R. JACOBSON Deborah R. Jacobson	Vice President of Corporate Development and Treasurer (Principal Financial Officer)	March 30, 2004

/s/ RANDALL S. FOJTASEK Randall S. Fojtasek	Director	March 30, 2004

/s/ ROYAL W. CARSON, III Royal W. Carson, III	Director	March 30, 2004

/s/ WILLIAM S. BANOWSKY William S. Banowsky	Director	March 30, 2004

/s/ WILLIAM H. CUNNINGHAM William H. Cunningham	Director	March 30, 2004

/s/ WILMA H. JORDAN Wilma H. Jordan	Director	March 30, 2004

Index to Financial Statements


LIN TV Corp.
Report of Independent Auditors		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

LIN Television Corporation
Report of Independent Auditors		F-42
Consolidated Balance Sheets		F-43
Consolidated Statements of Operations		F-44
Consolidated Statements of Stockholder’s Equity		F-45
Consolidated Statements of Cash Flows		F-46
Notes to Consolidated Financial Statements		F-47

Station Venture Holdings, LLC
Report of Independent Auditors		F-80
Balance Sheets		F-81
Statements of Operations		F-82
Statements of Members’ Deficit		F-83
Statements of Cash Flows		F-84
Notes to Financial Statements		F-85

Station Venture Operations, LP
Report of Independent Auditors		F-89
Balance Sheets		F-90
Statements of Operations		F-91
Statements of Partners’ Capital		F-92
Statements of Cash Flows		F-93
Notes to Financial Statements		F-94

Financial Statement Schedule
Schedule I — Condensed Financial Information of the Registrant		F-101

F-1

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of LIN TV Corp.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of LIN TV Corp. and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the accompanying financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2002, the Company changed its method of accounting for goodwill and other intangible assets.


	/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

February 24, 2004

F-2

LIN TV CORP.

CONSOLIDATED BALANCE SHEETS



				December 31,

				2003			2002


				(In thousands, except share
				data)
ASSETS
Current assets:
Cash and cash equivalents				$	9,475		$	143,860
Available for sale securities					—			23,674
Accounts receivable, less allowance for doubtful accounts (2003 - $1,698; 2002 - $2,709)					72,340			71,336
Program rights					17,661			14,515
Assets held for sale					—			10,606
Other current assets					3,216			1,631

	Total current assets				102,692			265,622
Property and equipment, net					203,049			208,072
Deferred financing costs					14,332			25,796
Equity investments					77,305			84,368
Program rights					11,444			8,953
Goodwill					586,269			599,263
Broadcast licenses					1,102,708			1,127,742
Other intangible assets, net					3,289			1,480
Other assets					14,822			13,074

			Total Assets	$	2,115,910		$	2,334,370

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt				$	7,000		$	106,154
Accounts payable					7,169			11,665
Accrued income taxes					320			7,104
Accrued interest expense					9,846			16,236
Accrued sales volume discount					6,075			5,415
Other accrued expenses					13,423			22,303
Liabilities held for sale					—			139
Program obligations					23,042			15,683

	Total current liabilities				66,875			184,699
Long-term debt, excluding current portion					693,367			758,366
Deferred income taxes, net					527,588			510,588
Program obligations					11,640			8,381
Other liabilities					54,306			12,131

		Total liabilities			1,353,776			1,474,165

Contingencies (Note 17)
Stockholders’ equity:
Class A common stock, $0.01 par value, 100,000,000 shares authorized, 26,652,060 shares at December 31, 2003 and 26,296,169 shares at December 31, 2002 issued and outstanding					266			262
Class B common stock, $0.01 par value, 50,000,000 shares authorized, 23,510,137 shares at December 31, 2003 and 23,579,788 shares at December 31, 2002 issued and outstanding; convertible into an equal number of Class A or Class C common stock					235			236
Class C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares at December 31, 2003 and December 31, 2002 issued and outstanding; convertible into an equal number of Class A common stock					—			—
Additional paid-in capital					1,066,897			1,064,122
Accumulated deficit					(294,805	)		(204,415	)
Accumulated other comprehensive loss					(10,459	)		—

		Total stockholders’ equity			762,134			860,205

			Total liabilities and stockholders’ equity	$	2,115,910		$	2,334,370

The accompanying notes are an integral part of the consolidated financial statements.

F-3

LIN TV CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS



		Year Ended December 31,

		2003			2002			2001


		(In thousands, except per share
		data)
Net revenues		$	349,529		$	349,594		$	271,038
Operating costs and expenses:
	Direct operating (excluding depreciation of $31.4 million, $28.0 million and $22.8 million for the years ended December 31, 2003, 2002 and 2001, respectively)		102,093			96,409			81,373
	Selling, general and administrative		91,554			80,691			64,630
	Amortization of program rights		24,835			20,759			21,847
	Corporate		16,101			12,508			8,436
	Restructuring charge		115			909			—
	Depreciation and amortization of intangible assets		32,614			28,658			65,925
	Impairment of broadcast licenses		51,665			—			—

Total operating costs and expenses			318,977			239,934			242,211

Operating income			30,552			109,660			28,827
Other (income) expense:
	Interest expense		60,505			95,775			97,646
	Investment income		(1,015	)		(3,131	)		(3,950	)
	Share of (income) loss in equity investments		(478	)		(6,328	)		4,121
	(Gain) loss on derivative instruments		(2,620	)		(5,552	)		5,552
	Gain on redemption of investment in Southwest Sports Group		—			(3,819	)		—
	Fee on termination of Hicks Muse agreements		—			16,000			—
	Loss on early extinguishment of debt		53,621			5,656			6,810
	Other, net		1,088			3,106			996

Total other expense, net			111,101			101,707			111,175

Income (loss) from continuing operations before provision for (benefit from) income taxes and cumulative effect of change in accounting principle			(80,549	)		7,953			(82,348	)
Provision for (benefit from) income taxes			10,053			25,501			(20,627	)

Loss from continuing operations before cumulative effect of change in accounting principle			(90,602	)		(17,548	)		(61,721	)
Discontinued operations:
Income from discontinued operations, net of tax provision of $22			—			(40	)		—
Gain from sale of discontinued operations, net of tax provision of $109 for the year ended December 31, 2003 and $425 for the year ended December 31, 2002			(212	)		(982	)		—
Cumulative effect of change in accounting principle, net of tax benefit of $16,525			—			30,689			—

Net loss		$	(90,390	)	$	(47,215	)	$	(61,721	)

Basic and diluted loss per common share:
Loss from continuing operations before cumulative effect of change in accounting principle		$	(1.81	)	$	(0.42	)	$	(2.40	)
Income from discontinued operations, net of tax			—			0.02			—
Cumulative effect of change in accounting principle, net of tax			—			(0.73	)		—

Net loss			(1.81	)		(1.13	)		(2.40	)

Weighted-average number of common shares outstanding used in calculating basic and diluted loss per common share			49,993			41,792			25,688

The accompanying notes are an integral part of the consolidated financial statements.

F-4

LIN TV CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY



		Class A				Class B						Class C										Accumulated
		Common Stock				Common Stock						Common Stock				Additional						Other			Total
																Paid-In			Accumulated			Comprehensive			Stockholder’s			Comprehensive
		Shares		Amount		Shares			Amount			Shares		Amount		Capital			Deficit			Loss			Equity			Loss


		(In thousands, except for number of shares)
Balance at January 1, 2001			6,494,276	$	65		19,193,882		$	192			2	$	—	$	561,412		$	(95,479	)	$	—		$	466,190			—
	Payments on exercises of phantom stock units		—		—		—			—			—		—		(38	)		—			—			(38	)
	Tax benefit from exercises of stock options		—		—		—			—			—		—		223			—			—			223
	Net loss		—		—		—			—			—		—		—			(61,721	)		—			(61,721	)	$	(61,721	)

	Comprehensive loss — 2001																											$	(61,721	)

Balance at December 31, 2001			6,494,276		65		19,193,882			192			2		—		561,597			(157,200	)		—			404,654
	Issuance of class A common stock in initial public offering, net of fees		19,550,000		196		—			—			—		—		399,748			—			—			399,944
	Issuance of class B common stock in settlement of Sunrise debt and preferred stock liabilities		—		—		3,984,773			41			—		—		87,625			—			—			87,666
	Issuance of class B common stock in exchange of warrants Hicks Muse						123,466						—		—		2,714									2,714
	Issuance of class A common stock in exchange for 100% of the stock in Sunrise Television Corp.		60,221		—		402,218			4			—		—		10,251			—			—			10,255
	Issuance of class A common stock in exchange for class B common shares		124,551		1		(124,551	)		(1	)		—		—		—			—			—			—
	Exercises of stock options and phantom stock units and employee stock purchase plan issuances		67,121		—		—			—			—		—		1,138			—			—			1,138
	Tax benefit from exercises of stock options																155									155
	Stock-based compensation		—		—		—			—			—		—		894			—			—			894
	Net loss		—		—		—			—			—		—		—			(47,215	)		—			(47,215	)		(47,215	)

	Comprehensive loss — 2002																											$	(47,215	)

Balance at December 31, 2002			26,296,169		262		23,579,788			236			2		—		1,064,122			(204,415	)		—			860,205
	Minimum additional pension liability		—		—		—			—			—		—		—			—			(10,459	)		(10,459	)	$	(10,459	)
	Issuance of class A common shares in exchange for class B common shares		69,651		1		(69,651	)		(1	)		—		—		—			—			—			—
	Exercises of stock options and phantom stock units and employee stock purchase plan issuances		286,240		3		—			—			—		—		2,628			—			—			2,631
	Stock-based compensation		—		—		—			—			—		—		147			—			—			147
	Net loss		—		—		—			—			—		—		—			(90,390	)		—			(90,390	)		(90,390	)

	Comprehensive loss — 2003																											$	(100,849	)

Balance at December 31, 2003			26,652,060	$	266		23,510,137		$	235			2	$	—	$	1,066,897		$	(294,805	)	$	(10,459	)	$	762,134

The accompanying notes are an integral part of the consolidated financial statements.

F-5

LIN TV CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS



		Year Ended December 31,

		2003			2002			2001


		(In thousands)
Net loss		$	(90,390	)	$	(47,215	)	$	(61,721	)
Adjustments to reconcile net loss to net cash provided by operating activities:
	Depreciation and amortization (including amortization of financing costs and note discounts)		46,666			75,688			105,210
	Less on extinguishment of debt		53,621			5,656			6,810
	Amortization of program rights		24,835			20,759			21,847
	Program payments		(23,029	)		(22,475	)		(22,386	)
	Interest and appreciation on Southwest Sports Group		—			(4,819	)		(3,000	)
	preferred units Tax benefit from exercises of stock options		—			155			223
	Employee stock-based compensation		147			894			—
	Deferred income taxes and utilization of previously unrecognized acquired net operating losses, net		6,082			22,493			(21,749	)
	Impairment of intangible assets, net of tax benefit in 2002		51,665			30,689			—
	Net loss (gain) on disposition of property and equipment		1,615			(107	)		1,128
	(Gain) loss on derivative instruments		(2,620	)		(5,552	)		5,552
	Share of loss (income) in equity investments		(478	)		(6,328	)		4,121
	Provision for doubtful accounts		(1,011	)		1,032			123
	Other non-cash items		21			12,394			—
Changes in operating assets and liabilities, net of acquisitions and disposals:
	Accounts receivable		7			(4,210	)		447
	Program rights, net of program obligations		3,175			(2,246	)		(523	)
	Other assets		(3,344	)		5,045			2,245
	Accounts payable		(4,496	)		(1,348	)		488
	Accrued income taxes		(6,784	)		1,109			(97	)
	Accrued interest expense		(6,390	)		(5,857	)		8,693
	Accrued sales volume discount		660			1,595			(908	)
	Other accrued expenses		2,586			(2,322	)		(4,311	)

Net cash provided by operating activities			52,538			75,030			42,192

INVESTING ACTIVITIES:
Capital expenditures			(28,357	)		(39,275	)		(21,503	)
Proceeds from disposals of property and equipment			57			74			923
Proceeds from sale of broadcast licenses and related			10,000			38,500			—
operating assets Investment in equity investments			—			(1,850	)		(1,500	)
Cash and cash equivalents acquired through merger with Sunrise Television			—			—			—
Capital distributions from equity investments			7,540			6,405			6,583
Payments for business combinations, net of cash acquired			(1,980	)		(7,916	)		(40,879	)
Proceeds from redemption of Southwest Sports Group preferred units			—			60,819			—
Other investments and deposits			(1,202	)		88			—
Proceeds from (purchase of) short-term investments			23,691			(23,478	)		—

Net cash provided by (used in) investing activities			9,749			33,367			(56,376	)

FINANCING ACTIVITIES:
Net proceeds (payments) on exercises of employee stock options and phantom stock units and employee stock purchase plan issuances			2,631			1,138			(38	)
Redemption of Sunrise Television preferred stack			—			(10,829	)		—
Net proceeds from initial public offering of common stock			—			399,944			—
Proceeds from long-term debt			500,000			—			267,015
Financing costs associated with proceeds from long-term debt			(10,347	)		—			—
Net proceeds (payments) from revolver debt			22,000			(10,000	)		13,000
Principal payments on long-term debt			(684,500	)		(354,901	)		(256,389	)
Principal payments on short-term debt			—			(7,125	)		—
Cash expenses associated with early extinguishment of debt			(26,456	)		—			—

Net cash (used in) provided by financing activities			(196,672	)		18,227			23,588

Net (decrease) increase in cash and cash equivalents			(134,385	)		126,624			9,404
Cash and cash equivalents at the beginning of the period			143,860			17,236			7,832

Cash and cash equivalents at the end of the period		$	9,475		$	143,860		$	17,236

The accompanying notes are an integral part of the consolidated financial statements.

F-6

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

LIN TV Corp. (“LIN TV”), together with its wholly owned subsidiary, LIN Television Corporation (“LIN Television”), (together, the “Company”), was formed on February 11, 1998. The non-voting equity interest of LIN TV is owned by affiliates of Hicks, Muse, Tate & Furst, Incorporated (“Hicks Muse”) and Royal W. Carson, III and Randall S. Fojtasek together own 70% of the voting equity interest in LIN TV. The Company is a television station group operator in the United States and Puerto Rico.

LIN TV Corp. guarantees all debt of LIN Television Corporation except for its $205.0 million aggregate principal amount of 8% Senior Notes due 2008. (see Note 11). All of the consolidated subsidiaries of LIN Television Corporation fully and unconditionally guarantee all the Company’s debt on a joint and several basis.

Certain reclassifications have been made to the prior period financial statements to conform to the current financial statement presentation.

The Company has revised its original valuation of the broadcast licenses acquired in connection with its purchase of Sunrise Television Corp. as of May 2, 2002. This revision to the original valuation modifies certain assumptions to better reflect those normally expected in the application of a discounted cash flow model used to value broadcast licenses. The revised appraisal increases the initial carrying amounts of the acquired licenses.

The Company identified adjustments relating to its previously filed quarterly financial statements in 2003 and 2002, arising as a result of this revised valuation. The Company has concluded that the effects of these adjustments are not material individually or in the aggregate to any quarters in 2003 or 2002. Accordingly, the quarterly financial statements have not been restated. Instead, these adjustments, that aggregate $189,000 on an after-tax basis, have been recorded effective July 1, 2003. The amounts of these adjustments are as follows:


	(i) The reclassification of $11.9 million from goodwill to broadcast licenses ($24.7 million) and deferred income taxes, net ($12.8 million);

	(ii) An incremental tax provision of $675,000; and

	(iii) An incremental gain from the sale of discontinued operations of $864,000, net of tax, related to the Company’s disposal of KRBC-TV and KACB-TV in June 2003.

These entries have no impact on the Company’s reported cash flows.

Equity Restructuring

Effective May 1, 2002, the Company amended its charter to create three classes of common stock, classes A, B and C, and to reclassify existing common stock, and to effect a 1-for-21 reverse common stock split. All references in the consolidated financial statements to shares of common stock have been retroactively adjusted to reflect this equity restructuring. Class A and class C common stock have voting rights, with each share of class A common stock having one vote per share and the class C common stock possessing 70% of the combined voting power of LIN TV. Class B common stock has no voting rights, however, without the consent of a majority of the class B shares, the Company may not enter into certain corporate transactions described below. Affiliates of Hicks Muse hold all of the non-voting class B shares. The class B common stock is convertible into class A or class C common stock and class C shares are convertible into class A shares under certain conditions.

F-7

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The class B common stock is generally not entitled to vote. However, without the consent of at least a majority of the shares of class B common stock then outstanding, the Company may not:


	•	sell or transfer assets with a total fair market value equal to 10% or more of the value of the Company’s outstanding common stock;

	•	merge or consolidate with another entity;

	•	reclassify any of the Company’s securities;

	•	reclassify, dissolve, liquidate or wind-up the Company’s affairs;

	•	issue equity securities or those of any of the Company’s subsidiaries, other than securities issued by a wholly owned subsidiary to the Company or by the Company to another wholly owned subsidiary or securities issued under the Company’s stock option plan or phantom stock plan;

	•	redeem or repurchase any shares of the Company’s or the Company’s subsidiaries’ capital stock, other than purchases made pursuant to the Company’s stock option plan or phantom stock plan;

	•	amend or modify the Company’s charter or bylaws so as to affect adversely the rights of the class B common stock;

	•	declare or pay any dividend or make any other distribution;

	•	enter into any transaction with an affiliate of the Company, other than in its ordinary course of business;

	•	enter into any transaction outside the Company’s ordinary course of business;

	•	engage in any business or transaction that would require any direct or indirect owner of an equity interest in the Company to divest itself of any such interest;

	•	incur or assume or permit any subsidiary to incur or assume any indebtedness in an amount equal to or greater than 10% of the Company’s fair market value;

	•	engage in any business other than any business a majority of whose revenue is derived from the ownership and operation of television stations or any business that the Company conducted as of the date of filing the Company’s second amended and restated charter; and

	•	settle or allow any subsidiary to settle any claim outside the ordinary course of the Company’s business that involves any material restriction on the Company’s continued business or assets or that of any of the Company’s subsidiaries or affiliates.

The class A, B and C common stock have identical dividend and distribution rights.

Note 2 — Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated. The Company conducts its business through its subsidiaries and has no operations or assets other than its investment in its subsidiaries. Accordingly, no separate or additional financial information about the subsidiaries or the Company on a stand-alone basis is provided.

F-8

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The only operating activities of the Company on a stand-alone basis for the years ended December 31, 2003, 2002 and 2001 were equity transactions with all net proceeds immediately contributed to the Company’s subsidiaries.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the notes thereto. The Company’s actual results could differ from these estimates. Estimates are used when accounting for the collectability of receivables and valuing intangible assets, amortization and impairment of program rights, barter transactions and net assets of businesses acquired.

Cash and cash equivalents

Cash equivalents consist of highly liquid, short-term investments that have an original maturity of three months or less when purchased. The Company’s excess cash is invested primarily in short-term U.S. Government securities and money market funds.

Short-term investments

All of the Company’s short-term investments are designated as available for sale and are reported at market value. Unrealized gains and losses on available for sale securities are included in stockholders’ equity as a component of accumulated other comprehensive income or loss. Dividends and interest, as well as amortization of premium or discount arising at acquisition are included in earnings. Realized gains and losses on available for sale securities are also reported in earnings.

Property and equipment

Property and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the assets, generally 20 to 30 years for buildings and fixtures, and 3 to 15 years for broadcast and other equipment. Upon retirement or other disposition, the cost and related accumulated depreciation of the assets are removed from the accounts and the resulting gain or loss is reflected in the determination of net loss. Expenditures for maintenance and repairs are expensed as incurred.

Equity investments

The Company’s equity investments are accounted for on the equity method, as the Company does not have a controlling interest. Accordingly, the Company’s share of the net loss or income of its equity investments is included in consolidated net loss.

Revenue recognition

Broadcast revenue is recognized during the financial statement period in which advertising is aired. Barter revenue is accounted for at the fair value of the assets or services received, or the advertising time surrendered, whichever is more clearly evident. Management judgment is required to determine which value is more clearly evident. Barter revenue is recorded at the time the advertising is broadcast, and barter expense is recorded at the time the assets or services are used. The Company recognized barter revenue in the amounts of $11.4 million, $12.5 million and $12.2 million in the years ended December 31, 2003, 2002 and 2001, respectively. The Company incurred barter expense in the amounts of $10.9 million, $12.4 million and $12.0 million in the years ended December 31, 2003, 2002 and 2001, respectively.

F-9

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Advertising expense

The cost of advertising is expensed as incurred. The Company incurred advertising costs in the amounts of $4.7 million, $4.6 million and $4.7 million in the years ended December 31, 2003, 2002 and 2001, respectively.

Intangible assets

Intangible assets include broadcast licenses, network affiliations and goodwill. The Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002. SFAS No. 142 requires, among other things, the discontinuance of the amortization of goodwill and indefinite life intangible assets and the introduction of impairment testing in its place.

The Company tests the impairment of its broadcast licenses annually or whenever events or changes in circumstances indicate that such assets might be impaired. The impairment test consists of a comparison of the fair value of broadcast licenses with their carrying amount on a station-by-station basis using a discounted cash flow valuation method, assuming a hypothetical startup scenario, that excludes network compensation payments.

The Company tests the impairment of its goodwill annually or whenever events or changes in circumstances indicate that goodwill might be impaired. The first step of the goodwill impairment test compares the fair value of a station with its carrying amount, including goodwill. The fair value of a station is determined through the use of a discounted cash flow analysis. The valuation assumptions used in the discounted cash flow model reflect historical performance of the station and prevailing values in the markets for broadcasting properties. If the fair value of the station exceeds its carrying amount, goodwill is not considered impaired. If the carrying amount of the station exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined by a notional reperformance of the purchase price allocation using the station’s fair value (as determined in Step 1) as the purchase price. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

An impairment assessment of goodwill could be triggered by a significant reduction in operating results or cash flows at one or more of the Company’s television stations, or a forecast of such reductions, a significant adverse change in the advertising marketplaces in which the Company’s television stations operate, or by adverse changes to Federal Communications Commission ownership rules, amongst others.

The future value of the Company’s broadcast licenses could be significantly impaired by the loss of corresponding network affiliation agreements, or vice versa. Accordingly, such an event could trigger an assessment of the carrying value of the broadcast licenses.

Network Affiliations

Different broadcast companies may use different assumptions in valuing acquired broadcast licenses and their related network affiliations than those used by the Company. These different assumptions may result in the use of different valuation methods that can result in significant variances in the amount of purchase price allocated to these assets between broadcast companies.

F-10

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company believes that the value of a television station is derived primarily from the attributes of its broadcast license. These attributes have a significant impact on the audience for network programming in a local television market compared to the national viewing patterns of the same network programming. These attributes and their impact on audiences can include:


	•	The scarcity of broadcast licenses assigned by the Federal Communication Commission to a particular market determines how many television networks and other program sources are viewed in a particular market.

	•	The length of time the broadcast license has been broadcasting. Television stations that have been broadcasting since the late 1940s, generally channels two to thirteen, are viewed more often than newer television stations.

	•	VHF stations, (generally channels two to thirteen) are typically viewed more often than UHF stations (generally channels fourteen to sixty-nine) because these stations have been broadcasting longer than UHF stations and because of the inferior UHF signal in the early years of UHF stations.

	•	The quality of the broadcast signal and location of the broadcast station within a market (i.e. the value of being licensed in the smallest city within a tri-city market has less value than being licensed in the largest city within a tri-city market.)

	•	The audience acceptance of the broadcast licensee’s local news programming and community involvement. A local television station’s news programming that attracts the largest audience in a market generally will provide a larger audience for its network programming.

	•	The quality of the other non-network programming carried by the television station. A local television station’s syndication programming that attracts the largest audience in a market generally will provide larger audience lead-ins to its network programming.

A local television station can be the number one station in a market, regardless of the national ranking of its affiliated network, depending on these factors or attributes listed above. ABC, FOX, NBC, and CBS each have multiple affiliations with local television stations that have the largest prime time audience in the local market in which the station operates.

Other broadcasting companies believe that network affiliations are an important component of the value of a station. These companies believe that VHF stations are popular because they have been affiliating with networks from the inception of network broadcasts, stations with network affiliations have the most successful local news programming and the network affiliation relationship enhances the audience for local syndicated programming. As a result, these broadcasting companies allocate a significant portion of the purchase price for any station that they may acquire to the network affiliation relationship.

In connection with the Company’s purchase of Sunrise Television Corp. in May 2002, the Company acquired broadcast licenses in markets with a number of commercial television stations equal to or less than the number of television networks seeking affiliates. The methodology the Company used in connection with the valuation of the stations acquired in the Sunrise transaction was based on the Company’s evaluation of the broadcast licenses acquired and the characteristics of the markets in which they operated. The Company believed that in these specific markets it would be able to replace a network affiliation agreement with little or no economic loss to the television station. As a result of this assumption, the Company ascribed no incremental value to the incumbent network affiliation in each market beyond the cost of negotiating a new agreement with another network and the value of any terms that were more favorable or unfavorable than those generally prevailing in the market. Other broadcasting companies have valued network affiliations on the basis that it is the affiliation and not the other attributes of the station, including its broadcast license, which contributes to the operating performance of that station. As a result,

F-11

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the Company believes that these broadcasting companies include in their network affiliation valuation amounts related to attributes that the Company believes are more appropriately reflected in the value of the broadcast license or goodwill.

If the Company were to assign higher values to its acquired network affiliation agreements and, therefore, less value to its broadcast licenses, it would have a significant impact on the Company’s operating results. The following chart reflects the hypothetical impact of the hypothetical reassignment of value from broadcast licenses to network affiliations and the resulting increase in amortization expense assuming a 15-year amortization period assuming that this change would not impact the $51.7 million impairment of broadcast licenses for the year ended December 31, 2003.



				Percentage of Total Value
				Reassigned to Network
				Affiliation Agreements

	As Reported			50%			25%

Balance Sheet (As of December 31, 2003):
Broadcast licenses	$	1,102,708		$	551,354		$	827,031
Other intangible assets, net (including network affiliation agreements)		3,289			481,129			242,209
Statement of Operations (For the year ended December 31, 2003):
Depreciation and amortization of intangible assets		32,614			69,371			87,749
Operating income		30,552			(6,205	)		(24,583	)
Loss from continuing operations		(90,602	)		(68,474	)		(79,538	)
Net loss		(90,390	)		(109,567	)		(98,504	)
Net loss per share	$	(1.81	)	$	(2.19	)	$	(1.97	)

In future acquisitions, the valuation of the broadcast licenses and network affiliations may differ from the Sunrise acquisition values due to different attributes of each station and the market in which it operates.

Long lived-assets

The Company periodically evaluates the net realizable value of long-lived assets, including tangible and intangible assets, relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. An impairment in the carrying value of an asset is recognized when the expected future operating cash flow derived from the asset is less than its carrying value.

Program rights

Program rights are recorded as assets when the license period begins and the programs are available for broadcasting, at the gross amount of the related obligations. Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast subsequently are considered noncurrent. The program costs are charged to operations over their estimated broadcast periods using the straight-line method.

If the projected future net revenues associated with a program are less than the current carrying value of the program rights due to poor ratings, the Company would be required to write-down the program rights assets to equal the amount of projected future net revenues. If the actual usage of the program rights is on a more accelerated basis than straight-line over the life of the contract, the Company would be required to write-down the program rights to equal the lesser of the amount of projected future net revenues or the average cost per run multiplied by the number of remaining runs.

F-12

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Program obligations are classified as current or non-current in accordance with the payment terms of the license agreement.

Accounting for stock-based compensation

At December 31, 2003, LIN TV Corp. had four stock-based employee compensation plans, which are described more fully in Note 12. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. In 2003 and 2002, the Company incurred $147,000 and $894,000, respectively, of stock-based employee compensation cost, which was reflected in earnings. No stock-based employee compensation cost was reflected in earnings in 2001 as all options granted under those plans had an exercise price equal to or more than the market value of the underlying common stock on the date of grant or remeasurement. The following table illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation (in thousands):



	Year Ended December 31,

	2003			2002			2001


	(in thousands, except share data)
Net loss, as reported	$	(90,390	)	$	(47,215	)	$	(61,721	)
Add: Stock-based employee compensation expense, as reported, net of related tax effect		88			536			—
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effect		(3,005	)		(2,235	)		(2,657	)

Pro forma net loss	$	(93,307	)	$	(48,914	)	$	(64,378	)

Basic and diluted net loss per common share, as reported	$	(1.81	)	$	(1.13	)	$	(2.40	)
Basic and diluted net loss per common share, pro forma	$	(1.87	)	$	(1.17	)	$	(2.51	)

The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model. For 2003 and 2002, the Black-Scholes fair value was calculated under the “multiple option” approach, which computes a separate fair value for each vesting increment of an option. The following assumptions were used for option grants under the Company’s stock option plans during the years ended December 31, 2003, 2002 and 2001 respectively:


	2003		2002		2001

Volatility factors		30%		35%		n/a
Risk-free interest rates		1.5 - 3.25%		3.4 - 5.1%		5.96%
Expected life		2 - 5 years		2 - 6 years		7 years
Dividend yields		0%		0%		0%

Income taxes

Deferred income taxes are recognized based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. A valuation allowance is applied against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

F-13

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments and trade receivables. Concentration of credit risk with respect to cash and cash equivalents and investments are limited as the Company maintains its primary banking relationships with only large nationally recognized institutions. Credit risk with respect to trade receivables is limited, as the trade receivables are primarily from advertising revenues generated from a large diversified group of local and nationally recognized advertisers. The Company does not require collateral or other security against trade receivable balances; however, it does maintain reserves for potential credit losses and such losses have been within management’s expectations for all years presented.

Earnings per Share

Basic and diluted earnings per common share are computed in accordance with SFAS No. 128, “Earnings per Share”. Basic loss per common share is computed by dividing loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. There is no difference between basic and diluted earnings per share since potential common shares from the exercises of stock options and phantom units are anti-dilutive for all periods presented and are, therefore, excluded from the calculation. Options to purchase 3,510,000, 2,957,000 and 1,817,000 shares of common stock and phantom units exercisable into 525,000, 675,000 and 680,000 shares of common stock were outstanding as of December 31, 2003, 2002 and 2001, respectively, but were not included in the calculation of diluted earnings per share because the effect to their inclusion would have been anti-dilutive.

Fair value of financial instruments

Financial instruments, including cash and cash equivalents, and investments, accounts receivable and accounts payable are carried in the consolidated financial statements at amounts that approximate fair value at December 31, 2003 and 2002 (see Note 11 relating to debt). Fair values are based on quoted market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

Recently issued accounting pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51.” This Interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Company’s application of FIN 46 will result in the consolidation of the assets, liabilities and non-controlling interests of Banks Broadcasting, Inc. into the Company’s financial statements at their fair value determined at the date that the Interpretation first applies, which for the Company is March 31, 2004, as it is not practicable for the Company to determine the carrying amount at such date. The difference, if any, between the fair value of the newly consolidated assets over the reported amount of any previously held interests and the fair value of newly consolidated liabilities and non-controlling interests shall be recognized as a cumulative effect of an accounting change. The Company’s maximum exposure to loss is limited to its investment in Banks Broadcasting, Inc. of approximately $11.3 million as of December 31, 2003.

F-14

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

upon schedule of cash payments. Under the LMA agreement, the LMA Operator provides substantial portions of the programming for airing on the LMA Licensee’s station and sells the advertising time associated with that programming. The broadcast license of the LMA station is subject to the ultimate programming and other controls exercised by the LMA licensee. The two LMA Licensees, with which the Company has LMA agreements, hold the broadcast licenses and the Company holds the option to buy their broadcast licenses for approximately $4.1 million. In addition, these two LMA Licensees have limited operating costs associated with the management of those broadcast licenses.

The Company believes that the terms of its LMA agreement and related purchase option arrangements identify the entities owning the related broadcast licenses as Variable Interest Entities (“VIE”) under FIN 46. However, the purchase option arrangements do not oblige the Company to absorb the entities’ expected losses, if they occur, beyond the premium paid for such options. The Company does not believe that these option premiums are significant in comparison to expected losses over the life of the broadcast licenses and, therefore, does not identify itself as the party that will absorb a majority of such expected losses. The Company notes that since March 2002 neither of its LMA arrangements have put options. Based on this assessment, the Company does not believe that FIN 46 will require the consolidation of the entities owning the broadcast licenses. The Company’s maximum exposure to loss is limited to approximately $1.0 million, which represents the current premium paid in respect of the purchase options.

On April 30, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies the accounting guidance on (1) derivative instruments (including certain derivative instruments embedded in other contracts) and (2) hedging activities that fall within the scope of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 amends SFAS No. 133 and certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS No. 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The Company does not believe that SFAS No. 149 will have a significant impact on reported financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This statement addresses financial accounting and reporting for financial instruments with characteristics of both liabilities and equity and is effective at the beginning of the first interim period beginning after June 12, 2003, with the exception of certain provisions which the FASB has deferred. The adoption of the new standard does not impact the Company’s results of operations or financial position.

In December 2003, the FASB revised SFAS No. 132, “Employers Disclosures about Pensions and Other Postretirement Benefits”. This statement requires additional disclosures about pension plans and other postretirement benefit plans to those in the original SFAS No. 132, however, it does not change the measurement or recognition of those plans.

Note 3 — Initial Public Offering

On May 2, 2002, the Company completed its initial public offering (“IPO”), in which it issued 19,550,000 shares of common stock at a price of $22.00 per share. Proceeds to the Company totaled approximately $399.9 million, net of commissions, discounts and other offering costs of approximately $30.2 million. The net proceeds from the IPO were immediately contributed to the Company’s subsidiary, LIN Television, through a capital contribution.

F-15

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company used a portion of the IPO proceeds together with proceeds from the redemption of Southwest Sports Group preferred units to repay debt and accrued interest of $325.0 million. This included the repayment to the lenders of the Company’s senior credit facilities of $192.3 million. In addition, the Company used a portion of the IPO proceeds to repay the debt and accrued interest and premiums of Sunrise Television Corp. (“Sunrise”) which was recorded at fair value of $166.0 million. A portion of the Sunrise debt, in the amount of a $33.3 million note held by affiliates of Hicks Muse, was exchanged for shares of the Company’s class B common stock. The Company repaid the balance of $132.7 million of the remaining Sunrise debt and accrued interest and premiums. In addition, the Company exchanged $54.4 million shares of Sunrise preferred stock held by affiliates of Hicks Muse for shares of the Company’s class B common stock and made a cash payment of $10.8 million to redeem the balance of Sunrise’ preferred stock held by another investor. The Company also used the proceeds to pay discounts, commissions and other expenses, including $6.2 million paid on May 2, 2002, and $7.3 million paid on August 23, 2002, to affiliates of Hicks Muse in connection with the termination of the Company’s monitoring and oversight agreement with such affiliates of Hicks Muse, and for general corporate purposes.

Note 4 — Available for Sale Securities

During the quarter ended March 31, 2003, the Company liquidated all of its available for sale securities for proceeds of $23.7 million. The amortized cost and fair value of the Company’s available-for-sale securities by major security type and class of security at December 31, 2002 was as follows (in thousands):


			Accrued
	Amortized		Investment		Fair
	Cost		Income		Value

Corporate debt securities	$	7,627	$	60	$	7,687
Mortgage-backed securities		15,851		136		15,987

	$	23,478	$	196	$	23,674

Note 5 — Acquisitions and Dispositions

UHF licenses. In December 2002 and June 2003, the Company acquired for $6.3 million the licenses to 700 MHz of spectrum currently allocated to television channels 54 and 59 in the following markets: Austin, Texas; Hartford-New Haven, Connecticut; Springfield, Massachusetts; Providence, Rhode Island; Grand Rapids, Michigan and various locations in Indiana, including Ft. Wayne and Lafayette. The spectrum can be utilized for any purpose other than analog television.

Sunrise Acquisition. On May 2, 2002, concurrent with the consummation of the Company’s IPO, the Company acquired all of the common stock of Sunrise. The Sunrise acquisition added seven stations to the Company’s operations, six of which are now owned and operated by the Company, one of which is subject to a proposed sale to Barrington Broadcasting pending FCC approval, and one station that is operated by the Company under a local marketing agreement. The Company issued 60,221 shares of class A common stock and 402,218 shares of class B common stock and options to acquire 3,688 shares of class A common stock with a value of approximately $10.3 million in exchange for all of Sunrise’s common stock and options. The Company has accounted for this transaction under the purchase method of accounting. On May 8, 2002, the Company contributed its investment in Sunrise to LIN Television through a capital contribution.

F-16

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

North Dakota television stations until August 23, 2002, on which date the Company sold these remaining assets and associated cash flows to Smith Television for $35.0 million.

WOTV-TV, WVBT-TV and WCTX-TV. The Company acquired the broadcast licenses and certain operating assets of WOTV-TV and WVBT-TV during the first quarter of 2002. The Company acquired the broadcast license of WCTX-TV during the second quarter of 2002. These business combinations were funded by available cash and were accounted for under the purchase method of accounting. The Company has been operating WOTV-TV, WVBT-TV, and WCTX-TV under local marketing agreements, since October 30, 1991, December 14, 1994, and December 9, 1994, respectively, and therefore, pro forma financial results would not differ significantly from actual results of operations.

The following table summarizes these acquisitions (in thousands):


											UHF		UHF
								Sunrise			Television		Television
		WOTV-TV		WVBT-TV		WCTX-TV		Television			Licenses		Licenses

Acquisition date		January 29, 2002		January 31, 2002		April 30, 2002		May 2, 2002			December 20, 2002		June 13, 2003

Fair value of assets and liabilities acquired:
	Assets held for sale	$	—	$	—	$	—	$	37,850		$	—	$	—
	Other current assets		—		—		—		20,491			—		—
	Property and equipment		1,291		—		—		36,984			—		—
	Goodwill		—		—		—		12,671			—		—
	Broadcast licenses		1,581		3,029		4,739		166,613			4,293		1,980
	Other long-term assets		—		—		—		5,613			—		—
	Liabilities held for sale		—		—		—		(1,850	)		—		—
	Total other liabilities		—		—		—		(36,910	)		—		—
	Long-term debt and accrued interest and premiums		—		—		—		(166,038	)		—		—
	Preferred stock		—		—		—		(65,169	)		—		—

Total purchase price, including direct acquisition expenses		$	2,872	$	3,029	$	4,739	$	10,255		$	4,293	$	1,980

On April 22, 2002, the Company sold its interest in WNAC-TV in Providence, Rhode Island, to Super Towers, Inc. in exchange for a $2.5 million promissory note due June 10, 2006. Interest on the note is calculated at 7% per annum and is payable annually commencing on December 31, 2002. The Company recognized a gain of $69,000 on the sale of WNAC-TV. The owner of Super Towers, Inc. is a relative of an executive officer of the Company. The Company continues to operate the station pursuant to a local marketing agreement.

F-17

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Disposition of KRBC-TV and KACB-TV. On June 13, 2003, the Company sold the broadcast licenses and operating assets of KRBC-TV in Abilene, Texas and KACB-TV in San Angelo, Texas, for $10.0 million in cash to Mission Broadcasting, Inc. The operating results of these stations have been recorded as discontinued operations. The carrying amounts of the assets and liabilities of the television stations, as of December 31, 2002, are as follows:


Accounts receivable		$	739
Program rights			(29	)
Other current assets			8
Property and equipment, net			3,694
Intangible assets, net			6,194

	Assets held for sale	$	10,606

Accounts payable		$	56
Program payable			83

	Liabilities held for sale	$	139

Concurrent with entering into the agreement to sell the stations, the Company entered into a local marketing agreement (“LMA”) with Mission, pursuant to which Mission began operating KRCB-TV and KACB-TV on January 1, 2003. Under the terms of the LMA, the Company transferred all economic benefit derived from the stations to Mission for the period from January 1, 2003 to June 13, 2003. Accordingly, the Company recorded a liability equal to the net operating results of the stations for the period from January 1, 2003 to June 13, 2003, the date the sale was completed, offsetting the results of discontinued operations in the Company’s statement of operations.

Note 6 — Discontinued Operations

On May 2, 2002, in conjunction with the acquisition of Sunrise, the Company sold to Smith Television the broadcast licenses of KVLY-TV in Fargo, North Dakota and KFYR-TV in Bismarck, North Dakota and its three satellite stations KMOT-TV in Minot, North Dakota, KUMV-TV in Williston, North Dakota and KQCD-TV in Dickinson, North Dakota for $1.0 million, with the Company retaining the other operating assets and the cash flows provided by the North Dakota television stations. On August 23, 2002, the Company sold these remaining assets to Smith Television for $35.0 million. Accordingly, the financial results of these television stations are accounted for as discontinued operations and the Company has recorded income from discontinued operations of approximately $40,000, net of a tax provision of $22,000 and gain from the sale of the discontinued operations of approximately $982,000, net of a tax provision of $425,000 for the year ended December 31, 2002.

Note 7 — Equity Investments

The Company has investments in a number of ventures with third parties through which it has an interest in television stations in locations throughout the United States of America. The following presents the Company’s basis in these ventures (in thousands):


	2003		2002

NBC joint venture	$	55,758	$	58,411
WAND (TV) Partnership		10,250		13,141
Banks Broadcasting, Inc.		11,297		12,816

	$	77,305	$	84,368

F-18

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Joint Venture with NBC:The Company owns a 20.38% interest in a joint venture with NBC and accounts for its interest using the equity method, as the Company does not have a controlling interest. The Company received distributions of $7.5 million, $5.6 million and $6.6 million from the joint venture for the years ended December 31, 2003, 2002 and 2001 respectively. The following presents the summarized financial information of the joint venture (in thousands):



	Year Ended December 31,

	2003		2002		2001

Net revenues	$	158,247	$	170,890	$	146,630
Operating income		89,691		102,226		49,880
Net income (loss)		23,985		38,057		(14,935	)



	December 31,

	2003		2002

Current assets	$	9,949	$	24,111
Non-current assets		237,469		236,140
Current liabilities		725		544
Non-current liabilities		815,500		815,500

WAND (TV) Partnership:The Company has a 33.33% interest in a partnership, WAND (TV) Partnership, with Block Communications. The Company accounts for its interest using the equity method, as the Company does not have a controlling interest. The Company received $800,000 in distributions from the partnership in 2002 and did not receive any distributions in 2003 and 2001. The Company has also entered into a management services agreement with WAND (TV) Partnership to provide specified management, engineering and related services for a fixed fee. Included in this agreement is a cash management arrangement under which the Company incurs expenditures on behalf of WAND (TV) Partnership and is periodically reimbursed. Amounts due from the Company to WAND (TV) Partnership under this arrangement were approximately $64,000 as of December 31, 2003. Amounts due to the Company from WAND (TV) Partnership under this arrangement were approximately $187,000 as of December 31, 2002. The following presents the summarized financial information of the WAND (TV) Partnership (in thousands):



	Year Ended December 31,

	2003			2002		2001

Net revenues	$	6,360		$	8,087	$	6,386
Operating (loss) income		(8,591	)		1,431		(747	)
Net income (loss)		(8,674	)		1,450		(711	)



	December 31,

	2003		2002

Current assets	$	2,013	$	2,137
Non-current assets		25,168		34,063
Current liabilities		405		751

F-19

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

management, engineering and related services for a fixed fee. Included in this agreement is a cash management arrangement under which the Company incurs expenditures on behalf of Banks Broadcasting, Inc. and is periodically reimbursed. Amounts due to the Company from Banks Broadcasting, Inc. under this arrangement were approximately $693,000 and $82,000 as of December 31, 2003 and 2002, respectively. The following presents the summarized financial information of Banks Broadcasting, Inc. (in thousands):



	Year Ended December 31,

	2003			2002			2001

Net revenues	$	5,152		$	5,270		$	4,539
Operating loss		(2,193	)		(1,731	)		(2,426	)
Net loss		(2,818	)		(2,366	)		(1,501	)



	December 31,

	2003		2002

Current assets	$	2,313	$	2,588
Non-current assets		26,684		27,444
Current liabilities		2,361		1,067
Non-current liabilities		2,165		1,456
Redeemable preferred stock		3		3

Southwest Sports Group Holdings, LLC:On May 2, 2002, Southwest Sports Group Holdings, LLC, an entity in which affiliates of Hicks Muse have a substantial economic interest, redeemed all 500,000 Series A Preferred Units held by the Company for an aggregate redemption price of $60.8 million, resulting in a gain of approximately $3.8 million to the Company.

Other Investments:The Company recorded losses of approximately $250,000 and $2.8 million for the years ended December 31, 2003 and 2002, respectively, in other expenses on an investment in the equity of an internet company. These amounts reflect impairments of the Company’s initial investment as a result of a reduction in the value of the internet company, which in the opinion of management are other than temporary.


Note 8 —	Property and Equipment

Property and equipment consisted of the following at December 31 (in thousands):


	2003			2002

Land and land improvements	$	14,492		$	14,300
Buildings and fixtures		97,924			82,389
Broadcasting equipment and other		245,771			208,247

		358,187			304,936
Less accumulated depreciation		(155,138	)		(96,864	)

	$	203,049		$	208,072

The Company recorded depreciation expense in the amounts of $31.4 million, $28.0 million and $22.8 million for the years ended December 31, 2003, 2002 and 2001, respectively.

F-20

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Note 9 —	Intangible Assets

The following table summarizes the carrying amount of each major class of intangible assets at December 31 (in thousands):


	2003			2002

Amortized Intangible Assets:
LMA purchase options	$	2,388		$	1,412
Network affiliations		377			377
Income leases		393			393
Other intangible assets		2,022			—
Accumulated amortization		(1,891	)		(702	)

		3,289			1,480

Unamortized Intangible Assets:
Broadcast licenses	$	1,102,708		$	1,127,742
Goodwill		586,269			599,263

		1,688,977			1,727,005

Total intangible assets	$	1,692,266		$	1,728,485

Amortization expense was approximately $1.2 million for the year ended December 31, 2003. There was approximately $1.0 million, $572,000 and $344,000 of amortization expense recorded on the local marketing agreement (“LMA”) purchase options for the years ended December 31, 2003, 2002 and 2001, respectively. The Company expects that the LMA purchase option will be fully amortized in 2007. The Company has recorded approximately $189,000 and $127,000 of amortization expense on network affiliation agreements and income leases acquired in connection with the Sunrise Television acquisition for the years ended December 31, 2003 and 2002, respectively. The network affiliation agreements will be fully amortized by their expiration dates, which range from August 29, 2004 to December 31, 2010, and the income leases will be fully amortized by November 2006.

Other intangible assets represent intangible pension assets recognized when the Company recorded its minimum pension liability in accordance with SFAS No. 87, “Employers’ Accounting for Pensions”. When a new determination of the amount of additional liability is made by the Company, the related intangible asset and separate component of equity shall be eliminated or adjusted as necessary.

Based on the guidance included in SFAS No. 142, “Goodwill and Other Intangible Assets”, the Company has ascribed an indefinite useful life to its broadcast licenses. This accounting treatment is based in part upon the Company’s belief that the cash flows from the ownership of its broadcast licenses are expected to continue indefinitely, as the Company intends to renew its licenses indefinitely and has demonstrated its ability to do so. The Company’s broadcast licenses are renewable every 8 years if the Company provides at least an average level of service to its customers and complies with the applicable Federal Communications Commission (“FCC”) rules and policies and the FCC Communications Act of 1934. The cost of renewal is not significant and historically there have been no compelling challenges to the Company’s renewal of licenses and the Company has no reason to expect that challenges will be brought in any future period.

In accordance with the provisions of SFAS No. 142, the Company has discontinued the amortization of goodwill and broadcast licenses. As required by SFAS No. 142, the Company completed a transitional impairment test for goodwill and broadcast licenses as of January 1, 2002 and also an annual impairment test as of December 31, 2002. As a result of these tests, an impairment loss of $47.2 million

F-21

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

($30.7 million, net of tax benefit) was recorded in the first quarter of 2002 to reflect the write-down of certain broadcast licenses to their fair value. The Company completed an annual impairment test as of December 31, 2003. As a result of this test, an impairment loss of $51.7 million was recorded in the fourth quarter of 2003 to reflect the write-down of certain broadcast licenses to their fair value. The following table shows, on a pro forma basis, what the Company’s net loss and net loss per common share would have been if SFAS No. 142 had been applied to the prior years, net of tax benefit (in thousands):


	2003			2002			2001

Reported net loss	$	(90,390	)	$	(47,215	)	$	(61,721	)
Addback: goodwill amortization, net of tax		—			—			10,455
Addback: intangible amortization, net of tax		—			—			17,447

Adjusted net loss	$	(90,390	)	$	(47,215	)	$	(33,819	)

Basic and diluted loss per share:
Reported net loss	$	(1.81	)	$	(1.13	)	$	(2.40	)
Addback: goodwill amortization		—			—			0.41
Addback: intangible amortization		—			—			0.68
Adjusted net loss		(1.81	)		(1.13	)		(1.32	)


Note 10 —	Local Marketing Agreements

The Company has made commitments aggregating $3.3 million to pay future minimum periodic fees related to local marketing agreements for KNVA-TV and WNAC-TV and a purchase option agreement for KNVA-TV.

In addition to the purchase option agreement for KNVA-TV, the Company has a purchase option agreement to acquire WNAC-TV. If the Company exercises these options to acquire the broadcast licenses and related assets of KNVA-TV and WNAC-TV, the Company would pay approximately $3.3 million in the aggregate.

F-22

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Note 11 —	Long-term Debt

Debt consisted of the following at December 31 (in thousands):



	December 31,

	2003		2002

Senior Credit Facilities	$	193,500	$	—
$205,000, 8% Senior Notes due 2008 (net of discount of $4,706 and $5,996 at December 31, 2003 and December 31, 2002, respectively)		200,294		204,004
$200,000, 6 1/2% Senior Subordinated Notes due 2013		200,000		—
$125,000, 2 1/2% Exchangeable Senior Subordinated Debentures due 2033 (net of discount of $18,427 at December 31, 2003)		106,573		—
$300,000, 8 3/8% Senior Subordinated Notes due 2008 (net of discount of $364 at December 31, 2002)		—		299,636
$276,000, 10% Senior Discount Notes due 2008 (net of discount of $4,443 at December 31, 2002)		—		271,557
$100,000, 10% Senior Discount Notes due 2008 (net of discount of $10,677 at December 31, 2002)		—		89,323

Total debt		700,367		864,520
Less current portion		7,000		106,154

Total long-term debt	$	693,367	$	758,366

Senior Credit Facilities

On February 7, 2003, the Company obtained a $175.0 million term loan, as part of an amendment to its existing credit facility. In connection with this amendment, the Company recorded approximately $1.2 million in deferred financing costs. In March 2003, the Company used the proceeds from the loan, a drawdown of $75.0 million from its existing revolving credit facility and cash on hand to retire the debt of the Company’s LIN Holdings Corp. subsidiary (“LIN Holdings”), consisting of $276.0 million aggregate principal amount of 10% Senior Discount Notes due 2008 and $100.0 million aggregate principal amount of 10% Senior Discount Add-On Notes due 2008. The Company incurred a charge of approximately $29.5 million related to the write-off of unamortized financing fees and discounts and associated costs as a result of the early extinguishment of LIN Holdings’ debt.

The repayment of the term loan began on September 30, 2003 with $1.75 million to be repaid each quarter until final maturity on December 31, 2007. The revolving credit facility is available until the scheduled termination date of March 31, 2005. Borrowings under the senior credit facilities bear interest at a rate based, at the Company’s option, on an adjusted LIBOR rate, plus an applicable margin range of 2.00% to 2.25% for the term loan and 1.50% to 2.75% for the revolving credit facility depending on whether the Company has met ratios specified in the senior credit agreement. The Company is required to pay quarterly commitment fees ranging from 0.375% to 0.750%, based upon the Company’s leverage ratio for that particular quarter, on the unused portion of the senior credit facilities, in addition to annual agency and other administration fees.

6 1/2% Senior Subordinated Notes

In May 2003, LIN Television issued $200.0 million aggregate principal amount at maturity of 6 1/2% Senior Subordinated Notes due 2013 in a private placement. LIN Television filed a registration statement with the Securities and Exchange Commission in January 2004 to register an exchange offer allowing holders of the 6 1/2% Senior Subordinated Notes to exchange their notes for notes with essentially identical terms. The

F-23

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

registered exchange offer closed in February 2004. The Company incurred $160,000 in penalty fees in connection with the delay of this registration. The 6 1/2% Senior Subordinated Notes were issued at par. The 6 1/2% Senior Subordinated Notes are unsecured and are subordinated in right of payment to all of LIN Television’s existing and future senior indebtedness, including its senior credit facilities and its 8% Senior Notes due 2008, and rank on parity in right of payment with all of its senior subordinated indebtedness, including its 2.50% Exchangeable Senior Subordinated Debentures due 2033. The 6 1/2% Senior Subordinated Notes are guaranteed, jointly and severally on an unsecured senior subordinated basis, by LIN TV Corp. and LIN Television’s direct and indirect, existing and future, domestic subsidiaries. Financing costs of $4.9 million were incurred in connection with the issuance and are being amortized over the term of the debt. Interest on the 6 1/2% Senior Subordinated Notes accrues at 6 1/2% per annum and is payable semi-annually in arrears commencing on November 15, 2003. LIN Television may redeem the 6 1/2% Senior Subordinated Notes at any time on or after May 15, 2008 at the redemption prices set forth below, (if redeemed during the 12 month period beginning on May 15 of each of the years set forth below):


Year	Price (as a percentage of outstanding principal amount)

2008		103.250	%
2009		102.167	%
2010		101.083	%
2011 and thereafter		100.000	%

LIN Television may also redeem up to 35% of the 6 1/2% Senior Subordinated Notes using proceeds of certain equity offerings completed before May 15, 2006 at 106.5% of the outstanding principal amount thereof plus accrued and unpaid interest to the redemption date.

The 6 1/2% Senior Subordinated Notes are also subject to early redemption provisions in the event of a change of control, which may require LIN Television to repurchase the 6 1/2% Senior Subordinated Notes at a price equal to 101% of the principal amount of the note, together with accrued and unpaid interest. The indenture governing the 6 1/2% Senior Subordinated Notes limits, among other things, the incurrence of additional indebtedness and issuance of capital stock; layering of indebtedness; the payment of dividends on, and redemption of, the Company’s capital stock; liens; mergers, consolidations and sales of all or substantially all of the Company’s assets; asset sales; asset swaps; dividend and other payment restrictions affecting restricted subsidiaries; and transactions with affiliates.

2.50% Exchangeable Senior Subordinated Debentures

In May 2003, LIN Television issued $125.0 million aggregate principal amount at maturity of 2.50% Exchangeable Senior Subordinated Debentures due 2033 in a private placement. The resale of the debentures and the shares of Class A common stock issuable upon conversion of the debentures were registered with the Securities Exchange Commission pursuant to a registration statement which became effective on January 16, 2004. The debentures are unsecured and subordinated in right of payment to all of LIN Television’s existing and future senior indebtedness including its senior credit facilities and 8% Senior Notes due 2008, and rank on a parity in right of payment with all of its senior subordinated indebtedness, including the 6 1/2% Senior Subordinated Notes due 2013. The debentures are guaranteed, jointly and severally on an unsecured senior subordinated basis, by LIN TV Corp. and LIN Television’s direct and indirect, existing and future, domestic restricted subsidiaries. Financing costs of $4.2 million were incurred in connection with the issuance and are being amortized over the term of the debt. Interest on the debentures accrues at 2.50% per annum and is payable semi-annually in arrears commencing on November 15, 2003. The Company may redeem for cash all or a portion of the debentures at any time on or after May 20, 2008 at a price equal to 100% of the principal amount of the debentures to be redeemed

F-24

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

plus accrued and unpaid interest. Holders of the debentures may require LIN Television to purchase all or a portion of their debentures on May 15, 2008, 2013, 2018, 2023 or 2028 at 100% of the principal amount, plus accrued and unpaid interest. The debentures are subject to early redemption provisions in the event of a fundamental change in which LIN TV Corp’s common stock is exchanged for or converted into consideration that is not all or substantially all common stock that is listed on a national securities exchange or quoted on Nasdaq. In addition, the indenture governing the debentures limits, among other things; the incurrence of additional indebtedness and issuance of capital stock; the payment of dividends on, and redemption of capital stock of certain of our subsidiaries; lines; mergers, consolidations and sales of all or substantially all of the assets of certain of the Company’s subsidiaries; asset sales; asset swaps; restricted payments and transactions with affiliates.

Contingent Interest. LIN Television will pay contingent interest to holders of the debentures during any six-month period from and including an interest payment date to but excluding the next interest payment date, commencing with the six-month period beginning May 15, 2008, if the average trading price of the debentures for a five-trading day measurement period immediately preceding the beginning of the applicable six-month period equals 120% or more of the principal amount. The contingent interest payable per $1,000 principal amount of debentures is 0.25% per annum. Any contingent interest will be payable on the interest payment date at the end of the relevant six-month period.

Exchange Rights. A holder may exchange each debenture for a number of shares of LIN TV class A common stock, equal to the exchange rate under the following conditions:


	•	during any fiscal quarter commencing after June 30, 2003, if the closing sale price of LIN TV common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is more than 120% of the base exchange price (initially 120% of $37.28, or $44.7360);

	•	during any period in which the credit rating assigned to the debentures by Standard & Poor’s Rate Services (“S&P”) is below B-, or the credit rating assigned to the debentures by Moody’s Investors Services (“Moody’s”) is below B3, or either S&P or Moody’s does not assign a rating to the debentures;

	•	during the five business-day period after any five consecutive trading-day period in which the trading price per debenture for each day of that period was less than 98% of the product of the closing sale price of LIN TV common stock and the exchange rate of each such day;

	•	if such debentures have been called for redemption; or

	•	upon the occurrence of certain corporate transactions, such as a consolidation, merger or binding share exchange pursuant to which shares of LIN TV common stock would be converted into cash, securities or other property.

Exchange Rates. Prior to May 15, 2008, the exchange rate will be determined as follows:


	•	if the applicable stock price is less than or equal to the base exchange price, the exchange rate will be the base exchange rate; and

	•	if the applicable stock price is greater than the base exchange price, the exchange rate will be determined in accordance with the following formula; provided, however, in no event will the exchange rate exceed 46.2748, subject to the same proportional adjustment as the base exchange rate:


Base Exchange Rate +		(Applicable Stock Price - Base Exchange Price) Applicable Stock Price		× Incremental Share Factor

F-25

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On May 15, 2008, the exchange rate will be fixed at the exchange rate then in effect.

The “base exchange rate” is 26.8240, subject to adjustments, and the “base exchange price” is a dollar amount (initially $37.28) derived by dividing the principal amount per debenture by the base exchange rate. The “incremental share factor” is 23.6051, subject to the same proportional adjustment as the base exchange rate. The “applicable stock price” is equal to the average of the closing sale prices of LIN TV Corp.’s common stock over the five trading-day period starting the third trading day following the exchange date of the debentures.

In accordance with the terms of the registration rights agreements relating to the issuance of the 2.50% Exchangeable Senior Subordinated Debentures due 2033, the Company is required to pay substantial penalties to a holder of these debt instruments under specified circumstances, including, among others the failure to maintain an effective registration statement permitting the resale of the debentures and the shares of Class A common stock issuable upon conversion of the debentures for more than brief intervals.

These penalties are generally paid based on a percentage of the outstanding principal amount of the indebtedness or a percentage of the value of the underlying Class A common stock. The Company incurred penalties of $96,000 in the year ended December 31, 2003 for being unable to have the resale registration statement declared effective within the permitted time limit.

On June 13, 2003, the Company used the proceeds from the 6 1/2% Senior Subordinated Notes due in 2013 and the 2.50% Exchangeable Senior Subordinated Debentures due in 2033, and borrowings under the Company’s senior credit facilities to redeem all of its $300.0 million in outstanding aggregate principal amount of 8 3/8% Senior Subordinated Notes due 2008. The Company incurred a charge of $23.6 million relating to the write-off of unamortized deferred financing costs and discounts and call premiums in connection with the redemption of the notes for the year ended December 31, 2003.

Embedded Derivative Features. The 2.50% Exchangeable Senior Subordinated Debentures have certain embedded derivative features that are required to be separately identified and recorded at fair value with a mark-to-market adjustment required each quarter. The value of these features on issuance of the debentures was $21.1 million and this amount was recorded as an original issue discount and is being accreted through interest expense over the period to May 2008. The derivative features are recorded at fair market value in other liabilities. The Company has recorded a gain on derivative instruments in connection with the mark-to-market of these derivative features of $2.6 million for the year ended December 31, 2003.

8% Senior Notes

LIN Television Corporation has $205.0 million outstanding in aggregate principal amount of 8% Senior Notes due January 15, 2008 as of December 31, 2003. Interest on these notes accrues at a rate of 8% and is payable semi-annually on January 15 and July 15 of each year. LIN Television Corporation may redeem some or all of these notes at any time on or after January 15, 2005. LIN Television Corporation may also redeem up to 35% of these notes using the proceeds of certain equity offerings completed before January 15, 2004.

These senior notes are general unsecured obligations and rank equally in right of payment with all of LIN Television Corporation’s existing and future senior indebtedness and senior in right of payment to all the Company’s existing and future subordinated indebtedness. Each of LIN Television Corporation’s direct and indirect, existing and future, domestic subsidiaries guarantee the senior notes on a senior basis. The indenture governing the senior notes contains a change of control provision which states, among other things, that upon a change of control the holders of these notes may require LIN Television Corporation to purchase all or a portion of its notes at a cash purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. In addition, the indenture

F-26

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

governing the senior notes limits, among other things; the incurrence of additional indebtedness and issuance of capital stock; the payment of dividends on, and redemption of capital stock of certain of LIN Television Corporation’s subsidiaries; liens; mergers, consolidations and sales of all or substantially all of the assets of certain of LIN Television Corporation’s subsidiaries; asset sales; asset swaps; restricted payments and transactions with affiliates.

On December 15, 2003 the Company used cash on hand to retire $5.0 million of LIN Television Corporation’s 8% Senior Notes due 2008. The Company incurred a charge of approximately $516,000 related to the write-off of unamortized discounts and associated costs as a result of the early extinguishment of debt.

Future principal payments in connection with the Senior Credit Facility, 8% Senior Notes, 6 1/2% Senior Subordinated Notes and 2.50% Exchangeable Senior Subordinated Debentures at December 31, 2003 are as follows (in thousands):


2004	$	31,500
2005		7,000
2006		7,000
2007		172,500
2008		305,500
Thereafter		200,000

	$	723,500

The fair values of LIN Television Corporation’s long-term debt are estimated based on quoted market prices for the same or similar issues, or on the current rates offered to LIN Television Corporation for debt of the same remaining maturities. The carrying amounts and fair values of long-term debt were as follows at December 31 (in thousands):


	2003		2002

Carrying amount	$	700,367	$	864,520
Fair value		740,027		415,500

F-27

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of interest expense that is recorded during the period, which is paid in cash during the period or in subsequent periods, and the interest expense related to amortization of discount and deferred financing fees (in thousands):



		Year Ended December 31,

		2003		2002		2001

Senior Credit Facility		$	7,194	$	3,928	$	24,029
$205,000 8% Senior Notes			16,783		16,800		9,100
$200,000 6 1/2% Senior Subordinated Notes			8,393		—		—
$125,000 2.50% Exchangeable Senior Subordinated Debentures			2,110		—		—
$300,000 8 3/8% Senior Subordinated Notes			11,448		25,125		25,125
$276,000 10% Senior Discount Notes			330		—		—
$100,000 10% Senior Discount Notes			194		—		—
Other			—		2,715		100

	Interest expense before amortization of discount and deferred financing fees		46,452		48,568		58,354
Amortization of discount and deferred financing fees			14,053		47,207		39,292

	Total interest expense	$	60,505	$	95,775	$	97,646

Note 12 — Stockholders’ Equity

Stock Option Plans. Pursuant to the Company’s 1998 Option Plan, 2002 Stock Plan, Sunrise Option Plan and the 2002 Non-Employee Director Plan (collectively, the “Option Plans”) nonqualified options in LIN TV Corp. class A common stock have been granted to certain directors, officers and key employees of the Company. In addition, pursuant to the 2002 Non-Employee Director Stock Plan, 1,000 shares of the Company’s class A common stock were awarded to members of the Board of Directors for consideration of $0 per share, resulting in compensation expense of $22,000 for the year ended December 31, 2002.

Options granted under the Option Plans have exercise prices equal to or more than the fair market value of the underlying common stock at the date of grant. The Board of Directors, prior to May 2, 2002, in assessing the fair market value of common stock, considered factors relevant at the time, including recent third-party transactions, composition of the management team, recent hiring results, financial condition and operating results and the lack of a public market for the Company’s common stock.

Options granted under the Option Plans generally have straight-line vesting terms over four or five years and expire ten years from the date of grant. There were 4,865,000 shares authorized for grant under the four plans. At December 31, 2003, there were 1,127,000 shares available for future grant under the Option Plans.

F-28

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides additional information regarding the Option Plans (shares in thousands):



	2003					2002					2001

				Weighted-					Weighted-					Weighted-
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price

Outstanding at beginning of period		2,957		$	20.19		1,817		$	18.96		1,836		$	18.83
Granted		697			23.56		1,312			21.94		59			25.44
Exercised		(69	)		19.34		(39	)		17.43		—			—
Forfeited		(75	)		22.12		(136	)		22.16		(78	)		20.86
Assumed in merger with Sunrise		—			—		3			51.55		—			—

Outstanding at end of period		3,510			20.83		2,957			20.19		1,817			18.96

Options exercisable at period-end		1,809					1,404					1,106

Weighted-average fair value of options granted during the period	$	5.96				$	6.79				$	7.35

In addition to the option grants above, the Company granted unrestricted stock awards of 1,340 shares of class A common stock to certain employees for consideration of $0 per share, resulting in compensation expense of $31,248.

The following table summarizes information about the Option Plans at December 31, 2003 (shares in thousands):



	Options Outstanding						Options Exercisable

			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life		Price		Exercisable		Price

$10.50 to $14.99		505		4.0	$	11.49		504	$	11.48
$15.00 to $19.99		10		4.2		18.70		10		18.70
$20.00 to $24.99		2,764		7.4		22.02		1,160		21.24
$25.00 to $29.99		230		6.9		26.25		134		26.25
$250.00 to $275.00		1		6.6		251.94		1		251.94

Phantom Stock Units Plan. Pursuant to the Company’s 1998 Phantom Stock Units Plan (“Phantom Stock Units Plan”), and as partial consideration for the acquisition of LIN Television by the Company in 1998, phantom units exercisable into shares of LIN TV class A common stock and with a $0 exercise price were issued to officers and key employees. As a non-compensatory element of the total purchase price of LIN Television, the phantom units are not subject to variable accounting and any cash paid on exercise of the phantom units is accounted for as a reduction to Additional Paid-in Capital.

The phantom units expire ten years from the date of issuance, are non-forfeitable, and are exercisable at a date selected by the holder within the ten-year term.

F-29

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides additional information regarding the Phantom Stock Units Plan (shares in thousands):



	Year Ended December 31,

	2003			2002			2001

Outstanding at beginning of period		675			680			682
Exercised		(150	)		(5	)		(2	)

Outstanding at end of period		525			675			680

Employee Stock Purchase Plan. Under the terms of LIN TV Corp.’s 2002 Employee Stock Purchase Plan, eligible employees of the Company may have up to 10% of eligible compensation deducted from their pay to purchase shares of LIN TV Corp.’s class A common stock. The per share purchase price is 85% of the average of the high and low per share trading price of LIN TV Corp.’s class A common stock on the New York Stock Exchange (“NYSE”) on the last trading day of each month during the offering period. During 2003, employees purchased 64,087 shares at a weighted average price of $19.49.

Note 13 — Restructuring Charge

During the second half of 2002, as a result of centralizing the master control transmission facilities in Indianapolis, Indiana and Springfield, Massachusetts, the Company recorded a pre-tax restructuring charge of approximately $909,000 for severance pay and benefits relating to the termination of 60 full time equivalent employees in the master control, sales support and business office areas. All employees had been informed of their termination benefits in the period that the charge was recorded. The Company recorded an additional $115,000 of restructuring charges in the year ended December 31, 2003. The Company has paid approximately $402,000 for severance pay and benefits through December 31, 2002 and $703,000 through December 31, 2003, and expects to pay the balance of approximately $321,000 during the first quarter of 2004.

Note 14 — Derivative Instruments

The Company’s 2.50% Exchangeable Senior Subordinated Debentures have certain embedded derivative features that are required to be separately identified and recorded at fair value with a mark-to-market adjustment required each quarter. The value of these features on issuance of the debentures was $21.1 million and this amount was recorded as an original issue discount and is being accreted through interest expense over the period to May 2008. The derivative features are recorded at fair market value in other liabilities. The Company has recorded a gain on derivative instruments in connection with the mark-to-market of these derivative features of $2.6 million for the year ended December 31, 2003.

In 2002 and 2001, the Company used interest rate collar, cap and swap arrangements, not designated as hedging instruments under SFAS No. 133 “Accounting for Derivative and Hedging Activities”, as amended, to mitigate the impact of the variability in interest rates in connection with its variable rate senior credit facilities and fixed rate senior notes. As of December 31, 2002, the Company held no derivative instruments. At December 31, 2001, the Company held derivative instruments with a notional amount of $430.0 million and the aggregate fair value of the instruments was a liability of $5.6 million. Other (income) expense for the years ended December 31, 2002 and 2001 includes a gain of $5.6 million and loss of $5.6 million, respectively, from the marking-to-market of these derivative instruments.

Note 15 — Related Party Transactions

Monitoring and Oversight Agreement. The Company was party to an agreement with Hicks Muse Partners, pursuant to which the Company agreed to pay Hicks Muse Partners an annual fee (payable

F-30

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

quarterly) for oversight and monitoring services. Hicks Muse Partners was also entitled to reimbursement for any expenses incurred by it in connection with rendering services allocable to the Company. The annual fee was approximately $368,000 and $1.3 million for the years ended December 31, 2002 and 2001, respectively. The Company and Hicks Muse Partners agreed to terminate this agreement on May 2, 2002 in exchange for an aggregate fee of $16.0 million consisting of an amount payable in cash of $6.2 million, $7.1 million in a promissory note and vested warrants to purchase 123,466 shares of the Company’s class B common stock at a price of $0.01 valued at $2.7 million, which were exercised on May 8, 2003.

Financial Advisory Agreement. The Company is party to an agreement with Hicks Muse Partners pursuant to which the Company reimburses Hicks Muse Partners, an affiliate of Hicks Muse, for certain expenses incurred by it in connection with rendering services relating to acquisitions, sales, mergers, exchange offers, recapitalization, restructuring or similar transactions allocable to the Company. The Company incurred fees under this arrangement of $67,000, $89,000 and $46,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

The Company was party to an agreement with Hicks Muse Partners, pursuant to which Hicks Muse Partners, prior to amending this agreement on May 2, 2002, received a fee equal to 1.5% of the total value of certain transactions in which the Company was involved and reimbursements of certain expenses. Transactions subject to this agreement included a tender offer, acquisition, sale, merger, exchange offer, recapitalization, restructuring or other similar transaction. The Company did not incur any fees under this arrangement for the year ended December 31, 2002. The fees for the year ended December 31, 2001 was $539,000.

Other Investment.The Company’s Chief Executive Officer serves on the Board of Directors of an internet company in which the Company has invested. The Company incurred fees for internet services provided by this company of approximately $494,000, $551,000 and $568,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Local Marketing Agreement. The Company is party to a local marketing agreement with Super Towers, Inc., of which the President of Super Towers, Inc. is related to a LIN TV Corp. executive. The Company has paid Super Towers, Inc. approximately $110,000 and $100,000 for the years ended December 31, 2003 and 2002, respectively, in connection with its local marketing agreement for WNAC-TV. The Company has also paid Super Towers, Inc. $66,000 and $55,000 for the years ended December 31, 2003 and 2002, respectively, for various reimbursable expenses.

Note 16 — Retirement Plans

401(k) Plan. The Company provides a defined contribution plan (“401(k) Plan”) to substantially all employees. The Company makes contributions to employee groups that are not covered by another retirement plan sponsored by the Company. Contributions made by the Company vest based on the employee’s years of service. Vesting begins after six months of service in 20% annual increments until the employee is 100% vested after five years. The Company matches 50% of the employee’s contribution up to 6% of the employee’s total annual compensation. The Company contributed $2.2 million, $1.6 million and $1.2 million to the 401(k) Plan in the years ended December 31, 2003, 2002 and 2001, respectively.

Retirement Plans. The Company has a number of noncontributory defined benefit retirement plans covering certain of its employees in the United States and Puerto Rico. Contributions are based on periodic actuarial valuations and are charged to operations on a systematic basis over the expected average remaining service lives of current employees. The net pension expense is assessed in accordance with the advice of professionally qualified actuaries. The benefits under the defined benefit plans are based on years of service and compensation.

F-31

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The benefit obligation, accumulated benefit obligation, and fair value of plan assets for retirement plans with accumulated benefit obligations in excess of plan assets, were $90.1 million, $83.2 million and $64.2 million at December 31, 2003, $76.7 million, $72.4 million and $55.4 million at December 31, 2002 and $2.8 million, $1.7 million and $0 at December 31, 2001, respectively.

The components of the net pension expense included in the financial statements and information with respect to the change in benefit obligation, change in plan assets, the funded status of the retirement plans and underlying assumptions are as follows:

Retirement Plans



		Year Ended December 31,

		2003			2002			2001


		(Amounts in thousands, except
		percentages)
Change in benefit obligation
Benefit obligation, beginning of period		$	76,711		$	64,754		$	58,553
	Service cost		1,827			1,592			1,047
	Interest cost		5,243			4,874			4,351
	Plan amendments		122			1,596			—
	Actuarial loss		8,920			7,111			3,141
	Benefits paid		(2,754	)		(3,216	)		(2,338	)

Benefit obligation, end of period		$	90,069		$	76,711		$	64,754

Change in plan assets
	Fair value of plan assets, beginning of period	$	55,375		$	65,514		$	66,824
	Actual return on plan assets		11,552			(6,924	)		1,028
	Employer contributions		36			—			—
	Benefits paid		(2,754	)		(3,215	)		(2,338	)

	Fair value of plan assets, end of period	$	64,209		$	55,375		$	65,514

	Funded status of the plan	$	(25,860	)	$	(21,337	)	$	810
	Unrecognized actuarial gain (loss)		17,878			15,130			(4,982	)
	Unrecognized prior service cost		1,518			1,562			198

	Total amount recognized and accrued benefit liability	$	(6,464	)	$	(4,645	)	$	(3,974	)

Amounts recognized in the balance sheets consist of:


	2003			2002

Accrued benefit cost	$	(18,943	)	$	(4,645	)
Intangible assets		2,020			—
Accumulated other comprehensive loss		10,459			—

Net amount recognized	$	(6,464	)	$	(4,645	)

F-32

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Components of Net Periodic Benefit Cost:


	2003			2002			2001

Service cost	$	1,827		$	1,592		$	1,047
Interest cost		5,243			4,874			4,351
Expected return on plan assets		(5,631	)		(5,730	)		(5,478	)
Amortization of prior service cost		166			157			12
Amortization of net loss (gain)		250			(142	)		(638	)
Transition amount recognized		—			—			(329	)

Net periodic benefit cost	$	1,855		$	751		$	(1,035	)

Assumptions:

Weighted-average assumptions used to determine benefit obligation at December 31:


	2003		2002		2001

Discount rate		6.00-6.25%		6.75%		7.25-8.00%
Expected long term rate of return on plan assets		8.25%		8.25%		8.25%
Rate of compensation increase		4.00-5.00%		4.00-5.00%		4.00-5.00%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:


	2003		2002		2001

Discount rate		6.75%		7.25-8.00%		7.50-8.00%
Expected long term rate of return on plan assets		8.25%		8.25%		8.25%
Rate of compensation increase		4.00-5.00%		4.00-5.00%		4.00-5.00%

Accumulated other comprehensive loss

The Company recorded $10.5 million in accumulated other comprehensive loss attributable to its minimum pension liability as of December 31, 2003. There was no accumulated other comprehensive income or loss as of December 31, 2002 and 2001.

The Company’s pension plan assets are invested in a manner consistent with the fiduciary standards of ERISA. Plan investments are made with the safeguards and diversity to which a prudent investor would adhere and all transactions undertaken are for the sold benefit of plan participants and their beneficiaries.

The Company’s investment objective is to obtain the highest possible return commensurate with the level of assumed risk. Fund performances are compared to benchmarks including the S&P 500 Index, S&P MidCap Index, Russell 2000 Index, MSCI EAFE Index, and Lehman Brothers Aggregate Bond Index. The expected long-term rate of return on plan assets was made considering the Retirement Plan’s asset mix, historical returns on equity securities, and expected yields to maturity for debt securities.

F-33

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The asset allocation for the Retirement Plan at December 31, 2003 and 2002 and the target allocation for December 31, 2004, by asset category, are as follows:



				Percentage of
				Plan Assets at
	Target			December 31,
	Allocation
Asset Category	2004			2003			2002

Equity securities		60-70	%		70	%		68	%
Debt securities		30-40	%		30	%		32	%

		100	%		100	%		100	%

Contributions.The Company does not currently have minimum funding requirements, as set forth in ERISA and federal tax laws. The Company did not contribute to the Retirement Plan in 2003, but does anticipate contributing $1.2 million to the Retirement Plan in 2004.

Note 17 — Commitments and Contingencies

Commitments.The Company leases land, buildings, vehicles and equipment under non-cancelable operating lease agreements that expire at various dates through 2011. Commitments for non-cancelable operating lease payments at December 31, 2003 are as follows (in thousands):


2004	$	661
2005		545
2006		493
2007		416
2008		178
Thereafter		2,828

	$	5,121

Rent expense included in the consolidated statements of operations was $1.6 million, $1.6 million and $1.0 million for the years ended December 31, 2003, 2002 and 2001, respectively.

The Company has entered into commitments for future syndicated news, entertainment, and sports programming. Future payments associated with these commitments at December 31, 2003 are as follows (in thousands):


2004	$	21,887
2005		16,079
2006		9,560
2007		5,689
2008		1,415
2009		1,033
Thereafter		1,278

Total obligations		56,941
Less recorded contracts		34,682

Future contracts	$	22,259

F-34

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies

GECC Note.GECC provided debt financing in connection with the formation of the joint venture with NBC in the form of an $815.5 million 25-year non-amortizing senior secured note bearing an initial interest rate of 8.0% per annum. During the last five years, the joint venture has produced cash flows to support the interest payments and to maintain minimum levels of required working capital reserves. In addition, the joint venture has made cash distributions to the Company and to NBC from the excess cash generated by the joint venture of approximately $32.3 million on average each year during the past three years. Accordingly, the Company expects that the interest payments on the GECC note will be serviced solely by the cash flow of the joint venture. The GECC note is not an obligation of the Company, but is recourse to the joint venture, the Company’s equity interests therein and to LIN TV Corp., pursuant to a guarantee. If the joint venture were unable to pay principal or interest on the GECC note and GECC could not otherwise get its money back from the joint venture, GECC could require LIN TV Corp. to pay the shortfall of any outstanding amounts under the GECC note. If this happened, the Company could experience material adverse consequences, including:


	•	GECC could force LIN TV Corp. to sell the stock of LIN Television held by LIN TV Corp. to satisfy outstanding amounts under the GECC note;

	•	if more than 50% of the ownership of LIN Television had to be sold to satisfy the GECC Note, it could cause an acceleration of the Company’s senior credit facilities and other outstanding indebtedness; or

	•	if the GECC note is prepaid because of an acceleration on default or otherwise, or if the note is repaid at maturity, the Company may incur a substantial tax liability.

The joint venture is approximately 80% owned by NBC, and NBC controls the operations of the stations through a management contract. Therefore, the operation and profitability of those stations and the likelihood of a default under the GECC note are primarily within NBC’s control.

Litigation. The Company currently and from time to time is involved in litigation incidental to the conduct of its business. In the opinion of the Company’s management, none of such litigation as of December 31, 2003 is likely to have a material adverse effect on the financial position, results of operations or cash flows of the Company.

F-35

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 18 — Income Taxes

The Company files a consolidated federal income tax return. Provision for (benefit from) income taxes included in the accompanying consolidated statements of operations consisted of the following (in thousands):



	Year Ended December 31,

	2003			2002		2001

Current:
Federal	$	—		$	376	$	—
State		823			750		859
Foreign		3,168			2,240		110

		3,991			3,366		969

Deferred:
Federal		4,476			12,134		(23,199	)
State		(295	)		4,974		(128	)
Foreign		1,881			5,027		1,731

		6,062			22,135		(21,596	)

	$	10,053		$	25,501	$	(20,627	)

The components of the (loss) income before income taxes were as follows (in thousands):



	Year Ended December 31,

	2003			2002			2001

United States of America	$	(91,804	)	$	(7,385	)	$	(87,982	)
Foreign		11,255			15,338			5,634

Income (loss) before income taxes and cumulative effect of change in accounting principle	$	(80,549	)	$	7,953		$	(82,348	)

The following table reconciles the amount that would be calculated by applying the 35% federal statutory rate to (loss) income before income taxes to the actual provision for (benefit from) income taxes (in thousands):



	Year Ended December 31,

	2003			2002		2001

(Benefit) provision assuming federal statutory rate	$	(28,192	)	$	2,783	$	(28,838	)
State taxes, net of federal tax benefit		343			769		430
Amortization		—			—		6,452
Foreign taxes, net of federal tax benefit		2,727			4,196		964
Change in valuation allowance		34,367			17,083		—
Other		808			670		365

	$	10,053		$	25,501	$	(20,627	)

F-36

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of the net deferred tax liability are as follows at December 31 (in thousands):



		As of December 31,

		2003			2002

Deferred tax liabilities:
	Intangible assets	$	243,539		$	234,496
	Property and equipment		19,653			21,726
	Equity Investments		266,589			267,935

			529,781			524,157

Deferred tax assets:
	Net operating loss carryforwards		(78,447	)		(39,456	)
	Valuation allowance		83,418			42,511
	Other		(7,164	)		(16,624	)

			(2,193	)		(13,569	)

	Net deferred tax liabilities	$	527,588		$	510,588

The Company maintains a full valuation allowance against its net deferred tax asset position because management believes it is more likely then not that their net deferred tax assets will not be realized in the future. The Company’s valuation allowance increased $41.0 million during 2003.

The Company records deferred tax liabilities relating to the difference in the book basis and tax basis of goodwill and intangibles. Prior to January 1, 2002, the reversals of those deferred tax liabilities were utilized to support the recognition of deferred tax assets (primarily consisting of net operating loss carryforwards) recorded by the Company. As a result of the adoption of SFAS No. 142, those deferred tax liabilities will no longer reverse on a scheduled basis and can no longer be utilized to support the realization of deferred tax assets.

Included in the Company’s total valuation allowance is a $28.2 million valuation allowance on the deferred tax assets recorded in connection with the acquisition of Sunrise Television. This valuation allowance increased $2.8 million during 2003 as a result of a re-evaluation of the accounting for the acquisition of Sunrise Television (see Note 1 to the Consolidated Financial Statements). These entries have no impact on the Company’s cash flows.

At December 31, 2003, the Company had a federal net operating loss carryforward of approximately $207.6 million that begins to expire in 2019. The Company also has net operating loss carryforwards in Puerto Rico of $3.5 million, which expire between 2005 through 2007. Under the provisions of the Internal Revenue Code, future substantial changes in the Company’s ownership could limit the amount of net operating loss carryforwards that could be used annually to offset future taxable income and income tax liability.

The Company had net cash tax payments of $5.8 million, $1.0 million and $1.0 million for the years ended December 31, 2003, 2002 and 2001, respectively. These net cash tax payments include $116,524, $600,000 and $144,402 in refunds for the years ended December 31, 2003, 2002 and 2001, respectively.

F-37

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 19 — Unaudited Quarterly Data



		Quarter Ended

		March 31,			June 30,			September 30,			December 31,
		2003			2003			2003			2003

Net revenues		$	75,254		$	91,078		$	85,769		$	97,428
Operating income (loss)			11,763			24,829			20,688			(26,728	)
(Loss) income from continuing operations			(40,867	)		(10,593	)		5,024			(44,166	)
Loss (gain) from sale of discontinued operations, net of tax			—			652			(864	)		—
Net (loss) income			(40,867	)		(11,245	)		5,888			(44,166	)

*Basic and Diluted (loss) income per common share:*
	(Loss) income from continuing operations	$	(0.82	)	$	(0.21	)	$	0.10		$	(0.88	)
	Loss (gain) from sale of discontinued operations, net of tax		—			0.01			(0.02	)		—
Net (loss) income			(0.82	)		(0.23	)		0.12			(0.88	)



		Quarter Ended

		March 31,			June 30,			September 30,			December 31,
		2002			2002			2002			2002

Net revenues		$	62,523		$	89,168		$	91,812		$	106,091
Operating income			14,170			30,485			28,236			36,769
(Loss) income from continuing operations before cumulative effect of change in accounting principle			(25,720	)		(9,650	)		5,193			12,629
(Income) loss from discontinued operations, net of tax			—			(227	)		261			(74	)
Gain from sale of discontinued operations, net of tax			—			—			(982	)		—
Cumulative effect of change in accounting principle, net of tax			30,689						—			—
Net (loss) income			(56,409	)		(9,423	)		5,914			12,703

*Basic and Diluted (loss) income per common share:*
	(Loss) income from continuing operations before cumulative effect of change in accounting principle	$	(1.00	)	$	(0.23	)	$	0.10		$	0.25
	Loss from discontinued operations, net of tax		—			(0.01	)		(0.01	)		—
	Cumulative effect of change in accounting principle, net of tax		(1.19	)		—			—			—
Net (loss) income			(2.20	)		(0.23	)		0.12			0.25

F-38

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 20 — Supplemental Disclosure of Cash Flow Information



			Year Ended December 31,

			2003		2002			2001

Cash paid for interest			$	52,722	$	48,435		$	50,348
Cash paid for income taxes				5,758		1,029			1,048
Cash investing activities:
On June 5, 2001, the Company acquired WNAC-TV for $2.5 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets								2,500
	Note issued								(2,500	)

		Liabilities assumed							—

On July 25, 2001, the Company acquired WNLO-TV for $26.0 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets								26,044
	Cash paid								(26,044	)

		Liabilities assumed							—

On August 2, 2001, the Company acquired the common stock of S&E Network, Inc. for $26.0 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets								11,736
	Cash paid								(11,699	)

		Liabilities assumed							37

On January 29, 2002, the Company acquired the broadcast license, property and equipment of WOTV-TV for $2.9 million, a station the Company had been operating under a local marketing agreement since October 30, 1991. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets					2,872
	Cash paid					(2,872	)

		Liabilities assumed				—

On January 31, 2002, the Company acquired the broadcast license of WVBT-TV for $3.0 million, a station the Company had been operating under a local marketing agreement since December 14, 1994. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets					3,029
	Cash paid					(3,029	)

		Liabilities assumed				—

F-39

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



			Year Ended December 31,

			2003	2002			2001

On April 30, 2002, the Company acquired the broadcast license of WCTX-TV for $4.7 million, a station the Company had been operating under a local marketing agreement since December 9, 1994. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets				4,739
	Cash paid				(4,739	)

		Liabilities assumed			—

On May 2, 2002, the Company acquired Sunrise Television Corp. for $10.3 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets				267,551
	Value of common stock in exchange for Sunrise				(10,255	)

		Liabilities assumed			(257,296	)

Note 21 — Valuation and Qualifying Accounts


		Balance at		Charged to					Balance at
		Beginning of Period		Operations			Deductions		End of Period

Year ended December 31, 2003
	Allowance for doubtful accounts	$	2,709	$	(293	)	$	718	$	1,698
Year ended December 31, 2002
	Allowance for doubtful accounts	$	1,802	$	1,801		$	894	$	2,709
Year ended December 31, 2001
	Allowance for doubtful accounts	$	1,679	$	1,069		$	946	$	1,802

Note 22 — Subsequent Events

On January 8, 2004, the Company signed an asset purchase agreement with Pilot TV Acquisition Corporation for the sale of WEYI-TV, the NBC affiliate serving Flint, Michigan for $24.0 million. This transaction is subject to the Federal Communications Commission’s approval and is expected to be completed by the middle of 2004. Accordingly, the Company will classify the assets and liabilities associated with this station as held for sale on its balance sheet and the operating results as discontinued operations on its statement of operations in its financial statements for the quarter ended March 31, 2004.

F-40

LIN TV CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The carrying amounts of the assets and liabilities of this station as of December 31, 2003 are as follows (in thousands):


		2003

Accounts receivable, net		$	1,391
Program rights			415
Other current assets			8
Property and equipment, net			5,875
Broadcast licenses, net			15,719
Network affiliations, net			76

	Total Assets	$	23,484

Accounts payable		$	192
Barter payable			4
Accrued income tax			24
Program obligations			414
Other accruals			543

	Total Liabilities	$	1,177

On January 14, 2004, the Company purchased WIRS-TV in Yauco, Puerto Rico from Marantha Christian Network, Corporation for a total purchase price of $4.5 million.

On January 30, 2004, the Company signed an asset purchase agreement for the broadcast license and certain operating assets of WTIN-TV in Ponce, Puerto Rico from Laura Nicolau for a total purchase price of $5.0 million, subject to FCC approval, which it expects to be completed by the middle of 2004.

In January 2004 the Company drew down funds from its revolving credit facility to retire $24.5 million of its 8% Senior Notes due 2008. The Company incurred a charge of approximately $2.4 million related to the write-off of unamortized discounts and associated costs as a result of the early extinguishment of debt.

F-41

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholder

of LIN Television Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholder’s equity and cash flows present fairly, in all material respects, the financial position of LIN Television Corporation and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2002, the Company changed its method of accounting for goodwill and other intangible assets.


	/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

February 24, 2004

F-42

LIN TELEVISION CORPORATION

CONSOLIDATED BALANCE SHEETS



				December 31,

				2003			2002


				(In thousands)
ASSETS
Current assets:
Cash and cash equivalents				$	9,475		$	143,860
Available for sale securities					—			23,674
Accounts receivable, less allowance for doubtful accounts (2003 — $1,698; 2002 — $2,709)					72,340			71,336
Program rights					17,661			14,515
Assets held for sale					—			10,606
Other current assets					3,216			1,631

	Total current assets				102,692			265,622
Property and equipment, net					203,049			208,072
Deferred financing costs					14,332			25,796
Equity investments					77,305			84,368
Program rights					11,444			8,953
Goodwill					586,269			599,263
Broadcast licenses					1,102,708			1,127,742
Other intangible assets, net					3,289			1,480
Other assets					14,822			13,074

		Total Assets		$	2,115,910		$	2,334,370

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Current portion of long-term debt				$	7,000		$	106,154
Accounts payable					7,169			11,665
Accrued income taxes					320			7,104
Accrued interest expense					9,846			16,236
Accrued sales volume discount					6,075			5,415
Other accrued expenses					13,423			22,303
Liabilities held for sale					—			139
Program obligations					23,042			15,683

	Total current liabilities				66,875			184,699
Long-term debt, excluding current portion					693,367			758,366
Deferred income taxes, net					527,588			510,588
Program obligations					11,640			8,381
Other liabilities					54,306			12,131

		Total liabilities			1,353,776			1,474,165

Contingencies (Note 17)
Stockholder’s equity:
Common stock, $0.01 par value: 1,000 shares authorized, issued and outstanding					—			—
Additional paid-in capital					1,067,398			1,064,620
Accumulated deficit					(294,805	)		(204,415	)
Accumulated other comprehensive loss					(10,459	)		—

		Total stockholder’s equity			762,134			860,205

			Total liabilities and stockholder’s equity	$	2,115,910		$	2,334,370

The accompanying notes are an integral part of the consolidated financial statements

F-43

LIN TELEVISION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS



		Year Ended December 31,

		2003			2002			2001


		(In thousands)
Net revenues		$	349,529		$	349,594		$	271,038
Operating costs and expenses:
	Direct operating (excluding depreciation of $31.4 million, $28.0 million and $22.8 million for the years ended December 31, 2003, 2002 and 2001, respectively)		102,093			96,409			81,373
	Selling, general and administrative		91,554			80,691			64,630
	Amortization of program rights		24,835			20,759			21,847
	Corporate		16,101			12,508			8,436
	Restructuring charge		115			909			—
	Depreciation and amortization of intangible assets		32,614			28,658			65,925
	Impairment of broadcast licenses		51,665			—			—

Total operating costs and expenses			318,977			239,934			242,211

Operating income			30,552			109,660			28,827
Other (income) expense:
	Interest expense		60,505			95,775			97,646
	Investment income		(1,015	)		(3,131	)		(3,950	)
	Share of (income) loss in equity investments		(478	)		(6,328	)		4,121
	(Gain) loss on derivative instruments		(2,620	)		(5,552	)		5,552
	Gain on redemption of investment in Southwest Sports Group		—			(3,819	)		—
	Fee on termination of Hicks Muse agreements		—			16,000			—
	Loss on early extinguishment of debt		53,621			5,656			6,810
	Other, net		1,088			3,106			996

Total other expense, net			111,101			101,707			111,175

Income (loss) from continuing operations before provision for (benefit from) income taxes and cumulative effect of change in accounting principle			(80,549	)		7,953			(82,348	)
Provision for (benefit from) income taxes			10,053			25,501			(20,627	)

Loss from continuing operations before cumulative effect of change in accounting principle			(90,602	)		(17,548	)		(61,721	)
Discontinued operations:
Income from discontinued operations, net of tax provision of $22			—			(40	)		—
Gain from sale of discontinued operations, net of tax provision of $109 for the year ended December 31, 2003 and $425 for the year ended December 31, 2002			(212	)		(982	)		—
Cumulative effect of change in accounting principle, net of tax benefit of $16,525			—			30,689			—

Net loss		$	(90,390	)	$	(47,215	)	$	(61,721	)

The accompanying notes are an integral part of the consolidated financial statements.

F-44

LIN TELEVISION CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY


												Accumulated
		Common Stock				Additional						Other			Total
						Paid-In			Accumulated			Comprehensive			Stockholder’s			Comprehensive
		Shares		Amount		Capital			Deficit			Loss			Equity			Loss


		(In thousands, except for number of shares)
Balance at January 1, 2001			1	$	—	$	561,669		$	(95,479	)	$	—		$	466,190			—
	Charge for payments on exercises of phantom stock units		—		—		(38	)		—			—			(38	)
	Tax benefit from exercises of stock options		—		—		223			—			—			223
	Net loss		—		—		—			(61,721	)		—			(61,721	)	$	(61,721	)

	Comprehensive loss — 2001																	$	(61,721	)

Balance at December 31, 2001			1		—		561,854			(157,200	)		—			404,654
	Capital contribution from LIN TV Corp. in connection with initial public offering, net of fees		—		—		399,944			—			—			399,944
	Capital contribution from LIN TV Corp. of Sunrise debt and preferred stock liabilities		—		—		87,666			—			—			87,666
	Capital contribution from LIN TV Corp. in connection with the termination of agreements with Hicks Muse						2,714									2,714
	Capital contribution from LIN TV Corp. of Sunrise Television Corp.’s assets and liabilities		—		—		10,255			—			—			10,255
	Net proceeds from exercises of stock options and phantom stock units and employee stock purchase plan insurances		—		—		1,138			—			—			1,138
	Tax benefit from exercises of stock options						155									155
	Charge for stock-based compensation		—		—		894			—			—			894
	Net loss		—		—		—			(47,215	)		—			(47,215	)		(47,215	)

	Comprehensive loss — 2002																	$	(47,215	)

Balance at December 31, 2002			1		—		1,064,620			(204,415	)		—			860,205
	Minimum additional pension liability		—		—		—			—			(10,459	)		(10,459	)	$	(10,459	)
	Net Proceeds from exercises of stock options and phantom stock units and employee stock purchase plan issuances		—		—		2,631			—			—			2,631
	Charge for stock-based compensation		—		—		147			—			—			147
	Net loss		—		—		—			(90,390	)		—			(90,390	)		(90,390	)

	Comprehensive loss — 2003																	$	(100,849	)

Balance at December 31, 2003			1	$	—	$	1,067,398		$	(294,805	)	$	(10,459	)	$	762,134

The accompanying notes are an integral part of the consolidated financial statements.

F-45

LIN TELEVISION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



			Year Ended December 31,

			2003			2002			2001


			(In thousands)
Net loss			$	(90,390	)	$	(47,215	)	$	(61,721	)
Adjustments to reconcile net loss to net cash provided by operating activities:
	Depreciation and amortization (including amortization of financing costs and note discounts)			46,666			75,688			105,210
	Loss on extinguishment of debt			53,621			5,656			6,810
	Amortization of program rights			24,835			20,759			21,847
	Program payments			(23,029	)		(22,475	)		(22,386	)
	Interest and appreciation on Southwest Sports Group preferred units			—			(4,819	)		(3,000	)
	Tax benefit from exercises of stock options			—			155			223
	Employee stock-based compensation			147			894			—
	Deferred income taxes and utilization of previously unrecognized acquired net operating losses, net			6,082			22,493			(21,749	)
	Impairment of intangible assets, net of tax benefit in 2002			51,665			30,689			—
	Net loss (gain) on disposition of property and equipment			1,615			(107	)		1,128
	(Gain) loss on derivative instruments			(2,620	)		(5,552	)		5,552
	Share of loss (income) in equity investments			(478	)		(6,328	)		4,121
	Provision for doubtful accounts			(1,011	)		1,032			123
	Other non-cash items			21			12,394			—
Changes in operating assets and liabilities, net of acquisitions and disposals:
		Accounts receivable		7			(4,210	)		447
		Program rights, net of program obligations		3,175			(2,246	)		(523	)
		Other assets		(3,344	)		5,045			2,245
		Accounts payable		(4,496	)		(1,348	)		488
		Accrued income taxes		(6,784	)		1,109			(97	)
		Accrued interest expense		(6,390	)		(5,857	)		8,693
		Accrued sales volume discount		660			1,595			(908	)
		Other accrued expenses		2,586			(2,322	)		(4,311	)

Net cash provided by operating activities				52,538			75,030			42,192

INVESTING ACTIVITIES:
Capital expenditures				(28,357	)		(39,275	)		(21,503	)
Proceeds from disposals of property and equipment				57			74			923
Proceeds from sale of broadcast licenses and related operating assets				10,000			38,500			—
Investment in equity investments				—			(1,850	)		(1,500	)
Cash and cash equivalents acquired through merger with Sunrise Television				—			—			—
Capital distributions from equity investments				7,540			6,405			6,583
Payments for business combinations, net of cash acquired				(1,980	)		(7,916	)		(40,879	)
Proceeds from redemption of Southwest Sports Group preferred units				—			60,819			—
Other investments and deposits				(1,202	)		88			—
Proceeds from (purchase of) short-term investments				23,691			(23,478	)		—

Net cash provided by (used in) investing activities				9,749			33,367			(56,376	)

FINANCING ACTIVITIES:
Net proceeds (payments) on exercises of employee stock options and phantom stock units and employee stock purchase plan issuances				2,631			1,138			(38	)
Redemption of Sunrise Television preferred stock				—			(10,829	)		—
Capital contributions from LIN TV Corp.				—			399,944			—
Proceeds from long-term debt				500,000			—			267,015
Financing costs and associated with proceeds from long-term debt				(10,347	)		—			—
Net proceeds (payments) from revolver debt				22,000			(10,000	)		13,000
Principal payments on long-term debt				(684,500	)		(354,901	)		(256,389	)
Principal payments on short-term debt				—			(7,125	)		—
Cash expenses associated with early extinguishment of debt				(26,456	)		—			—

Net cash (used in) provided by financing activities				(196,672	)		18,227			23,588

Net (decrease) increase in cash and cash equivalents				(134,385	)		126,624			9,404
Cash and cash equivalents at the beginning of the period				143,860			17,236			7,832

Cash and cash equivalents at the end of the period			$	9,475		$	143,860		$	17,236

The accompanying notes are an integral part of the consolidated financial statements.

F-46

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

LIN Television Corporation (“LIN Television”) is a television station group operator in the United States and Puerto Rico. LIN Holdings and its subsidiaries are affiliates of Hicks, Muse, Tate & Furst Incorporated (“Hicks Muse”). LIN TV Corp. is the parent company of LIN Holdings and its subsidiaries.

On December 17, 2003, LIN Television completed its acquisition of all the capital stock of LIN Holdings Corp. by means of a merger, with LIN Television the surviving entity. These consolidated financial statements reflect the combined financial position, operating results and cash flows of LIN Television and LIN Holdings Corp. as if they had been combined for all periods.

LIN TV Corp. guarantees all debt of LIN Television Corporation except for its $205.0 million aggregate principal amount of 8% Senior Notes due 2008. (See Note 11). All of the consolidated subsidiaries of LIN Television Corporation fully and unconditionally guarantee all the Company’s debt on a joint and several basis.

Certain reclassifications have been made to the prior financial statements to conform to the current period financial statement presentation.


	(i) The reclassification of $11.9 million from goodwill to broadcast licenses ($24.7 million) and deferred income taxes, net ($12.8 million);

	(ii) An incremental tax provision of $675,000; and

	(iii) An incremental gain from the sale of discontinued operations of $864,000, net of tax, related to the Company’s disposal of KRBC-TV and KACB-TV in June 2003.

These entries have no impact on the Company’s reported cash flows.

Note 2 — Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below.

Principles of Consolidation

F-47

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Use of Estimates

Cash and Cash Equivalents

Short-Term Investments

Property and Equipment

Equity Investments

Revenue Recognition

Advertising Expense

F-48

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible Assets

An impairment assessment of enterprise level goodwill could be triggered by a significant reduction in operating results or cash flows at one or more of the Company’s television stations, or a forecast of such reductions, a significant adverse change in the advertising marketplaces in which the Company’s television stations operate, or by adverse changes to Federal Communications Commission ownership rules, amongst others.

Network Affiliations


	•	The scarcity of broadcast licenses assigned by the Federal Communication Commission to a particular market determines how many television networks and other program sources are viewed in a particular market.

F-49

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	•	The length of time the broadcast license has been broadcasting. Television stations that have been broadcasting since the late 1940s, generally channels two to thirteen, are viewed more often than newer television stations.

	•	VHF stations, (generally channels two to thirteen) are typically viewed more often than UHF stations (generally channels fourteen to sixty-nine) because these stations have been broadcasting longer than UHF stations and because of the inferior UHF signal in the early years of UHF stations.

	•	The quality of the broadcast signal and location of the broadcast station within a market (i.e. the value of being licensed in the smallest city within a tri-city market has less value than being licensed in the largest city within a tri-city market.)

	•	The audience acceptance of the broadcast licensee’s local news programming and community involvement. A local television station’s news programming that attracts the largest audience in a market generally will provide a larger audience for its network programming.

	•	The quality of the other non-network programming carried by the television station. A local television station’s syndication programming that attracts the largest audience in a market generally will provide larger audience lead-ins to its network programming.

F-50

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15-year amortization period assuming that this change would not impact the $51.7 million impairment of broadcast licenses for the year ended December 31, 2003.



				Percentage of Total Value
				Reassigned to Network
				Affiliation Agreements

	As Reported			50%			25%

Balance Sheet (As of December 31, 2003):
Broadcast licenses	$	1,102,708		$	551,354		$	827,031
Other intangible assets, net (including network affiliation agreements)		3,289			481,129			242,209
Statement of Operations (For the year ended December 31, 2003):
Depreciation and amortization of intangible assets		32,614			69,371			87,749
Operating income		30,552			(6,205	)		(24,583	)
Loss from continuing operations		(90,602	)		(68,474	)		(79,538	)
Net loss		(90,390	)		(109,567	)		(98,504	)

Long Lived-Assets

Program Rights

Program obligations are classified as current or non-current in accordance with the payment terms of the license agreement.

Accounting for Stock-Based Compensation

At December 31, 2003, LIN TV Corp. had four stock-based employee compensation plans, which are described more fully in Note 12. LIN TV Corp. awards options on behalf of LIN Television and LIN

F-51

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Television accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. In 2003 and 2002, the Company incurred $147,000 and $894,000, respectively, of stock-based employee compensation cost, which was reflected in earnings. No stock-based employee compensation cost was reflected in earnings in 2001 as all options granted under those plans had an exercise price equal to or more than the market value of the underlying common stock on the date of grant or remeasurement. The following table illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation (in thousands):



	Year Ended December 31,

	2003			2002			2001


	(In thousands, except share data)
Net loss, as reported	$	(90,390	)	$	(47,215	)	$	(61,721	)
Add: Stock-based employee compensation expense, as reported, net of related tax effect		88			536			—
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effect		(3,005	)		(2,235	)		(2,657	)

Pro forma net loss	$	(93,307	)	$	(48,914	)	$	(64,378	)


	2003		2002		2001

Volatility factors		30%		35%		n/a
Risk-free interest rates		1.5-3.25%		3.4-5.1%		5.96%
Expected life		2-5 years		2-6 years		7 years
Dividend yields		0%		0%		0%

Income Taxes

Concentration of Credit Risk

F-52

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value of Financial Instruments

Recently Issued Accounting Pronouncements

The Company operates two television stations under local marketing agreements (“LMA agreement”). An LMA agreement is a contract between two separately owned broadcast licensees serving a common television market where the broadcast licensee (“LMA Operator”) of one station contracts with another broadcast licensee (“LMA Licensee”) to operate the LMA Licensee’s broadcast license for an agreed upon schedule of cash payments. Under the LMA agreement, the LMA Operator provides substantial portions of the programming for airing on the LMA Licensee’s station and sells the advertising time associated with that programming. The broadcast license of the LMA station is subject to the ultimate programming and other controls exercised by the LMA licensee. The two LMA Licensees, with which the Company has LMA agreements, hold the broadcast licenses and the Company holds the option to buy their broadcast licenses for approximately $4.1 million. In addition, these two LMA Licensees have limited operating costs associated with the management of those broadcast licenses.

F-53

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and Hedging Activities.” SFAS No. 149 amends SFAS No. 133 and certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS No. 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The Company does not believe that SFAS No. 149 will have a significant impact on reported financial position or results of operations.

Note 3 — Initial Public Offering

On May 2, 2002, LIN TV Corp. completed its initial public offering (“IPO”), in which it issued 19,550,000 shares of common stock at a price of $22.00 per share. Proceeds to LIN TV Corp. totaled approximately $399.9 million, net of commissions, discounts and other offering costs of approximately $30.2 million. The net proceeds from the IPO were immediately contributed to LIN Television, through a capital contribution.

The Company used a portion of the IPO proceeds together with proceeds from the redemption of Southwest Sports Group preferred units to repay debt and accrued interest of $325.0 million. This included the repayment to the lenders of the Company’s senior credit facilities of $192.3 million. In addition, the Company used a portion of the IPO proceeds to repay the debt and accrued interest and premiums of Sunrise Television Corp. (“Sunrise”) which was recorded at fair value of $166.0 million. A portion of the Sunrise debt, in the amount of a $33.3 million note held by affiliates of Hicks Muse, was exchanged for shares of LIN TV Corp.’s class B common stock. The Company repaid the balance of $132.7 million of the remaining Sunrise debt and accrued interest and premiums. In addition, LIN TV Corp. exchanged $54.4 million shares of Sunrise preferred stock held by affiliates of Hicks Muse for shares of LIN TV Corp.’s class B common stock and made a cash payment of $10.8 million to redeem the balance of Sunrise’ preferred stock held by another investor. These share issuances by LIN TV Corp. are reflected as capital contributions in the Company’s financial statements. The Company also used the proceeds to pay discounts, commissions and other expenses, including $6.2 million paid on May 2, 2002, and $7.3 million paid on August 23, 2002, to affiliates of Hicks Muse in connection with the termination of the Company’s monitoring and oversight agreement with such affiliates of Hicks Muse, and for general corporate purposes.

F-54

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4 — Available for Sale Securities


			Accrued
	Amortized		Investment		Fair
	cost		Income		Value

Corporate debt securities	$	7,627	$	60	$	7,687
Mortgage-backed securities		15,851		136		15,987

	$	23,478	$	196	$	23,674

Note 5 — Acquisitions and Dispositions

UHF licenses. In December 2002 and June 2003, the Company acquired for $6.3 million the licenses to 700 MHz of spectrum currently allocated to television channels 54 and 59 in the following markets: Austin, Texas; Hartford-New Haven, Connecticut; Springfield, Massachusetts; Providence, Rhode Island; Grand Rapids, Michigan and various locations in Indiana, including Ft. Wayne and Lafayette. The spectrum can be utilized for any purpose other than analog television.

Sunrise Acquisition. On May 2, 2002, concurrent with the consummation of LIN TV Corp.’s IPO, LIN TV Corp. acquired all of the common stock of Sunrise. The Sunrise acquisition added seven stations to the Company’s operations, six of which are now owned and operated by the Company, one of which is subject to a proposed sale to Barrington Broadcasting pending FCC approval, and one station that is operated by the Company under a local marketing agreement. LIN TV Corp. issued 60,221 shares of class A common stock and 402,218 shares of class B common stock and options to acquire 3,688 shares of class A common stock with a value of approximately $10.3 million in exchange for all of Sunrise’s common stock and options. The Company has accounted for this transaction under the purchase method of accounting. On May 8, 2002, the Company contributed its investment in Sunrise to LIN Television through a capital contribution.

In conjunction with the acquisition of Sunrise, the Company sold to Smith Television of North Dakota, Inc. (“Smith Television”) the broadcast licenses of Sunrise’s North Dakota television stations for $1.0 million with the Company retaining the other operating assets and the cash flow provided by the North Dakota television stations until August 23, 2002, on which date the Company sold these remaining assets and associated cash flows to Smith Television for $35.0 million.

F-55

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes these acquisitions (in thousands):


											UHF		UHF
								Sunrise			Television		Television
		WOTV-TV		WVBT-TV		WCTX-TV		Television			Licenses		Licenses

Acquisition date		January 29, 2002		January 31, 2002		April 30, 2002		May 2, 2002			December 20, 2002		June 13, 2003

Fair value of assets and liabilities acquired:
	Assets held for sale	$	—	$	—	$	—	$	37,850		$	—	$	—
	Other current assets		—		—		—		20,491			—		—
	Property and equipment		1,291		—		—		36,984			—		—
	Goodwill		—		—		—		12,671
	Broadcast licenses		1,581		3,029		4,739		166,613			4,293		1,980
	Other long-term assets		—		—		—		5,613			—		—
	Liabilities held for sale		—		—		—		(1,850	)		—		—
	Total other liabilities		—		—		—		(36,910	)		—		—
	Long-term debt and accrued interest and premiums		—		—		—		(166,038	)		—		—
	Preferred stock		—		—		—		(65,169	)		—		—

Total purchase price, including direct acquisition expenses		$	2,872	$	3,029	$	4,739	$	10,255		$	4,293	$	1,980


Accounts receivable		$	739
Program rights			(29	)
Other current assets			8
Property and equipment, net			3,694
Intangible assets, net			6,194

	Assets held for sale	$	10,606

Accounts payable		$	56
Program payable			83

	Liabilities held for sale	$	139

F-56

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 6 — Discontinued Operations

Note 7 — Equity Investments


	2003		2002

NBC joint venture	$	55,758	$	58,411
WAND (TV) Partnership		10,250		13,141
Banks Broadcasting, Inc.		11,297		12,816

	$	77,305	$	84,368

Joint Venture with NBC: The Company owns a 20.38% interest in a joint venture with NBC and accounts for its interest using the equity method, as the Company does not have a controlling interest. The Company received distributions of $7.5 million, $5.6 million and $6.6 million from the joint venture for the years ended December 31, 2003, 2002 and 2001 respectively. The following presents the summarized financial information of the joint venture (in thousands):



	Year Ended December 31,

	2003		2002		2001

Net revenues	$	158,247	$	170,890	$	146,630
Operating income		89,691		102,226		49,880
Net income (loss)		23,985		38,057		(14,935	)

F-57

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	December 31,

	2003		2002

Current assets	$	9,949	$	24,111
Non-current assets		237,469		236,140
Current liabilities		725		544
Non-current liabilities		815,500		815,500

WAND (TV) Partnership: The Company has a 33.33% interest in a partnership, WAND (TV) Partnership, with Block Communications. The Company accounts for its interest using the equity method, as the Company does not have a controlling interest. The Company received $800,000 in distributions from the partnership in 2002 and did not receive any distributions in 2003 and 2001. The Company has also entered into a management services agreement with WAND (TV) Partnership to provide specified management, engineering and related services for a fixed fee. Included in this agreement is a cash management arrangement under which the Company incurs expenditures on behalf of WAND (TV) Partnership and is periodically reimbursed. Amounts due from the Company to WAND (TV) Partnership under this arrangement were approximately $64,000 as of December 31, 2003. Amounts due to the Company from WAND (TV) Partnership under this arrangement were approximately $187,000 as of December 31, 2002. The following presents the summarized financial information of the WAND (TV) Partnership (in thousands):



	Year Ended December 31,

	2003			2002		2001

Net revenues	$	6,360		$	8,087	$	6,386
Operating (loss) income		(8,591	)		1,431		(747	)
Net income (loss)		(8,674	)		1,450		(711	)



	December 31,

	2003		2002

Current assets	$	2,013	$	2,137
Non-current assets		25,168		34,063
Current liabilities		405		751

Banks Broadcasting, Inc: The Company owns preferred stock that represents a 50% non-voting interest in Banks Broadcasting, Inc., which owns and operates KWCV-TV, a WB affiliate in Wichita, Kansas and KNIN-TV, a UPN affiliate in Boise, Idaho. The Company is able to exercise significant, but not controlling, influence over the activities of Banks Broadcasting, Inc. through representation on the Board of Directors and, therefore, accounts for its investment using the equity method. The Company has also entered into a management services agreement with Banks Broadcasting, Inc. to provide specified management, engineering and related services for a fixed fee. Included in this agreement is a cash management arrangement under which the Company incurs expenditures on behalf of Banks Broadcasting, Inc. and is periodically reimbursed. Amounts due to the Company from Banks Broadcasting, Inc. under this arrangement were approximately $693,000 and $82,000 as of December 31, 2003 and 2002, respectively.

The following presents the summarized financial information of Banks Broadcasting, Inc. (in thousands):



	Year Ended December 31,

	2003			2002			2001

Net revenues	$	5,152		$	5,270		$	4,539
Operating loss		(2,193	)		(1,731	)		(2,426	)
Net loss		(2,818	)		(2,366	)		(1,501	)

F-58

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



	December 31,

	2003		2002

Current assets	$	2,313	$	2,588
Non-current assets		26,684		27,444
Current liabilities		2,361		1,067
Non-current liabilities		2,165		1,456
Redeemable preferred stock		3		3

Southwest Sports Group Holdings, LLC: On May 2, 2002, Southwest Sports Group Holdings, LLC, an entity in which affiliates of Hicks Muse have a substantial economic interest, redeemed all 500,000 Series A Preferred Units held by the Company for an aggregate redemption price of $60.8 million, resulting in a gain of approximately $3.8 million to the Company.

Other Investments: The Company recorded losses of approximately $250,000 and $2.8 million for the years ended December 31, 2003 and 2002, respectively, in other expenses on an investment in the equity of an internet company. These amounts reflect impairments of the Company’s initial investment as a result of a reduction in the value of the internet company, which in the opinion of management are other than temporary.


Note 8 —	Property and Equipment

Property and equipment consisted of the following at December 31 (in thousands):


	2003			2002

Land and land improvements	$	14,492		$	14,300
Buildings and fixtures		97,924			82,389
Broadcasting equipment and other		245,771			208,247

		358,187			304,936
Less accumulated depreciation		(155,138	)		(96,864	)

	$	203,049		$	208,072

The Company recorded depreciation expense in the amounts of $31.4 million, $28.0 million and $22.8 million for the years ended December 31, 2003, 2002 and 2001, respectively.

F-59

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Note 9 —	Intangible Assets

The following table summarizes the carrying amount of each major class of intangible assets at December 31 (in thousands):


		2003			2002

Amortized Intangible Assets:
LMA purchase options		$	2,388		$	1,412
Network affiliations			377			377
Income leases			393			393
Other intangible assets			2,022			—
Accumulated amortization	��		(1,891	)		(702	)

			3,289			1,480

Unamortized Intangible Assets:
Broadcast licenses		$	1,102,708		$	1,127,742
Goodwill			586,269			599,263

			1,688,977			1,727,005

Total intangible assets		$	1,692,266		$	1,728,485

Other intangible assets represent intangible pension assets recognized when the Company recorded its minimum pension liability in accordance SFAS No. 87, “Employers’ Accounting for Pensions”. When a new determination of the amount of additional liability is made by the Company, the related intangible asset and separate component of equity shall be eliminated or adjusted as necessary.

F-60

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	2003			2002			2001

Reported net loss	$	(90,390	)	$	(47,215	)	$	(61,721	)
Addback: goodwill amortization, net of tax		—			—			10,455
Addback: intangible amortization, net of tax		—			—			17,447

Adjusted net loss	$	(90,390	)	$	(47,215	)	$	(33,819	)


Note 10 —	Local Marketing Agreements

F-61

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Note 11 —	Long-term Debt

Debt consisted of the following at December 31 (in thousands):



	December 31,

	2003		2002

Senior Credit Facilities	$	193,500	$	—
$205,000, 8% Senior Notes due 2008 (net of discount of $4,706 and $5,996 at December 31, 2003 and December 31, 2002, respectively)		200,294		204,004
$200,000, 6 1/2% Senior Subordinated Notes due 2013		200,000		—
$125,000, 2 1/2% Exchangeable Senior Subordinated Debentures due 2033 (net of discount of $18,427 at December 31, 2003)		106,573		—
$300,000, 8 3/8% Senior Subordinated Notes due 2008 (net of discount of $364 at December 31, 2002)		—		299,636
$276,000, 10% Senior Discount Notes due 2008 (net of discount of $4,443 at December 31, 2002)		—		271,557
$100,000, 10% Senior Discount Notes due 2008 (net of discount of $10,677 at December 31, 2002)		—		89,323

Total debt		700,367		864,520
Less current portion		7,000		106,154

Total long-term debt	$	693,367	$	758,366

Senior Credit Facilities

6 1/2% Senior Subordinated Notes

F-62

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Year	Price (as a percentage of outstanding principal amount)

2008		103.250	%
2009		102.167	%
2010		101.083	%
2011 and thereafter		100.000	%

2.50% Exchangeable Senior Subordinated Debentures

F-63

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Exchange Rights. A holder may exchange each debenture for a number of shares of LIN TV class A common stock, equal to the exchange rate under the following conditions:


	•	during any fiscal quarter commencing after June 30, 2003, if the closing sale price of LIN TV common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is more than 120% of the base exchange price (initially 120% of $37.28, or $44.7360);

	•	during any period in which the credit rating assigned to the debentures by Standard & Poor’s Rate Services (“S&P”) is below B-, or the credit rating assigned to the debentures by Moody’s Investors Services (“Moody’s”) is below B3, or either S&P or Moody’s does not assign a rating to the debentures;

	•	during the five business-day period after any five consecutive trading-day period in which the trading price per debenture for each day of that period was less than 98% of the product of the closing sale price of LIN TV common stock and the exchange rate of each such day;

	•	if such debentures have been called for redemption; or

	•	upon the occurrence of certain corporate transactions, such as a consolidation, merger or binding share exchange pursuant to which shares of LIN TV common stock would be converted into cash, securities or other property.

Exchange Rates. Prior to May 15, 2008, the exchange rate will be determined as follows:


	•	if the applicable stock price is less than or equal to the base exchange price, the exchange rate will be the base exchange rate; and

	•	if the applicable stock price is greater than the base exchange price, the exchange rate will be determined in accordance with the following formula; provided, however, in no event will the exchange rate exceed 46.2748, subject to the same proportional adjustment as the base exchange rate:


	(Applicable Stock Price – Base Exchange Price)

Base Exchange Rate +	Applicable Stock Price	× Incremental Share Factor

F-64

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On May 15, 2008, the exchange rate will be fixed at the exchange rate then in effect.

8% Senior Notes

F-65

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


2004	$	31,500
2005		7,000
2006		7,000
2007		172,500
2008		305,500
Thereafter		200,000

	$	723,500


	2003		2002

Carrying amount	$	700,367	$	864,520
Fair value		740,027		415,500

F-66

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table is a summary of interest expense that is recorded during the period, which is paid in cash during the period or subsequent periods, and the interest expense related to amortization of discount and deferred financing fees (in thousands):



			Year Ended December 31,

			2003		2002		2001

	Senior Credit Facility		$	7,194	$	3,928	$	24,029
	$205,000 8% Senior Notes			16,783		16,800		9,100
	$200,000 6 1/2% Senior Subordinated Notes			8,393		—		—
	$125,000 2.50% Exchangeable Senior Subordinated Debentures			2,110		—		—
	$300,000 8 3/8% Senior Subordinated Notes			11,448		25,125		25,125
	$276,000 10% Senior Discount Notes			330		—		—
	$100,000 10% Senior Discount Notes			194		—		—
	Other			—		2,715		100

		Interest expense before amortization of discount and deferred financing fees		46,452		48,568		58,354
Amortization of discount and deferred financing fees				14,053		47,207		39,292

	Total interest expense		$	60,505	$	95,775	$	97,646

Note 12 — Stockholders’ Equity

Stock Option Plans. Pursuant to LIN TV Corp.’s 1998 Option Plan, 2002 Stock Plan, Sunrise Option Plan and the 2002 Non-Employee Director Plan (collectively, the “Option Plans”) nonqualified options in LIN TV Corp. class A common stock have been granted to certain directors, officers and key employees of the Company. In addition, pursuant to the 2002 Non-Employee Director Stock Plan, 1,000 shares of LIN TV Corp.’s class A common stock were awarded to members of the Board of Directors for consideration of $0 per share, resulting in compensation expense of $22,000, for the year ended December 31, 2002.

F-67

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides additional information regarding the Option Plans (shares in thousands):



	2003					2002					2001

				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price

Outstanding at beginning of period		2,957		$	20.19		1,817		$	18.96		1,836		$	18.83
Granted		697			23.56		1,312			21.94		59			25.44
Exercised		(69	)		19.34		(39	)		17.43		—			—
Forfeited		(75	)		22.12		(136	)		22.16		(78	)		20.86
Assumed in merger with Sunrise		—			—		3			51.55		—			—

Outstanding at end of period		3,510			20.83		2,957			20.19		1,817			18.96

Options exercisable at period-end		1,809					1,404					1,106

Weighted-average fair value of options granted during the period	$	5.96				$	6.79				$	7.35

In addition to the option grants above, LIN TV Corp. granted unrestricted stock awards of 1,340 shares of class A common stock to certain employees of LIN Television for consideration of $0 per share, resulting in compensation expense of $31,248.

The following table summarizes information about the Option Plans at December 31, 2003 (shares in thousands):



	Options Outstanding						Options Exercisable

			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life		Price		Exercisable		Price

$10.50 to $14.99		505		4.0	$	11.49		504	$	11.48
$15.00 to $19.99		10		4.2		18.70		10		18.70
$20.00 to $24.99		2,764		7.4		22.02		1,160		21.24
$25.00 to $29.99		230		6.9		26.25		134		26.25
$250.00 to $275.00		1		6.6		251.94		1		251.94

Phantom Stock Units Plan. Pursuant to LIN TV Corp.’s 1998 Phantom Stock Units Plan (“Phantom Stock Units Plan”), and as partial consideration for the acquisition of LIN Television by the Company in 1998, phantom units exercisable into shares of LIN TV class A common stock and with a $0 exercise price were issued to officers and key employees. As a non-compensatory element of the total purchase price of LIN Television, the phantom units are not subject to variable accounting and any cash paid on exercise of the phantom units is accounted for as a reduction to Additional Paid-in Capital.

The phantom units expire ten years from the date of issuance, are non-forfeitable, and are exercisable at a date selected by the holder within the ten-year term.

F-68

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides additional information regarding the Phantom Stock Units Plan (shares in thousands):



	Year Ended
	December 31,

	2003			2002			2001

Outstanding at beginning of period		675			680			682
Exercised		(150	)		(5	)		(2	)

Outstanding at end of period		525			675			680

Employee Stock Purchase Plan. Under the terms of LIN TV Corp.’s 2002 Employee Stock Purchase Plan, eligible employees of the Company may have up to 10% of eligible compensation deducted from their pay to purchase shares of LIN TV Corp.’s class A common stock. The per share purchase price is 85% of the average of the high and low per share trading price of LIN TV Corp.’s class A common stock on the New York Stock Exchange (“NYSE”) on the last trading day of each month during the offering period. During 2003, employees purchased 64,087 shares at a weighted average price of $19.49.

Note 13 — Restructuring Charge

Note 14 — Derivative Instruments

In 2002 and 2001, the Company used interest rate collar, cap and swap arrangements, not designated as hedging instruments under SFAS No. 133, “Accounting for Derivative and Hedging Activities”, as amended, to mitigate the impact of the variability in interest rates in connection with its variable rate senior credit facilities and fixed rate senior notes. As of December 31, 2002, the Company held no derivative instruments. At December 31, 2001, the Company held derivative instruments with a notional amount of $430.0 million and the aggregate fair value of the instruments was a liability of $5.6 million. Other (income) expense for the years ended December 31, 2002 and 2001 includes a gain of $5.6 million and loss of $5.6 million, respectively, from the marking-to-market of these derivative instruments.

F-69

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 15 — Related Party Transactions

Monitoring and Oversight Agreement. The Company was party to an agreement with Hicks Muse Partners, pursuant to which the Company agreed to pay Hicks Muse Partners an annual fee (payable quarterly) for oversight and monitoring services. Hicks Muse Partners was also entitled to reimbursement for any expenses incurred by it in connection with rendering services allocable to the Company. The annual fee was approximately $368,000 and $1.3 million for the years ended December 31, 2002 and 2001, respectively. The Company and Hicks Muse Partners agreed to terminate this agreement on May 2, 2002 in exchange for an aggregate fee of $16.0 million consisting of an amount payable in cash of $6.2 million, $7.1 million in a promissory note and vested warrants to purchase 123,466 shares of LIN TV Corp.’s class

B common stock at a price of $0.01 valued at $2.7 million, which were exercised on May 8, 2003.

Other Investment. The Company’s Chief Executive Officer serves on the Board of Directors of an internet company in which the Company has invested. The Company incurred fees for internet services provided by this company of approximately $494,000, $551,000 and $568,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Note 16 — Retirement Plans

401(k) Plan. The Company provides a defined contribution plan (“401(k) Plan”) to substantially all employees. The Company makes contributions to employee groups that are not covered by another retirement plan sponsored by the Company. Contributions made by the Company vest based on the employee’s years of service. Vesting begins after six months of service in 20% annual increments until the employee is 100% vested after five years. The Company matches 50% of the employee’s contribution up to 6% of the employee’s total annual compensation. The Company contributed $2.2 million, $1.6 million and $1.2 million to the 401(k) Plan in the years ended December 31, 2003, 2002 and 2001, respectively.

Retirement Plans. The Company has a number of noncontributory defined benefit retirement plans covering certain of its employees in the United States and Puerto Rico. Contributions are based on periodic actuarial valuations and are charged to operations on a systematic basis over the expected average remaining service lives of current employees. The net pension expense is assessed in accordance with the

F-70

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

advice of professionally qualified actuaries. The benefits under the defined benefit plans are based on years of service and compensation.

Retirement Plans



		Year Ended December 31,

		2003			2002			2001


		(Amounts in thousands, except
		percentages)
Change in benefit obligation
Benefit obligation, beginning of period		$	76,711		$	64,754		$	58,553
	Service cost		1,827			1,592			1,047
	Interest cost		5,243			4,874			4,351
	Plan amendments		122			1,596			—
	Actuarial loss		8,920			7,111			3,141
	Benefits paid		(2,754	)		(3,216	)		(2,338	)

Benefit obligation, end of period		$	90,069		$	76,711		$	64,754

Change in plan assets
	Fair value of plan assets, beginning of period	$	55,375		$	65,514		$	66,824
	Actual return on plan assets		11,552			(6,924	)		1,028
	Employer contributions		36			—			—
	Benefits paid		(2,754	)		(3,215	)		(2,338	)

	Fair value of plan assets, end of period	$	64,209		$	55,375		$	65,514

	Funded status of the plan	$	(25,860	)	$	(21,337	)	$	810
	Unrecognized actuarial gain (loss)		17,878			15,130			(4,982	)
	Unrecognized prior service cost		1,518			1,562			198

	Total amount recognized and accrued benefit liability	$	(6,464	)	$	(4,645	)	$	(3,974	)

Amounts recognized in the balance sheets consist of:


	2003			2002

Accrued benefit cost	$	(18,943	)	$	(4,645	)
Intangible assets		2,020			—
Accumulated other comprehensive loss		10,459			—

Net amount recognized	$	(6,464	)	$	(4,645	)

F-71

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Components of Net Periodic Benefit Cost:


	2003			2002			2001

Service cost	$	1,827		$	1,592		$	1,047
Interest cost		5,243			4,874			4,351
Expected return on plan assets		(5,631	)		(5,730	)		(5,478	)
Amortization of prior service cost		166			157			12
Amortization of net loss (gain)		250			(142	)		(638	)
Transition amount recognized		—			—			(329	)

Net periodic benefit cost	$	1,855		$	751		$	(1,035	)

Assumptions:

Weighted-average assumptions used to determine benefit obligation at December 31:


	2003	2002	2001

Discount rate	6.00 - 6.25%	6.75%	7.25 - 8.00%
Expected long term rate of return on plan assets	8.25%	8.25%	8.25%
Rate of compensation increase	4.00 - 5.00%	4.00 - 5.00%	4.00 - 5.00%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:


	2003	2002	2001

Discount rate	6.75%	7.25 - 8.00%	7.50 - 8.00%
Expected long term rate of return on plan assets	8.25%	8.25%	8.25%
Rate of compensation increase	4.00 - 5.00%	4.00 - 5.00%	4.00 - 5.00%

Accumulated other comprehensive loss

F-72

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The asset allocation for the Retirement Plan at December 31, 2003 and 2002 and the target allocation for December 31, 2004, by asset category, are as follows:



		Percentage of
	Target	Plan Assets at
	Allocation	December 31,

Asset Category	2004	2003		2002

Equity securities	60 - 70%		70%		68%
Debt securities	30 - 40%		30%		32%

	100%		100%		100%

Contributions. The Company does not currently have minimum funding requirements, as set forth in ERISA and federal tax laws. The Company did not contribute to the Retirement Plan in 2003, but does anticipate contributing $1.2 million to the Retirement Plan in 2004.

Note 17 — Commitments and Contingencies

Commitments.The Company leases land, buildings, vehicles and equipment under non-cancelable operating lease agreements that expire at various dates through 2011. Commitments for non-cancelable operating lease payments at December 31, 2003 are as follows (in thousands):


2004	$	661
2005		545
2006		493
2007		416
2008		178
Thereafter		2,828

	$	5,121

Rent expense included in the consolidated statements of operations was $1.6 million, $1.6 million and $1.0 million for the years ended December 31, 2003, 2002 and 2001, respectively.


2004	$	21,887
2005		16,079
2006		9,560
2007		5,689
2008		1,415
2009		1,033
Thereafter		1,278

Total obligations		56,941
Less recorded contracts		34,682

Future contracts	$	22,259

F-73

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies

GECC Note. GECC provided debt financing in connection with the formation of the joint venture with NBC in the form of an $815.5 million 25-year non-amortizing senior secured note bearing an initial interest rate of 8.0% per annum. During the last five years, the joint venture has produced cash flows to support the interest payments and to maintain minimum levels of required working capital reserves. In addition, the joint venture has made cash distributions to the Company and to NBC from the excess cash generated by the joint venture of approximately $32.3 million on average each year during the past three years. Accordingly, the Company expects that the interest payments on the GECC note will be serviced solely by the cash flow of the joint venture. The GECC note is not an obligation of the Company, but is recourse to the joint venture, the Company’s equity interests therein and to LIN TV Corp., pursuant to a guarantee. If the joint venture were unable to pay principal or interest on the GECC note and GECC could not otherwise get its money back from the joint venture, GECC could require LIN TV Corp. to pay the shortfall of any outstanding amounts under the GECC note. If this happened, the Company could experience material adverse consequences, including:


	•	GECC could force LIN TV Corp. to sell the stock of LIN Television held by LIN TV Corp. to satisfy outstanding amounts under the GECC note;

	•	if more than 50% of the ownership of LIN Television had to be sold to satisfy the GECC Note, it could cause an acceleration of the Company’s senior credit facilities and other outstanding indebtedness; or

	•	if the GECC note is prepaid because of an acceleration on default or otherwise, or if the note is repaid at maturity, the Company may incur a substantial tax liability.

F-74

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 18 — Income Taxes



	Year Ended December 31,

	2003			2002		2001

Current:
Federal	$	—		$	376	$	—
State		823			750		859
Foreign		3,168			2,240		110

		3,991			3,366		969

Deferred:
Federal		4,476			12,134		(23,199	)
State		(295	)		4,974		(128	)
Foreign		1,881			5,027		1,731

		6,062			22,135		(21,596	)

	$	10,053		$	25,501	$	(20,627	)

The components of the (loss) income before income taxes were as follows (in thousands):



	Year Ended December 31,

	2003			2002			2001

United States of America	$	(91,804	)	$	(7,385	)	$	(87,982	)
Foreign		11,255			15,338			5,634

Income (loss) before income taxes and cumulative effect of change in accounting principle	$	(80,549	)	$	7,953		$	(82,348	)



	Year Ended December 31,

	2003			2002		2001

(Benefit) provision assuming federal statutory rate	$	(28,192	)	$	2,783	$	(28,838	)
State taxes, net of federal tax benefit		343			769		430
Amortization		—			—		6,452
Foreign taxes, net of federal tax benefit		2,727			4,196		964
Change in Valuation Allowance		34,367			17,083		—
Other		808			670		365

	$	10,053		$	25,501	$	(20,627	)

F-75

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of the net deferred tax liability are as follows (in thousands):



		As of
		December 31,

		2003			2002

Deferred tax liabilities:
	Intangible assets	$	243,539		$	234,496
	Property and equipment		19,653			21,726
	Equity Investments		266,589			267,935

			529,781			524,157

Deferred tax assets:
	Net operating loss carryforwards		(78,447	)		(39,456	)
	Valuation allowance		83,418			42,511
	Other		(7,164	)		(16,624	)

			(2,193	)		(13,569	)

	Net deferred tax liabilities	$	527,588		$	510,588

F-76

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 19 — Unaudited Quarterly Data



	Quarter Ended

	March 31,			June 30,			September 30,			December 31,
	2003			2003			2003			2003

Net revenues	$	75,254		$	91,078		$	85,769		$	97,428
Operating income (loss)		11,763			24,829			20,688			(26,728	)
(Loss) income from continuing operations		(40,867	)		(10,593	)		5,024			(44,166	)
Loss (gain) from sale of discontinued operations, net of tax		—			652			(864	)		—
Net (loss) income		(40,867	)		(11,245	)		5,888			(44,166	)



	Quarter Ended

	March 31,			June 30,			September 30,				December 31,
	2002			2002			2002				2002

Net revenues	$	62,523		$	89,168		$	91,812		��	$	106,091
Operating income		14,170			30,485			28,236				36,769
(Loss) income from continuing operations before cumulative effect of change in accounting principle		(25,720	)		(9,650	)		5,193				12,629
(Income) loss from discontinued operations, net of tax		—			(227	)		261				(74	)
Gain from sale of discontinued operations, net of tax		—			—			(982	)			—
Cumulative effect of change in accounting principle, net of tax		30,689						—				—
Net (loss) income		(56,409	)		(9,423	)		5,914				12,703

Note 20 — Supplemental Disclosure of Cash Flow Information



			Year Ended December 31,

			2003		2002		2001

Cash paid for interest			$	52,722	$	48,435	$	50,348
Cash paid for income taxes				5,758		1,029		1,048
Cash Investing Activities:
On June 5, 2001, the Company acquired WNAC-TV for $2.5 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets							2,500
	Note issued							(2,500	)

		Liabilities assumed						—

On July 25, 2001, the Company acquired WNLO-TV for $26.0 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets							26,044
	Cash paid							(26,044	)

		Liabilities assumed						—

F-77

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



			Year Ended December 31,

			2003	2002			2001

On August 2, 2001, the Company acquired the common stock of S&E Network, Inc. for $26.0 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets							11,736
	Cash paid							(11,699	)

	Liabilities assumed							37

On January 29, 2002, the Company acquired the broadcast license, property and equipment of WOTV-TV for $2.9 million, a station the Company had been operating under a local marketing agreement since October 30, 1991. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets				2,872
	Cash paid				(2,872	)

		Liabilities assumed			—

On January 31, 2002, the Company acquired the broadcast license of WVBT-TV for $3.0 million, a station the Company had been operating under a local marketing agreement since December 14, 1994. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets				3,029
	Cash paid				(3,029	)

		Liabilities assumed			—

On April 30, 2002, the Company acquired the broadcast license of WCTX-TV for $4.7 million, a station the Company had been operating under a local marketing agreement since December 9, 1994. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets				4,739
	Cash paid				(4,739	)

		Liabilities assumed			—

On May 2, 2002, LIN TV Corp. acquired Sunrise Television Corp. for $10.3 million. In conjunction with this acquisition, liabilities were assumed as follows:
	Fair value of assets acquired and intangible assets				267,551
	Value of common stock issued in exchange for Sunrise				(10,255	)

		Liabilities assumed			(257,296	)

F-78

LIN TELEVISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 21 — Valuation and Qualifying Accounts


		Balance at		Charged to					Balance at
		Beginning of Period		Operations			Deductions		End of Period

Year ended December 31, 2003
	Allowance for doubtful accounts	$	2,709	$	(293	)	$	718	$	1,698
Year ended December 31, 2002
	Allowance for doubtful accounts	$	1,802	$	1,801		$	894	$	2,709
Year ended December 31, 2001
	Allowance for doubtful accounts	$	1,679	$	1,069		$	946	$	1,802

Note 22 — Subsequent Events


		2003

Accounts receivable, net		$	1,391
Program rights			415
Other current assets			8
Property and equipment, net			5,875
Broadcast licenses, net			15,719
Network affiliations, net			76

	Total Assets	$	23,484

Accounts payable		$	192
Barter payable			4
Accrued income tax			24
Program obligations			414
Other accruals			543

	Total Liabilities	$	1,177

On January 14, 2004, the Company purchased WIRS-TV in Yauco, Puerto Rico from Marantha Christian Network, Corporation for a total purchase price of $4.5 million.

F-79

Station Venture Holdings, LLC

Independent Auditors’ Report

The Members

Station Venture Holdings, LLC:

We have audited the accompanying balance sheets of Station Venture Holdings, LLC (a limited liability company) as of December 31, 2003 and 2002, and the related statements of operations, members’ deficit, and cash flows for each of the years in the three-year period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as 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 financial position of Station Venture Holdings, LLC as of December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

San Diego, California

March 5, 2004

F-80

STATION VENTURE HOLDINGS, LLC

(A Limited Liability Company)

BALANCE SHEETS

December 31, 2003 and 2002


		2003			2002

Assets (Note 4)
Current assets — cash and cash equivalents — restricted (note 2)		$	9,949,000			24,111,000
Investment in Station Venture Operations, LP (note 3)			237,502,000			236,138,000

	Total assets	$	247,451,000			260,249,000


Liabilities and Members’ Deficit
Current liabilities — accrued interest payable		$	724,000			543,000
Long-term debt due to affiliate (note 4)			815,500,000			815,500,000

	Total liabilities		816,224,000			816,043,000
Members’ deficit			(568,773,000	)		(555,794,000	)
Commitments and contingencies (note 6)

	Total liabilities and members’ deficit	$	247,451,000			260,249,000

See accompanying notes to financial statements.

F-81

STATION VENTURE HOLDINGS, LLC

(A Limited Liability Company)

STATEMENTS OF OPERATIONS

Years ended December 31, 2003, 2002, and 2001


			2003			2002			2001

Revenue:
	Equity in income from investment		$	90,142,000			104,146,000			73,966,000

Other income (expense):
	Interest expense – related party			(66,146,000	)		(66,146,000	)		(66,146,000	)
	Interest income			25,000			56,000			594,000

		Total other expense		(66,121,000	)		(66,090,000	)		(65,552,000	)

		Net income	$	24,021,000			38,056,000			8,414,000

See accompanying notes to financial statements.

F-82

STATION VENTURE HOLDINGS, LLC

(A Limited Liability Company)

STATEMENTS OF MEMBERS’ DEFICIT

Years ended December 31, 2003, 2002, and 2001


	Outlet						Total
	Broadcasting,			LIN Television			members’
	Inc.			of Texas, LP			deficit

Balance at December 31, 2000	$	235,635,000			(778,099,000	)		(542,464,000	)
Distributions		(25,717,000	)		(6,583,000	)		(32,300,000	)
Net income		6,699,000			1,715,000			8,414,000

Balance at December 31, 2001		216,617,000			(782,967,000	)		(566,350,000	)
Distributions		(21,896,000	)		(5,604,000	)		(27,500,000	)
Net income		30,300,000			7,756,000			38,056,000

Balance at December 31, 2002		225,021,000			(780,815,000	)		(555,794,000	)
Distributions		(29,459,000	)		(7,541,000	)		(37,000,000	)
Net income		19,126,000			4,895,000			24,021,000

Balance at December 31, 2003	$	214,688,000			(783,461,000	)		(568,773,000	)

See accompanying notes to financial statements.

F-83

STATION VENTURE HOLDINGS, LLC

(A Limited Liability Company)

STATEMENTS OF CASH FLOWS

Years ended December 31, 2003, 2002, and 2001


				2003			2002			2001

Cash flows from operating activities:
	Net income			$	24,021,000			38,056,000			8,414,000
	Adjustments to reconcile net income to net cash provided by operating activities:
		Equity in income from investment			(90,142,000	)		(104,146,000	)		(73,966,000	)
		Distributions from investment			88,778,000			116,125,000			67,132,000
		Increase (decrease) in accrued interest payable			181,000			(363,000	)		(182,000	)

			Net cash provided by operating activities		22,838,000			49,672,000			1,398,000
Net cash flows from financing activities — distributions					(37,000,000	)		(27,500,000	)		(32,300,000	)

			Increase (decrease) in cash and cash equivalents		(14,162,000	)		22,172,000			(30,902,000	)
Cash and cash equivalents at beginning of year					24,111,000			1,939,000			32,841,000

Cash and cash equivalents at end of year				$	9,949,000			24,111,000			1,939,000

Supplemental cash flow information — cash paid for interest				$	65,965,000			66,509,000			66,328,000

See accompanying notes to financial statements.

F-84


(1)	Description of Business and Summary of Significant Accounting Policies


(a)	Description of Business

On March 3, 1998, Station Venture Holdings, LLC (a limited liability company) (the Company) was incorporated as a Delaware limited liability company and is owned 79.62% by Outlet Broadcasting, Inc. (Outlet), a wholly owned subsidiary of National Broadcasting Company, Inc. (NBC), a wholly owned subsidiary of General Electric Company (GEC), and 20.38% by LIN Television of Texas, LP (LIN-Texas), a wholly owned subsidiary of LIN Television (LIN TV). Voting control is shared equally between NBC and LIN TV. On March 2, 1998, General Electric Capital Corporation (GECC), a wholly owned subsidiary of GEC, loaned $815,500,000 to LIN-Texas. Upon formation of the Company, Outlet contributed 99% of KNSD-TV (KNSD) assets and operations to the Company and LIN-Texas contributed KXAS-TV (KXAS) and the GECC debt to the Company. The contributions of KNSD and KXAS were treated as an exchange of assets and were recorded at their historical book value. Immediately after, Outlet and the Company formed Station Venture Operations, LP (Station Venture Operations), a limited partnership. The Company contributed KXAS and its 99% interest in KNSD for 99.75% ownership in Station Venture Operations and Outlet contributed the remaining 1% of KNSD for 0.25% ownership in Station Venture Operations. Under the terms of the LLC agreement, the Company shall be solely liable for any loan or related agreement, debt, obligation, or liability and no member shall be obligated personally solely for reason of being a member. The Company shall exist until the 25th anniversary of the funding date of March 2, 1998, unless dissolved earlier.

Net earnings and losses from operations and distributions are allocated to the members in proportion to each member’s relative ownership interest. Gain or loss upon sale of the Company’s assets is to be allocated in a manner that will cause the members’ capital accounts to be in proportion to the members’ relative ownership percentages prior to distribution of the proceeds from the sale.

The Company’s operations consist primarily of holding its 99.75% limited partnership interest in Station Venture Operations. The general partner in Station Venture Operations is Outlet, which holds the remaining 0.25% interest and all voting control.


(b)	Cash Equivalents

Cash equivalents consist of time deposits with original maturities of less than three months. For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.

The Company’s cash balances are exposed to a concentration of credit risk. The Company’s cash balances are placed with high-credit quality and federally insured institutions. Cash balances with any one institution may be in excess of federally insured limits or may be invested in a nonfederally insured money market account. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.


(c)	Investment in Partnership

The Company’s investment in Station Venture Operations, LP (the Partnership) is accounted for by the equity method as the Company does not control the Partnership. Under the equity method of accounting, the Company recognizes its share of the net earnings or losses of the partnership as earned or incurred, increases the carrying value of its investment by the amount of contributions made, and reduces the carrying value of its investment by the amount of distributions received.


(d)	Fair Value of Financial Instruments

Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about Fair Value of Financial Instruments, requires that fair values be disclosed for the Company’s financial instruments. The carrying amounts of cash and cash equivalents and accrued interest payable are considered to be representative of

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their respective fair values because of the short-term nature of these financial instruments. The fair value of long-term debt cannot be reasonably determined due to the related party nature of the instrument.


(e)	Impairment of Long-Lived Assets

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets to Be Disposed of, provides a single accounting model for long-lived assets to be disposed of. SFAS No. 144 also changes the criteria for classifying an asset as held for sale, broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations, and changes the timing of recognizing losses on such operations. The Company adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not affect the Company’s financial statements.

In accordance with SFAS No. 144, long-lived assets, such as property, plant, and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

Goodwill and intangible assets not subject to amortization are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.


(f)	Income Taxes

As a limited liability company, the Company is treated as a partnership for federal and state income tax purposes, and accordingly, its income or loss is taxable directly to its members.


(g)	Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.


(h)	Reclassification

Certain 2002 and 2001 amounts have been reclassified to conform to the presentation used in 2003.


(2)	Restricted Cash

In accordance with the amended and restated limited liability company agreement between Outlet and LIN-Texas, the Company is to maintain a reserve in the amount of $10 million, and $15 million as of December 31, 2003, and 2002, respectively. The reserve is to be used by the Company to make interest and principal payments on debt in the event that the Company has insufficient cash on hand to make such payments. The reserve requirement may be reduced at any time by LIN-Texas, guarantor of the debt. LIN-Texas has waived the reserve requirement as of and for the year ended December 31, 2003.

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(3)	Investment in Station Venture Operations, LP

The Company has a 99.75% limited partnership interest in Station Venture Operations, LP. Initial capital contributions made to Station Venture Operations totaled $254,222,000, of which $252,012,000 was contributed by the Company and $2,210,000 was contributed by Outlet.

Summarized balance sheet information for Station Venture Operations, LP as of December 31, 2003 and 2002 is as follows:


		2003		2002

Assets
Cash and cash equivalents		$	5,906,000		366,000
Accounts receivable, net			35,789,000		34,090,000
Property and equipment, net			25,141,000		26,381,000
Goodwill, net			186,169,000		186,169,000
Other			2,200,000		2,420,000

		$	255,205,000		249,426,000


Liabilities and Partners’ Capital
Program contract liability		$	1,735,000		2,008,000
Accounts payable			3,583,000		2,491,000
Accrued expenses			3,864,000		4,680,000
Due to affiliates, net			6,348,000		1,940,000
Partners’ capital:
	Company’s share		237,502,000		236,138,000
	Other owner		2,173,000		2,169,000

		$	255,205,000		249,426,000

Summarized statement of operations information for Station Venture Operations, LP for each of the years in the three-year period ended December 31, 2003 is as follows:


		2003			2002			2001

Operations
Net revenue		$	158,957,000			171,548,000			146,630,000
Other income			354,000			2,184,000			922,000
Costs and expenses			(68,943,000	)		(69,325,000	)		(73,400,000	)

	Net income	$	90,368,000			104,407,000			74,152,000

Company’s share of income		$	90,142,000			104,146,000			73,966,000


(4)	Long-Term Debt

Long-term debt at December 31, 2003 and 2002 is as follows:


	2003		2002

Note payable to GECC, interest payable quarterly through March 2, 2023, bearing interest at 8% until March 2, 2013 and thereafter at 9%, and maturing on March 2, 2023	$	815,500,000		815,500,000

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The Company may voluntarily prepay all or part of the loan at any time after March 2, 2005. Substantially all of the assets of the Company are pledged to GECC as collateral under the terms of the note payable to GECC.


(5)	Related Party Transactions

For each of the years ended December 31, 2003, 2002, and 2001, the Company recorded interest expense of $66,146,000 related to the note payable to GECC. At December 31, 2003 and 2002, the Company had recorded accrued interest payable of $724,000 and $543,000 and respectively, related to the note payable to GECC.


(6)	Commitments and Contingencies

From time to time, the Company is subject to routine litigation incidental to its business. Management believes, based in part on the advice of legal counsel, that the results of pending legal proceedings will not materially affect the Company’s financial position, results of operations, or liquidity.

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Station Venture Operations, LP

Independent Auditors’ Report

The Managing Partner

Station Venture Operations, LP:

We have audited the accompanying balance sheets of Station Venture Operations, LP (a limited partnership) as of December 31, 2003 and 2002 and the related statements of operations, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2003. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Station Venture Operations, LP as of December 31, 2003 and 2002 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

As discussed in note 1 to the financial statements, the Partnership adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets, and, accordingly, changed its method of accounting for goodwill in 2002.

/s/ KPMG LLP

San Diego, California

March 5, 2004

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STATION VENTURE OPERATIONS, LP

(A Limited Partnership)

BALANCE SHEETS

December 31, 2003 and 2002


			2003		2002

Assets (Note 4)
Current assets:
	Cash and cash equivalents		$	5,906,000		366,000
	Accounts receivable, less allowance for doubtful accounts of $498,000 in 2003 and $620,000 in 2002			35,789,000		34,090,000
	Program rights			287,000		271,000
	Prepaid expenses and other assets			1,913,000		2,149,000

		Total current assets		43,895,000		36,876,000
Property and equipment, net (note 2)				25,141,000		26,381,000
Goodwill, net				186,169,000		186,169,000

		Total assets	$	255,205,000		249,426,000


Liabilities and Partners’ Capital
Current liabilities:
	Program contract liability		$	1,735,000		2,008,000
	Accounts payable			3,583,000		2,491,000
	Accrued liabilities			3,864,000		4,680,000
	Due to affiliates, net (note 4)			6,348,000		1,940,000

		Total liabilities		15,530,000		11,119,000
Partners’ capital				239,675,000		238,307,000
Commitments and contingencies (note 6)

		Total liabilities and partners’ capital	$	255,205,000		249,426,000

See accompanying notes to financial statements

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STATION VENTURE OPERATIONS, LP

(A Limited Partnership)

STATEMENTS OF OPERATIONS

Years ended December 31, 2003, 2002, and 2001


			2003			2002		2001

Net revenue (note 3 and 4)			$	158,957,000			171,548,000		146,630,000

Operating expenses (note 4):
	Technical, programming, and news			41,822,000			41,781,000		41,254,000
	Selling, general, and administrative			20,216,000			20,299,000		17,782,000
	Amortization of goodwill			—			—		7,700,000
	Advertising and promotion			2,703,000			2,691,000		2,520,000
	Depreciation			4,202,000			4,554,000		4,144,000

		Total operating expenses		68,943,000			69,325,000		73,400,000

		Operating income		90,014,000			102,223,000		73,230,000

Other income (expense):
	Gain (loss) on sale of property and equipment			(323,000	)		1,474,000		—
	Rental income			628,000			625,000		652,000
	Other income, net			49,000			85,000		270,000

		Total other income		354,000			2,184,000		922,000

		Net income	$	90,368,000			104,407,000		74,152,000

See accompanying notes to financial statements.

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STATION VENTURE OPERATIONS, LP

(A Limited Partnership)

STATEMENTS OF PARTNERS’ CAPITAL

Years ended December 31, 2003, 2002, and 2001


	Station
	Venture			Outlet			Total
	Holdings,			Broadcasting,			partners’
	LLC			Inc.			capital

Balance at December 31, 2000	$	241,283,000			2,181,000			243,464,000
Distributions		(67,132,000	)		(168,000	)		(67,300,000	)
Net income		73,966,000			186,000			74,152,000

Balance at December 31, 2001		248,117,000			2,199,000			250,316,000
Distributions		(116,125,000	)		(291,000	)		(116,416,000	)
Net income		104,146,000			261,000			104,407,000

Balance at December 31, 2002		236,138,000			2,169,000			238,307,000
Distributions		(88,778,000	)		(222,000	)		(89,000,000	)
Net income		90,142,000			226,000			90,368,000

Balance at December 31, 2003	$	237,502,000			2,173,000			239,675,000

See accompanying notes to financial statements

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STATION VENTURE OPERATIONS, LP

(A Limited Partnership)

STATEMENTS OF CASH FLOWS

Years ended December 31, 2003, 2002, and 2001


				2003			2002			2001

Cash flow from operating activities:
	Net income			$	90,368,000			104,407,000			74,152,000
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			4,202,000			4,554,000			11,845,000
		(Gain) loss on disposal of property and equipment			323,000			(1,474,000	)		29,000
		Changes in operating assets and liabilities:
			Accounts receivable		(1,699,000	)		(1,462,000	)		4,645,000
			Program rights		(16,000	)		(19,000	)		0
			Prepaid expenses and other assets		236,000			(297,000	)		112,000
			Due to affiliates, net		4,408,000			5,486,000			(2,648,000	)
			Program contract liability		(273,000	)		(2,150,000	)		(1,905,000	)
			Accounts payable		1,092,000			(4,059,000	)		4,211,000
			Accrued liabilities		(816,000	)		550,000			(648,000	)

Net cash provided by operating activities					97,825,000			105,536,000			89,793,000


Cash flows from investing activities:
	Purchase of property and equipment				(3,296,000	)		(2,243,000	)		(14,482,000	)
	Proceeds from sale of property and equipment				11,000			4,554,000			22,000

Net cash provided by (used in) investing activities					(3,285,000	)		2,311,000			(14,460,000	)


Net cash flows from financing activities — distributions					(89,000,000	)		(116,416,000	)		(67,300,000	)


Net increase (decrease) in cash and cash equivalents					5,540,000			(8,569,000	)		8,033,000
Cash and cash equivalents at beginning of year					366,000			8,935,000			902,000

Cash and cash equivalents at end of year				$	5,906,000			366,000			8,935,000

See accompanying notes to financial statements

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(1)	Description of Business and Summary of Significant Accounting Policies


(a)	Description of Business

On March 3, 1998, Station Venture Operations, LP (a limited partnership) (the Partnership) was formed as a Delaware limited partnership and is owned 99.75% by Station Venture Holdings, LLC, a limited liability company (SVH), and 0.25% by Outlet Broadcasting, Inc. (Outlet), a wholly owned subsidiary of National Broadcasting Company, Inc. (NBC), a wholly owned subsidiary of General Electric Company (GEC). SVH is owned 79.62% by Outlet and 20.38% by LIN Television of Texas, LP (LIN-Texas), a wholly owned subsidiary of LIN Television. On March 3, 1998, SVH contributed its 99% ownership in KNSD-TV (KNSD) assets and operations, the San Diego NBC network-affiliated UHF television station, and its 100% ownership in KXAS-TV (KXAS) assets and operations, the Dallas NBC network-affiliated VHF television station, to the Partnership. Simultaneously, NBC contributed the remaining 1% of KNSD to the Partnership. Outlet has majority voting control of the Partnership, and, as General Partner of the Partnership, manages the day-to-day operations of the Partnership, KNSD, and KXAS. The contributions of KNSD and KXAS were treated as an exchange of assets and were recorded at their historical book value. The Partnership shall exist until the 25th anniversary of the funding date of March 2, 1998, unless dissolved earlier.

Net earnings and losses from operations and distributions of the Partnership are allocated to the partners in proportion to each partner’s relative ownership interest. Gain or loss upon sale of the Partnership’s assets is to be allocated in a manner that will cause the partners’ capital accounts to be in proportion to the partners’ relative ownership percentages prior to distribution of the proceeds from the sale.

The Partnership’s operations consist of its two television broadcasting stations, KNSD and KXAS. KNSD serves the San Diego, California area, and KXAS serves the Dallas – Ft. Worth, Texas area.


(b)	Cash Equivalents

For purposes of the statements of cash flows, the Partnership considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of time deposits.

The Partnership’s cash balances are exposed to a concentration of credit risk. The Partnership’s cash balances are placed with high-credit quality and federally insured institutions. Cash balances with any one institution may be in excess of federally insured limits or may be invested in a nonfederally insured money market account. The Partnership has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.


(c)	Program Rights

Program rights and related program contract liabilities are recorded at contractual cost when the program material is available for its initial broadcast. The costs are amortized using the straight-line method over the life of the contract.


(d)	Property and Equipment

Property and equipment are recorded at cost. Depreciation on property and equipment is calculated using the straight-line method over a 3- to 40-year estimated useful life.


(e)	Goodwill

Goodwill represents the excess of costs over fair value of assets of businesses acquired. The Partnership adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, as of January 1, 2002. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS

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No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Partnership does not have any identifiable intangible assets.

In connection with SFAS No. 142’s transitional goodwill impairment evaluation, the statement required the Partnership to perform an assessment of whether there was an indication that goodwill is impaired as of the date of adoption. To accomplish this, the Partnership was required to identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill, to those reporting units as of January 1, 2002. The Partnership concluded that there was one reporting unit for purposes of the SFAS No. 142 analysis. The Partnership was required to determine the fair value of the reporting unit and compare it to the carrying amount of the reporting unit within six months of January 1, 2002. To the extent the carrying amount of a reporting unit exceeded the fair value of the reporting unit, the Partnership would be required to perform the second step of the transitional impairment test, as this is an indication that the reporting unit goodwill may be impaired. On January 1, 2002, the Partnership had goodwill of $186,169,000 (net of accumulated amortization of $54,278,000), which was assessed for impairment. The Partnership completed its assessment of impairment in accordance with SFAS No. 142, which did not indicate any impairment of goodwill as of the adoption date; therefore, the second test was not required.

Additionally, the Partnership completed its annual impairment test as required under the provisions of SFAS No. 142 during the fourth quarter of 2003. No indicator of impairment was present as of December 31, 2003.

Prior to the adoption of SFAS No. 142, goodwill was amortized on a straight-line basis over the expected periods to be benefited, 30 and 40 years, by KNSD and KXAS, respectively, and assessed for recoverability by determining whether the amortization of the goodwill balance over its remaining life could be recovered through undiscounted future operating cash flows of the acquired operation. The amount of goodwill impairment, if any, was measured based on projected discounted future operating cash flows using a discount rate reflecting the Partnership’s average cost of funds.

Had the Partnership accounted for its goodwill under the provisions of SFAS 142 beginning January 1, 2001, the Partnership’s net income would have been as follows for the years ended December 31, 2003, 2002 and 2001:


		2003		2002		2001

Reported net income		$	90,368,000		104,407,000		74,152,000
Add Back: Goodwill amortization			—		—		7,700,000

	Net income as adjusted	$	90,368,000		104,407,000		81,852,000


(f)	Impairment of Long-Lived Assets

SFAS No. 144 provides a single accounting model for long-lived assets to be disposed of. SFAS No. 144 also changes the criteria for classifying an asset as held for sale, broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations, and changes the timing of recognizing losses on such operations. The Partnership adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS No. 144 did not affect the Partnership’s financial statements.

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separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

Prior to the adoption of SFAS No. 144, the Partnership accounted for long-lived assets in accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.


(g)	Revenue Recognition

Revenue is derived from the following sources; advertising, network compensation, retransmission fees, and cable license fees. Revenues are recognized in the period during which the related time spots are aired.


(h)	Fair Value of Financial Instruments

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires that fair values be disclosed for the Partnership’s financial instruments. The carrying amounts of cash and cash equivalents, accounts receivable, program contract liability, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of these financial instruments. The fair value of the due to affiliates balance cannot be reasonably determined due to its related party nature.


(i)	Income Taxes

The Partnership is treated as a partnership for federal and state income tax purposes, and accordingly, its income or loss is taxable directly to its partners.


(j)	Advertising

Advertising costs are expensed as incurred. Advertising costs amounted to $986,000, $992,000 and $824,000 for the years ended December 31, 2003, 2002, and 2001, respectively.


(k)	Use of Estimates

Management of the Partnership has made a number of estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

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(l)	Reclassification

Certain 2002 and 2001 amounts have been reclassified to conform to the presentation used in 2003.


(2)	Property and Equipment

Property and equipment consists of the following:


	2003			2002

Land	$	1,633,000			1,633,000
Building		8,786,000			7,750,000
Machinery and equipment		30,845,000			31,837,000
Office furniture and equipment		3,884,000			3,294,000
Autos and trucks		2,928,000			3,215,000
Leasehold improvements		5,660,000			5,633,000
Construction in progress		1,928,000			1,395,000

		55,664,000			54,757,000
Less accumulated depreciation and amortization		(30,523,000	)		(28,376,000	)

	$	25,141,000			26,381,000


(3)	Commissions

Net revenue for the years ended December 31, 2003, 2002, and 2001 is net of agency and national representative commissions of approximately $30,473,000, $33,230,000 and $27,435,000, respectively.


(4)	Related Party Transactions

The balance sheets and statements of operations include certain transactions with NBC and GEC, the parent Company of NBC. As of December 31, 2003 and 2002, the net amount due to affiliates was $6,348,000, and $1,940,000, respectively. In addition, the Partnership recorded net revenue and expenses with NBC and GEC totaling $8,183,000 and $42,664,000, respectively, for the year ended December 31, 2003, $7,466,000 and $42,463,000, respectively, for the year ended December 31, 2002, and $7,920,000 and $40,166,000, respectively, for the year ended December 31, 2001.

For the years ended December 31, 2003, 2002, and 2001, the Partnership recorded network compensation from NBC in the amount of $9,256,000, $9,263,000, and $9,256,000, respectively, retransmission fee income from NBC of $2,100,000, $1,859,000 and $1,568,000, respectively, cable license fee income from NBC of $696,000, $717,000, and $649,000, respectively, and advertising time sales from NBC and GEC of $3,000, $23,000, and $0, respectively, which is included in net revenue in the accompanying statements of operations. For the years ended December 31, 2003, 2002, and 2001, the Partnership recorded commissions to NBC of $3,872,000, $4,396,000, and $3,554,000, respectively, which is included in net revenue in the accompanying statements of operations.

As stated in the Master Service Agreement, NBC receives a management fee equal to 6% of the aggregate broadcast cash flow, defined as operating income plus depreciation and amortization, including both tangible and intangible assets and program rights, less cash payments for program rights and capital expenditures. The Partnership recorded management fee expense of $6,103,000, $6,546,000, and $4,400,000 for the years ended December 31, 2003, 2002, and 2001, respectively, which is included in selling, general, and administrative expense in the accompanying statements of operations.

In 2001, the Partnership entered into a lease agreement with a related entity of GEC, for the lease of a new facility. In connection with the lease, the Partnership expensed $988,000, $966,000, and $304,000 during 2003, 2002, and 2001, respectively.

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Substantially all of the assets of the Partnership are pledged as collateral under the terms of Station Venture Holdings, LLC’s note payable to General Electric Capital Corporation.


(5)	Employee Benefits

The Partnership does not have any employees. All operations are performed through a management agreement by employees of Station Operations, Inc., a 100% wholly owned subsidiary of NBC. Employees of Station Operations, Inc. are covered under pension, health, and life insurance plans. The pension benefits are provided under the General Electric Pension Plan, a defined benefit plan. The Partnership’s health and life insurance benefits are covered under the General Electric Life, Disability, and Medical Plan. Certain executives participate in General Electric Stock Option Plans. The accounting related to the aforementioned plans is the responsibility of GEC and is reflected within its financial statements.


(6)	Commitments and Contingencies

The Partnership is obligated under several noncancelable operating leases for certain property and equipment. There are no contingent rental payments applicable to any of the leases. The majority of the leases provide that the Partnership pay taxes, maintenance, insurance, and certain other operating expenses applicable to the leased premises, in addition to the monthly minimum payments. Total rental expense under operating leases was approximately $2,076,000, $1,930,000, and $1,277,000 for the years ended December 31, 2003, 2002, and 2001, respectively.

Future minimum lease payments under noncancelable operating leases with initial or remaining lease terms in excess of one year as of December 31, 2003 are approximately:


			Nonrelated		Related
			parties		parties		Total

Year ending:
	2004		$	1,182,000		850,000		2,032,000
	2005			1,142,000		859,000		2,001,000
	2006			706,000		862,000		1,568,000
	2007			654,000		828,000		1,482,000
	2008			207,000		858,000		1,065,000
	Thereafter			462,000		13,976,000		14,438,000

		Total minimum lease payments	$	4,353,000		18,233,000		22,586,000

The Partnership has entered into contracts to obtain the program license rights of certain programs with a value of approximately $26,320,000 and $17,399,000 as of December 31, 2003 and 2002, respectively. The portions of these commitments that are payable to NBC were $7,854,000 and $1,171,000 as of December 31, 2003 and 2002, respectively. As these programs were not available for broadcast at December 31, 2003 and 2002, and no payments had been made, the program contract liability and related program license rights are not recorded in the Partnership’s balance sheets at December 31, 2003 and 2002.

From time to time, the Partnership is subject to routine litigation incidental to its business. Management believes, based in part on the advice of legal counsel, that the results of pending legal proceedings will not materially affect the Partnership’s financial position, results of operations, or liquidity.

F-98

Schedule I — Condensed Financial Information of the Registrant

LIN TV CORP.

CONDENSED BALANCE SHEETS

(In thousands, except share data)



			December 31,

			2003			2002

ASSETS
	Investment in wholly owned subsidiaries		$	762,134		$	860,205

		Total assets	$	762,134		$	860,205


STOCKHOLDERS’ EQUITY
Class A common stock. $0.01 par value, 100,000,000 shares authorized, 26,652,060 shares at December 31, 2003 and 26,296,169 shares at December 31, 2002 issued and outstanding			$	266		$	262
Class B common stock, $0.01 par value, 50,000,000 shares authorized 23,510,137 shares at December 31, 2003 and 23,579,788 shares at December 31, 2002 issued and outstanding; convertible into an equal number of Class A or Class C common stock				235			236
Class C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares at December 31, 2003 and December 31, 2002 issued and outstanding; convertible into an equal number of Class A common stock				—			—
Additional paid-in capital				1,066,897			1,064,122
Accumulated deficit				(294,805	)		(204,415	)
Accumulated other comprehensive loss				(10,459	)		—

Total stockholders’ equity				762,134			860,205

		Total stockholders’ equity	$	762,134		$	860,205



		Year ended December 31,

		2003			2002			2001

Share of loss in wholly owned subsidiaries		$	(90,390	)	$	(47,215	)	$	(61,721	)

Net loss		$	(90,390	)	$	(47,215	)	$	(61,721	)

Basic and diluted loss per common share:
	Net loss	$	(1.81	)	$	(1.13	)	$	(2.40	)
Weighted-average number of common shares outstanding used in calculating basic and diluted loss per common share			49,993			41,792			25,688

F-99



	Year ended December 31,

	2003			2002			2001

Operating activities:
Net loss	$	(90,390	)	$	(47,215	)	$	(61,721	)
Share of loss in wholly owned subsidiaries		90,390			47,215			61,721
Net cash used in operating activities		—			—			—

Investing activities:
Capital contributions in wholly-owned subsidiaries		—			(399,944	)		—

Net cash used in investing activities		—			(399,944	)		—

Financing activities:
Net proceeds from initial public offering of common stock		—			399,944			—

Net cash used in financing actvities		—			399,944			—

Net change in cash and cash equivalents		—			—			—
Cash and cash equivalents at the beginning of the period		—			—			—

Cash and cash equivalents at the end of the period	$	—		$	—		$	—

F-100

Schedule I — Condensed Financial Information of the Registrant

LIN TV CORP.

CONDENSED BALANCE SHEETS

(In thousands, except share data)



			December 31,

			2003			2002

ASSETS
	Investment in wholly owned subsidiaries		$	762,134		$	860,205

		Total assets	$	762,134		$	860,205

STOCKHOLDERS’ EQUITY
	Class A common stock, $0.01 par value, 100,000,000 shares authorized, 26,652,060 shares at December 31, 2003 and 26,296,169 shares at December 31, 2002 issued and outstanding		$	266		$	262
	Class B common stock, $0.01 par value, 50,000,000 shares authorized, 23,510,137 shares at December 31, 2003 and 23,579,788 shares at December 31, 2002 issued and outstanding; convertible into an equal number of Class A or Class C common stock			235			236
	Class C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares at December 31, 2003 and December 31, 2002 issued and outstanding; convertible into an equal number of Class A common stock			—			—
	Additional paid-in capital			1,066,897			1,064,122
	Accumulated deficit			(294,805	)		(204,415	)
		Accumulated other comprehensive loss		(10,459	)		—

	Total stockholders’ equity			762,134			860,205

		Total stockholders’ equity	$	762,134		$	860,205

LIN TV CORP.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



		Year Ended December 31,

		2003			2002			2001

Share of loss in wholly owned subsidiaries		$	(90,390	)	$	(47,215	)	$	(61,721	)

Net loss		$	(90,390	)	$	(47,215	)	$	(61,721	)

Basic and diluted loss per common share:
	Net loss	$	(1.81	)	$	(1.13	)	$	(2.40	)
Weighted-average number of common shares outstanding used in calculating basic and diluted loss per common share			49,993			41,792			25,688

F-101

LIN TV CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)



	Year Ended December 31,

	2003			2002			2001

Operating activities:
Net loss	$	(90,390	)	$	(47,215	)	$	(61,721	)
Share of loss in wholly owned subsidiaries		90,390			47,215			61,721

Net cash used in operating activities		—			—			—

Investing activities:
Capital contributions to wholly owned subsidiaries		—			(399,944	)		—

Net cash used in investing activities		—			(399,944	)		—

Financing activities:
Net proceeds from initial public offering of common stock		—			399,944			—

Net cash used in financing activities		—			399,944			—

Net change in cash and cash equivalents		—			—			—
Cash and cash equivalents at the beginning of the period		—			—			—

Cash and cash equivalents at the end of the period	$	—		$	—		$	—

F-102

Lin Television (LNTV) Inactive 10-K/A2003 FY Annual report (amended)