SINCLAIR BROADCAST GROUP INC (Form: 10-K, Filing Date: 03/09/2007)

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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K Annual report pursuant to section 13 and 15(d)

Filing Date: 2007-03-09 | Period of Report: 2006-12-31 SEC Accession No. 0001104659-07-017779

(HTML Version on secdatabase.com)

FILER SINCLAIR BROADCAST GROUP INC Mailing Address Business Address 2000 W 41ST ST 2000 WEST 41ST ST CIK:912752| IRS No.: 521494660 | State of Incorp.:MD | Fiscal Year End: 1231 BALTIMORE MD 21211 BALTIMORE MD 21211 Type: 10-K | Act: 34 | File No.: 000-26076 | Film No.: 07684290 4104675005 SIC: 4833 Television broadcasting stations

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (mark one) FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

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

FOR THE TRANSITION PERIOD FROM TO .

COMMISSION FILE NUMBER: 000-26076

SINCLAIR BROADCAST GROUP, INC. (Exact name of Registrant as specified in its charter)

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

10706 Beaver Dam Road Hunt Valley, MD 21030 (Address of principal executive offices)

(410) 568-1500 (Registrants telephone number, including area code)

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

Title of each class Name of each exchange on which registered Class A Common Stock, par value $0.01 per share The NASDAQ Stock Market LLC

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

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 x 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 registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

Large accelerated filer o Accelerated filer x Non-accelerated filer o

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

Based on the closing sales price of $8.56 per share as of June 30, 2006, the aggregate market value of the voting and non-voting common equity of the Registrant held by non-affiliates was approximately $408.6 million.

Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.

Number of shares outstanding as of Title of each class March 5, 2007 Class A Common Stock 48,780,162 Class B Common Stock 37,534,960

Documents Incorporated by Reference - Portions of our definitive Proxy Statement relating to our 2007 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K. We anticipate that our Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2006.

SINCLAIR BROADCAST GROUP, INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2006

TABLE OF CONTENTS

PART I ITEM 1. BUSINESS ITEM 1A. RISK FACTORS ITEM 1B. UNRESOLVED STAFF COMMENTS ITEM 2. PROPERTIES ITEM 3. LEGAL PROCEEDINGS ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ITEM 9A. CONTROLS AND PROCEDURES ITEM 9B. OTHER INFORMATION

PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

SIGNATURES

FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. These forward- looking statements are subject to risks, uncertainties and assumptions about us, including, among other things, the following risks:

General risks

· the impact of changes in national and regional economies; · the activities of our competitors; · terrorist acts of violence or war and other geopolitical events;

Industry risks

· the business conditions of our advertisers; · competition with other broadcast television stations, radio stations, multi-channel video programming distributors and internet and broadband content providers serving in the same markets; · availability and cost of programming; · the effects of governmental regulation of broadcasting or changes in those regulations and court actions interpreting those regulations, including ownership regulations, indecency regulations, retransmission regulations, political advertising restrictions and regulations and timing regarding the transition from analog to digital over-the-air broadcasting; · the continued viability of networks and syndicators that provide us with programming content;

Risks specific to us

· the effectiveness of our management; · our ability to successfully negotiate retransmission consent agreements; · our ability to attract and maintain local and national advertising; · our ability to service our outstanding debt; · FCC license renewals; · our ability to maintain our affiliation agreements with the top four networks; · the popularity of syndicated programming we purchase and network programming that we air;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · successful integration of outsourcing and news share agreements; · the strength of ratings for our local news broadcasts; · changes in the makeup of the population in the areas where our stations are located; · acceptance by viewers and advertisers of The CW Television Network and MyNetworkTV; and · the success of our multi-channel broadcasting initiatives.

Other matters set forth in this report, including the Risk Factors set forth in Item 1A of this report and/or in the documents incorporated by reference, may also cause actual results in the future to differ materially from those described in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur.

PART I

ITEM 1. BUSINESS

We are a diversified television broadcasting company that owns or provides certain programming, operating or sales services to more television stations than any other commercial broadcasting group in the United States. We currently own, provide programming and operating services pursuant to local marketing agreements (LMAs) or provide (or are provided) sales services pursuant to outsourcing agreements to 58 television stations in 36 markets. For the purpose of this report, these 58 stations are referred to as our stations. We currently have 11 duopoly markets where we own and operate at least two stations within the same market. We have ten LMA markets where, with one exception, we own and operate one station in the market and provide or are provided programming and operating services to, or by, another station within that market. In the remaining 15 markets, we own and operate a single television station.

We have a mid-size market focus and 44 of our 58 stations are located in television designated markets areas (DMAs) that rank between the 12th and 75th largest in the United States. Our television station group is diverse in network affiliation: FOX (19 stations); MyNetworkTV (17 stations); ABC (10 stations); The CW (9 stations); CBS (2 stations) and NBC (1 station). Refer to our Markets and Stations table later in this section for more information.

We broadcast free over-the-air programming to television viewing audiences in the communities we serve through our local television stations. The programming that we provide consists of network provided programs, news produced locally, local sporting events and syndicated entertainment programs. We provide network produced programming, which we broadcast pursuant to our agreements with the network with which the stations are affiliated. We produce news at 19 stations in 13 markets including two stations which have a local news sharing arrangement with a competitive station in that market. We have 13 stations which have local news sharing arrangements with a competitive station in that market, which produces the news aired on our station. We provide live local sporting events on many of our stations by acquiring the local television broadcast rights for these events. Additionally, we purchase and barter for popular syndicated programming from third parties. See Operating Strategy later in this Item for more information regarding the programming we provide.

Our primary source of revenue is the sale of commercial inventory on our television stations to our advertising customers. Our objective is to meet the needs of our advertising customers by delivering significant audiences in key demographics. Our strategy is to achieve this objective by providing quality local news programming and popular network and syndicated programs to our viewing audience. We attract our national television advertisers through a single national marketing representation firm with offices in New York City, Los Angeles, Chicago and Atlanta. Our local television advertisers are attracted through the use of a local sales force at each of our television stations, which is comprised of approximately 490 account executives company-wide.

Our operating results are subject to seasonal fluctuations. The second and fourth quarter operating results are typically higher than the first and third quarters due to increased advertising revenues. The second quarter operating results are typically higher than the first and third quarters primarily because advertising expenditures are increased in anticipation of consumer spending on summer related items such as home improvements, lawn care and travel plans. The fourth quarter operating results are typically the highest in anticipation of holiday season spending by consumers. Our operating results are usually subject to cyclical fluctuations from political advertising. In the past, political spending has been significantly higher in the even-number years due to the cyclicality of political advertising. In addition, every four years,

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document political spending is elevated further due to the advertising revenue preceding the presidential election. We believe political advertising is one of the fastest growing advertising category in our industry. Broadcast televisions share of political advertising in 2006 (a non-presidential election year) is expected to increase 8.8% and 73.0% over 2004 (a presidential election year) and 2002 (a non-presidential election year), respectively, according to PQ Medias October 2006 report, Political Media Buying 2006: Analysis of advertising & marketing spending on nine key media and its impact on the major media companies in the U.S. Previously, there has been a significant difference in our operating results when comparing even-number years performance to the odd-number years performance. However, we expect the television industry to begin to generate increased revenues in odd-number years preceding presidential election years due to earlier state primary dates and an increase in political advertising budgets.

Over the last few years, we have been earning revenue from our retransmission consent agreements through payments from the multi- channel video programming distributors (MVPDs) in our markets. The MVPDs are local cable companies, satellite television and local telecommunication video providers. The revenues primarily represent payments from the MVPDs for access to our signal so they may rebroadcast directly to and charge their subscribers. We have seen this revenue category grow significantly as we successfully renew our retransmission consent agreements with the MVPDs.

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

TELEVISION BROADCASTING

Markets and Stations

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

Affiliation as Station Expiration Market Former of September Rank in Date of FCC Market Rank (a) Stations Status (b) Affiliation (c) 2006 (c) (d) Market (e) License Tampa, Florida 12 WTTA LMA(f) WB MNT 6 of 8 02/01/13 Minneapolis/St. Paul, Minnesota 15 WUCW(g) O&O WB CW 6 of 7 04/01/06 (h) St. Louis, Missouri 21 KDNL O&O ABC ABC 4 of 8 02/01/06 (h) Pittsburgh, Pennsylvania 22 WPGH O&O FOX FOX 4 of 9 08/01/07 WPMY(g) O&O WB MNT 6 of 9 08/01/07 Baltimore, Maryland 24 WBFF O&O FOX FOX 3 of 5 10/01/04 (h) WNUV LMA(i) WB CW 4 of 5 10/01/12 Raleigh/Durham, North Carolina 29 WLFL O&O WB CW 5 of 7 12/01/04 (h) WRDC O&O UPN MNT 6 of 7 12/01/04 (h) Nashville, Tennessee 30 WZTV O&O FOX FOX 4 of 8 08/01/05 (h) WUXP O&O UPN MNT 5 of 8 08/01/05 (h) WNAB OSA(j) WB CW 6 of 8 08/01/05 (j) Columbus, Ohio 32 WSYX O&O ABC ABC 3 of 6 10/01/05 (h) WTTE LMA(i) FOX FOX 4 of 6 10/01/05 (h) Cincinnati, Ohio 33 WSTR O&O WB MNT 5 of 8 10/01/05 (h) Milwaukee, Wisconsin 34 WCGV O&O UPN MNT 5 of 9 12/01/05 (h) WVTV O&O WB CW 6 of 9 12/01/05 (h) Asheville, North Carolina/ 36 WLOS O&O ABC ABC 3 of 7 12/01/04 (h) Greenville/Spartanburg/ Anderson, WMYA(g) LMA(i) WB MNT 6 of 7 12/01/04 (h) South Carolina

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document San Antonio, Texas 37 KABB O&O FOX FOX 4 of 7 08/01/06 (h) KMYS(g) O&O WB MNT 5 of 7 08/01/06 (h) Birmingham, Alabama 40 WTTO O&O WB CW 5 of 9 04/01/05 (h) WABM O&O UPN MNT 6 of 9 04/01/05 (h) WDBB LMA WB CW 5 of 9(k) 04/01/13 Norfolk, Virginia 42 WTVZ O&O WB MNT 6 of 8 10/01/12 Las Vegas, Nevada 43 KVCW(g) O&O IND CW 5 of 7 10/01/14 KVMY(g) O&O WB MNT 6 of 7 10/01/06 (h) Oklahoma City, Oklahoma 46 KOKH O&O FOX FOX 4 of 9 06/01/06 (h) KOCB O&O WB CW 5 of 9 06/01/06 (h) Greensboro/Winston-Salem/ 47 WXLV O&O ABC ABC 4 of 7 12/01/04 (h) Highpoint, North Carolina WMYV(g) O&O UPN MNT 6 of 7 12/01/04 (h) Buffalo, New York 49 WUTV O&O FOX FOX 4 of 9 06/01/07 WNYO O&O WB MNT 6 of 9 06/01/07 Dayton, Ohio 58 WKEF O&O ABC ABC 2 of 8 10/01/05 (h) WRGT LMA(i) FOX FOX 4 of 8 10/01/05 (h) Mobile, Alabama/ 59 WEAR O&O ABC ABC 2 of 9 02/01/05 (h) Pensacola, Florida WFGX O&O IND MNT not rated 02/01/13 Richmond, Virginia 61 WRLH O&O FOX FOX 4 of 5 10/01/04 (h) Lexington, Kentucky 63 WDKY O&O FOX FOX 4 of 6 08/01/05 (h) Charleston/Huntington, 65 WCHS O&O ABC ABC 3 of 7 10/01/12 West Virginia WVAH LMA(i) FOX FOX 4 of 7 10/01/04 (h) Flint/Saginaw/Bay City, Michigan 66 WSMH O&O FOX FOX 4 of 7 10/01/05 (h) Des Moines, Iowa 73 KDSM O&O FOX FOX 4 of 5 02/01/06 (h) Portland, Maine 74 WGME O&O CBS CBS 2 of 6 04/01/07 Rochester, New York 78 WUHF O&O(l) FOX FOX 4 of 6 06/01/07 Syracuse, New York 79 WSYT O&O FOX FOX 4 of 6 06/01/07 WNYS LMA WB MNT 6 of 6 06/01/07 Cape Girardeau, Missouri/ 80 KBSI O&O FOX FOX 4 of 7 02/01/06 (h) Paducah, Kentucky WDKA LMA WB MNT 6 of 7 08/01/13 Springfield/Champaign, Illinois 82 WICS O&O ABC ABC 2 of 6 12/01/05 (h) WICD O&O ABC ABC 2 of 6(m) 12/01/05 (h) Madison, Wisconsin 85 WMSN O&O FOX FOX 4 of 6 12/01/05 (h) Cedar Rapids, Iowa 89 KGAN O&O(l) CBS CBS 3 of 6 02/01/06 (h) Charleston, South Carolina 100 WTAT LMA(i) FOX FOX 4 of 6 12/01/04 (h) WMMP O&O UPN MNT 6 of 6 12/01/04 (h) Tallahassee, Florida 108 WTWC O&O NBC NBC 3 of 8 02/01/05 (h) Springfield, Massachusetts 109 WGGB O&O ABC ABC 2 of 6 04/01/07 Peoria/Bloomington, Illinois 116 WYZZ O&O(l) FOX FOX 4 of 6 12/01/05 (h)

a) Rankings are based on the relative size of a stations designated market area (DMA) among the 210 generally recognized DMAs in the United States as estimated by Nielsen as of November 2006. b) O & O refers to stations that we own and operate. LMA refers to stations to which we provide programming services pursuant to a local marketing agreement. OSA refers to stations to which we provide or receive sales services pursuant to an outsourcing agreement. c) On March 17, 2006, we announced that all of our stations previously affiliated with UPN, one of our stations that previously had no affiliation and certain stations that were previously affiliated with The WB entered into an agreement with MyNetworkTV. On May 2,

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2006, we announced that certain of our stations that had been affiliated with The WB and one of our stations that was previously not affiliated with any network entered into an affiliation agreement with The CW. Beginning September 2006, we began airing programming content provided under these new affiliation agreements. d) When we negotiate the terms of our affiliation agreements with each network, we negotiate on behalf of all of our stations affiliated with that network simultaneously. This results in substantially similar terms for our stations, including the expiration date of the affiliation agreement. A summary of these expiration dates is as follows:

Affiliate Expiration Date FOX All 19 agreements expire on March 6, 2012 MNT All 17 agreements expire on September 4, 2011 ABC All 10 agreements expire on December 31, 2009 CW All 9 agreements expire on August 31, 2010 CBS Both agreements expire on December 31, 2007 NBC Agreement expires on December 31, 2016 e) The first number represents the rank of each station in its market and is based upon the November 2006 Nielsen estimates of the percentage of persons tuned into each station in the market from 7:00 a.m. to 1:00 a.m., Monday through Sunday. The second number represents the estimated number of television stations designated by Nielsen as local to the DMA, excluding public television stations and stations that do not meet the minimum Nielsen reporting standards (weekly cumulative audience of at least 0.1%) for the Monday through Sunday 7:00 a.m. to 1:00 a.m. time period as of November 2006. This information is provided to us in a summary report by Katz Television Group. f) The license assets for this station are currently owned by Bay Television, Inc., a related party. See Note 12. Related Person Transactions, in the Notes to our Consolidated Financial Statements for more information. g) The call letters of some of our stations, and one LMA station, were changed in June 2006 as a result of our new affiliation agreements with MyNetworkTV and The CW:

Market New Call Letters Former Call Letters Minneapolis, MN WUCW KMWB Pittsburgh, PA WPMY WCWB Greenville/Anderson, SC WMYA WBSC San Antonio, TX KMYS KRRT Greensboro/Winston-Salem, NC WMYV WUPN Las Vegas, NV KVMY KVWB KVCW KFBT h) We, or subsidiaries of Cunningham Broadcasting Company (Cunningham), timely filed applications for renewal of these licenses with the FCC. Unrelated third parties have filed petitions to deny or informal objections against such applications. We opposed the petitions to deny and the informal objections and those applications are currently pending. See Note 11. Commitments and Contingencies, in the Notes to our Consolidated Financial Statements for more information. i) The license assets for these stations are currently owned by a subsidiary of Cunningham. j) We have entered into an outsourcing agreement with the unrelated third party owner of WNAB-TV to provide certain non-programming related sales, operational and administrative services to WNAB-TV. Our application to acquire this FCC license is pending FCC approval. k) WDBB-TV simulcasts the programming broadcast on WTTO-TV pursuant to a programming services agreement. The station rank applies to the combined viewership of these stations. l) We have entered into outsourcing agreements with unrelated third parties, under which the unrelated third parties provide certain non- programming related sales, operational and managerial services to these stations. We continue to own all of the assets of these stations and to program and control each stations operations.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document m) WICD-TV, a satellite of WICS-TV under FCC rules, simulcasts all of the programming aired on WICS-TV except the news broadcasts. WICD-TV airs its own news broadcasts. The station rank applies to the combined viewership of these stations.

Operating Strategy

Our operating strategy includes the following elements:

Programming to Attract Viewership. We seek to target our programming offerings to attract viewership, to meet the needs of the communities in which we serve and to meet the needs of our advertising customers. In pursuit of this strategy, we seek to obtain, at attractive prices, popular syndicated programming that is complementary to each stations network programming. We also seek to broadcast live local and national sporting events that would appeal to a large segment of the local community. Moreover, we produce news at 19 stations in 13 markets, including two stations which have a local news sharing agreement with a competitive station in that market. We have 13 stations which have local news sharing arrangements with a competitive station in that market, which produces the news aired on our station.

Attract and Retain High Quality Management. We believe that much of our success is due to our ability to attract and retain highly skilled and motivated managers at both the corporate and local station levels. We provide, a combination of base salary, long-term incentive compensation and, where appropriate, cash bonus pay designed to be competitive with comparable employers in the television broadcast industry. A significant portion of the compensation available to our Chief Operating Officer, sales vice presidents, group managers, general managers, sales managers and other station managers is based on their exceeding certain operating results. We also provide some of our corporate and station managers with deferred compensation plans.

Developing Local Franchises. We believe the greatest opportunity for a sustainable and growing customer base lies within our local communities. Therefore, we have focused on developing a strong local sales force at each of our television stations, which is comprised of approximately 490 account executives company-wide. Excluding political advertising revenue, 64.8% of our net time sales were local for the year ended December 31, 2006, up from 62.7% in 2005. Our goal is to grow our local revenues by increasing our market share and by developing new business opportunities.

Developing New Business. We are always striving to develop new business models to complement or enhance our existing television broadcast business. During the past few years, we have built a profitable direct mail business at many of our stations using, for the most part, our existing sales force. With the success of our direct mail program, which generated $8.7 million in revenues in 2006 and margins of 30.2% to 66.4%, we have developed other initiatives that will give us an additional competitive advantage.

These new business iniatives include A Better Life, a self-improvement program, starring Meredith Baxter. This type of programming connects to a wide array of viewers, which provides an opportunity for advertisers that have not traditionally focused on television advertising to effectively reach their potential customers. A Better Life has resulted in advertising revenues, net of agency commission, of $6.0 million for the year ended December 31, 2006. In 2007, we expect to add MDTV and E-Trimdown.com (aka Perfectly You) to our new business programs.

Local News. We believe that the production and broadcasting of local news is an important link to the community and an aid to a stations efforts to expand its viewership. In addition, local news programming can provide access to advertising sources targeted specifically to local news viewers. We assess the anticipated benefits and costs of producing local news prior to the introduction of local news at our stations because a significant investment in capital equipment is required and substantial operating expenses are incurred in introducing, developing and producing local news programming. We also continuously review the performance of our existing news operations to make sure they are economically viable.

Our local news initiatives are an important part of our strategy that has resulted in our entering into 16 local news sharing arrangements with other television broadcasters. We are the provider of news services in some instances; however, in most of our news share arrangements, we are the recipient of services. We believe news share arrangements generally provide both higher viewer ratings and revenues for the station receiving the news and generate a profit for the news share provider. Generally, both parties and the local community are beneficiaries of these arrangements.

Monetizing Retransmission Consent Agreements. As the competition for programming content increases among the many cable, satellite and telecommunications companies, we are in a position to realize significant additional revenues. We have retransmission consent agreements with MVPDs, such as cable, satellite and telecommunications operators in our markets. Previously, most of these agreements

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document allowed the MVPDs to air our programming to their subscribers without compensating us. We believe that these companies should compensate us for the right to retransmit our broadcast signals. As such, as these agreements come up for renewal or as we renegotiate existing agreements, which are terminable on short notice, we are including terms which provide us with a revenue stream from these agreements. Additionally, as the portable device service providers develop their infrastructure to deliver programming content to television sets, cell phones and other hand-held devices using our spectrum capacity, we may be able to generate additional revenue streams through agreements with them.

Ownership Duopolies and Utilization of Local Marketing Agreements. We have sought to increase our revenues and improve our margins through the ownership of two stations in a single market, called a duopoly, and by providing programming services pursuant to an LMA to a second station in eight DMAs where we already own one station. Duopolies and LMAs allow us to realize significant economies of scale in marketing, programming, overhead and capital expenditures. We also believe these arrangements enable us to air popular programming and contribute to the diversity of programming within each DMA. Although under the FCC ownership rules released in June 2003, we would be allowed to continue to program most of the stations with which we have an LMA, in the absence of a waiver, the 2003 rules would require us to terminate or modify three of our LMAs. Although there can be no assurances, we have studied the application of the 2003 rules to our markets and believe we are qualified for waivers. For additional information, refer to Risk Factors - Changes in Rules on Television Ownership, and Risk Factors - The FCCs multiple ownership rules limit our ability to operate multiple television stations in some markets and may result in a reduction in our revenue or prevent us from reducing costs. Changes in these rules may threaten our existing strategic approach to certain television markets.

Use of Outsourcing Agreements. In addition to our LMAs, we currently operate under four (and may seek opportunities for additional) outsourcing agreements in which our stations provide or are provided various non-programming related services such as sales, operational and managerial services to or by other stations. Pursuant to these agreements, our stations in Nashville, Tennessee currently provide services to another station in the market and other parties provide services to our stations in Peoria/Bloomington, Illinois, Cedar Rapids, Iowa and Rochester, New York. As a result of a change in ownership of the unrelated third party, we terminated our outsourcing agreement in Tallahassee, Florida on February 19, 2006. We believe the outsourcing structure allows stations to achieve operational efficiencies and economies of scale, which should otherwise improve broadcast cash flow and competitive positions. While television joint sales agreements (JSAs) are not currently attributable, as that term is defined by the FCC, on August 2, 2004, the FCC released a notice of proposed rulemaking seeking comments on its tentative conclusion that television joint sales agreements should be attributable. We cannot predict the outcome of this proceeding, nor can we predict how many changes, together with possible changes to ownership rules, would apply to our existing outsourcing agreements.

Multi-Channel Digital Broadcasting. FCC rules allow broadcasters to transmit additional digital channels within the spectrum allocated to each FCC license holder. This provides viewers with additional programming alternatives at no additional cost to them. Four of our television stations are experimenting with broadcasting a second digital channel in accordance with these rules, airing various alternative programming formats. In Baltimore, where our corporate offices are located, we are airing a secondary digital channel comprised of classic television programming and religious programming. In the three other markets, we have a similar format along with MyNetwork TV programming. In addition, we had been airing the Tube Network in 29 of our markets on a secondary digital channel. This effort ended on December 30, 2006.

During the January 2007 Consumer Electronics Show in Las Vegas, Samsung partnered with us to demonstrate the viability of the digital modulation standard known as Advanced-Vestigial Side-Band (A-VSB). This modification developed by Samsung allows for dynamic mobility of the stations broadcast signal. This development is in its earliest stages.

We expect to continue to consider other alternative programming formats that we could air using our multi-channel digital spectrum space when it makes financial sense.

Control of Operating and Programming Costs. By employing a disciplined approach to managing programming acquisition and other costs, we have been able to achieve operating margins that we believe are very competitive within the television broadcast industry. We believe our national reach of approximately 22% of the country provides us with a strong position to negotiate with programming providers, and, as a result, the opportunity to purchase high quality programming at more favorable prices. Moreover, we emphasize control of each of our stations programming and operating costs through program-specific profit analysis, detailed budgeting, regionalization of staff and detailed long-term planning models.

Popular Sporting Events. Our CW and MyNetworkTV affiliated stations generally face fewer restrictions on broadcasting live local sporting events compared with FOX, ABC, CBS and NBC affiliates, which are required to broadcast a greater number of hours of programming supplied by the networks. At some of our stations, we have been able to acquire local television broadcast rights for certain

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document sporting events, including NBA basketball, Major League Baseball, NFL football, NHL hockey, ACC basketball and both Big Ten and SEC football and basketball. We seek to expand our sports broadcasting in DMAs only as profitable opportunities arise. In addition, our stations that are affiliated with FOX, ABC, CBS and NBC broadcast certain NBA basketball, Major League Baseball games, NFL football games, NHL hockey games and NASCAR races, as well as other popular sporting events.

Strategic Realignment of Station Portfolio. We continue to examine our television station group portfolio in light of the FCCs broadcast ownership rules adopted in 2003. For a summary of these rules, refer to Ownership Matters, discussed in the Federal Regulation of Television Broadcasting. Our objective is to build our local franchises in the markets we deem strategic. We routinely review and conduct investigations of potential television station acquisitions, dispositions and station swaps. At any given time, we may be in discussions with one or more television station owners. For more information related to station sales, see Note 13. Discontinued Operations, in the Notes to our Consolidated Financial Statements.

Community Involvement. Each of our stations actively participates in various community activities and offers many community services. Our activities include broadcast programming of local interest and sponsorship of community and charitable events. We also encourage our station employees to become active members of their communities and to promote involvement in community and charitable affairs. After Hurricane Ivan affected their community, WEAR-TV in Pensacola, Florida compiled their news footage of the hurricane into a DVD entitled In Focus: Hurricane Ivan Special. Approximately $180,000 of the proceeds from the sale of the DVDs was donated to various charities including Habitat for Humanity and United Way. In response to the Tsunami tragedy in Southeast Asia during 2004, our employees generously donated over $17,000; we matched this amount with a contribution to the American Red Cross. In response to the disaster caused by Hurricane Katrina, the Sinclair Relief Fund (the Fund) was formed by David D. Smith, Frederick Smith, J. Duncan Smith, three of our controlling shareholders, and Barry M. Faber, our Vice President and General Counsel. The Fund is a qualified charitable organization formed to provide monetary aid and relief to the victims of natural disasters. Our employees and viewers generously donated over $208,000 to the Fund and we made an additional contribution of $50,000. The Fund distributed the contributions to various organizations including the American Red Cross, the Salvation Army, Feed the Children and USA Harvest. We believe that active community involvement by our stations provides our stations with increased exposure in their respective DMAs and is our responsibility as stewards of the communitys broadcast license.

FEDERAL REGULATION OF TELEVISION BROADCASTING

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

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

License Grant and Renewal

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

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

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document All of the stations that we currently own and operate or provide programming services or sales services to, pursuant to LMAs or other agreements, are presently operating under regular licenses, which expire as to each station on the dates set forth under Television Broadcasting above. Although renewal of a license is granted in the vast majority of cases even when petitions to deny are filed, there can be no assurance that the license of any station will be renewed.

In 2004, we filed with the FCC an application for the license renewal of WBFF-TV in Baltimore, Maryland. Subsequently, an individual named Richard DAmato filed a petition to deny the application. In 2004, we also filed with the FCC applications for the license renewal of television stations: WXLV-TV, Winston-Salem, North Carolina; WMYV-TV, Greensboro, North Carolina; WLFL-TV, Raleigh/Durham, North Carolina; WRDC-TV, Raleigh/Durham, North Carolina; WLOS-TV, Asheville, North Carolina and WMMP-TV, Charleston, South Carolina. An organization calling itself Free Press filed a petition to deny the renewal applications of these stations and also the renewal applications of two other stations in those markets, which we program pursuant to LMAs: WTAT-TV, Charleston, South Carolina and WMYA-TV, Anderson, South Carolina. Several individuals and an organization named Sinclair Media Watch also filed informal objections to the license renewal applications of WLOS-TV and WMYA-TV, raising essentially the same arguments presented in the Free Press petition. The FCC is currently in the process of considering these renewal applications and we believe the objections have no merit.

On October 12, 2004, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) in the amount of $7,000 per station to virtually every FOX station, including the 15 FOX affiliates presently licensed to us and the four FOX affiliates programmed by us and one FOX affiliate we sold in 2005. The NAL alleged that the stations broadcast indecent material contained in an episode of a FOX network program that aired on April 7, 2003. We, as well as other parties including the FOX network, filed oppositions to the NAL. That proceeding is still pending. Although we cannot predict the outcome of that proceeding or the effect of any adverse outcome on the stations license renewal applications, the FOX network has agreed to indemnify its affiliates for the full amount of this liability.

On July 21, 2005, we filed with the FCC an application to acquire WNAB-TV in Nashville, Tennessee. Rainbow/PUSH filed a petition to deny that application and also requested that the FCC initiate a hearing to investigate whether WNAB-TV was improperly operated with WZTV-TV and WUXP-TV, two of our stations located in the same market as WNAB-TV. That proceeding is currently pending and we believe the petition has no merit.

On August 1, 2005, we filed applications with the FCC requesting renewal of the broadcast licenses for WICS-TV and WICD-TV in Springfield/Champaign, Illinois. Subsequently, various viewers filed informal objections requesting that the FCC deny these renewal applications. Also on August 1, 2005, we filed applications with the FCC requesting renewal of the broadcast licenses for WCGV-TV and WVTV-TV in Milwaukee, Wisconsin. On November 1, 2005, the Milwaukee Public Interest Media Coalition filed a petition with the FCC to deny these renewal applications. On September 30, 2005, we filed an application with the FCC for the renewal of the broadcast license for KGAN-TV in Cedar Rapids, Iowa. On December 28, 2005, an organization calling itself Iowans for Better Local Television filed a petition to deny that application. The FCC is currently in the process of considering these renewal applications and we believe the objections and petitions requesting denial have no merit.

On March 15, 2006, the FCC issued an NAL in the amount of $32,500 per station to a number of CBS affiliated and owned and operated stations, including KGAN-TV in Cedar Rapids, Iowa. The NAL alleged that the stations broadcast indecent material contained in an episode of Without a Trace, a CBS network program that aired on December 31, 2004 at 9:00 pm. CBS opposed the NAL but has not agreed to indemnify its affiliates for the full amount of this liability, if any. We cannot predict the outcome of this proceeding or the effect of any adverse outcome on the stations license renewal application.

On October 17, 2006, Mediacom Communications Corporation (Mediacom), in connection with a retransmission consent dispute with us, filed a pleading opposing the grant of the pending license renewal applications of thirty-nine stations licensed to us or to which we provide services. On February 2, 2007, we reached a retransmission consent agreement with Mediacom, and on February 6, 2007, Mediacom submitted a motion to withdraw and dismiss its pleading with prejudice.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Action on many license renewal applications, including those we have filed, has been delayed because of the pendency of complaints that programming aired by the various networks contained indecent material. We cannot predict when the FCC will address these complaints and act on the renewal applications.

Recent actions by the FCC have also made it difficult for us to predict the impact on our license renewals from allegations related to the airing of indecent material that may arise in the ordinary course of our business. For example, on Veterans Day in November 2004, we preempted (did not air) Saving Private Ryan, a program that was aired during ABCs network programming time. We were concerned that since the program contained the use of the F word (indecent material as defined by the FCC) airing the programming could result in a fine or other negative consequences for one or more of our ABC stations. In February 2005, the FCC dismissed all complaints filed against ABC stations regarding this program. The FCCs decision justified what some may consider indecent material as appropriate in the context of the program. Although this ruling has expanded the programming opportunities of our stations, it still leaves us at risk because what might be determined as legitimate context by us may not be deemed so by the FCC and the FCC will not rule beforehand as this may be considered a restriction of free speech. For example, in September 2006, we preempted a CBS network documentary on the events that happened on September 11, 2001 because the program contained what some have argued is indecent material and the FCC would not provide, in advance of the airing of the documentary, any guidance on whether that material was appropriate in the context of the program. The result of this is that we only know that Saving Private Ryan and Schindlers List are allowed to be aired in their unedited entirety under current FCC rulings.

Ownership Matters

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

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Communications Act prohibits the issuance of a broadcast license to, or the holding of a broadcast license by, any corporation of which more than 20% of the capital stock is owned of record or voted by non-U. S. citizens or their representatives or by a foreign government or a representative thereof, or by any corporation organized under the laws of a foreign country (collectively, aliens). The Communications Act also authorizes the FCC, if the FCC determines that it would be in the public interest, to prohibit the issuance of a broadcast license to, or the holding of a broadcast license by, any corporation directly or indirectly controlled by any other corporation of which more than 25% of the capital stock is owned of record or voted by aliens. The FCC has issued interpretations of existing law under which these restrictions in modified form apply to other forms of business organizations, including partnerships.

As a result of these provisions, the licenses granted to our subsidiaries by the FCC could be revoked if, among other restrictions imposed by the FCC, more than 25% of our stock were directly or indirectly owned or voted by aliens. Sinclair and its subsidiaries are domestic corporations, and the members of the Smith family (who together hold approximately 82% of the common voting rights of Sinclair) are all United States citizens. Our amended and restated Articles of Incorporation (the amended certificate) contain limitations on alien ownership and control that are substantially similar to those contained in the Communications Act. Pursuant to the amended certificate, we have the right to repurchase alien-owned shares at their fair market value to the extent necessary, in the judgment of the Board of Directors, to comply with the alien ownership restrictions.

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

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

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

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

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

If these rules become law, broadcast television owners would be permitted to own more television stations, potentially affecting our competitive position. The Third Circuit Court of Appeals has stayed the application of the 2003 rules as a result of numerous legal challenges, including one we filed. In July 2004, the Court issued a decision holding, among other things, that the numerical limits established by the FCCs 2003 local television ownership rule were patently unreasonable and not consistent with

the record evidence. The Court remanded the numerical limits for the FCC to justify or modify and left the stay in effect pending the FCCs action on remand. Several parties, including us, filed petitions with the Supreme Court of the United States seeking review of the Third Circuit decision, but the Supreme Court denied the petitions in June 2005. In July 2006, as part of the FCCs statutorily required quadrennial review of its media ownership rules, the FCC released a Further Notice of Proposed Rule Making seeking comment on how to address the issues raised by the Third Circuits decision, among other things, remanding the local television ownership rule. During the pendency of the remand, the Third Circuit has ordered the FCC to continue to apply the ownership rules in effect prior to the adoption of the 2003 rules. The FCC ownership rules currently being applied are described below:

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Dual Network Rule. The four major television networks, FOX, ABC, CBS and NBC, are prohibited, absent a waiver, from merging with each other. In May 2001, the FCC amended its dual network rule to permit the four major television networks to own, operate, maintain or control other television networks, such as The CW or MyNetworkTV.

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

All but seven of the stations we own and operate, or to which we provide programming services, are UHF. We reach approximately 22% of U. S. television households or 12.5% taking into account the FCCs UHF discount.

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

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

· if the market containing both the stations will contain at least eight independently owned full-power television stations post-merger (the eight voices test) and not more than one station is among the top-four ranked stations in the market.

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

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

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

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

Local Marketing Agreements

Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs. One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such programming segments on the other licensees station subject to the ultimate editorial and other controls being exercised by the latter licensee. We believe these arrangements allow us to reduce our operating expenses and enhance profitability.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Under the FCC ownership rules adopted in 2003, we would be allowed to continue to program most of the stations with which we have an LMA. In the absence of a waiver, the 2003 ownership rules would require us to terminate or modify three of our LMAs in markets where both the station we own and the station with which we have an LMA are ranked among the top four stations in their particular designated market area. The FCCs 2003 ownership rules include specific provisions permitting waivers of this top four restriction. Although there can be no assurances, we have studied the application of the 2003 ownership rules to our markets and believe we are qualified for waivers. The effective date of the 2003 ownership rules has been stayed by the U. S. Court of Appeals for the Third Circuit and the rules are on remand to the FCC. Several parties, including us, filed petitions with the Supreme Court of the United States seeking review of the Third Circuit decision, but the Supreme Court denied the petitions. In July 2006, as part of the FCCs statutorily required quadrennial review of its media ownership rules, the FCC released a Further Notice of Proposed Rule Making seeking comment on how to address the issues raised by the Third Circuits decision, among other things, remanding the local television ownership rules. We cannot predict the outcome of that proceeding, which could significantly impact our business.

When the FCC decided to attribute LMAs for ownership purposes in 1999, it grandfathered our LMAs that were entered into prior to November 5, 1996, permitting the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCCs 2004 biennial review. The FCC stated it would conduct a case-by-case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering periods. Subsequently, the FCC invited comments as to whether, instead of beginning the review of the grandfathered LMAs in 2004, it should do so in 2006. The FCC did not initiate any such review of grandfathered LMAs in 2004 and has not indicated it would do so as part of its 2006 quadrennial review. We do not know when, or if, the FCC will conduct any such review of grandfathered LMAs.

Because the effective date of the 2003 ownership rules has been stayed and, in connection with the adoption of those rules, the FCC concluded the old rules could not be justified as necessary in the public interest, we have taken the position that an issue exists regarding whether the FCC has any current legal right to enforce any rules prohibiting the acquisition of television stations. The FCC, however, dismissed our applications to acquire certain LMA stations. We filed an application for review of that decision, which is still pending. In 2005, we filed a petition with the U. S. Court of Appeals for the D.C. Circuit requesting that the Court direct the FCC to take final action on our applications, but that petition was denied. On January 6, 2006, we submitted a motion to the FCC requesting that it take final action on our applications and that request is pending.

On November 15, 1999, we entered into a plan and agreement of merger to acquire through merger WMYA-TV (formerly WBSC-TV) in Anderson, South Carolina from Cunningham, but that transaction was denied by the FCC. In light of the change in the 2003 ownership rules, we have filed a petition for reconsideration with the FCC and amended our application to acquire the license of WMYA-TV. We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations: WRGT-TV, Dayton, Ohio; WTAT- TV, Charleston, South Carolina; WVAH-TV, Charleston, West Virginia; WNUV-TV, Baltimore, Maryland; and WTTE-TV, Columbus, Ohio. Rainbow/PUSH filed a petition to deny these five applications and to revoke all of our licenses. The FCC dismissed our applications in light of the stay of the 2003 ownership rules and also denied the Rainbow/PUSH petition. Rainbow/PUSH filed a petition for reconsideration of that denial and we filed an application for review of the dismissal, which may be impacted by the remand of the FCCs 2003 ownership rules. In 2005, we filed a petition with the U. S. Court of Appeals for the D. C. Circuit requesting that the Court direct the FCC to take final action on our applications, but that petition was dismissed. On January 6, 2006, we submitted a motion to the FCC requesting that it take final action on our applications. Both the applications and the associated petition to deny are still pending. We believe the Rainbow/PUSH petition is without merit.

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

In 1988, Congress enacted the Satellite Home Viewer Act (SHVA), which enabled satellite carriers to provide broadcast programming to those satellite subscribers who were unable to obtain broadcast network programming over-the-air. SHVA did not permit satellite carriers to retransmit local broadcast television signals directly to their subscribers. The Satellite Home Viewer Improvement Act of 1999 (SHVIA) revised SHVA to reflect changes in the satellite and broadcasting industry. This legislation allowed satellite carriers, until December 31, 2004, to provide local television signals by satellite within a station market, and effective January 1, 2002, required satellite carriers to carry all local signals in any market where they carry any local signals. On or before July 1, 2001, SHVIA required all television stations to elect to exercise certain must carry or retransmission consent

rights in connection with their carriage by satellite carriers. We have entered into compensation agreements granting the two primary satellite carriers retransmission consent to carry all our stations. In December 2004, President Bush signed into law the Satellite Home Viewer Extension and Reauthorization Act (SHVERA). SHVERA extended, until December 31, 2009, the rights of broadcasters and satellite carriers under SHVIA to retransmit local television signals by satellite. SHVERA also authorized satellite delivery of distant network signals, significantly viewed signals and local low-power television station signals into local markets under defined circumstances. With respect to digital signals, SHVERA established a process to allow satellite carriers to retransmit distant network signals and significantly viewed signals to subscribers under certain circumstances. In November 2005, the FCC completed a rulemaking proceeding enabling the satellite carriage of significantly viewed signals. In December 2005, the FCC concluded a study, as required by SHVERA, regarding the applicable technical standards for determining when a subscriber may receive a distant digital network signal. The carriage of programming from two network stations to a local market on the same satellite system could result in a decline in viewership of the local network station, adversely impacting the revenues of our affected owned and programmed stations.

Must Carry/Retransmission Consent

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

· the number of activated channels on a cable system;

· the location and size of a cable system; and

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

Therefore, under certain circumstances, a cable system may decline to carry a given station. Alternatively, if a broadcaster chooses to exercise retransmission consent rights, it can prohibit cable systems from carrying its signal or grant the appropriate cable system the authority to retransmit the broadcast signal for a fee or other consideration. In October 2005, we elected retransmission consent with respect to all of our stations. Some of these retransmission consent agreements had been negotiated for cable carriage of our analog and/or digital signal and are short-term and subject to month-to-month extensions.

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document However, we have entered into retransmission consent agreements with a significant number of MVPDs. These retransmission consent agreements generally have expiration dates in December 2009.

Syndicated Exclusivity/Territorial Exclusivity

The FCCs syndicated exclusivity rules allow local broadcast television stations to demand that cable operators black out syndicated non- network programming carried on distant signals (i.e. signals of broadcast stations, including so-called superstations, which serve areas substantially removed from the cable systems local community). The FCCs network non-

duplication rules allow local broadcast, network affiliated stations to require that cable operators black out duplicate network programming carried on distant signals. However, in a number of markets in which we own or program stations affiliated with a network, a station that is affiliated with the same network in a nearby market is carried on cable systems in our markets. This is not necessarily a violation of the FCCs network non-duplication rules. However, the carriage of two network stations on the same cable system could result in a decline of viewership, adversely affecting the revenues of our owned or programmed stations.

In December 2004, President Bush signed into law the Satellite Home Viewer Extension and Reauthorization Act (SHVERA). Among other things, SHVERA allows satellite carriers to transmit distant signals and the signals of significantly viewed stations under certain circumstances. In November 2005, the FCC completed a rulemaking proceeding enabling the satellite carriage of significantly viewed signals. In December 2005, the FCC concluded a study, as required by SHVERA, regarding the applicable technical standards for determining when a subscriber may receive a distant digital network signal. The carriage of programming of two network stations to a local market on the same satellite system could result in a decline in viewership of the local network station, adversely impacting the revenues of our affected owned and programmed stations.

Digital Television

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

DTV channels are generally located in the range of channels from channel 2 through channel 51. All commercial stations were required to begin digital broadcasting on May 1, 2002. Under the FCCs rules, all DTV stations are required to operate at all times in which their analog stations are operating. In September 2004, the FCC eliminated its requirement that a digital station simulcast a certain percentage of the programming transmitted on its associated analog station.

As of December 31, 2004, DTV stations were required to meet a certain signal strength standard for the digital signal coverage in their communities of license. By July 2005, a DTV licensee affiliated with a top four network (i.e, FOX, ABC, CBS or NBC) that is located in one of the top 100 markets was required to meet a higher replication standard or lose interference protection for those areas not covered by the digital signal. For a station subject to this deadline which had not yet received a construction permit, the FCC required that such station build a checklist facility by August 2005. For all other commercial DTV licensees, as well as non-commercial DTV licensees, that have received construction permits, the deadline for meeting a higher replication standard was July 2006. We filed requests, that are pending, for extensions and/or waivers of these deadlines for WSMH-DT, Flint, Michigan and WSTR-DT, Cincinnati, Ohio. There are no guarantees that our extension and waiver requests will be granted. Loss of interference protection for any of our stations could reduce the number of viewers of that station and could adversely impact revenues for that station.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We operate our television stations at different power levels pursuant to our FCC licenses, applicable permits or special temporary authority granted by the FCC. The following table is a summary of our operating status as of December 31, 2006:

DTV Operating Status # of Stations Operating with approved digital license 21 Operating at full power, pending license approval 23 Operating at low power with special temporary authority 2 Applications pending for construction permits 1 LMA/JSA stations operating with approved digital license 3 LMA/JSA stations operating at full power, pending license approval 6 LMA/JSA stations operating at low power with special temporary authority 2 58

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

After completion of the transition period, the FCC will reclaim the non-digital channels. Congress passed legislation establishing a hard deadline of February 17, 2009 by which broadcasters must cease using their analog channel. There can be no assurance that the stations we own or program will be fully transitioned to digital broadcasts by this deadline. A stations failure to

meet the deadline could result in a loss of interference protection or the applicable FCC license, adversely impacting the revenues of our owned and programmed stations and LMA/JSA stations.

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

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

Reclamation of analog channels. Analog broadcasters are required to cease operation on their assigned analog spectrum by February 17, 2009. At that time, the FCC will reclaim this spectrum from broadcasters and make it available to the entities who have been assigned the spectrum through FCC auctions. The FCC envisions that the reclaimed band will be used for a variety of broadcast-type applications including two-way interactive services and services using Coded Orthogonal Frequency Division Multiplexing technology. We cannot predict how the development of this spectrum will affect our television operations.

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

Multi-Channel Digital Broadcasting. FCC rules allow broadcasters to transmit additional digital signals within the spectrum allocated to each FCC license holder. We are currently broadcasting a single digital signal for all but four of our television stations. During 2006, we began broadcasting a second digital signal in Baltimore, Maryland on which we are currently airing various programs including religious, paid-programming and classic syndicated programming. We also entered into agreements with MyNetworkTV to air prime-time programming on the second digital signal in Columbus, Ohio, Dayton, Ohio and Richmond, Virginia. During non prime-time hours these stations air religious, paid-programming and classic syndicated programming.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Capital and operating costs. We have incurred and will continue to incur costs to replace equipment in our stations in order to provide digital television. Some of our stations will also incur increased utilities costs as a result of broadcasting both analog and digital signals during the transition period.

Childrens programming. In 2004, the FCC established childrens educational and informational programming obligations for digital multicast broadcasters and placed restrictions on the increasing commercialization of childrens programming on both analog and digital broadcast and cable television systems. In addition to imposing its limit as to the amount of commercial matter in childrens programming (10.5 minutes per hour on weekends and 12 minutes per hour on weekdays) on all digital or video programming, free or pay, directed to children 12 years old and younger, the FCC also mandated that digital broadcasters air an additional half hour of core childrens programming per every increment of 1 to 28 hours of free video programming provided in addition to the main DTV program stream. The additional core childrens programming requirement for digital broadcasters took effect on January 2, 2007.

Emergency Alert System. In November 2005, the FCC adopted an order requiring that digital broadcasters comply with the FCCs present Emergency Alert System (EAS) rules. It also issued a further notice of proposed rulemaking seeking comments on what actions the FCC should take to expedite the development of a digitally based public alert and warning system. Any additional EAS requirements on digital broadcasters could increase our costs.

Restrictions on Broadcast Programming

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

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

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

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

· during the 45 days preceding a primary or primary run-off election and during the 60 days preceding a general or special election, legally qualified candidates for elective office may be charged no more than the stations lowest unit charge for the same class and amount of time for the same period.

It is a violation of federal law and FCC regulations to broadcast obscene or indecent programming. FCC licensees are, in general, responsible for the content of their broadcast programming, including that supplied by television networks. Accordingly, there is a risk of being fined as a result of our broadcast programming, including network programming. As a result of legislation passed in June 2006, the maximum forfeiture amount for the broadcast of indecent or obscene material was increased to $325,000 from $32,500 for each violation.

Programming and Operation

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Equal Employment Opportunity. On November 20, 2002, the FCC adopted rules, effective March 10, 2003, requiring licensees to create equal employment opportunity outreach programs and maintain records and make filings with the FCC evidencing such efforts. The FCC simultaneously released a notice of proposed rulemaking seeking comments on whether and how to apply these rules and policies to part-time positions, defined as less than 30 hours per week. That rulemaking is still pending.

Childrens Television Programming. Television stations are required to broadcast a minimum of three hours per week of core childrens educational programming, which the FCC defines as programming that:

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

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

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

In addition and as noted above under Digital Television, the FCC concluded that starting on January 2, 2007 a digital broadcaster must air an additional half hour of core childrens programming per every increment of 1 to 28 hours of free video programming provided in addition to the main DTV program stream.

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

In 2004, the FCC initiated a notice of inquiry seeking comments on issues relating to the presentation of violent programming on television and its impact on children. That proceeding is still pending.

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

In 2004, the FCC initiated a notice of inquiry seeking comments on what actions, if any, it should take to ensure that licensees air programming that is responsive to the interests and needs of their communities of license. That proceeding is still pending.

Closed Captioning. Effective January 1, 2006, all new nonexempt analog and digital English language programming was required to be captioned. Additionally, the FCC, in July 2005, initiated a rulemaking to determine whether any revisions should be made to enhance the effectiveness of its closed captioning rules, including monitoring compliance and the establishment of a base forfeiture amount for noncompliance.

Pending Matters

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

Other matters that could affect our broadcast properties include technological innovations and developments generally affecting competition in the mass communications industry, such as direct television broadcast satellite service, Class A television service, the continued establishment of wireless cable systems and low power television stations, digital television technologies, the internet and mobility and portability of our broadcast signal to hand-held devices.

For example, in October 2006, the FCC adopted an order taking the initial steps toward allowing new low power devices to operate in the broadcast television spectrum at locations where channels in that spectrum are not in use. The operation of such devices could cause harmful interference to our broadcast signals adversely affecting the operation and profitability of our stations. In December 2006, the FCC adopted

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document an order prohibiting franchising authorities from unreasonably refusing to award competitive franchises for the provision of cable services. The order could facilitate the provision of such services by telephone companies, increasing competition to our stations.

Other Considerations

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

ENVIRONMENTAL REGULATION

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

COMPETITION

Our television stations compete for audience share and advertising revenue with other television stations in their respective designated market areas (DMAs), as well as with other advertising media such as radio, newspapers, magazines, outdoor advertising, transit advertising, telecommunications providers, internet, yellow page directories, direct mail, MVPDs and wireless video. Some competitors are part of larger organizations with substantially greater financial, technical and other resources than we have. Other factors that are material to a television stations competitive position include signal coverage, local program acceptance, network affiliation, audience characteristics and assigned broadcast frequency.

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

Broadcast television stations compete for advertising revenues primarily with other broadcast television stations, radio stations, cable channels, MVPDs serving the same market, as well as with newspapers, the internet, yellow page directories, direct mail, outdoor advertising operators and transit advertisers. Television stations compete for audience share primarily on the basis of program popularity, which has a direct effect on advertising rates. Our big four affiliated stations: WTTA-TV, Tampa, Florida; WUCW-TV, Minneapolis/St. Paul, Minnesota; KDNL-TV, St. Louis, Missouri and WPGH-TV, Pittsburgh, Pennsylvania are largely dependent upon the performance of the networks programs in attracting viewers. Non-network time periods are programmed by the station primarily with syndicated programs purchased for cash, cash and barter or barter-only, as well as through self-produced news, public affairs programs, live local sporting events, paid- programming and other entertainment programming.

Television advertising rates are based upon factors which include the size of the DMA in which the station operates, a programs popularity among the viewers that an advertiser wishes to attract, the number of advertisers competing for the available time, the demographic makeup of the DMA served by the station, the availability of alternative advertising media in the DMA including radio, MVPDs, internet,

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document newspapers and yellow page directories, direct mail, the aggressiveness and knowledge of the sales forces in the DMA and development of projects, features and programs that tie advertiser messages to programming. We believe that our sales and programming strategies allow us to compete effectively for advertising revenues within our DMAs.

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

There are sources of video service other than conventional television stations, the most common being cable television, which can increase competition for a broadcast television station by bringing into its market additional program channels. These narrow program channels serve as low rated, expensive programs to local advertisers. Other principal sources of competition include home video exhibition and Direct Broadcast Satellite (DBS) services and Broadband Radio Service (BRS). DBS and cable operators, in particular, compete aggressively for advertising revenues.

Moreover, technology advances and regulatory changes affecting programming delivery though fiber optic telephone lines and video compression could lower entry barriers for new video channels and encourage the further development of increasingly specialized niche programming. Telephone companies are permitted to provide video distribution services via radio communication, on a common carrier basis, as cable systems or as open video systems, each pursuant to different regulatory schemes. Additionally, in January 2004, the FCC concluded an auction for licenses operating in the 12 GHz band that can be used to provide multi-channel video programming distribution. Those licenses were granted in July 2004. We are unable to predict what other video technologies might be considered in the future or the effect that technological and regulatory changes will have on the broadcast television industry and on the future profitability and value of a particular broadcast television station.

While DTV technology is currently available in most viewing markets, the transition of our viewers from the current analog broadcast format to a digital format is scheduled to occur on February 17, 2009. We are currently exploring whether or not television broadcasting will be enhanced significantly by the development and increased availability of DTV technology. This technology has the potential to permit us to provide viewers multiple channels of digital television over each of our existing standard channels, to provide certain programming in high definition television format and to deliver various forms of data and programming to the internet, to PCs and mobile handheld devices. These additional capabilities may provide us with additional sources of revenue, as well as additional competition. In addition, emerging technologies that allow viewers to digitally record and play back television programming have increased the number of hours people spend watching television.

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

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

As of March 5, 2007, we had approximately 2,786 employees. Approximately 182 employees at six of our television stations are represented by labor unions under certain collective bargaining agreements. We have not experienced any significant labor problems and consider our overall labor relations to be good.

AVAILABLE INFORMATION

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

ITEM 1A. RISK FACTORS

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

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

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

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

· the health of the economy in the area where our television stations are located and in the nation as a whole;

· the popularity of our programming;

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

· the activities of our competitors, including increased competition from other forms of advertising-based mediums, such as other broadcast television stations, radio stations, satellite television providers, internet content providers, cable system operators and telecommunication providers serving in the same markets; and

· other factors that may be beyond our control.

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

We have a high level of debt, totaling $1.4 billion at December 31, 2006, compared to the book value of shareholders equity of $266.6 million on the same date. Our relatively high level of debt poses the following risks, particularly in periods of declining revenues:

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · the interest rate under our Bank Credit Agreement is a floating rate and will increase as interest rates increase. This will reduce the funds available to repay our obligations and for operations and future business opportunities and will make us more vulnerable to the consequences of our leveraged capital structure;

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

· our ability to finance working capital needs and general corporate purposes for the public and private markets, as well as the associated cost of funding is dependent, in part, by our credit ratings. As of December 31, 2006, our credit ratings, as assigned by Moodys Investor Services (Moodys) and Standard & Poors Ratings Services (S&P) were:

Moodys S&P Senior Secured Credit Facilities Baa3 BB Corporate Credit Ba3 BB- Senior Subordinated Notes B1 B Convertible Senior Notes B2 B

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

We may be more vulnerable to adverse economic conditions than less leveraged competitors and thus, less able to withstand competitive pressures.

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

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

At December 31, 2006, we had $175.0 million available (subject to certain borrowing conditions) for additional borrowings under the Bank Credit Agreement, all of which was available under our current borrowing capacity. In addition, under the terms of our debt instruments, we may be able to incur substantial additional indebtedness in the future, including additional senior debt and in some cases, secured debt. Provided we meet certain financial and other covenants, the terms of the indentures governing our outstanding notes do not prohibit us from incurring such additional indebtedness. If we incur additional indebtedness, the risks described above relating to having substantial debt could intensify.

We must purchase television programming in advance based on expectations about future revenues. Actual revenues may be lower than our expectations. If this happens, we could experience losses that may make our securities less valuable.

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Our existing financing agreements prevent us from taking certain actions and require us to meet certain tests. These restrictions and tests may require us to conduct our business in ways that make it more difficult for us to repay our indebtedness or decrease the value of our business. These restrictions and tests include the following:

· restrictions on additional debt;

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

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

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

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

· restrictions on the type of business we and our subsidiaries may operate in; and

· financial ratio and condition tests including the ratio of earnings before interest, tax, depreciation and amortization, as adjusted (adjusted EBITDA) to certain of our fixed expenses, the ratio of indebtedness to adjusted EBITDA, adjusted EBITDA to senior indebtedness and adjusted EBITDA to operating company indebtedness.

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

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

Network Affiliation Agreements Beginning in September 2006, our 58 television stations that we own and operate, or to which we provide programming services or sales services, are affiliated as follows: FOX (19 stations); MyNetworkTV (17 stations); ABC (10 stations); The CW (9 stations); CBS (2 stations) and NBC (1 station). Prior to September 2006, of the 58 television stations that we owned and operated, or to which we provided programming services or sales services, 56 were affiliated as follows: FOX (19 stations); WB (18 stations); ABC (10 stations); UPN (6 stations); CBS (2 stations) and NBC (1 station). The remaining two stations were independent. The networks produce and distribute programming in exchange for each stations commitment to air the programming at specified times and for commercial announcement time during programming. The amount and quality of programming provided by each network varies.

On December 22, 2006, NBC agreed to renew our affiliation agreement for WTWC-TV in Tallahassee, Florida. The agreement has a ten-year term that will expire on December 31, 2016. As of December 31, 2006, the net book value of this affiliation agreement was $2.1 million.

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

reduced revenues. Upon the termination of any of the above affiliation agreements, we would be required to establish a new affiliation agreement with another network or operate as an independent station. At such time, the remaining value of the network affiliation asset could become impaired and we would be required to write down the value of the asset. At this time, we cannot predict the final outcome of future negotiations and what impact, if any, they may have on our consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows. See Item 1. Business, Television Broadcasting table for further information regarding our affiliation agreements.

A change in a critical accounting estimate that affects the accounting treatment of goodwill and FCC licenses could cause material future losses due to asset impairment.

In June 2001, the Financial Accounting Standards Board (FASB) approved SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 142 requires companies to cease amortizing goodwill and certain other intangible assets including FCC licenses. SFAS 142 also establishes a method of testing goodwill and FCC licenses for impairment on an annual basis, or on an interim basis if an event occurs that would reduce the fair value of a reporting unit below its carrying value.

We test our goodwill and FCC licenses for impairment. To perform this test, we estimate the fair values of our station assets and liabilities using a combination of observed prices paid for similar assets and liabilities, discounted cash flow models and appraisals. We make certain critical estimates about the future revenue growth rates within each of our markets as well as the discount rates that would be used by market participants in an arms-length transaction. If these growth rates decline or if the discount rate increases, our goodwill and/or FCC licenses could be impaired. An impairment of some or all of the value of these assets could result in a material effect on the consolidated statements of operations.

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

Some of our officers, directors and majority shareholders own stock or partnership interests in businesses that engage in television broadcasting, do business with us or otherwise do business that conflicts with our interests. They may transact some business with us upon approval by the independent members of our Board of Directors even if there is a conflict of interest or they may engage in business competitive to our business and those transactions may benefit the officers, directors or majority shareholders to the detriment of our securityholders. David D. Smith, Frederick G. Smith, and J. Duncan Smith are each an officer and director of Sinclair and Robert E. Smith is a director of Sinclair. Together, the Smiths hold shares of our common stock that control the outcome of most matters submitted to a vote of shareholders. The Smiths own a controlling interest in a television station which we program pursuant to an LMA. The Smiths also own businesses that lease real property and tower space to us and engage in other transactions with us. David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and David B. Amy, our Executive Vice President and Chief Financial Officer, together own less than 2.8% of Allegiance Capital Limited Partnership, a limited partnership in which we hold a 97.0% interest. Also, David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith together own less than 1.0% of the stock of G1440, a company of which we own approximately 94.0% and David D. Smith owns less than 0.1% of Acrodyne Communications, Inc., a company of which we own approximately 82.3%. We can give no assurance that these transactions or any transactions that we may enter into in the future with our officers, directors or majority shareholders, have been, or will be, negotiated on terms as favorable to us as we would obtain from unrelated parties.

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

For additional information regarding our related person transactions, see Note 12. Related Person Transactions, in the Notes to our Consolidated Financial Statements.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Smiths exercise control over most matters submitted to a shareholder vote and may have interests that differ from yours. They may, therefore, take actions that are not in the interests of other securityholders.

David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith hold shares representing approximately 82% of the common stock voting rights and, therefore, control the outcome of most matters submitted to a vote of shareholders, including, but not limited to, electing directors, adopting amendments to our certificate of incorporation and approving corporate transactions. The Smiths hold substantially all of the Class B Common Stock, which have ten votes per share. Our Class A Common Stock has only one vote per share. In addition, the Smiths hold half our board of directors seats and, therefore, have the power to exert significant influence over our corporate management and policies. The Smiths have entered into a stockholders agreement pursuant to which they have agreed to vote for each other as candidates for election to the board of directors until June 13, 2015.

Circumstances may occur in which the interests of the Smiths, as the controlling security holders, could be in conflict with the interests of other securityholders and the Smiths would have the ability to cause us to take actions in their interest. In addition, the Smiths could pursue acquisitions, divestitures or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to our other securityholders. (See Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters and Item 13. Certain Relationships and Related Transactions, which will be included as part of our Proxy Statement for our 2007 Annual Meeting.)

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

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

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

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

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

It is a violation of federal law and FCC regulations to broadcast obscene or indecent programming. In the past few years, the FCC has intensified its scrutiny of allegedly indecent and obscene programming. FCC licensees are, in general, responsible for the content of their broadcast programming, including content supplied by television networks. Accordingly, there is a risk of being fined as a result of our broadcast programming, including network programming.

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Changes in Rules on Television Ownership Congress passed a bill requiring the FCC to establish a national audience reach cap of 39% and President Bush signed the bill into law on January 23, 2004. This law permits broadcast television owners to own more television stations nationally, potentially affecting our competitive position.

In June 2003, the FCC adopted new multiple ownership rules. In July 2004, the Court of Appeals for the Third Circuit issued a decision which upheld a portion of such rules and remanded the matter to the FCC for further justification of the rules. The court also issued a stay of the 2003 rules pending the remand. Several parties, including us, filed petitions with the Supreme Court of the United States seeking review of the Third Circuit decision, but the Supreme Court denied the petitions in June 2005. In July 2006, as part of the FCCs statutorily required quadrennial review of its media ownership rules, the FCC released a Further Notice of Proposed Rule Making seeking comment on how to address the issues raised by the Third Circuits decision, among other things, remanding the local television ownership rule. We cannot predict the outcome of that proceeding, which could significantly impact our business.

Changes in Rules on Local Marketing Agreements Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs. One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such programming segments on the other licensees station subject to the ultimate editorial and other controls being exercised by the latter licensee. We believe these arrangements allow us to reduce our operating expenses and enhance profitability.

Under the FCC ownership rules adopted in 2003, we would be allowed to continue to program most of the stations with which we have an LMA. In the absence of a waiver, the 2003 ownership rules would require us to terminate or modify three of our LMAs in markets where both the station we own and the station with which we have an LMA are ranked among the top four stations in their particular designated market area. The FCCs 2003 ownership rules include specific provisions permitting waivers of this top four restriction. Although there can be no assurances, we have studied the application of the 2003 ownership rules to our markets and believe we are qualified for waivers. The effective date of the 2003 ownership rules has been stayed by the U. S. Court of Appeals for the Third Circuit and the rules are on remand to the FCC. Several parties, including us, filed petitions with the Supreme Court of the United States seeking review of the Third Circuit decision, but the Supreme Court denied the petitions in June 2005. In July 2006, as part of the FCCs statutorily required quadrennial review of its media ownership rules, the FCC released a Further Notice of Proposed Rule Making seeking comment on how to address the issues raised by the Third Circuits decision, among other things, remanding the local television ownership rule. We cannot predict the outcome of that proceeding, which could significantly impact our business.

Because the effective date of the 2003 ownership rules has been stayed and, in connection with the adoption of those rules, the FCC concluded the old rules could not be justified as necessary to the public interest, we have taken the position that an issue exists regarding whether the FCC has any current legal right to enforce any rules prohibiting the acquisition of television stations. The FCC, however, dismissed our applications to acquire certain LMA stations. On November 15, 1999, we entered into a plan and agreement of merger to acquire through merger WMYA-TV (formerly WBSC-TV) in Anderson, South Carolina from Cunningham Broadcasting Corporation (Cunningham), but that transaction was denied by the FCC. In light of the change in the 2003 ownership

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document rules, we have filed a petition for reconsideration with the FCC and amended our application to acquire the license of WMYA-TV. We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations: WRGT-TV, Dayton, Ohio; WTAT-TV, Charleston, South Carolina; WVAH-TV, Charleston, West Virginia; WNUV-TV, Baltimore, Maryland; and WTTE-TV, Columbus, Ohio. The Rainbow/PUSH Coalition (Rainbow/PUSH) filed a petition to deny these five applications and to revoke all of our licenses. The FCC dismissed our applications in light of the stay of the 2003 rules and also denied the Rainbow/PUSH petition. Rainbow/PUSH filed a petition for reconsideration of that denial and we filed an application for review of the dismissal, which may be impacted by the remand of the FCCs 2003 ownership rules. In 2005, we filed a petition with the U. S. Court of Appeals for the D. C. Circuit requesting that the Court direct the FCC to take final action on our applications, but that petition was dismissed. On January 6, 2006, we submitted a motion to the FCC requesting that it take final action on our applications. Both the applications and the associated petition to deny are still pending. We believe the Rainbow/PUSH petition is without merit.

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

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

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

Use of outsourcing agreements In addition to our LMAs, we have entered into four (and may seek opportunities for additional) outsourcing agreements in which our stations provide or are provided various non-programming related services such as sales, operational and managerial services to or by other stations. Pursuant to these agreements, one of our stations in Nashville, Tennessee currently provides services to another station in the market and other parties provide services to our stations in Peoria/Bloomington, Illinois, Cedar Rapids, Iowa and Rochester, New York. We believe this structure

allows stations to achieve operational efficiencies and economies of scale, which should otherwise improve broadcast cash flow and competitive positions. While television joint sales agreements (JSAs) are not currently attributable, on August 2, 2004, the FCC released a notice of proposed rulemaking seeking comments on its tentative conclusion that television joint sales agreements should be attributable. We cannot predict the outcome of this proceeding, nor can we predict how any changes, together with possible changes to the ownership rules, would apply to our existing outsourcing agreements.

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Competition from other broadcasters or other content providers and changes in technology may cause a reduction in our advertising revenues and/or an increase in our operating costs.

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

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

Types of competitors We also face competition from rivals that may have greater resources than we have. These include:

· other local free over-the-air broadcast television and radio stations;

· telecommunication companies;

· cable and satellite system operators;

· print media providers such as newspapers, direct mail and periodicals;

· internet providers; and

· competition from other emerging technologies.

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

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

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

Unrelated third parties may claim that we infringe on their rights based on the nature and content of information posted on websites maintained by us.

We host internet services that enable individuals and businesses to exchange information, generate content, advertise products and services, conduct business and engage in various online activities. The law relating to the liability of providers of these online services for activities of their users is currently unsettled both within the United States and internationally. Claims may be brought

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document against us for defamation, negligence, copyright or trademark infringement, unlawful activity, tort, including personal injury, fraud, or other theories based on the nature and content of information that we provide links to or that may be posted online or generated by our users. Our defense of such actions could be costly and involve significant time and attention of our management and other resources.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Generally, each of our stations has facilities consisting of offices, studios and tower sites. Transmitter and tower sites are located to provide maximum signal coverage of our stations markets. We believe that all of our properties, both owned and leased, are generally in good operating condition, subject to normal wear and tear and are suitable and adequate for our current business operations. The following is a summary of our principal owned and leased real properties. We believe that no one property represents a material amount of the total properties owned or leased. See Item 1. Business, for a listing of our station locations.

OWNED LEASED Office and Studio Buildings 535,243 square feet 403,537 square feet Office and Studio Land 373 acres 4 acres Transmitter Building Sites 82,388 square feet 59,402 square feet Transmitter and Tower Land 1,279 acres 1,434 acres

ITEM 3. LEGAL PROCEEDINGS

We are a party to lawsuits and claims from time to time in the ordinary course of business. Actions currently pending are in various preliminary stages and no judgments or decisions have been rendered by hearing boards or courts in connection with such actions. After reviewing developments to date with legal counsel, our management is of the opinion that the outcome of our pending and threatened matters will not have a material adverse effect on our consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows.

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

No matters were submitted to a vote of our shareholders during the fourth quarter of 2006.

PART II

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

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

2006 High Low First Quarter $ 9.56 $7.19 Second Quarter $ 8.75 $7.70 Third Quarter $ 8.68 $7.51 Fourth Quarter $10.91 $7.76

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2005 High Low First Quarter $ 9.14 $7.48 Second Quarter $ 9.13 $7.45 Third Quarte $ 9.57 $8.71 Fourth Quarter $10.00 $8.22

As of March 5, 2007, there were approximately 94 shareholders of record of our common stock. This number does not include beneficial owners holding shares through nominee names.

We did not repurchase any Class A Common Stock during 2006.

Dividend Policy

Future dividends on our common shares, if any, will be at the discretion of our Board of Directors and will depend on several factors including our results of operations, cash requirements and surplus, financial condition, covenant restrictions and other factors that the Board of Directors may deem relevant. Our Bank Credit Agreement and some of our subordinated debt instruments have general restrictions on the amount of dividends that may be paid. Under the indentures governing our 8.75% Senior Subordinated Notes, due 2011 and 8% Senior Subordinated Notes, due 2012, we are restricted from paying dividends on our common stock unless certain specified conditions are satisfied, including that:

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

· after taking account of the dividend, we are within certain restricted payment requirements contained in the indenture. In addition, under certain of our senior unsecured debt, the payment of dividends is not permissible during a default thereunder.

Our current dividend of $0.15 per share per quarter is not in excess of any applicable restrictions or conditions contained within the indentures of our various senior subordinated notes and our Bank Credit Agreement. We expect to continue to pay a dividend in the foreseeable future.

In May 2004, we declared a quarterly cash dividend on our Class A and Class B Common Stock for the first time in our companys history. For the quarters ended June 30, 2004, September 30, 2004 and December 31, 2004, we paid dividends of $0.025 per share of our common stock. During 2005, the Board of Directors voted to increase that dividend on three occasions. The 2005 dividends declared were as follows:

Quarterly Dividend Annual Dividend For the quarter ended Per Share Per Share Date dividends were paid March 31, 2005 $ 0.050 $ 0.200 April 15, 2005 June 30, 2005 $ 0.075 $ 0.300 July 15, 2005 September 30, 2005 $ 0.075 $ 0.300 October 14, 2005 December 31, 2005 $ 0.100 $ 0.400 January 13, 2006

During 2006, the Board of Directors voted to increase the dividend once. On February 14, 2007, we announced that our Board of Directors approved an increase to our annual dividend to $0.60 per share from $0.50 per share. We will begin paying this dividend rate beginning in the second quarter 2007 and intend to continue in each future quarter. The 2006 dividends declared were as follows:

Quarterly Dividend Annual Dividend For the quarter ended Per Share Per Share Date dividends were paid March 31, 2006 $ 0.100 $ 0.400 April 13, 2006

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document June 30, 2006 $ 0.100 $ 0.400 July 13, 2006 September 30, 2006 $ 0.125 $ 0.500 October 12, 2006 December 31, 2006 $ 0.125 $ 0.500 January 12, 2007

Convertible Bond Repurchases

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data for the years ended December 31, 2006, 2005, 2004, 2003 and 2002 have been derived from our audited consolidated financial statements. The consolidated financial statements for the years ended December 31, 2006, 2005 and 2004 are included elsewhere in this report.

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

STATEMENTS OF OPERTIONS DATA (In thousands, except per share data)

Years Ended December 31, 2006 2005 2004 2003 2002 Statements of Operations Data: Net broadcast revenues (a) $ 635,842 $ 614,436 $ 634,609 $ 611,893 $ 621,561 Revenues realized from station barter arrangements 54,686 55,034 57,814 58,845 57,318 Other operating divisions revenues 24,610 22,597 13,054 14,568 4,344 Total revenues 715,138 692,067 705,477 685,306 683,223

Station production expenses 148,276 152,771 155,276 149,073 137,600 Station selling, general and administrative expenses 140,579 138,304 146,373 130,619 128,336 Expenses recognized from station barter arrangements 49,508 50,460 53,358 54,104 51,117 Depreciation and amortization (b) 155,015 138,913 155,793 160,677 173,539 Other operating divisions expenses 24,193 20,944 14,932 16,375 6,051 Corporate general and administrative expenses 22,795 21,220 21,496 19,745 17,953 Impairment of intangibles 15,589 44,055 Operating income 159,183 169,455 114,194 154,713 168,627

Interest expense and amortization of debt discount and deferred financing cost (115,217) (120,002) (120,400) (121,165) (118,114) Subsidiary trust minority interest expense (c) (11,246) (23,890) Interest income 2,008 650 191 560 1,484 Gain (loss) from sale of assets 143 (80) (52) (452) (54) Loss from extinguishment of debt (904) (1,937) (2,453) (15,187) (15,362) Unrealized gain (loss) from derivative instrument 2,907 21,778 29,388 17,354 (30,939) Income (loss) from equity and cost investees 6,338 (1,426) 1,100 1,193 (1,189) Gain on insurance settlement 1,193 3,341

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Other income 1,159 721 894 1,189 1,811 Income (loss) from continuing operations before income taxes 55,617 70,352 26,203 26,959 (17,626) Income tax (provision) benefit (6,970) (36,115) (11,522) (10,817) 7,498 Net income (loss) from continuing operations 48,647 34,237 14,681 16,142 (10,128)

Discontinued operations: Income from discontinued operations, net of related income taxes 3,556 5,671 9,341 8,250 4,519 Gain on sale of discontinued operations, net of related income taxes 1,774 146,024 7,519 Cumulative adjustment for change in accounting principle, net of related income taxes (f) (566,404) Net income (loss) $ 53,977 $ 185,932 $ 24,022 $ 24,392 $ (564,494) Net income (loss) available to common shareholders $ 53,977 $ 207,129 $ 13,842 $ 14,042 $ (574,844)

Years Ended December 31, 2006 2005 2004 2003 2002 Per Common Share Data: Basic and diluted earnings (loss) per share from continuing operations $ 0.57 $ 0.65 $ 0.05 $ 0.07 $ (0.24) Basic and diluted earnings per share from discontinued operations $ 0.06 $ 1.78 $ 0.11 $ 0.09 $ 0.14 Basic and diluted loss per share from cumulative effect of change in accounting principle $ $ $ $ $ (6.64) Basic and diluted earnings (loss) per share $ 0.63 $ 2.43 $ 0.16 $ 0.16 $ (6.74) Dividends declared per share $ 0.450 $ 0.300 $ 0.075 $ $

Balance Sheet Data: Cash and cash equivalents $ 67,408 $ 9,655 $ 10,491 $ 28,730 $ 5,315 Total assets $ 2,272,598 $ 2,283,305 $ 2,465,663 $ 2,567,106 $ 2,599,713 Total debt (d) $ 1,413,623 $ 1,450,738 $ 1,639,615 $ 1,729,921 $ 1,548,050 HYTOPS (e) $ $ $ $ $ 200,000 Total shareholders equity $ 266,645 $ 249,722 $ 226,551 $ 229,005 $ 219,678 (a) Net broadcast revenues is defined as broadcast revenues, net of agency commissions.

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

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

(d) Total debt is defined as notes payable, capital leases and commercial bank financing, including the current and long-term portions. Total debt does not include HYTOPS (see footnote (e)) or our preferred stock, in applicable years related balances were outstanding including 2004, 2003 and 2002.

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (f) The cumulative adjustment relates to an impairment charge taken in conjunction with the adoption of SFAS No. 142, Goodwill and Other Intangible Assets.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Managements Discussion and Analysis provides qualitative and quantitative information about our financial performance and condition and should be read in conjunction with our consolidated financial statements and the accompanying notes to those statements. This discussion consists of the following sections:

Executive Overview a description of our business, financial highlights from 2006, information about industry trends and sources of revenues and operating costs;

Critical Accounting Policies and Estimates a discussion of the accounting policies that are most important in understanding the assumptions and judgments incorporated in the consolidated financial statements and a summary of recent accounting pronouncements;

Results of Operations a summary of the components of our revenues by category and by network affiliation, a summary of other operating data and an analysis of our revenues and expenses for 2006, as restated for certain expenses, 2005 and 2004, including comparisons between years and expectations for 2007; and

Liquidity and Capital Resources a discussion of our primary sources of liquidity, an analysis of our cash flows from or used in operating activities, investing activities and financing activities, a discussion of our dividend policy and a summary of our contractual cash obligations and off-balance sheet arrangements.

EXECUTIVE OVERVIEW

We believe that we are one of the largest and most diversified television broadcasting companies in the United States. We currently own, provide programming and operating services pursuant to local marketing agreements (LMAs) or provide, or are provided, sales services pursuant to outsourcing agreements to 58 television stations in 36 markets. For the purpose of this report, these 58 stations are referred to as our stations. We currently have 11 duopoly markets where we own and operate two stations within the same market. We have ten LMA markets where, with one exception, we own and operate one station in the market and provide or are provided programming and operating services to, or by, another station within the market. In the remaining 15 markets, we own and operate a single television station.

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

Sinclair Television Group, Inc. (STG), a wholly owned subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under our existing Bank Credit Agreement, as amended, the 8.75% Senior Subordinated Notes, due 2011, which were redeemed in full on January 22, 2007, and the 8% Senior Subordinated Notes, due 2012. Our Class A Common Stock, Class B Common Stock, the 6.0% Convertible Debentures, due 2012 and the 4.875% Convertible Senior Notes, due 2018 remain obligations or securities of SBG and are not obligations or securities of STG.

2006 Highlights

· During 2006, we continued to monetize our retransmission consent agreements. Our retransmission consent agreements generated $25.4 million in broadcast revenues during 2006, an increase of 32.3% over 2005. The incremental value created from our agreements is expected to grow in 2007 through further monetization. We expect total revenue generation from our agreements to be significantly greater in 2007. · During 2006, a non-presidential election year, political revenues were $32.0 million, which is substantially the same amount we earned in the 2004 presidential election year;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · Operating income decreased 6.1% in 2006 due to an impairment of $15.6 million related to a markets goodwill and definite-lived intangible assets; · We increased our quarterly dividend rate from $0.10 to $0.125 per share beginning with the October dividend payment. The quarterly dividend rate per share increased again to $0.15 on February 13, 2007; · We repurchased, in the open market, $8.6 million face value of our 6% Convertible Debentures, due 2012 and $23.7 million face value of our 8% Senior Subordinated Notes, due 2012; · We renewed our affiliation agreement with the FOX network for our 19 FOX affiliates for another six years; · We entered into affiliation agreements, which expire August 31, 2010 with CW Television Network for nine of our former WB and independent stations; · We entered into affiliation agreements, which expire September 4, 2011 with MyNetworkTV for 17 of our former WB, UPN and independent stations; · Our television station in Baltimore, Maryland, WBFF-TV, went live on May 1, 2006 with WBFF-DT Channel 45-2, the markets first multi-digital channel to carry syndicated and other local programming; · We entered into a news share arrangement in which our television station in Springfield/Champaign, Illinois (WICS/WICD-TV) began producing an evening news program for television stations in Springfield, Illinois (WRSP-TV) and Urbana, Illinois (WCCU- TV) effective September 2006; · Our FOX affiliate, KBSI-TV in Cape Girardeau, Paducah and Harrisburg, entered into a news share arrangement with the NBC affiliate, WPSD-TV in the same market effective October 2006; · We entered into a news share arrangement in which our CBS affiliate, WGME-TV in Portland, Maine began producing a 10:00pm newscast for Portlands FOX affiliate, WPFO-TV, beginning February 2007; · Our FOX affiliate, WDKY-TV in Lexington, Kentucky expanded its news share arrangement with WKYT-TV, the CBS affiliate in that market, to add a one-hour morning newscast beginning at 7:00am, effective March 2007. · We launched morning news programming in Dayton, Ohio on WKEF-TV and WRGT-TV as an expansion of the stations already successful evening news programming; · We redefined the mission of our News Central operations to improve the quality, profitability and competitiveness of our local newscasts; and · We announced the redemption of our 8.75% Senior Subordinated Notes, due 2011, which we redeemed, in full, on January 22, 2007.

Industry Trends

· Political advertising increases in even-numbered years, such as 2006, due to the advertising expenditures from candidates running in local and national elections. In every fourth year, such as 2004, political advertising is elevated further due to the presidential election; · Seasonal advertising increases in the second and fourth quarters due to the advertising expenditures related to the anticipation of certain seasonal and holiday spending by consumers; · Not all cable system operators and satellite providers pay for the analog or digital signals they receive from broadcasters, but we expect more operators and providers will be paying for these signals in the future as alternative competing video delivery providers increase; · Compensation from networks to their affiliates in exchange for broadcasting of network programming has significantly declined in recent years and may be eliminated in the future in lieu of alternative network and affiliate relationships; · Automotive-related advertising is a significant portion of our total net revenues in all periods presented and these revenues have been trending downward in recent years and we expect this trend to continue in 2007; · The Federal Communications Commission (FCC) has mandated that beginning February 17, 2009, all broadcast television stations must broadcast using only a digital signal and will no longer be able to broadcast using an analog signal; · The FCC has permitted broadcast television stations to use their digital spectrum for a wide variety of services including multi- channel broadcasts. The FCC must carry rules only apply to a stations primary digital stream. We have launched several digital channels using our TV stations digital signal during 2006; · Many broadcasters are enhancing/upgrading their websites to use the internet to deliver rich media content, such as newscasts and weather updates, to attract advertisers; and · Retransmission consent rules provide a mechanism for broadcasters to seek payment from multi-channel video programming distributors (MVPDs) who carry broadcasters signals. Recognition of the value provided by broadcasters, including digital and high definition signals and popular network programming, in addition to increased competition among video delivery providers, has increased this payment stream. We expect this trend to continue as the demand for high definition signals grows and competition among video delivery providers continues in the market.

Most of our revenues are generated from the transactional spot market rather than the traditional up front and scatter markets that networks access. These operating revenues are derived from local and national advertisers and, to a much lesser extent, from political advertisers. Recently, we have begun to generate revenues from our retransmission consent agreements. These agreements have helped to produce a new, viable revenue stream that has replaced the steady decline in revenues from television network compensation. We expect further monetization of our agreements and strong revenue growth over the next fiscal year. Our revenues from local advertisers have continued to trend upward and revenues from national advertisers have continued to trend downward when measured as a percentage of gross broadcast revenue. We believe this trend is the result of our focus on increasing local advertising revenues as a percentage of total advertising revenues, combined with a decrease in overall spending by national advertisers and an increase in the number of competitive media outlets providing national advertisers multiple alternatives in which to advertise their goods or services. Our efforts to mitigate the effect of these increasing competitive media outlets for national advertisers include continuing our efforts to increase local revenues and developing innovative sales and marketing strategies to sell traditional and non-traditional services to our advertisers.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

results. However, because future events and their effects cannot be determined with certainty, actual results could differ from our estimates and such differences could be material.

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

Revenue Recognition. Advertising revenues, net of agency and national representatives commissions, are recognized in the period during which time spots are aired. All other revenues are recognized as services are provided. The revenues realized from station barter arrangements are recorded as the programs are aired at the estimated fair value of the advertising airtime given in exchange for the program rights.

Our retransmission consent agreements contain both advertising and retransmission consent elements that are paid in cash. We have determined that our agreements are revenue arrangements with multiple deliverables and fall within the scope of EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21). Advertising and retransmission consent deliverables sold under our agreements are separated into different units of accounting based on fair value. Revenue applicable to the advertising element of the arrangement is recognized consistent with the advertising revenue policy noted above. Revenue applicable to the retransmission consent element of the arrangement is recognized ratably over the life of the agreement.

Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated losses resulting from extending credit to our customers that are unable to make required payments. If the economy and/or the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. For example, a 10% increase of the balance of our allowance for doubtful accounts as of December 31, 2006, would reduce net income available to common shareholders by approximately $0.4 million.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Program Contract Costs. We have agreements with distributors for the rights to televise programming over contract periods, which generally run from one to seven years. Contract payments are made in installments over terms that are generally equal to or shorter than the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross cash contractual commitment when the license period begins and the program is available for its first showing. The portion of program contracts which become payable within one year is reflected as a current liability in the consolidated balance sheets.

The programming rights are reflected in the consolidated balance sheets at the lower of unamortized cost or estimated net realizable value (NRV). Estimated NRVs are based on managements expectation of future advertising revenue, net of sales commissions, to be generated by the remaining program material available under the contract terms. In conjunction with our NRV analysis of programming rights reflected in our consolidated balance sheets, we perform similar analysis on future programming rights yet to be reflected in our consolidated balance sheets and establish allowances when future payments exceed the estimated NRV. Amortization of program contract costs is generally computed using a four-year accelerated method or a straight-line method, depending on the length of the contract. Program contract costs estimated by management to be amortized within one year are classified as current assets. Program contract liabilities are typically paid on a scheduled basis and are not reflected by adjustments for amortization or estimated NRV. If our estimate of future advertising revenues declines, then additional write downs to NRV may be required.

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

We have determined our broadcast licenses to be indefinite-lived intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets, which requires such assets to be tested for impairment on an annual basis along with our goodwill. We test our broadcast licenses and goodwill by estimating the fair market value of the broadcast licenses, or the net assets for each of our markets in the case of goodwill, using a combination of quoted market prices, observed earnings multiples paid for comparable television stations, discounted cash flow models and appraisals. We then compare the estimated fair market value to the book value of these assets to determine if an impairment exists. Our discounted cash flow model is based on our judgment of future market conditions within each designated marketing area, as well as discount rates that would be used by market participants in an arms-length transaction. Future events could cause us to conclude that market conditions have declined or discount rates have increased to the extent that our broadcast licenses and/or goodwill could be impaired. Any resulting impairment loss could have a material adverse impact on our consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows.

Income Taxes. We recognize deferred tax assets and liabilities based on the differences between the financial statements carrying amounts and the tax bases of assets and liabilities. We provide a valuation allowance for deferred tax assets relating to various federal and state net operating losses (NOL) that are carried forward. As of December 31, 2006, valuation allowances have been provided for a substantial amount of our available federal and state NOLs. We evaluate the need and extent of a valuation allowance based on the expected timing of the reversals of existing temporary book/tax differences, alternative tax strategies and projected future taxable income. If we are unable to generate sufficient taxable income, if there is a material change in our projected taxable income, or if there is a change in our ability to use NOL carryforwards due to changes in federal and state laws, we will make any necessary adjustments to the valuation allowance. Management periodically performs a comprehensive review of our tax positions and accrues amounts for tax contingencies. Based on these reviews, the status of ongoing audits and the expiration of applicable statute of limitations, accruals are adjusted as necessary.

Restructuring Costs

During the year ended December 31, 2006, we incurred costs associated with restructuring the news operations at certain of our stations. Specifically, on or before March 31, 2006, we ceased our locally produced news broadcasts in nine of our markets and consequently let go our news employees and cancelled our news-related contracts.

We recorded restructuring charges in station production expenses. The major components of the restructuring charges and the remaining accrual balance related to the restructuring plan as of December 31, 2006 follow (in thousands):

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Salary and Contract Other Severance Costs Expenses Exit Costs Total Balance at December 31, 2005 $ $ $ $ Restructuring charges 525 365 306 1,196 Amounts utilized (525) (286) (272) (1,083) Balance at December 31, 2006 $ $ 79 $ 34 $ 113

All restructuring costs were associated with our broadcast segment.

Recent Accounting Pronouncements

On January 1, 2006, we adopted Statement of Financial Accounting Standard (SFAS) No. 123R, Share-Based Payment (SFAS 123R). SFAS 123R requires us to expense the fair value of grants of various stock-based compensation programs over the vesting period of the awards. We elected to adopt SFAS 123R using the Modified Prospective Application transition method which does not result in the restatement of previously issued consolidated financial statements. For additional information regarding our accounting under SFAS 123R, see Note 2. Stock-Based Compensation Plans in the notes to our consolidated financial statements.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition of positions taken or expected to be taken in income tax returns. Only tax positions meeting a more-likely-than-not threshold of being sustained are recognized under FIN 48. FIN 48 also provides guidance on derecognition, classification of interest and penalties and accounting and disclosures for annual and interim financial statements. FIN 48 is effective for our fiscal year beginning January 1, 2007. The cumulative effect of any changes arising from the initial application of FIN 48 is required to be reported as an adjustment to the opening balance of retained earnings in the period of adoption. We are currently evaluating the impact that the adoption of FIN 48 will have on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This statement will be effective for the year ending December 31, 2008. We are currently evaluating the effect this statement will have on our consolidated financial statements.

comprehensive loss. These gains or losses will be adjusted as they are subsequently recognized as a component of net periodic pension costs. As of December 31, 2006, we have also recognized a liability of $0.4 million representing the under funded status of our defined benefit pension plan, which is included in other long-term liabilities in the accompanying consolidated balance sheet. We do not expect the adoption of SFAS 158 to have a material impact on our consolidated financial statements in future years.

In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in the current year financial statements. SAB 108 requires registrants to quantify misstatements using both a balance sheet and an income statement approach and evaluate whether either approach results in a misstatement

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document that, when all relevant quantitative and qualitative factors are considered, is material. The two methods for evaluating misstatements are referred to as the rollover method and the iron curtain method. The rollover method quantifies misstatements based on the effects of correcting the misstatements that exist in the current year income statement, including misstatements that arose in the current year, as well as, the reversal or correction of the misstatements that arose in prior years. The iron curtain method quantifies misstatements based on the effects of correcting the misstatements that exist in the balance sheet at the end of the current year, regardless of the misstatements year of origin.

SAB 108 does not change the guidance in SAB 99, Materiality (SAB 99), when evaluating the materiality of misstatements. Upon initial application, SAB 108 permits a one-time cumulative effect adjustment to beginning retained earnings to correct prior year misstatements.

We adopted SAB 108 during 2006 and recorded a cumulative effect adjustment of $0.2 million (net of income taxes of $6.0 million), to increase retained earnings as of January 1, 2006. The adjustment was comprised of the following components (in millions):

Increase (decrease) to net income Years affected Cumulative amortization expense not recognized due to the misapplication of useful lives related to a definite-lived intangible asset and leasehold improvements $ (6.4) 1999-2005 Increase to operating income resulting from the over-accrual of accrued liabilities and deferred revenue 1.7 2001-2005 Decreases to other income due to an error in the accounting for the consolidation of one of our variable interest entities (1.1) 2004-2005 Tax effects attributable to above adjustments at our applicable effective tax rates 1.9 (3.9) Decrease in provision for income taxes resulting from the over-accrual of tax reserves and balance sheet book to tax basis differences 4.1 2001-2005 Net impact on January 1, 2006 retained earnings $ 0.2

Under the rollover method of evaluating misstatements, we previously concluded that the misstatements noted above were immaterial to all prior years results. The misstatements under the iron curtain method described in SAB 108, as well as, the provisions of SAB 99, are material to 2006 results and therefore, have been reflected as a cumulative effect adjustment to retained earnings as of January 1, 2006.

RESULTS OF OPERATIONS

In general, this discussion is related to the results of our continuing operations, except for discussions regarding our cash flows (which also include the results of our discontinued operations). Unless otherwise indicated, references in this discussion to 2006, 2005 and 2004 are to our fiscal years ended December 31, 2006, 2005 and 2004, respectively. Additionally, any references to the first, second, third or fourth quarters are to the three months ended March 31, June 30, September 30 and December 31, respectively, for the year being discussed.

Broadcast Revenues

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

Years Ended December 31, 2006 2005 2004 Local/regional advertising (a) $ 416.4 57.0% $ 413.1 58.5% $ 406.2 55.5% National advertising 231.9 31.8% 251.4 35.6% 258.3 35.3%

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Political advertising 37.6 5.2% 2.4 0.3% 38.0 5.2% Network compensation 9.5 1.3% 13.3 1.9% 14.3 1.9% Retransmission consent 20.5 2.8% 15.2 2.2% 3.5 0.5% Other station revenues 14.1 1.9% 10.4 1.5% 12.1 1.6% Gross broadcast revenues 730.0 100.0% 705.8 100.0% 732.4 100.0% Less: agency commissions (94.2) (91.3) (97.8) Net broadcast revenues 635.8 614.5 634.6 Revenues realized from station barter arrangements 54.7 55.0 57.8 Other operating divisions revenues 24.6 22.6 13.1 Total revenues $ 715.1 $ 692.1 $ 705.5 (a) In 2006 and 2005, an additional $4.9 million and $4.0 million, respectively, in revenues generated from our retransmission consent agreements are categorized as local/regional advertising pursuant to EITF 00-21.

Our primary types of programming and their approximate percentages of 2006 net broadcast revenues from continuing operations were syndicated programming (39.5%), network programming (26.6%), news (15.1%), direct advertising programming (7.6%), sports programming (5.8%) and other programming (5.4%).

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

Percent of # of Sales Net Time Sales (a) Percent Change Stations 2006 2006 2005 (b) 2004 06 vs. 05 05 vs. 04 FOX 19(c) 39.8% $ 235.3 $ 230.4 $ 237.4 2.1% (3.0%) MyNetworkTV(d) 17(c) 20.4% 120.8 123.0 127.4 (1.8%) (3.5%) ABC 10 24.3% 144.1 130.2 140.7 10.7% (7.5%) The CW (d) 9 12.9% 76.6 77.7 81.4 (1.4%) (4.6%) CBS 2(c) 1.8% 10.5 10.7 13.6 (1.9%) (21.3%) NBC 1 0.7% 4.3 3.5 4.2 22.9% (16.7%) Digital (e) 4 0.1% 0.4 100.0% % Total 62(c) $ 592.0 $ 575.5 $ 604.7

(a) During 2006 and 2005, several of our stations switched affiliations. We have reclassified the revenue from those stations in prior years for comparability.

(b) 2006 and 2004 include significantly more political revenue than 2005 for most of our affiliates.

(c) During 2004, we entered into agreements to sell our CBS station in Sacramento, California and our WB station in Kansas City, Missouri. During 2005, we entered into an agreement to sell our FOX station in Tri-Cities, Tennessee. The time sales from these stations are not included in this table because they are accounted for as time sales from discontinued operations.

(d) In September 2006, our composition of network affiliates changed as a result of our agreement to air MyNetworkTV programming and the merger of UPN and The WB into a network called The CW. Refer to our Markets and Stations table on page 5 for additional information.

(e) Some of our television stations are broadcasting a second digital signal in accordance with FCC rules.

Operating Data

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The following table sets forth certain of our operating data from continuing operations for the years ended December 31, 2006, 2005 and 2004 (in millions). For definitions of terms, see the footnotes to the table in Item 6. Selected Financial Data.

Years Ended December 31, 2006 2005 2004 Net broadcast revenues $ 635.8 $ 614.5 $ 634.6 Revenues realized from station barter arrangements 54.7 55.0 57.8 Other operating divisions revenues 24.6 22.6 13.1 Total revenues 715.1 692.1 705.5 Station production expenses 148.3 152.8 155.3 Station selling, general and administrative expenses 140.6 138.3 146.4 Expenses recognized from station barter arrangements 49.5 50.5 53.4 Depreciation and amortization 154.9 138.9 155.8 Other operating divisions expenses 24.2 20.9 14.9 Corporate general and administrative expenses 22.8 21.2 21.5 Impairment of intangibles 15.6 44.0 Operating income $ 159.2 $ 169.5 $ 114.2 Net income $ 54.0 $ 185.9 $ 24.0 Net income available to common shareholders $ 54.0 $ 207.1 $ 13.8

Revenue Discussion and Analysis

The following table presents our revenues from continuing operations, net of agency commissions, for the three years ended December 31, 2006, 2005 and 2004 (in millions):

Percent Change 2006 2005 2004 06 vs. 05 05 vs. 04 Local revenues: Non-Political (a) $ 362.7 $ 359.6 $ 352.9 0.9% 1.9% Political 10.2 1.2 9.4 (b) (b) Total Local 372.9 360.8 362.3 3.4% (0.4%) National revenues: Non-Political 197.3 213.9 219.7 (7.8%) (2.6%) Political 21.8 0.8 22.7 (b) (b) Total National 219.1 214.7 242.4 2.1% (11.4%) Net Time Sales 592.0 575.5 604.7 2.9% (4.8%) Other revenues 43.8 39.0 29.9 12.3% 30.4% Total Broadcasting Revenues $ 635.8 $ 614.5 $ 634.6 3.5% (3.2%)

(a) Revenues of $4.9 million and $4.0 million in 2006 and 2005, respectively, generated from our retransmission consent agreements are categorized as local/regional advertising pursuant to EITF 00-21.

(b) Political revenue is not comparable from year to year due to the cyclicality of elections. See Political Revenues below for more information.

Our largest categories of advertising and their approximate percentages of 2006 net time sales were automotive (21.3%), professional services (13.6%), paid programming (6.8%), fast food (6.7%), schools (6.3%), retail (6.1%) and political (5.4%). No other advertising category accounted for more than 5.0% of our net time sales in 2006. Along with the industry, we have seen softness in the automotive advertising category and we expect this to continue in 2007. We conduct business with thousands of advertisers. Other than advertisers from our automotive category, no other advertiser accounted for more than 1.0% of our consolidated net time sales in 2006.

Net Broadcast Revenues. From a revenue category standpoint, the year ended December 31, 2006, when compared to 2005, was impacted by an increase of advertising revenues generated from the political, telecommunications, restaurant-other, schools, movies and home products sectors, offset by decreases in the internet, toys/games, food-breakfast, soft drinks and travel/leisure sectors. Automotive, our single largest category, representing 21.3% of the years net time sales, was down 7.7%. We expect automotive sales to trend downward during 2007.

Political Revenues. Both local and national political revenues were the primary drivers of higher revenue in 2006 and 2004, compared to 2005 because 2004 and 2006 were election years. In fact, during 2004, we owned television stations in 11 of the 16 so called Battleground States, including multiple stations in Ohio, Florida and West Virginia. We expect political revenues to decrease in 2007 from 2006 levels, because 2007 is not an election year.

Local Revenues. Our revenues from local advertisers, excluding political revenues, increased during the last three years. We continue to focus on increasing local advertising revenues through innovative sales and marketing strategies in our markets. Revenues from our new business initiatives increased $2.1 million during 2006 to $28.5 million from $26.4 million in 2005. Revenues from our new business initiatives increased by $11.0 million in 2005 from $15.4 million during 2004. We expect to continue our focus on new business revenues in 2007. Additionally, during 2004, we implemented an enhanced sales training course for all of our salespeople with a focus on local revenue sales. We have continued these efforts throughout 2006 and will continue these efforts in 2007.

National Revenues. Our revenues from national advertisers, excluding political revenues, have continued to trend downward over time. We believe this trend represents a shift in the way national advertising dollars are being spent and we believe it has recently begun accelerating. Advertisers in major categories like automotive, soft drink and packaged goods are shifting significant portions of their advertising budgets away from spot television into non-traditional media, in-store promotions and product placement in network shows. Automotive decreases are due to automotive companies reducing advertising budgets and shifting advertising to specific markets. We expect this trend to continue into 2007.

Other Revenues and Expenses. Our other revenues consist primarily of revenues from retransmission consent agreements with cable and satellite providers, network compensation, production revenues and revenues from our outsourcing agreements. Our retransmission consent agreements, including the advertising component, generated $25.4 million in total broadcast revenues during 2006 compared with $19.2 million in 2005 and $3.5 million in 2004. This growth trend is the result of our ability to monetize our existing relationships as cable providers struggle with increased competition from alternative video delivery providers and have begun to recognize the value of our digital and high definition signals and network programming. Pursuant to EITF 00-21, during 2006, $20.5 million of the total $25.4 million in revenues generated from our retransmission consent agreements are included in other revenues while the remaining $4.9 million is included in net time sales. During 2005, $15.2 million of the total $19.2 million in revenues generated from our retransmission consent agreements are included in other revenues while the remaining $4.0 million is included in net time sales. We expect further monetization of our agreements in 2007. Network compensation decreased by $3.8 million during 2006 and $1.0 million during 2005. We expect further decreases in revenues from network compensation in 2007.

Expense Discussion and Analysis

The following table presents our significant expense categories for the three years ended December 31, 2006, 2005 and 2004 (in millions):

Percent Change 2006 2005 2004 06 vs. 05 05 vs. 04 Station production expenses $ 148.3 $ 152.8 $ 155.3 (2.9%) (1.6%) Station selling, general and administrative expenses $ 140.6 $ 138.3 $ 146.4 1.7% (5.5%) Amortization of program contract costs $ 90.7 $ 70.7 $ 89.2 28.3% (20.7%) Depreciation of property and equipment $ 46.2 $ 50.3 $ 48.2 (8.2%) 4.4% Corporate general and administrative expenses $ 22.8 $ 21.2 $ 21.5 7.5% (1.4%) Interest expense $ 115.2 $ 120.0 $ 120.4 (4.0%) (0.3%)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unrealized gain from derivative instruments $ 2.9 $ 21.8 $ 29.4 (86.7%) (25.9%) Income (loss) from equity and cost investees $ 6.3 $ (1.4) $ 1.1 550.0% (227.3%) Gain on insurance settlement $ $ 1.2 $ 3.3 (100.0%) (63.6%) Impairment of intangibles $ 15.6 $ $ 44.1 100.0% (100.0%) Income tax provision $ 7.0 $ 36.1 $ 11.5 (80.6%) 213.9%

Station production expenses. Station production expenses for 2006 decreased compared to 2005. In 2006, we experienced decreases in news expenses of $3.6 million related to the shutdown of News Central at several stations, rating service fees of $1.5 million and programming expenses of $1.7 million. These decreases were offset by increases in costs related to LMAs and outsourcing agreements of $0.3 million, engineering expenses of $0.7 million, music license fees of $0.8 million, promotion expenses of $0.2 million, production expenses of $0.2 million and other miscellaneous expenses of $0.1 million.

Station production expenses decreased during the year ended December 31, 2005 compared to 2004 primarily due to decreases in costs related to LMAs and outsourcing agreements of $1.2 million. In addition, there were also decreases in promotion expense due to cutbacks in promotional plans amounting to $1.6 million, news costs of $1.6 million, programming expenses of $0.6 million, production expenses of $0.2 million, music license fees of $0.1 million and other miscellaneous expenses of $0.6 million. These decreases were offset by increases in engineering expenses of $1.3 million, rating service fees of $1.1 million, salary expense of $0.5 million and FOX inventory costs of $0.5 million.

Station selling, general and administrative expenses. Station selling, general and administrative expenses for 2006 increased compared to the same period in 2005 as a result of increases in general and administrative expenses primarily related to salary and bonus increases of $1.1 million, bad debt expense of $0.7 million, audit and accounting fees of $0.4 million and insurance, utilities and other net costs of $1.5 million. In addition, there was an increase in national representative commissions costs of $0.2 million. These increases were offset by decreases in traffic expense of $1.4 million, sales expenses of $0.1 million and other miscellaneous expenses of $0.1 million.

Station selling, general and administrative expense decreased during 2005 compared to 2004 as a result of decreases in sales expenses related to direct mailers of $4.1 million, local and national sales representatives commissions of $3.0 million, salary expense of $1.0 million, workers compensation refunds of $0.8 million, expenses related to an annual sales trip of $0.5 million, bad debt expenses of $0.3 million and electric expenses of $0.2 million. These decreases were offset by a one-time adjustment of $1.0 million to our self-insured healthcare plan during the third quarter of 2005, increases in expense for Cunningham Broadcasting Corporation, a related party entity that we consolidate, of $0.5 million and vacation expense of $0.3 million.

We expect 2007 station production and station selling, general and administrative expenses excluding barter to be up slightly from 2006.

Amortization of program contract costs. The amortization of program contract costs increased during 2006 compared to 2005 primarily due to significant program additions in 2006. The amortization decrease during 2005 compared to 2004 was primarily because the costs to acquire syndicated programming had been declining. We expect program contract amortization expense to relatively flat in 2007 when compared to 2006.

Depreciation of property and equipment. The depreciation of property and equipment decreased in 2006 compared to 2005. The decrease is primarily related to a large number of assets that had become fully depreciated during 2006. This decrease is offset by

depreciation associated with capital expenditures of $16.9 million, $16.7 million and $44.9 million in 2006, 2005 and 2004, respectively, as we completed the final phase of our digital build-out. Additionally, during 2005, a $1.1 million impairment was recognized for certain capitalized software costs that became obsolete as a result of our conversion to a new revenue billing system during the second quarter of 2005. We expect depreciation on property and equipment to decrease in 2007 when compared to 2006. However, capital expenditures are expected to be greater in 2007.

Corporate general and administrative expenses. Corporate general and administrative expenses represent the costs to operate our corporate headquarters location. Such costs include, among other things, corporate departmental salaries, bonuses and fringe benefits, directors and officers life insurance, rent, telephone, consulting fees, legal, accounting, director fees and strategic development initiatives. Corporate departments include executive, treasury, finance and accounting, human resources, technology, corporate relations, legal, sales, operations and purchasing.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Corporate general and administrative expense for 2006 increased compared to the same period in 2005 due to increases of $1.7 million related to the shutdown of News Central at several stations and other strategic development initiatives related to news, salary and bonus expense of $1.4 million, legal fees of $0.5 million, restricted and unrestricted stock compensation costs of $0.1 million and other miscellaneous expenses of $0.2 million. These increases were offset by property and general insurance reimbursements of $0.2 million, workers compensation refunds of $0.4 million, decreases in health care costs of $1.0 million and audit and accounting fees of $0.7 million.

Corporate general and administrative expenses decreased during 2005 compared to 2004 as a result of decreases in salary and training expense related to open positions of $1.1 million, consulting fees of $0.5 million and sales promotion of $0.2 million. These decreases were offset by an increase in expense of $1.4 million related to compliance with the Sarbanes-Oxley Act of 2002, as well as the $0.1 million increase related to our charitable contributions to the Sinclair Relief Fund, a related party charitable organization established in response to the disaster caused by Hurricane Katrina.

We expect corporate overhead expenses to increase slightly in 2007.

Interest expense. Interest expense presented in the financial statements is related to continuing operations. Interest expense has been decreasing since 2004. The decrease during 2006 compared to 2005 is due to the expiration of two interest rate swap agreements, a decrease of interest related to derivative instruments, and the repurchase of 8% Senior Subordinated Notes, due 2012. The decrease was offset by increases due to the accretion of a debt discount as a result of the redemption of our Series D Convertible Exchangeable Preferred Stock for Convertible Debentures in the second quarter of 2005 and interest expense related to amended state income tax returns.

The decrease during 2005 when compared to 2004 is primarily related to the use of proceeds from television station sales to repay debt during 2005, partially offset by rising interest rates on our floating rate debt and by the accretion of a debt discount due to the exchange of our Series D Convertible Exchangeable Preferred Stock for Convertible Debentures, which increased interest expense.

We expect interest expense to be less in 2007 then in 2006, assuming no changes in the current interest rate yield curve or changes in our assumption of debt levels for 2007.

Unrealized gain from derivative instruments. We record gains and losses related to certain of our derivative instruments. We entered into these instruments prior to implementing SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and they did not qualify as effective hedges (as that term is defined in the accounting guidance). Generally, when derivative instruments are not effective, the change in the fair value of the instruments is recorded in the statement of operations for each respective period. The fair value of our derivative instruments is primarily based on the anticipated future interest rate curves at the end of each period. During 2006, certain instruments expired resulting in a reduction in unrealized gain.

Gain on insurance settlement. In the first quarter of 2003, one of our towers in Charleston, West Virginia collapsed during a severe ice storm. This tower was insured and we used the insurance proceeds to rebuild the tower and to replace the other assets that were destroyed by the collapse. In the fourth quarter of 2004, we completed substantially all of the construction of the new tower and placed it in service, and at that time we recognized a gain on insurance settlement of $3.3 million. In 2005, we recognized a gain on insurance settlement of $1.2 million related to rebuilding the tower and replacing the other assets that were destroyed by the collapse. We did not receive any additional payments or gains related to this claim in 2006.

Impairment of intangibles. On a periodic basis, we test our goodwill for impairment in accordance with the applicable accounting rules. See Note 5. Goodwill and Other Intangible Assets, in the Notes to our Consolidated Financial Statements. In 2006 and 2004, we recorded impairments of $11.9 million and $44.1 million, respectively, related to goodwill in two different markets. In addition, during 2006, we wrote-down a decaying advertiser based definite-lived intangible asset by $3.7 million.

Income tax provision. The 2006 income tax provision for our pre-tax income from continuing operations of $55.6 million resulted in an effective tax rate of 12.5%. The 2005 income tax provision for our pre-tax income from continuing operations of $70.4 million resulted in an effective tax rate of 51.3%. The decrease in the effective tax rate from 2005 to 2006 is primarily attributable to the release of discrete tax and related interest reserves as a result of the expiration of the statute of limitations for the Federal income tax returns for 1999 through 2002. We expect that the effective tax rate will increase to more normalized levels in 2007.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of December 31, 2006, we had a net deferred tax liability of $274.0 million as compared to a net deferred tax liability of $266.9 million as of December 31, 2005. The increase in deferred taxes primarily relates to a decrease in deferred tax assets associated with additional valuation allowances recorded to reflect a change in judgment with respect to realizability of state net operating losses.

The 2005 income tax provision for our pre-tax income from continuing operations of $70.4 million resulted in an effective tax rate of 51.3%. The 2004 income tax provision for our pre-tax income from continuing operations of $26.2 million resulted in an effective tax rate of 44.0%. The increase in the effective tax rate from 2004 to 2005 is primarily attributable to a one-time loss of certain state net operating losses, net of applicable valuation allowances, resulting from a corporate restructuring, offset by the effect of an Ohio tax law change.

As of December 31, 2005, we had a net deferred tax liability of $266.9 million as compared to a net deferred tax liability of $196.6 million as of December 31, 2004. The increase in deferred taxes primarily relates to an increase in deferred tax liabilities associated with book and tax differences relating to the amortization of intangible assets and a decrease in deferred tax assets resulting from utilization of Federal net operating losses to offset the gains on sale of several stations during 2005.

Other Operating Divisions Revenue and Expense

The following table presents Other Operating Divisions revenue and expenses related to G1440 Holdings, Inc. (G1440), our software development and consulting company and Acrodyne Communications, Inc. (Acrodyne), a manufacturer of television transmissions systems, for the years ended December 31, 2006, 2005 and 2004 (in millions):

For the years ended December 31, Percent Change 2006 2005 2004 06 vs. 05 05 vs. 04 Revenues: G1440 $ 8.5 $ 9.2 $ 6.7 (7.6%) 37.3% Acrodyne $ 16.1 $ 13.4 $ 6.3 20.2% 112.7%

Expenses: G1440 $ 8.6 $ 8.1 $ 6.4 6.2% 26.6% Acrodyne $ 15.6 $ 12.9 $ 8.5 20.9% 51.8%

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash provided by operations and availability under our Bank Credit Agreement (the Bank Credit Agreement). On December 21, 2006, we amended and restated the Bank Credit Agreement, lowering our annual interest rate and increasing our outstanding balances. As part of the amendment, the Bank Credit Agreement now includes a Term Loan A-1 facility (Term Loan A-1) of $225.0 million maturing on December 31, 2012. The Bank Credit Agreement, as in effect on December 31, 2006, also includes a Term Loan A Facility (the Term Loan A) of $100.0 million and a Revolving Credit Facility (the Revolver) of $175.0 million maturing on December 31, 2011 and June 30, 2011, respectively.

Scheduled payments on the Term Loan A, Term Loan A-1 and Revolver are calculated at the London Interbank Offered Rate (LIBOR) plus 1.25%, with step-downs tied to a leverage grid. We have the right to terminate the Term Loan A, Term Loan A-1 or Revolver at any time without prepayment penalty. The Term Loan A is repayable in quarterly installments, amortizing as follows:

· 1.25% per quarter commencing March 31, 2007 to December 31, 2008 · 3.75% per quarter commencing March 31, 2009 to December 31, 2010 · 15.0% per quarter commencing March 31, 2011 and continuing through its maturity on December 31, 2011.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Term Loan A-1 is repayable in quarterly installments, amortizing as follows:

· 1.25% per quarter commencing March 31, 2009 to December 31, 2009

· 2.50% per quarter commencing March 31, 2010 to December 31, 2010

· 3.75% per quarter commencing March 31, 2011 to December 31, 2011

· 17.50% per quarter commencing March 31, 2012 and continuing through its maturity on December 31, 2012.

Availability under the Revolver does not reduce incrementally and terminates at maturity. We are required to repay Term Loan A, Term Loan A-1 and reduce the Revolver with (i) 100% of the net proceeds of any casualty loss or condemnation and (ii) 100% of the net proceeds of any sale or other disposition of our assets in excess of $5.0 million in the aggregate in any 12 month period, to the extent not used to acquire new assets.

As of December 31, 2006, we had $67.4 million in cash balances and working capital of approximately $5.4 million. We anticipate that cash flow from our operations and the Revolver will be sufficient to continue paying dividends under our current policy and to satisfy our debt service obligations, capital expenditure requirements and working capital needs for the next year. As of December 31, 2006, we had borrowed $100.0 million under our Term Loan A. Our ability to draw on our Revolver is based on pro forma trailing cash flow levels as defined in our Bank Credit Agreement. For the year ended December 31, 2006, the entire $175.0 million of current borrowing capacity was available under our Revolver. Our Term Loan A-1 was drawn in full on January 16, 2007 in order to redeem the 8.75% Senior Subordinated Notes, due 2011, which we redeemed in full on January 22, 2007.

On April 22, 2002, we filed a $350.0 million universal shelf registration statement with the Securities and Exchange Commission which will permit us to offer and sell various types of securities from time to time. Offered securities may include common stock, debt securities, preferred stock, depository shares or any combination thereof in amounts, prices and on terms to be announced when the securities are offered. If we decide to offer any securities under our shelf registration, we intend to use the proceeds for general corporate purposes, including, but not limited to, the reduction, redemption or refinancing of debt or other obligations, acquisitions, capital expenditures and working capital. We have $350.0 million of availability under this shelf registration, which expires on November 30, 2008.

Sources and Uses of Cash

The following table sets forth our cash flows for the years ended December 31, 2006, 2005 and 2004 (in millions):

2006 2005 2004 Net cash flows from operating activities $ 155.3 $ 54.6 $ 120.1

Net cash flows from (used in) investing activities: Capital expenditures $ (16.9) $ (16.7) $ (44.9) Station sales (acquisitions) (0.3) 279.7 28.6 Sale of investments 21.5 Proceeds from sales of assets 2.4 0.1 Other (0.3) 0.2 (1.4) $ (15.1) $ 284.8 $ (17.7)

Net cash flows (used in) from financing activities: Issuance of debt $ 75.0 $ 52.0 $ 533.0 Repayment of debt (114.4) (360.4) (620.4) Dividend payments (36.1) (24.2) (14.5) Other (6.9) (7.6) (18.8) $ (82.4) $ (340.2) $ (120.7)

Operating Activities

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net cash flows from operating activities were $100.7 million higher for the year ended December 31, 2006 compared to the same period in 2005. During 2006, cash receipts from customers, net of cash payments to vendors for operating expenses and other working capital cash activities were $37.0 million higher compared to the same period in 2005. Additionally, we paid $16.0 million less in program payments, $10.7 million less in interest payments, $33.4 million less in tax payments and received $11.3 million more in tax refunds and $4.0 million more in distributions from equity investees in the year ended December 31, 2006. These amounts were offset by $11.7 million in operating cash flows from stations we owned during 2005 but which were sold prior to 2006.

Net cash flows from operating activities decreased during 2005 compared to 2004 primarily as a result of television station sales during 2005 and the related cash tax payments as a result of the gains from the sales. Cash tax payments in 2005 were $37.4 million as compared to $0.4 million in cash tax payments in 2004. Additionally, changes in our regular cash flows from operations resulted in net cash outflows of $7.0 million in 2005 compared to net cash inflows of $9.6 million in 2004 from similar operational changes. Interest payments decreased to $120.1 million in 2005 compared to $130.5 million in 2004. Our program payments decreased to $104.0 million in 2005 compared to $110.2 million in 2004.

Investing Activities

Net cash flows from investing activities were also significantly different for the year ended December 31, 2006 compared to the same period in 2005 because of proceeds from the sale of television stations, net of cash paid for the acquisition of stations and cash proceeds from sales of equity investees during 2005.

Net cash flows from investing activities increased significantly during 2005 compared to the net cash flows used in investing activities in 2004. The primary driver of this increase was cash from the sale of television stations of $295.2 million and the sale of our investment in Atlantic Automotive for $21.5 million. The cash from station sales was offset by $12.8 million cash paid related to the purchase options for WNAB-TV in Nashville, Tennessee and a cash payment of $2.7 million related to the FCC license purchase option for WNYS-TV in Syracuse, New York. Additionally, our cash payments for property and equipment decreased by $28.2 million in 2005, as compared to 2004, primarily because we spent less on digital conversion costs.

For 2007, we anticipate incurring an increase of capital expenditures when compared to 2006 for station maintenance, equipment replacement and consolidation of building and tower needs in some markets. We expect to fund such capital expenditures with cash generated from operating activities and borrowings under our Bank Credit Agreement or an issuance of securities.

Financing Activities

Net cash flows from financing activities were significantly different for the year ended December 31, 2006 compared to the same period in 2005 because we utilized the cash from the sale of television stations to repay debt during 2005. Our debt repayments to non-affiliates, net of debt issuances, in 2006 was $39.4 million compared to $308.4 million in 2005. Dividend payments on our common stock were $16.9 million higher for the year ended December 31, 2006 compared to the same period in 2005 because our dividend rate increased.

Net cash flows used in financing activities increased significantly in 2005 compared to 2004 primarily because we utilized the cash from the sales of our television stations to repay debt. Our debt repayments to non-affiliates, net of debt issuances, in 2005 were $308.4 million compared to $87.4 million in 2004. Additionally, we paid $14.9 million more in common stock dividend payments in 2005 as compared to 2004. See below for additional information about our common stock dividend payments.

During 2005 and 2004, we paid $5.0 million and $10.2 million in dividends on our Series D Convertible Preferred Stock, respectively. We will not incur these dividend payments in the future because we exchanged the Convertible Preferred Stock for Convertible Debentures on June 15, 2005. For additional information, refer to Note 6. Notes Payable and Commercial Bank Financing, in the Notes to our Consolidated Financial Statements.

In May 2004, we declared a quarterly cash dividend on our common stock for the first time in our companys history. On November 1, 2005, the Board of Directors increased the annual dividend paid on our Class A and Class B Common Stock from $0.30 per share to $0.40 per share. On February 14, 2007, we announced that our Board of Directors approved an increase to our annual dividend to $0.60 per share from $0.50 per share. We will begin paying this dividend rate beginning in the second quarter 2007 and intend to continue in each future quarter, using cash generated from operating activities and borrowings under our Bank Credit Agreement. The dividends paid for 2006, 2005 and 2004 are shown below:

For the quarter ended Total dividends paid Payment date March 31, 2006 $ 8.6 million April 13, 2006 June 30, 2006 $ 8.6 million July 13, 2006 September 30, 2006 $ 10.7 million October 12, 2006 December 31, 2006 $ 10.7 million January 12, 2007

For the quarter ended Total dividends paid Payment date March 31, 2005 $ 4.3 million April 15, 2005 June 30, 2005 $ 6.4 million July 15, 2005 September 30, 2005 $ 6.4 million October 14, 2005 December 31, 2005 $ 8.5 million January 13, 2006

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

During the year ended December 31, 2006, we repurchased, in the open market, $23.7 million in face value of our 8% Senior Subordinated Notes, due 2012 and $8.6 million in face value of our 6% Convertible Debentures, due 2012. From time to time, we may repurchase additional outstanding debt on the open market. We expect to fund any repurchases with cash generated from operating activities and borrowings under our Bank Credit Agreement.

Contractual Obligations

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

The following table reflects a summary of our contractual cash obligations as of December 31, 2006 and the future periods in which such obligations are expected to be settled in cash (in thousands):

CONTRACTUAL OBLIGATIONS RELATED TO CONTINUING OPERATIONS

2012 and Total 2007 2008-2009 2010-2011 thereafter (a) Notes payable, capital leases and commercial bank financing (b) $ 1,983,297 $ 188,853 $ 202,358 $ 506,038 $ 1,086,048 Notes and capital leases payable to affiliates 40,132 5,421 8,830 6,641 19,240 Operating leases 20,873 3,160 5,207 4,023 8,483 Employment contracts 15,649 8,396 6,999 254

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Film liability - active 183,115 85,746 72,632 24,737 Film liability - future (c) 113,467 8,829 57,089 41,171 6,378 Programming services (d) 190,639 37,027 68,553 56,275 28,784 Maintenance and support 7,667 2,088 3,084 2,494 1 Network affiliation agreements 17,691 11,736 5,955 Other operating contracts 8,160 1,867 1,163 838 4,292 Total contractual cash obligations $ 2,580,690 $ 353,123 $ 431,870 $ 642,471 $ 1,153,226 (a) Includes a one-year estimate of $28.6 million in payments related to contracts that automatically renew. We have not calculated potential payments for years after 2012.

(b) Includes interest on fixed rate debt and capital leases. Estimated interest on our recourse variable rate debt has been excluded. Recourse variable rate debt represents $100.0 million of our $1.4 billion total face value of debt as of December 31, 2006.

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

(d) Includes obligations related to rating service fees, music license fees, market research, weather and news services.

Off Balance Sheet Arrangements

Off balance sheet arrangements as defined by the SEC include the following four items: obligations under certain guarantees or contracts; retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangements; obligations under certain derivative arrangements; and obligations under material variable interest. We have entered into arrangements where we have obligations under certain guarantees or contracts because we believe they will help improve shareholder returns.

We have determined that WNAB continues to be a variable interest entity (VIE) and that we remain the primary beneficiary of the variable interest as a result of the terms of our outsourcing agreement. As a result, we continue to consolidate the assets and liabilities of WNAB, which were adjusted to reflect an appraisal prepared in connection with the closing of the non-license assets. Goodwill and FCC license book values were increased by $5.8 million and $4.2 million, respectively, upon the closing of the non-license assets in May 2005.

On May 26, 2005, we entered into a twelve-month limited scope liquidity assurance with Acrodyne Communications, Inc. (Acrodyne), one of our majority-owned subsidiaries. On July 14, 2006, we extended the liquidity assurance for an additional twelve-month period. Pursuant to this agreement, we will provide to them sufficient funding to cover any necessary working capital needs through May 25, 2007 should Acrodyne not be able to provide that funding on its own. The exposure to us in this liquidity assurance cannot be estimated nor can its probability of occurrence be estimated. In connection with this liquidity assurance, we established a $0.5 million line of credit for Acrodyne. Interest on any unpaid indebtedness will be calculated on a daily basis at LIBOR plus 225 basis points per annum. As of December 31, 2006, Acrodyne had borrowed $0.3 million under this line of credit. We do not believe the liquidity assurance will have a material impact on our consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows and, therefore, we have not recorded any liability related to it.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The following table reflects a summary of these off balance sheet arrangements, as defined by the Securities and Exchange Commission (SEC), as of December 31, 2006 and the future periods in which such arrangements may be settled in cash if certain contingent events occur (in thousands):

2012 and Total 2007 2008-2009 2010-2011 thereafter Letters of credit $ 1,177 $ 418 $ 216 $ 543 $ Investments and loan commitments (a) 5,924 5,924 Purchase commitments 500 500 LMA and outsourcing agreements (b) 24,583 7,825 10,828 5,434 496 Total other commercial commitments $ 32,184 $ 14,667 $ 11,044 $ 5,977 $ 496 (a) Commitments to contribute capital or provide loans to Allegiance Capital, LP, Acrodyne and Sterling Ventures Partners, LP.

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risks

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

We account for derivative instruments under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133 (collectively, SFAS 133). For additional information on SFAS 133, see Note 9. Derivative Instruments, in the Notes to our Consolidated Financial Statements.

On April 20, 2006, we terminated two of our derivative instruments with a cash payment of $3.8 million, the aggregate fair value of the derivative liabilities on that date. These swap agreements were accounted for as fair value hedges in accordance with SFAS 133 and changes in their fair market values were reflected as adjustments to the carrying value of the underlying debt that was being hedged. Therefore, on the termination date, the carrying value of the underlying debt was adjusted to reflect the $3.8 million payment and that amount will be treated as a discount on the underlying debt that was being hedged and will be amortized over its remaining life, in accordance with SFAS 133. Amortization of the discount of $0.5 million was recorded as interest expense for the year ended December 31, 2006.

On June 5, 2006, two of our derivative instruments expired. These expired swap agreements did not qualify for hedge accounting treatment under SFAS 133 and, therefore, the changes in their fair market values were reflected in historical earnings as an unrealized gain from derivative instruments through the expiration date. For the years ended December 31, 2006, 2005 and 2004, we recorded an unrealized gain of $2.9 million, $21.8 million and $29.4 million, respectively.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Offered Rate (LIBOR) plus 2.28% and the interest we receive is at 8%. The fair market value of these agreements is estimated by obtaining quotations from the international financial institution party to the contract. This fair value is an estimate of the net amount that we would pay on December 31, 2006 if we cancelled the contracts or transferred them to other parties and includes net accrued interest receivable. This amount was a net asset of $5.7 million and $10.7 million as of December 31, 2006 and 2005, respectively.

To determine the sensitivity of these derivative instruments to changes in interest rates, we also obtain quotations from the party to the contract that estimate the pro forma fair market value of the instruments on December 31, 2006 if current interest rates were higher by 1% or lower by 1%. As of December 31, 2006, the fair market value of these instruments would be a liability of $2.1 million if interest rates were 1% higher and an asset of $5.6 million if interest rates were 1% lower than current rates.

During May 2003, we completed an issuance of $150.0 million aggregate principal amount of 4.875% Convertible Senior Notes, due 2018. Under certain circumstances, we will pay contingent cash interest to the holder of the convertible notes during any six month period from January 15 to July 14 and from July 15 to January 14, commencing with the six month period beginning January 15, 2011. The contingent interest feature is an embedded derivative which had a negligible fair value as of December 31, 2006.

We are also exposed to risk from a change in interest rates to the extent we are required to refinance existing fixed rate indebtedness at rates higher than those prevailing at the time the existing indebtedness was incurred. As of December 31, 2006, we had senior subordinated notes with face amounts totaling $307.4 million and $618.3 million and convertible senior bonds totaling $153.2 million and $150.0 million expiring in the years 2011, 2012, 2012 and 2018, respectively. Based on the quoted market price, the fair value of the notes and bonds was $1.2 billion as of December 31, 2006. Generally, the fair market value of the notes will decrease as interest rates rise and increase as interest rates fall. We estimate that a 1.0% increase from prevailing interest rates would result in a decrease in fair value of the notes by $57.4 million as of December 31, 2006. The estimates related to the increase or decrease of interest rates are based on assumptions for forecasted future interest rates.

The fair value of the notes and bonds was $1.2 billion as of December 31, 2005 and at that time we estimated that a 1.0% increase in prevailing interest rates would have resulted in a decrease of $64.2 million in fair value. This indicates that our exposure to risk from a change in interest rates has not materially changed since December 31, 2005.

On January 22, 2007, we redeemed in full our 8.75% Senior Subordinated Notes, due 2011.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

There were no changes in and/or disagreements with accountants on accounting and financial disclosure during the year ended December 31, 2006.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2006. The term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation,

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the companys management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2006, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

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

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2006 based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management believes that, as of December 31, 2006, our internal control over financial reporting is effective based on those criteria.

Managements assessment of the effectiveness of our internal control over financial reporting as of December 31, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report included in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during or subsequent to the quarter ended December 31, 2006, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

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

We have audited managements assessment, included in the accompanying Report of Management on Sinclair Broadcast Group, Inc.s Internal Control Over Financial Reporting, that Sinclair Broadcast Group, Inc. maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Sinclair Broadcast Group, Inc.s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

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

In our opinion, managements assessment that Sinclair Broadcast Group, Inc. maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Sinclair Broadcast Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Sinclair Broadcast Group, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, shareholders equity, and cash flows for each of the three years in the period ended December 31, 2006 of Sinclair Broadcast Group, Inc. and our report dated March 8, 2007 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Baltimore, Maryland March 8, 2007

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be included in our Proxy Statement for the 2007 Annual Meeting of shareholders under the caption, Directors, Executive Officers and Corporate Governance, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2006 and is incorporated by reference in this report.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item will be included in our Proxy Statement for the 2007 Annual Meeting of shareholders under the caption, Executive Compensation, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2006 and is incorporated by reference in this report.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be included in our Proxy Statement for the 2007 Annual Meeting of shareholders under the caption, Security Ownership Of Certain Beneficial Owners and Management, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2006 and is incorporated by reference in this report.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be included in our Proxy Statement for the 2007 Annual Meeting of shareholders under the caption, Certain Relationships and Related Transactions, and Director Independence, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2006 and is incorporated by reference in this report.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item will be included in our Proxy Statement for the 2007 Annual Meeting of shareholders under the caption, Principal Accountant Fees and Services, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2006 and is incorporated by reference in this report.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1) Financial Statements

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

Page: Sinclair Broadcast Group, Inc. Financial Statements: Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2006 and 2005 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005 and 2004 F-4 Consolidated Statements of Shareholders Equity and Other Comprehensive Income for the Years Ended December 31, 2006, 2005 and 2004 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004 F-8 Notes to Consolidated Financial Statements F-10

(a) (2) Financial Statements Schedules

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

Index to Schedules S-1 Schedule II - Valuation and Qualifying Accounts S-2

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

The following exhibits are filed with this report:

EXHIBIT NO. EXHIBIT DESCRIPTION 3.1 Amended and Restated Certificate of Incorporation. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended June 30, 1998). 3.2 Amended By-Laws of Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 4.1 First Supplemental Indenture, dated as of April 4, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and First Union National Bank, as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-107522) filed on July 31, 2003). 4.2 Second Supplemental Indenture, dated as of July 26, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-107522) filed on July 31, 2003). 4.3 Third Supplemental Indenture, dated as of January 17, 2003, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-107522) filed on July 31, 2003). 4.4 Fourth Supplemental Indenture, dated as of May 9, 2003, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-107522) filed on July 31, 2003). 4.5 Fifth Supplemental Indenture, dated as of July 17, 2003, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-107522) filed on July 31, 2003).

4.6 First Supplemental Indenture, dated as of July 26, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-103681) filed on March 7, 2003). 4.7 Second Supplemental Indenture, dated as of November 8, 2002, among Sinclair Broadcast Group, Inc., the Guarantors named therein and Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-103681) filed on March 7, 2003). 4.8 Indenture, dated as of May 20, 2003, between Sinclair Broadcast Group, Inc. and Wachovia Bank, National Association. (Incorporated by reference from Registrants Registration Statement on Form S-4 (333-107522) filed on July 31, 2003). 4.9 Ninth Supplemental Indenture, dated as of May 13, 2005 between Sinclair Broadcast Group, Inc., as Issuer, and Wachovia Bank, National Association, formerly First Union National Bank, as Trustee. (Incorporated by reference from Registrants Report on Form 8-K filed on June 21, 2005). 10.1 Lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.2 Amendment No. 1 to the lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.3 Amendment No. 2 to the lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.4 Amendment No. 3 to the lease dated as of September 23, 1993 between Gerstell Development Limited Partnership and WPGH, Inc. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.5 Lease Agreement dated as of July 1, 1987 between Cunningham Communications, Inc. and Chesapeake Television, Inc. as amended on July 1, 1997 and July 1, 2005. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-69482).

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.6 Lease Agreement dated as of June 1, 1991 between Cunningham Communications, Inc. and Chesapeake Television, Inc. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-69482). 10.7 Lease Agreement dated as of April 1, 1992 between Cunningham Communications, Inc. and Chesapeake Television, Inc. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-69482). 10.8 Lease dated February 1, 1996 by and between Keyser Investment Group, Inc., a Maryland corporation, and Sinclair Broadcast Group, Inc., a Maryland corporation. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.9 Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and William Richard Schmidt, as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.10 Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and C. Victoria Woodward, as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.11 Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and Dyson Ehrhardt, as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.12 Common Non-Voting Capital Stock Option between Sinclair Broadcast Group, Inc. and Mark Knobloch, as trustee. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.13 Incentive Stock Option Plan for Designated Participants. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.14 Incentive Stock Option Plan for Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Registration Statement on Form S-1 No. 33-90682). 10.15 First Amendment to Incentive Stock Option Plan for Sinclair Broadcast Group, Inc., adopted April 10, 1996. (Incorporated by reference from Registrants Report on Form 10-K/A for the year ended December 31, 1996).

10.16 Second Amendment to Incentive Stock Option Plan for Sinclair Broadcast Group, Inc., adopted May 31, 1996. (Incorporated by reference from Registrants Report on Form 10-K/A for the year ended December 31, 1996). 10.17 1996 Long-Term Incentive Plan for Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 10-K/A for the year ended December 31, 1996). 10.18 First Amendment to 1996 Long-Term Incentive Plan for Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Proxy Statement on Schedule 14A for the year ended December 31, 1998). 10.19 Employment Agreement by and between Sinclair Broadcast Group, Inc. and Frederick G. Smith, dated June 12, 1998. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended September 30, 1998). 10.20 Employment Agreement by and between Sinclair Broadcast Group, Inc. and J. Duncan Smith, dated June 12, 1998. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended September 30, 1998). 10.21 Employment Agreement by and between Sinclair Broadcast Group, Inc, and David B. Amy, dated September 15, 1998. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended September 30, 1998). 10.22 Employment Agreement by and between Sinclair Broadcast Group, Inc. and Barry M. Faber dated August 4, 2004. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended June 30, 2004). 10.23 Asset Purchase Agreement dated as of December 2, 2004 among CBS Broadcasting, Inc., Sinclair Broadcast Group, Inc., Chesapeake Television, Inc., and SCI-Sacramento Licensee, LLC. (Incorporated by reference from Registrants Report on Form 8-K filed on December 3, 2004). 10.24 Beaver Dam Limited Liability Company Operating Agreement dated as of May 30, 1996 by and among David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004). 10.25 First Amendment to the Operating Agreement and Agreement to Retire dated as of April 18, 1997 by and among Beaver Dam Limited Liability Company, David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004).

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.26 Second Amendment to the Operating Agreement and Agreement to Redeem Membership Rights dated as of May 6, 1998 by and among Beaver Dam Limited Liability Company, David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004). 10.27 Agreement of Lease dated as of December 18, 1998 by and between Beaver Dam Limited Liability Company and Sinclair Communications, Inc. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004). 10.28 Agreement of Lease dated as of December 18, 1998 by and between Beaver Dam Limited Liability Company and SBG Group. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004).

10.29 Agreement of Lease dated as of May 25, 2000 by and between Beaver Dam Limited Liability Company and Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004). 10.30 Agreement of Lease dated as of May 25, 2000 by and between Beaver Dam Limited Liability Company and Sinclair Broadcast Group. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004). 10.31 Agreement of Lease dated as of May 14, 2002 by and between Beaver Dam Limited Liability Company and Sinclair Broadcast Group, Inc. (Incorporated by reference from Registrants Report on Form 8-K filed on December 20, 2004). 10.32 Asset Purchase Agreement dated November 12, 2004 among KSMO Licensee, Inc. and Meredith Corporation. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.33 Joint Sales and Shared Services Agreement dated as of November 12, 2004, by and among KSMO Licensee, Inc., a Delaware Corporation, KSMO, Inc., a Maryland Corporation, and Meredith Corporation, an Iowa Corporation. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.34 Form of WB Television Network Affiliation Agreement. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.35 Director Compensation. (Incorporated by reference from Registrants Report on Form 10-K for the year ended December 31, 2004). 10.36 Executive Officer Compensation. (Incorporated by reference from Registrants Report on Form 8-K filed on March 15, 2005). 10.37 Employment Agreement by and between Sinclair Broadcast Group, Inc. and Lucy Rutishauser dated March 19, 2001. (Incorporated by reference from Registrants Report on Form 10-K/A filed on April 29, 2005). 10.38 Asset Purchase Agreement, dated as of May 16, 2005, between Bluestone Television Inc. and Sinclair Properties, LLC. (Incorporated by reference from Registrants Report on Form 8-K filed on May 20, 2005). 10.39 Asset Purchase Agreement, dated as of May 16, 2005, among Aurora Broadcasting, Inc., Sinclair Properties, LLC, and WEMT Licensee L.P. (Incorporated by reference from Registrants Report on Form 8-K filed on May 20, 2005). 10.40 Amendment No. 2, dated as of July 1, 2005 and effective July 1, 2005, by and between Cunningham Communications, Inc. (Lessor) and Sinclair Communications, LLC, as successor by merger of Chesapeake Television, Inc. (Lessee) to the Lease Agreement (the Agreement) between Lessor and Lessee, effective as of July 1, 1987, as amended July 1, 1997. (Incorporated by reference from Registrants Report on Form 8-K filed on July 1, 2005). 10.41 Stock Redemption Agreement, dated as of August 2, 2005, by and between Sinclair Broadcast Group, Inc. and Atlantic Automotive Corporation. (Incorporated by reference from Registrants Report on Form 8-K/A filed on August 8, 2005). 10.42 Stock Purchase Agreement, dated as of August 2, 2005, by and among Sinclair Broadcast Group, Inc. and David D. Smith. (Incorporated by reference from Registrants Report on Form 8-K/A filed on August 8, 2005). 10.43 Release and Settlement agreement dated as of May 2, 2006 by Bay Television, Inc. and between Sinclair Broadcast Group, Inc., Bay Television, Inc, The WB Television Network and UPN. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended June 30, 2006) 10.44 Form of FOX Broadcasting Company Station Affiliation Agreement dated June 26, 2006. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended June 30, 2006)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.45 Form of Restricted Stock Award Agreement. (Incorporated by reference from Registrants Report on Form 10-Q for the quarter ended June 30, 2006) 10.46 Credit Agreement dated as of December 21, 2006, between Sinclair Television Group, Inc. (the Company) and JP Morgan Chase Bank N.A, as Administrative Agent. 12 Computation of Ratio of Earnings to Fixed Charges. 21 Subsidiaries of the Registrant. 23 Consent of Independent Registered Public Accounting Firm. 24 Power of Attorney; included above registrants signatures of this Form 10-K.

31.1 Certification by David D. Smith, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to § 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7241). 31.2 Certification by David B. Amy, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to § 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7241). 32.1 Certification by David D. Smith, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350). 32.2 Certification by David B. Amy, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350). 99 Stockholders Agreement dated April 19, 2005 by and among the Smith Brothers. (Incorporated by reference from Registrants Report on Form 8-K filed on April 26, 2005).

(b) Exhibits

The exhibits required by this Item are listed under Item 15 (a) (3).

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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on this 9th day of March 2007.

SINCLAIR BROADCAST GROUP, INC.

POWER OF ATTORNEY

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

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

Signature Title Date

/s/ David D. Smith Chairman of the Board, President and David D. Smith Chief Executive Officer March 9, 2007

/s/ David B. Amy Executive Vice President and David B. Amy Chief Financial Officer March 9, 2007

/s/ David R. Bochenek Vice President and David R. Bochenek Chief Accounting Officer March 9, 2007

/s/ Frederick G. Smith Frederick G. Smith Director March 9, 2007

/s/ J. Duncan Smith J. Duncan Smith Director March 9, 2007

/s/ Robert E. Smith Robert E. Smith Director March 9, 2007

/s/ Basil A. Thomas Basil A. Thomas Director March 9, 2007

/s/ Lawrence E. McCanna Lawrence E. McCanna Director March 9, 2007

/s/ Daniel C. Keith Daniel C. Keith Director March 9, 2007

/s/ Martin R. Leader Martin R. Leader Director March 9, 2007

INDEX TO FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of December 31, 2006 and 2005 F-3

Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005 and 2004 F-4

Consolidated Statements of Shareholders Equity and Other Comprehensive Income for the Years Ended F-5 December 31, 2006, 2005 and 2004

Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004 F-8

Notes to Consolidated Financial Statements F-10

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Sinclair Broadcast Group, Inc. (a Maryland corporation) and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, shareholders equity, and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 consolidated financial position of Sinclair Broadcast Group, Inc. and subsidiaries at December 31, 2006 and 2005, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in note 1 of the notes to the consolidated financial statements, the Company changed the manner in which it quantifies and corrects the effects of prior year uncorrected misstatements upon the adoption of the Securities and Exchange Commissions Staff Accounting

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements on January 1, 2006.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Sinclair Broadcast Group, Inc.s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 8, 2007 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Baltimore, Maryland March 8, 2007

F-2

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)

As of December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 67,408 $ 9,655 Accounts receivable, net of allowance for doubtful accounts of $3,985 and $4,596, respectively 130,227 127,913 Affiliate receivable 12 14 Current portion of program contract costs 65,322 51,528 Income taxes receivable 3,625 Prepaid expenses and other current assets 13,922 17,616 Deferred barter costs 2,509 2,027 Assets held for sale 3,678 Deferred tax assets 8,340 10,591 Total current assets 291,365 223,022

PROGRAM CONTRACT COSTS, less current portion 49,187 36,494 PROPERTY AND EQUIPMENT, net 274,962 304,355 GOODWILL, net 1,007,268 1,040,234 BROADCAST LICENSES, net 409,620 409,620 DEFINITE-LIVED INTANGIBLE ASSETS, net 205,147 224,673 OTHER ASSETS 35,049 44,907 Total assets $ 2,272,598 $ 2,283,305

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES: Accounts payable $ 4,849 $ 3,799 Income taxes payable 2,662 Accrued liabilities 90,713 84,623 Current portion notes payable, capital leases and commercial bank financing 98,265 33,802 Current portion of notes and capital leases payable to affiliates 3,985 4,135 Current portion of program contracts payable 85,746 88,510 Deferred barter revenues 2,388 2,501 Deferred gain on sale of broadcast assets 3,249 Liabilities held for sale 1,407 Total current liabilities 285,946 224,688

LONG-TERM LIABILITIES: Notes payable, capital leases and commercial bank financing, less current portion 1,290,899 1,397,649 Notes payable and capital leases to affiliates, less current portion 20,474 15,152 Program contracts payable, less current portion 97,369 65,239 Deferred tax liabilities 282,317 277,451 Other long-term liabilities 28,263 52,438 Total liabilities 2,005,268 2,032,617

MINORITY INTEREST IN CONSOLIDATED ENTITIES 685 966

SHAREHOLDERS EQUITY: Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 47,552,682 and 47,122,407 shares issued and outstanding, respectively 476 471 Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 38,348,331 shares issued and outstanding, respectively, convertible into Class A Common Stock 383 383 Additional paid-in capital 596,667 593,259 Accumulated deficit (328,406) (344,391) Accumulated other comprehensive loss (2,475) Total shareholders equity 266,645 249,722 Total liabilities and shareholders equity $ 2,272,598 $ 2,283,305

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

F-3

SINCLAIR BROADCAST GROUP, INC.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands, except per share data)

2006 2005 2004 REVENUES: Station broadcast revenues, net of agency commissions $ 635,842 $ 614,436 $ 634,609 Revenues realized from station barter arrangements 54,686 55,034 57,814 Other operating divisions revenue 24,610 22,597 13,054 Total revenues 715,138 692,067 705,477

OPERATING EXPENSES: Station production expenses 148,276 152,771 155,276 Station selling, general and administrative expenses 140,579 138,304 146,373 Expenses recognized from station barter arrangements 49,508 50,460 53,358 Amortization of program contract costs and net realizable value adjustments 90,746 70,666 89,152 Other operating divisions expenses 24,193 20,944 14,932 Depreciation of property and equipment 46,248 50,275 48,159 Corporate general and administrative expenses 22,795 21,220 21,496 Amortization of definite-lived intangible assets and other assets 18,021 17,972 18,482 Impairment of intangibles 15,589 44,055 Total operating expenses 555,955 522,612 591,283 Operating income 159,183 169,455 114,194

OTHER INCOME (EXPENSE): Interest expense and amortization of debt discount and deferred financing costs (115,217) (120,002) (120,400) Interest income 2,008 650 191 Gain (loss) from sale of assets 143 (80) (52) Loss from extinguishment of debt (904) (1,937) (2,453) Unrealized gain from derivative instruments 2,907 21,778 29,388 Income (loss) from equity and cost investees 6,338 (1,426) 1,100 Gain on insurance settlement 1,193 3,341 Other income, net 1,159 721 894 Total other expense (103,566) (99,103) (87,991) Income from continuing operations before income taxes 55,617 70,352 26,203

INCOME TAX PROVISION (6,970) (36,115) (11,522) Income from continuing operations 48,647 34,237 14,681

DISCONTINUED OPERATIONS: Income from discontinued operations, net of related income tax benefit (provision) of $3,502, ($1,644) and ($5,915), respectively 3,556 5,671 9,341 Gain from discontinued operations, net of related income tax provision of $885 and $80,002, respectively 1,774 146,024 NET INCOME 53,977 185,932 24,022 PREFERRED STOCK DIVIDENDS (5,004) (10,180) EXCESS OF PREFERRED STOCK CARRYING VALUE OVER REDEMPTION VALUE 26,201 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 53,977 $ 207,129 $ 13,842

BASIC AND DILUTED EARNINGS PER COMMON SHARE: Earnings per share from continuing operations $ 0.57 $ 0.65 $ 0.05

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Earnings per share from discontinued operations $ 0.06 $ 1.78 $ 0.11 Earnings per share $ 0.63 $ 2.43 $ 0.16 Weighted average common shares outstanding 85,680 85,380 85,590 Weighted average common and common equivalent shares outstanding 85,694 85,389 85,741 Dividends declared per share $ 0.450 $ 0.300 $ 0.075

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

F-4

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands)

Accumulated Other Series D Class A Class B Additional Comprehensive Total Preferred Common Common Paid-In Accumulated (Loss) Shareholders Stock Stock Stock Capital Deficit Income Equity BALANCE, December 31, 2003 $ 35 $ 446 $ 412 $ 762,588 $ (533,916) $ (560) $ 229,005 Dividends declared on Class A and Class B Common Stock (6,403) (6,403) Dividends paid on Series D Convertible Exchangeable Preferred Stock (10,166) (10,166) Class A Common Stock issued pursuant to employee benefit plans and stock options exercised 3 3,509 3,512 Class B Common Stock converted into Class A Common Stock 21 (21) Repurchase of 970,500 shares of Class A Common Stock (10) (9,540) (9,550) Amortization of deferred compensation 127 127 Repurchase of Series D Convertible Exchangeable Preferred Stock (2) (4,750) (4,752) Tax benefit of nonqualifying stock options exercised 196 196 Net income 24,022 24,022 Amortization of derivative instruments, net of tax provision of $304 560 560 BALANCE, December 31, 2004 $ 33 $ 460 $ 391 $ 752,130 $ (526,463) $ $ 226,551

Other comprehensive income: Net income $ $ $ $ $ 24,022 $ $ 24,022 Amortization of derivative instruments, net of tax provision of $304 560 560

F-5

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands)

Series D Class A Class B Additional Total Preferred Common Common Paid-In Accumulated Shareholders Stock Stock Stock Capital Deficit Equity BALANCE, December 31, 2004 $ 33 $ 460 $ 391 $ 752,130 $ (526,463) $ 226,551 Dividends declared on Class A and Class B Common Stock (25,474) (25,474) Dividends paid on Series D Convertible Exchangeable Preferred Stock (4,587) (4,587) Class A Common Stock issued pursuant to employee benefit plans and stock options exercised 3 2,426 2,429 Class B Common Stock converted into Class A Common Stock 8 (8) Series D Convertible Exchangeable Preferred Stock converted into debt (33) (161,302) 26,201 (135,134) Amortization of deferred compensation 5 5 Net income 185,932 185,932

BALANCE, December 31, 2005 $ $ 471 $ 383 $ 593,259 $ (344,391) $ 249,722

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

F-6

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands)

Accumulated Class A Class B Additional Other Total Common Common Paid-In Accumulated Comprehensive Shareholders Stock Stock Capital Deficit Loss Equity BALANCE, December 31, 2005 $ 471 $ 383 $ 593,259 $ (344,391) $ $ 249,722 Dividends declared on Class A and Class B Common Stock (38,176) (38,176) Class A Common Stock issued pursuant to employee benefit plans and stock options exercised 5 3,348 3,353 Tax benefit of nonqualified stock options exercised 60 60 Net income 53,977 53,977 Adjustment related to adoption of SFAS 158, net of taxes (2,475) (2,475)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Adjustment related to adoption of SAB 108, net of taxes 184 184 BALANCE, December 31, 2006 $ 476 $ 383 $ 596,667 $ (328,406) $ (2,475) $ 266,645

Other comprehensive income (loss): Net income $ $ $ $ 53,977 $ $ 53,977 Adjustment related to adoption of SFAS 158, net of taxes (2,475) (2,475) Comprehensive income (loss) $ $ $ $ 53,977 $ (2,475) $ 51,502

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

F-7

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (In thousands)

2006 2005 2004 CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES: Net income $ 53,977 $ 185,932 $ 24,022 Adjustments to reconcile net income to net cash flows from operating activities: Amortization of debt discount, net of debt premium 2,263 600 (1,081) Depreciation of property and equipment 46,248 50,831 50,877 Recognition of deferred revenue (7,730) (4,942) (4,928) Accretion of capital leases 453 638 706 (Income) loss from equity and cost investees (6,057) 1,426 (1,100) (Gain) loss on sale of property (143) 80 52 Gain on sale of broadcast assets related to discontinued operations (2,659) (226,026) Gain on involuntary conversion, non-cash portion (3,212) Impairment of intangibles 15,589 44,055 Unrealized gain from derivative instruments (2,907) (21,778) (29,388) Amortization of definite-lived intangible assets and other assets 18,021 17,997 19,035 Amortization of program contract costs and net realizable value adjustments 90,746 71,337 94,180 Amortization of deferred financing costs 2,509 2,505 2,839 Stock-based compensation 1,905 1,701 1,906 Loss from extinguishment of debt, non-cash portion 854 1,995 1,289 Amortization of derivative instruments 538 538 1,098 Deferred tax provision related to continuing operations 18,833 43,631 11,125 Deferred tax (benefit) provision related to discontinued operations (1,177) 36,033 5,828 Net effect of change in deferred barter revenues and deferred barter costs (595) (50) 118 Changes in assets and liabilities, net of effects of acquisitions and dispositions:

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (Increase) decrease in accounts receivable, net (3,366) 2,485 7,477 (Increase) decrease in taxes receivable (3,625) 624 1,328 Decrease (increase) in prepaid expenses and other current assets 3,736 (1,050) (3,206) (Increase) decrease in other long-term assets (780) 5,151 555 Increase (decrease) in accounts payable and accrued liabilities 12,907 (11,687) 4,809 Increase in income taxes payable 2,255 908 Decrease in other long-term liabilities (5,573) (3,390) (1,380) Decrease in minority interest (100) (77) (67) Dividends and distributions of earnings from equity and cost investees 7,217 3,219 3,327 Payments on program contracts (88,006) (104,020) (110,151) Net cash flows from operating activities 155,333 54,611 120,113

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: Acquisition of property and equipment (16,923) (16,673) (44,881) Consolidation of variable interest entity 239 Payments for acquisition of television stations (1,710) (15,540) Investments in equity and cost investees (339) (970) (5,549) Proceeds from the sale of assets 2,430 66 39 Proceeds from the sale of broadcast assets related to discontinued operations 1,400 295,190 28,561 Proceeds from the sale of equity investees 21,500 Proceeds from insurance settlements 1,193 2,521 Loans to affiliates (143) (126) (143) Proceeds from loans to affiliates 141 125 1,511 Net cash flows (used in) from investing activities (15,144) 284,765 (17,702)

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SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004 (CONTINUED) (In thousands)

2006 2005 2004 CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing and capital leases 75,000 52,000 533,000 Repayments of notes payable, commercial bank financing and capital leases (114,364) (360,367) (620,400) Proceeds from exercise of stock options 1,065 178 1,152 Payments for deferred financing costs (1,913) (953) Payments for derivative terminations (3,750) Dividends paid on Series D Convertible Exchangeable Preferred Stock (5,004) (10,180) Dividends paid on Class A and Class B Common Stock (36,062) (19,201) (4,274) Repurchase of Series D Convertible Exchangeable Preferred Stock (4,752) Repurchase of Class A Common Stock (9,550)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Repayments of notes and capital leases to affiliates (4,325) (5,905) (4,693) Net cash flows used in financing activities (82,436) (340,212) (120,650) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 57,753 (836) (18,239) CASH AND CASH EQUIVALENTS, beginning of year 9,655 10,491 28,730 CASH AND CASH EQUIVALENTS, end of year $ 67,408 $ 9,655 $ 10,491

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

F-9

SINCLAIR BROADCAST GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

Sinclair Broadcast Group, Inc. is a diversified television broadcasting company that owns or provides certain programming, operating or sales services to television stations pursuant to broadcasting licenses that are granted by the Federal Communications Commission. We currently own, provide programming and operating services pursuant to local marketing agreements (LMAs) or provide, or are provided, sales services pursuant to outsourcing agreements to 58 television stations in 36 markets. For the purpose of this report, these 58 stations are referred to as our stations. We currently have 11 duopoly markets where we own and operate at least two or more stations within the same market. We have ten LMA markets where, with one exception, we own and operate one station in the market and provide programming and operating services to, or by, another station within the market. In the remaining 15 markets, we own and operate a single television station. Our broadcast group is a single reportable segment for accounting purposes. Beginning in September 2006, our diverse network affiliations are as follows: FOX (19 stations); MyNetworkTV (17 stations); ABC (10 stations); The CW (9 stations); CBS (2 stations) and NBC (1 station). We no longer have independent stations. Prior to September 2006, of the 58 television stations that we owned and operated, or to which we provided programming services or sales services, 56 were affiliated as follows: FOX (19 stations); WB (18 stations); ABC (10 stations); UPN (6 stations); CBS (2 stations) and NBC (1 station). The remaining two stations were independent.

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities for which we are the primary beneficiary. Minority interest represents a minority owners proportionate share of the equity in certain of our consolidated entities. All significant intercompany transactions and account balances have been eliminated in consolidation. The financial statements for the unrelated third-party owner of WNAB-TV in Nashville, Tennessee, a variable interest entity (VIE) for which we are a primary beneficiary, have been consolidated since March 31, 2004. (See Variable Interest Entities below.)

Discontinued Operations

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long- Lived Assets, we have reported the financial position and results of operations of KOVR-TV in Sacramento, California, KSMO-TV in Kansas City, Missouri and WEMT-TV in Tri-Cities, Tennessee as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations. Discontinued operations have not been segregated in the consolidated statements of cash flows and, therefore, amounts for certain captions will not agree with the accompanying consolidated balance sheets and consolidated statements of operations. The operating results of KOVR-TV, KSMO-TV and WEMT-TV are not included in our consolidated results from continuing

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document operations for the years ended December 31, 2006, 2005 and 2004. In accordance with Emerging Issues Task Force Issue No. 87-24, Allocation of Interest to Discontinued Operations, we have allocated $3.6 million and $7.7 million of interest expense to discontinued operations for the years ended December 31, 2005 and 2004, respectively. No interest expense was allocated for the year ended December 31, 2006. See Note 13. Discontinued Operations, for additional information.

Use of Estimates

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

Recent Accounting Pronouncements

On January 1, 2006, we adopted SFAS No. 123R, Share-Based Payment (SFAS 123R). SFAS 123R requires us to expense the fair value of grants of various stock-based compensation programs over the vesting period of the awards. We elected to adopt SFAS 123R using the Modified Prospective Application transition method which does not result in the restatement of previously issued consolidated financial statements. For additional information regarding our accounting under SFAS 123R, see Note 2. Stock-Based Compensation Plans.

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In July 2006, Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition of positions taken or expected to be taken in income tax returns. Only tax positions meeting a more-likely-than-not threshold of being sustained are recognized under FIN 48. FIN 48 also provides guidance on derecognition, classification of interest and penalties and accounting and disclosures for annual and interim financial statements. FIN 48 is effective for our fiscal year beginning January 1, 2007. The cumulative effect of any changes arising from the initial application of FIN 48 is required to be reported as an adjustment to the opening balance of retained earnings in the period of adoption. We are currently evaluating the impact that the adoption of FIN 48 will have on our consolidated financial statements.

In September 2006, the FASB issued SFAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R) (SFAS 158). SFAS 158 required us to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension plan in our December 31, 2006 consolidated financial statements, with a corresponding adjustment to accumulated other comprehensive loss, net of tax. At adoption, the adjustment to accumulated other comprehensive loss of $2.5 million (net of taxes of $1.7 million) represented the net unrecognized actuarial losses which we previously netted against the plans funded status in our consolidated financial statements pursuant to the provisions of Statement 87. This amount will be subsequently recognized as net periodic pension cost pursuant to our historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as a component of net periodic pension cost are recognized as increases or decreases in accumulated other comprehensive loss. These gains or losses will be adjusted as they are subsequently recognized as a component of net periodic pension costs. As of December 31, 2006, we have also recognized a liability of $0.4 million representing the under funded status of our defined benefit pension plan, which is included in other long- term liabilities in the accompanying consolidated balance sheet. We do not expect the adoption of SFAS 158 to have a material impact on our consolidated financial statements in future years.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document misstatements using both a balance sheet and an income statement approach and evaluate whether either approach results in a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. The two methods for evaluating misstatements are referred to as the rollover method and the iron curtain method. The rollover method quantifies misstatements based on the effects of correcting the misstatements that exist in the current year income statement, including misstatements that arose in the current year, as well as, the reversal or correction of the misstatements that arose in prior years. The iron curtain method quantifies misstatements based on the effects of correcting the misstatements that exist in the balance sheet at the end of the current year, regardless of the misstatements year of origin.

F-11

Variable Interest Entities

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

We have determined that WNAB-TV in Nashville, Tennessee continues to be a VIE and that we remain the primary beneficiary of the variable interest as a result of the terms of our outsourcing agreement and our purchase option. As a result, we continue to consolidate the assets and liabilities of WNAB-TV, which were adjusted to reflect an appraisal prepared in connection with the closing of the non-license assets in 2005. The consolidated assets of WNAB-TV consist of broadcast licenses of $18.6 million, network affiliation of $2.2 million and property and equipment of $2.7 million. The consolidation of WNAB-TV did not have a material impact on our consolidated statements of operations. We made payments to the unrelated third-party owner of WNAB-TV of $1.2 million, $1.6 million and $1.7 million related to our outsourcing agreement for the years ended December 31, 2006, 2005 and 2004, respectively. On January 2, 2003, we made an $18.0 million non-refundable deposit against the purchase price of the put or call options on the non-license assets. We believe that our maximum exposure to loss as a result of our involvement with WNAB-TV consists of the fees that we pay related to the outsourcing agreement. See Note 11. Commitments and Contingencies, for more information.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On March 25, 2005, we exercised the option agreements to acquire certain license and non-license assets of WNAB-TV for $5.0 million and $8.3 million, respectively. On May 31, 2005, we completed the purchase of the non-license broadcast assets. The closing on the license assets is pending approval by the FCC. We paid $0.5 million and $4.5 million for the years ended December 31, 2006 and 2005, respectively, for the purchase of the license assets. On August 25, 2005, the Rainbow/PUSH Coalition filed a petition with the FCC to deny the transfer of the WNAB-TV broadcast license to us and also requested that the FCC initiate a hearing to investigate whether WNAB-TV was improperly operated with WZTV-TV and WUXP-TV, two of our stations located in the same market as WNAB-TV. The FCC is currently in the process of considering the transfer of the broadcast license and we believe the Rainbow/PUSH petition has no merit.

We have determined that Cunningham Broadcasting Corporation (Cunningham) is a VIE and that we are the primary beneficiary of the variable interests. As a result, we continue to consolidate the assets and liabilities of Cunningham.

F-12

Cash and Cash Equivalents

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

Accounts Receivable

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

Programming

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

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

Barter Arrangements

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

We broadcast certain customers advertising in exchange for equipment, merchandise and services. The estimated fair value of the equipment, merchandise or services received is recorded as deferred barter costs and the corresponding obligation to broadcast advertising is recorded as deferred barter revenues. The deferred barter costs are expensed or capitalized as they are used, consumed or received and are

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document included in station production expenses and station selling, general and administrative expenses, as applicable. Deferred barter revenues are recognized as the related advertising is aired and are recorded in revenues realized from station barter arrangements.

Other Assets

Other assets as of December 31, 2006 and 2005 consisted of the following (in thousands):

2006 2005 Equity and cost method investments $17,894 $18,934 Unamortized costs related to securities issuances 14,636 15,477 Fair value of derivative instruments 4,628 Other 2,519 5,868 Total other assets $35,049 $44,907

F-13

Investments

We use the equity method of accounting for investments in which we have between 20% and 50% ownership interest or when we have significant influence over the operations of the business. For investments in which we have more than 50% ownership interest, we consolidate the operations and for investments in which we have less than 20% ownership interest, we use the lower of cost or fair market value method of accounting. See Note 3. Investments, for more information regarding our investments.

Impairment of Long-lived Assets

Under the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), we periodically evaluate our long-lived assets for impairment and will continue to evaluate them as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. We evaluate the recoverability of long-lived assets by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with them. At the time that such evaluations indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are tested for impairment by comparing their fair value to the carrying value. We typically estimate fair value using discounted cash flow models and appraisals. As of December 31, 2006, we recorded a $3.7 million impairment charge in our consolidated statement of operations. See Note 5. Goodwill and Other Intangible Assets, for more information.

Accrued Liabilities

Accrued liabilities consisted of the following as of December 31, 2006 and 2005 (in thousands):

2006 2005 Compensation $16,847 $14,957 Interest 20,911 23,821 Dividends payable 10,640 8,547 Other accruals relating to operating expenses 27,328 27,006 Deferred revenue 14,987 10,292 Total accrued liabilities $90,713 $84,623

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

We recognize deferred tax assets and liabilities based on the differences between the financial statements carrying amounts and the tax bases of assets and liabilities. We provide a valuation allowance for deferred tax assets relating to various federal and state net operating losses (NOLs) that are carried forward. As of December 31, 2006, valuation allowances have been provided for a substantial amount of our available federal and state NOLs. We evaluate the need and extent of a valuation allowance based on the expected timing of the reversals of existing temporary book/tax differences, alternative tax strategies and projected future taxable income. If we are unable to generate sufficient taxable income, or if there is a material change in our projected taxable income, or if there is a change in our ability to use NOL carryforwards due to changes in federal and state laws, we will make any necessary adjustments to the valuation allowance. Management periodically performs a comprehensive review of our tax positions and accrues amounts for tax contingencies. Based on these reviews, the status of ongoing audits and the expiration of applicable statute of limitations, accruals are adjusted as necessary.

F-14

Supplemental Information Statements of Cash Flows

During 2006, 2005 and 2004, we had the following cash transactions (in thousands):

2006 2005 2004 Income taxes paid related to continuing operations $ 654 $ 776 $ 1,854 Income taxes paid related to sale of discontinued operations $ 4,057 $ 37,355 $ 429 Income tax refunds received related to continuing operations $ 4,993 $ 394 $ 1,460 Income tax refunds received related to discontinued operations $ 6,762 $ 93 $ 3 Interest paid $ 109,459 $ 120,163 $ 130,493 Payments related to debt extinguishment $ 50 $ 628 $ 1,168

Non-cash barter and trade revenue and expense are presented in the consolidated statements of operations. Non-cash transactions related to capital lease obligations were $3.3 million, $1.0 million and $4.7 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Local Marketing Agreements

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

Included in the accompanying consolidated statements of operations for the years ended December 31, 2006, 2005 and 2004 are net revenues of $120.0 million, $118.6 million and $114.6 million, respectively, that relate to LMAs.

Outsourcing Agreements

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

Revenue Recognition

Total revenues include: (i) cash and barter advertising revenues, net of agency and national representatives commissions; (ii) retransmission consent fees; (iii) network compensation; (iv) other broadcast revenues and (v) revenues from our other operating divisions.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Advertising revenues, net of agency and national representatives commissions, are recognized in the period during which time spots are aired.

Our retransmission consent agreements contain both advertising and retransmission consent elements. We have determined that our agreements are revenue arrangements with multiple deliverables and fall within the scope of EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21). Advertising and retransmission consent deliverables sold under our agreements are separated into different units of accounting at fair value. Revenue applicable to the advertising element of the arrangement is recognized similar to the advertising revenue policy noted above. Revenue applicable to the retransmission consent element of the arrangement is recognized ratably over the life of the agreement.

Network compensation revenue is recognized ratably over the term of the contract. All other significant revenues are recognized as services are provided.

Network Compensation

On January 24, 2006, CBS Corporation (CBS) and Warner Bros. Entertainment (Warner Bros.) announced their intent to merge the operations of their respective networks, UPN and The WB, under a broadcasting network to be called The CW. On August 1, 2004, we entered into an affiliation agreement with UPN (for six stations) that was set to expire July 31, 2007. The

F-15

agreement was for the networks to produce and distribute programming in exchange for each stations commitment to air the programming at specified times and for commercial announcement time during programming. Under this agreement, UPN was to pay us a fixed amount as revenue for each station during the first two years, in equal installments at the beginning of each month. No payment was due from UPN in the third year of the agreement. The amount received from UPN had been recognized over the term of the agreement and a pro-rata portion of the revenue had been deferred to be recognized in the third year.

On May 2, 2006, we entered into a Release and Settlement Agreement with The WB and UPN, in which we released The WB and UPN, and The WB and UPN released us, from any claims or other liabilities we or The WB or UPN may have arising out of or in connection with (a) any agreement, including any affiliation agreements entered into by us with The WB or UPN, and (b) any services previously performed by any one of the parties to the Release and Settlement Agreement for any other party to the Release and Settlement Agreement. As a result of this agreement, we have changed the revenue recognition period from an end date of July 31, 2007 to an end date of September 30, 2006, when UPN ceased broadcasting. For the year ended December 31, 2006, we recorded UPN network compensation of $0.9 million.

Restructuring Costs

Salary and Severance Contract Other Exit Costs Expenses Costs Total Balance at December 31, 2005 $ $ $ $ Restructuring charges 525 365 306 1,196 Amounts utilized (525) (286) (272) (1,083) Balance at December 31, 2006 $ $ 79 $ 34 $ 113

Advertising Expenses

Advertising expenses are recorded in the period when incurred and are included in station production expenses. Total advertising expenses from continuing operations, net of advertising co-op credits, were $7.7 million, $8.3 million and $9.7 million for the years ended December 31, 2006, 2005 and 2004, respectively.

We receive, from time to time, up front payments from service providers. Such amounts are recognized as a reduction in selling, general and administrative expenses on a straight line basis over the term of the contracts.

Financial Instruments

Financial instruments, as of December 31, 2006 and 2005, consisted of cash and cash equivalents, trade accounts receivable, notes receivable (which are included in other current assets), accounts payable, accrued liabilities and notes payable. The carrying amounts approximate fair value for each of these financial instruments, except for the notes payable. See Note 6. Notes Payable and Commercial Bank Financing, for additional information regarding the fair value of notes payable.

Reclassifications

Certain reclassifications have been made to prior years consolidated financial statements to conform to the current years presentation.

F-16

2. STOCK-BASED COMPENSATION PLANS:

Description of Awards

We have five types of stock-based compensation awards: compensatory stock options (options), restricted stock awards (RSAs), an employee stock purchase plan (ESPP), employer matching contributions (the Match) for participants in our 401(k) plan and stock grants to our non-employee directors. Below is a summary of the key terms and methods of valuation of our stock-based compensation awards:

Options. In June 1996, our Board of Directors adopted, upon approval of the shareholders by proxy, the 1996 Long-Term Incentive Plan (LTIP). The purpose of the LTIP is to reward key individuals for making major contributions to our success and the success of our subsidiaries and to attract and retain the services of qualified and capable employees. Options granted pursuant to the LTIP must be exercised within 10 years following the grant date. A total of 14,000,000 shares of Class A Common Stock are reserved for awards under this plan. As of December 31, 2006, 9,955,884 shares (including forfeited shares) were available for future grants.

On April 21, 2005, we accelerated the vesting of 390,039 stock options, which were all of our outstanding unvested options at that time. We accelerated the vesting of these options to prevent recognizing an expense of approximately $0.8 million, before taxes, in 2006 and future periods. The acceleration of the vesting resulted in a modification to the original options. In accordance with FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock-Based Compensation (FIN 44), we recorded an immaterial compensation charge based on the intrinsic value of the awards (as defined by FIN 44) as measured on the modification date. The exercise prices of these options ranged from $7.39 to $15.19 per share and there was no material impact to earnings as a result of this acceleration because most options had an exercise price that was above the trading price on the vesting date. We have not issued any options subsequent to accelerating the vesting.

The following is a summary of changes in outstanding stock options:

Weighted-Average Weighted-Average Options Exercise Price Exercisable Exercise Price Outstanding at December 31, 2003 6,508,883 $ 16.07 5,531,870 $ 16.09

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2004 Activity: Granted 475,250 $ 12.23 Exercised (110,488) $ 10.00 Forfeited (297,125) $ 20.25 Outstanding at December 31, 2004 6,576,520 $ 15.73 5,950,757 $ 15.73

2005 Activity: Granted 2,000 $ 8.24 Exercised (20,750) $ 7.76 Forfeited (205,050) $ 14.91 Outstanding at December 31, 2005 6,352,720 $ 15.78 6,352,720 $ 15.78

2006 Activity: Granted $ Exercised (119,275) $ 8.95 Forfeited (3,149,770) $ 15.20 Outstanding at December 31, 2006 3,083,675 $ 16.53 3,083,675 $ 16.53

Weighted-Average Remaining Contractual Life Weighted Average Outstanding Exercise Price (In Years) Exercisable Exercise Price 967,175 $ 6.68 9.98 4.3 967,175 $ 9.07 859,000 $ 10.09 15.06 5.2 859,000 $ 12.79 18,000 $ 15.19 18.88 2.7 18,000 $ 17.13 1,239,500 $ 24.20 28.42 1.3 1,239,500 $ 24.94 3,083,675 $ 6.68 28.42 3.3 3,083,675 $ 16.53

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We do not expect to issue options in future periods, and instead, we expect to issue RSAs, discussed below. Therefore, the adoption of SFAS 123R does not have a material effect on our consolidated income, cash flows and basic and diluted earnings per share.

In the event the Board of Directors decides to issue options, we would be required to determine the method we would use to estimate the fair value, such as the Black-Scholes method or a lattice method. Additionally, we would be required to estimate certain assumptions, including expected volatility and estimated forfeitures.

The following option plans expired in June 2005. Therefore, no options are available for future grants.

Incentive Stock Option Plan. In connection with our initial public offering in June 1995, our Board of Directors adopted an Incentive Stock Option Plan (ISOP) pursuant to which options for shares of Class A Common Stock may be granted to certain employees. The number of shares of Class A Common Stock reserved for issuance under the ISOP was 800,000. In June 1996, the Board of Directors adopted, upon approval of the shareholders by proxy, an amendment to our ISOP. The purpose of the amendment was (i) to increase the number of shares of Class A Common Stock approved for issuance under the plan from 800,000 to 1,000,000, (ii) to lengthen the period after date of grant before options become exercisable from two years to three years and (iii) to provide immediate termination and three-year ratable vesting of options in certain circumstances. Options granted pursuant to the ISOP must be exercised within 10 years following the grant date. As of December 31, 2005, 714,200 shares have been granted under the ISOP and no shares (including forfeited shares) were available for future grants because the ISOP expired in June 2005, the tenth anniversary of the ISOP.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Designated Participants Stock Option Plan. In connection with our initial public offering in June 1995, our Board of Directors adopted an Incentive Stock Option Plan for Designated Participants (Designated Participants Stock Option Plan) pursuant to which options for shares of Class A Common Stock were granted to certain of our key employees. The Designated Participants Stock Option Plan provides that the number of shares of Class A Common Stock reserved for issuance under that plan is 141,000. Options granted pursuant to Designated Participants Stock Option Plan must be exercised within 10 years following the grant date. As of December 31, 2005, no shares were available for future grants because the Plan expired in June 2005, the tenth anniversary date of the Plan.

RSAs. RSAs are granted to employees pursuant to the LTIP. RSAs have certain restrictions that lapse over three years at 25%, 25% and 50%, respectively. As the restrictions lapse, the stock may be freely traded on the open market. On April 3, 2006, we awarded 40,000 RSAs that had a fair value of $7.81 per share, which was the value of the stock on the trading date immediately prior to the grant date. For the year ended December 31, 2006, we recorded expense of less than $0.1 million and we will continue to record an expense related to this grant using a straight-line methodology over the 3-year lapse period. We did not issue any RSAs in 2005 or 2004. This expense will reduce our consolidated income, but it will have no effect on our consolidated cash flows. Additionally, any RSAs for which the restrictions have lapsed will be included in total shares outstanding, which will have a dilutive effect on our earnings per share. Any RSAs for which the restrictions have not lapsed will be included in total equivalent shares outstanding, based on the treasury stock method, which could have a dilutive effect on our diluted earnings per share.

ESPP. In March 1998, the Board of Directors adopted, subject to approval of the shareholders, the ESPP. The ESPP provides our employees with an opportunity to become shareholders through a convenient arrangement for purchasing shares of Class A Common Stock. On the first day of each payroll deduction period, each participating employee receives options to purchase a number of shares of our common stock with money that is withheld from his or her paycheck. The number of shares available to the participating employee is determined at the end of the payroll deduction period by dividing the total amount of money withheld during the payroll deduction period by the exercise price of the options (as described below). Options granted under the ESPP to employees are automatically exercised to purchase shares on the last day of the payroll deduction period unless the participating employee has, at least thirty days earlier, requested that his or her payroll contributions stop. Any cash accumulated in an employees account for a period in which an employee elects not to participate is distributed to the employee.

The initial exercise price for options under the ESPP is 85% of the lesser of the fair market value of the common stock as of the first day of the payroll deduction period and as of the last day of that period. No participant can purchase more than $25,000 worth of our common stock over all payroll deduction periods ending during the same calendar year. We value the stock options under the ESPP using the Black- Scholes option pricing model, which incorporates the following assumptions as of December 31, 2006:

2006 Risk-free interest rate 5.37% Expected life 90 days Expected volatility 23.25% Annual dividend yield 6.43%

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We use the Black-Scholes model as opposed to a lattice pricing model because employee exercise patterns are not relevant to this plan. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life is based on the approximate number of days in the quarter. The expected volatility is based on our historical stock prices over the previous 90-day period. The annual dividend yield is based on the annual dividend per share divided by the share price on the grant date.

The stock-based compensation expense recorded related to the ESPP for the year ended December 31, 2006 was $0.1 million. Less than 0.1 million shares were issued to employees during the year ended December 31, 2006. This expense reduced our consolidated income, but it had no effect on our consolidated cash flows. See 2005 and 2004 Pro Forma Compensation below for our accounting treatment during the years ended December 31, 2005 and 2004. Additionally, options issued under the ESPP are included in the total shares outstanding at the end of each period, which results in a dilutive effect on our basic and diluted earnings per share.

Match. The Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and Trust (the 401(k) Plan) is available as a benefit for our eligible employees. Contributions made to the 401(k) Plan include an employee elected salary reduction amount, company-matching contributions (the Match) and an additional discretionary amount determined each year by the Board of Directors. The Match and any discretionary

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document contributions may be made using our Class A Common Stock if the Board of Directors so chooses. In general, we make the Match using our Class A Common Stock.

The value of the Match is based on the level of elective deferrals into the 401(k) plan. The amount of shares of our Class A Common Stock used to make the Match is determined using the closing price on or about March 1st of each year for the previous calendar years Match. The Match is discretionary and is equal to a maximum of 50% of elective deferrals by eligible employees, capped at 4% of the employees total cash compensation. For the years ended December 31, 2006, 2005 and 2004, we recorded $1.6 million, $1.7 million and $1.5 million, respectively, of compensation expense related to our match. The 2006 match of $1.6 million for the year ended December 31, 2006, will be made using our Class A Common Stock in March 2007. There has been no change in the method of accounting for the Match as a result of adopting SFAS 123R. Therefore, there will be no changes in the effect of the Match on our consolidated income, cash flows and basic and diluted earnings per share in future periods as compared to previous periods.

Stock Grants to Non-Employee Directors. In addition to their base compensation, on the date of each of our annual meetings of shareholders, each non-employee director receives a grant of 2,000 shares of Class A Common Stock pursuant to the LTIP. On May 11, 2006, we granted 10,000 shares that had a fair value of $8.09 per share, which was the closing value of the stock on the date of grant. We recorded an expense of less than $0.1 million on the date of grant for each of the years ended December 31, 2006 and 2005 and this expense reduced our consolidated income, but it had no effect on our consolidated cash flows. No stock grants were issued during 2004. Additionally, these shares are included in the total shares outstanding, which results in a dilutive effect on our basic and diluted earnings per share.

We have accounted for stock-based compensation in accordance with interpretive guidance provided by the SEC in SAB No. 107. The following table presents the stock-based compensation classified as station production, station selling, general and administrative and corporate general and administrative expenses for the years ended December 31, 2006, 2005 and 2004 (in thousands):

For the years ended December 31, 2006 2005 2004 Station production expenses $ 147,683 $ 152,196 $ 154,731 Stock-based compensation 593 575 545 Station production expenses, as reported $ 148,276 $ 152,771 $ 155,276

Station selling, general and administrative expenses $ 139,652 $ 137,586 $ 145,660 Stock-based compensation 927 718 713 Station selling, general and administrative expenses, as reported $ 140,579 $ 138,304 $ 146,373

Corporate general and administrative expenses $ 22,410 $ 20,812 $ 21,160 Stock-based compensation 385 408 336 Corporate general and administrative expenses, as reported $ 22,795 $ 21,220 $ 21,496

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2005 and 2004 Pro Forma Compensation

For the years ended December 31, 2005 and 2004, we applied the intrinsic value method of accounting for stock options as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, which was permitted by SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123). Accordingly, no expense was recognized for our options or shares granted under the ESPP. Had compensation expense related to our stock options and shares under the ESPP been determined consistent with SFAS 123, our net income available to common shareholders for the years ended December 31, 2005 and 2004 would approximate the pro forma amounts below (in thousands, except per share data):

For the Years Ended December 31, 2005 2004

Net income available to common shareholders $ 207,129 $ 13,842

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Add: Stock-based employee compensation expense included in net income, net of related tax effects 833 893 Less: Total stock-based employee compensation expense determined under the fair value method for all awards, net of related tax effects (1,823) (2,757) Net income available to common shareholders, pro forma $ 206,139 $ 11,978

Basic and diluted earnings per share: As reported $ 2.43 $ 0.16 Pro forma $ 2.41 $ 0.14

We have computed, for pro forma disclosure purposes, the value of all options granted during the years ended December 31, 2005 and 2004, using the Black-Scholes option pricing model as prescribed by SFAS 123 using the following weighted average assumptions:

2005 2004 Risk-free interest rate N/A 3.10% Expected lives N/A 5 years Expected volatility N/A 48.0% Dividend yield N/A 2.2% Weighted average fair value N/A $ 5.48

Adjustments are made for options forfeited prior to vesting. All options were vested as of April 21, 2005. Therefore, there are not any applicable assumptions to be listed for the year ended December 31, 2005.

3. INVESTMENTS:

Allegiance Capital Limited Partnership As of December 31, 2006 and 2005, we had a 97.0% limited partnership interest in Allegiance Capital Limited Partnership (Allegiance). Allegiance is a private mezzanine venture capital fund, which invests in the subordinated debt and equity of privately held companies. The partnership is structured as a debenture Small Business Investment Company (SBIC) and is a federally licensed SBIC. Since we do not have significant control, but only significant influence, we account for our investment in Allegiance under the equity method of accounting.

Atlantic Automotive Corporation On May 31, 2005, we entered into an agreement with Auto Properties LLC, an affiliate of Atlantic Automotive Corporation (Atlantic Automotive, formerly Summa Holdings, Ltd.) to sell our 17.5% equity interest, or 21.22 shares, in Atlantic Automotive to Auto Properties LLC for approximately $21.5 million in cash. On August 2, 2005, the agreement between us and Auto Properties LLC was nullified and we entered into new stock purchase agreements with David D. Smith, our President and Chief Executive Officer and Steven B. Fader, an unrelated third party, and entered into a stock redemption agreement with Atlantic Automotive, totaling approximately $21.5 million. Pursuant to the stock purchase agreements, on August 2, 2005, 9.87 shares were sold to each party for $10.0 million in cash and pursuant to the stock redemption agreements, Atlantic Automotive redeemed the remaining 1.48 shares of our equity interest for $1.5 million in cash.

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

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In the event that one or more of our investments are significant, we are required to disclose summarized financial information. The table below presents the unaudited summarized financial information for these investments for the years ended December 31, 2006, 2005 and 2004, respectively (in thousands):

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of December 31, 2006 2005 Current assets $ 3,508 $ 4,502 Long-term assets 22,427 21,042 Total assets $25,935 $25,544

Current liabilities $ 304 $ 324 Long-term liabilities 14,854 14,838 Total liabilities 15,158 15,162

Equity 10,777 10,382 Total liabilities and equity $25,935 $25,544

For the Years Ended December 31, 2006 2005 2004 Operating revenue $ 2,581 $ 673,572 $ 1,112,778 Cost of sales $ $ 564,025 $ 935,389 Operating expenses $ 1,573 $ 97,252 $ 154,725 Income from continuing operations $ 8,570 $ 6,682 $ 19,925 Net income $ 8,570 $ 6,682 $ 19,450

Impairment of Investments

Each quarter, we review our investments for impairment. For any investments that indicate a potential impairment, we estimate the fair values of those investments using discounted cash flow models, unrelated third party valuations or industry comparables, based on the various facts available to us. As a result of these reviews, we recorded an impairment of equity investees of $1.5 million and $4.0 million in the consolidated statements of operations for the years ended December 31, 2005 and 2004, respectively. No impairment was recorded for the year ended December 31, 2006.

4. PROPERTY AND EQUIPMENT:

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

Buildings and improvements 10 - 30 years Station equipment 5 - 10 years Office furniture and equipment 5 - 10 years Leasehold improvements Lesser of 10 - 30 years or lease term Automotive equipment 3 - 5 years Property and equipment under capital leases Lease term

Property and equipment consisted of the following as of December 31, 2006 and 2005 (in thousands):

2006 2005 Land and improvements $ 16,896 $ 16,214 Buildings and improvements 79,753 75,306 Station equipment 414,669 406,274 Office furniture and equipment 46,651 46,619 Leasehold improvements 15,589 14,268 Automotive equipment 11,193 11,034 Construction in progress 3,312 12,560

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 588,063 582,275 Less: accumulated depreciation (313,101) (277,920) $274,962 $304,355

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

In the first quarter of 2003, one of our towers in Charleston, West Virginia collapsed during a severe ice storm. This tower was insured and we used the insurance settlement to rebuild the tower and to replace the other assets that were destroyed by the collapse. In the fourth quarter of 2004, we completed substantially all of the construction of the new tower and placed it in service. At that time, we recognized a gain of $3.3 million, representing amounts received from insurance above the net book value of the old tower. Of this amount, $0.1 million was related to business interruption insurance recoveries. In 2005, we recognized a gain of $1.2 million, which represented additional amounts received from the insurance settlement.

5. GOODWILL AND OTHER INTANGIBLE ASSETS:

SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142) requires that goodwill be tested for impairment at the reporting unit level at least annually. We have determined that our designated marketing areas (DMAs) are reporting units under SFAS 142. Annually, we test for impairment by comparing the book value of our reporting units, including goodwill, to the estimated fair value of our reporting units. We estimate the fair value of our reporting units using a combination of quoted market prices, observed earnings multiples paid for comparable television stations, discounted cash flow models and appraisals.

We tested our goodwill and indefinite-lived intangible assets for impairment as of October 1, 2006, 2005 and 2004 using the step one and step two methodologies provided in SFAS 142. In 2006 and 2004 we determined that the carrying value of goodwill of a reporting unit exceeded its fair value. As required, we calculated the fair value of goodwill, and as a result, we recorded an $11.9 million and $44.1 million impairment charge in our consolidated statements of operations during the years ending December 31, 2006 and 2004, respectively. There was no impairment charge recorded for 2005 based on the results of our testing.

Definite-lived intangible assets and other assets subject to amortization are being amortized on a straight-line basis over periods of 5 to 25 years. These amounts result from the acquisition of certain television station non-license assets. We analyze specific definite-lived intangibles for impairment when events occur that may impact their value in accordance with Statement 144, Accounting for Impairment or Disposal of Long-Lived Assets. During 2006 and in conjunction with the abovementioned impairment of goodwill, we determined that the decaying advertiser base definite-lived intangible asset of a station was impaired and as a result, we recorded a $3.7 million impairment charge in our consolidated statement of operations. The following table shows the gross carrying amount and accumulated amortization of intangibles and estimated amortization related to continuing operations (in thousands):

As of December 31, 2006 As of December 31, 2005 Weighted Average Gross Gross Amortization Carrying Accumulated Carrying Accumulated Period Amount Amortization Amount Amortization Amortized intangible assets: Network affiliation 25 years $ 249,287 $ (93,424) $ 249,653 $ (83,959) Decaying advertiser base 15 years 124,867 (90,289) 128,603 (83,564) Other 15 years 41,781 (27,075) 39,184 (25,244) Total $ 415,935 $ (210,788) $ 417,440 $ (192,767)

The amortization expense of the definite-lived intangible assets and other assets for the years ended December 31, 2006, 2005 and 2004 was $18.0 million, $18.0 million and $18.5 million, respectively. The following table shows the estimated amortization expense of the definite-lived intangible assets and other assets for the next five years (in thousands):

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For the year ended December 31, 2007 $18,075 For the year ended December 31, 2008 $18,075 For the year ended December 31, 2009 $17,691 For the year ended December 31, 2010 $17,223 For the year ended December 31, 2011 $15,897

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The change in the carrying amount of broadcast licenses related to continuing operations was as follows (in thousands):

As of December 31, 2006 2005 Beginning balance $409,620 $405,416 Consolidation of variable interest entity and other 4,204 Ending balance $409,620 $409,620

The change in the carrying amount of goodwill related to continuing operations was as follows (in thousands):

As of December 31, 2006 2005 Beginning balance $1,040,234 $1,041,452 Goodwill impairment charge (11,882) Consolidation of variable interest entity and other (a) (21,084) (1,218) Ending balance $1,007,268 $1,040,234

(a) During 2006, the primary change in goodwill was the result of the recognition of tax benefits related to purchase business combinations. See Note 10. Income Taxes, for further information.

Goodwill of $37.3 million related to the sale of KOVR-TV is included in the gain from discontinued operations line for the year ended December 31, 2005 consolidated statement of operations.

6. NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement

On July 15, 2002, we closed on a new Bank Credit Agreement, allowing us more operating capacity and liquidity. The Bank Credit Agreement originally consisted of a $225.0 million Revolving Credit Facility maturing on June 30, 2008 and a $375.0 million Term Loan B Facility maturing on December 31, 2009. The Bank Credit Agreement contains representations and warranties, and affirmative and negative covenants, including among other restrictions, limitations on additional indebtedness, customary for credit facilities of this type. On December 31, 2002, we closed on an additional $125.0 million Term Loan Facility maturing on December 31, 2009. The proceeds from this additional borrowing, together with $125.0 million of our 8% Senior Subordinated Notes, due 2012 and cash on hand, were used to redeem our 8.75% Senior Subordinated Notes, due 2007.

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

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The loss was computed in accordance with EITF No. 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments (EITF 96-19).

On May 12, 2005, we amended and restated the Bank Credit Agreement, lowering our annual interest rate. The Bank Credit Agreement in effect on December 31, 2005, includes a Term Loan A Facility (the Term Loan A) of $100.0 million and a Revolving Credit Facility (the Revolver) of $175.0 million maturing on December 31, 2011 and June 30, 2011, respectively. As part of the amendment, we fully redeemed our $150.0 million Term Loan A Facility and $250.0 million Term Loan C Facility with proceeds from the sale of KOVR-TV in Sacramento, California, cash on hand and the new $100.0 million Term Loan.

On December 21, 2006, we amended and restated the Bank Credit Agreement. As part of the amendment, in addition to the Term Loan A and the Revolver, the Credit Agreement now includes a Term Loan A-1 facility (the Term Loan A-1) of $225.0 million maturing on December 31, 2012. On January 19, 2007, we borrowed net proceeds of $225.0 million under our Term Loan A-1 and used these proceeds along with cash on hand and additional borrowing to redeem our 8.75% Senior Subordinated Notes, due 2011. See 8.75% Senior Subordinated Notes, due 2011 below for additional information.

Availability under the Revolver terminates at maturity. STG is required to prepay the Term Loan A-1 and Term Loan A and reduce the Revolver with (i) 100% of the net proceeds of any casualty loss or condemnation and (ii) 100% of the net proceeds of

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any sale or other disposition of our assets in excess of $5.0 million in the aggregate in any 12 month period, to the extent such proceeds are not used to acquire new assets.

Scheduled payments on the Term Loan A, Term Loan A-1 and Revolver are calculated at the London Interbank Offered Rate (LIBOR) plus 1.25%, with step-downs tied to a leverage grid. We have the right to terminate the Term Loan A, Term Loan A-1 or Revolver at any time without prepayment penalty. The Term Loan A-1 includes potential interest rate reductions that depend on future leverage. The Term Loan A is repayable in quarterly installments, amortizing as follows:

The Term Loan A-1 is repayable in quarterly installments, amortizing as follows:

· 1.25% per quarter commencing March 31, 2009 to December 31, 2009 · 2.50% per quarter commencing March 31, 2010 to December 31, 2010 · 3.75% per quarter commencing March 31, 2011 to December 31, 2011 · 17.50% per quarter commencing March 31, 2012 and continuing through its maturity on December 31, 2012.

As a result of amending the Bank Credit Agreement, during 2005, we incurred debt acquisition costs of $2.0 million and recognized a loss of $1.6 million, which represents the write-off of certain debt acquisition costs associated with indebtedness replaced by the new facilities. The loss was computed in accordance with EITF 96-19. As a result of amending the Bank Credit Agreement, during 2006, we incurred debt acquisition costs of $1.6 million.

The Bank Credit Agreement is not publicly traded on a market; therefore, it is not practicable for us to calculate the fair value associated with this financial instrument. The weighted average interest rates of the Term Loan A for the year and the month ended December 31, 2006 were 5.88% and 6.07%, respectively. The weighted average interest rates of the Term Loan A for the year and the month ended December 31, 2005, were 4.64% and 5.78%, respectively. During 2006, 2005 and 2004, the interest expense relating to the Bank Credit Agreement was $6.0 million, $9.3 million and $16.0 million, respectively.

8.75% Senior Subordinated Notes, Due 2011

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In December 2001, we completed an issuance of $310.0 million aggregate principal amount of 8.75% Senior Subordinated Notes, due 2011 (the 2001 Notes). We received net proceeds of $306.2 million. The net proceeds of this offering were utilized to repay the 10% Senior Subordinated Notes, due 2005. Interest on the 2001 Notes is paid semiannually on June 15 and December 15 of each year. The 2001 Notes were issued under an indenture among us, our subsidiaries (the guarantors) and the trustee. Costs associated with the offering totaled $4.1 million, including an underwriting discount of $3.8 million. These costs were capitalized and are being amortized over the life of the debt.

During 2005, we repurchased, in the open market, $2.6 million of the 2001 Notes at face value. The $0.2 million in costs related to these repurchases have been recorded as a loss from extinguishment of debt in our consolidated statements of operations.

On January 22, 2007, we redeemed in full, the $307.4 million aggregate principal amount of the 2001 Notes. The redemption was effected in accordance with the terms of the indenture governing the 2001 Notes at a redemption price of 104.375% of the principal amount of the 2001 Notes plus accrued and unpaid interest. As a result of the redemption, we will record a loss from extinguishment of debt of $15.7 million representing the redemption premium and write-off of certain debt acquisition costs during the first quarter of 2007. The redemption of the 2001 Notes and payment of accrued interest was funded from the net proceeds of the $225.0 million Term Loan A-1, described above, additional borrowings under the Revolver of $23.0 million and cash on hand of $59.4 million. As of December 31, 2006, $59.4 million of the aggregate principal amount of the 2001 Notes have been classified as short-term debt.

Interest expense was $26.9 million, $27.0 million and $27.1 million for the years ended December 31, 2006, 2005 and 2004, respectively. Based on the quoted market price, the fair value of the 2001 Notes as of December 31, 2006 and 2005 was $322.2 million and $324.3 million, respectively.

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8% Senior Subordinated Notes, Due 2012

In March 2002, we completed an issuance of $300.0 million aggregate principal amount of 8% Senior Subordinated Notes, due 2012 (the 2002 Notes), generating gross proceeds to us of $300.0 million. The gross proceeds of this offering were utilized to repay $300.0 million of the Term Loan Facility. Interest on the 2002 Notes is paid semiannually on March 15 and September 15 of each year, beginning September 15, 2002. The 2002 Notes were issued under an indenture among us, certain of our subsidiaries (the guarantors) and the trustee. Net costs associated with the offering totaled $3.4 million. These costs were capitalized and are being amortized to interest expense over the life of the debt.

On November 8, 2002, we completed an add-on issuance of $125.0 million aggregate principal amount of the 2002 Notes at a price of 100.5% of par, plus accrued interest from September 15, 2002 to November 7, 2002. Net costs associated with the offering totaled $1.6 million. These costs were capitalized and are being amortized to interest expense over the life of the debt.

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

On May 29, 2003, we completed an add-on issuance of $100.0 million aggregate principal amount of the 2002 Notes. The Notes were issued at a price of $105.3359 plus accrued interest from March 15, 2003 to May 28, 2003, yielding a rate of 7.00%. We used the net proceeds, along with the net proceeds received in connection with our issuance of $150.0 million of Convertible Senior Notes, due 2018, to finance the redemption of the 11.625% High Yield Trust Offered Preferred Securities due 2009 and for general corporate purposes. Net costs associated with the offering totaled $1.3 million. These costs were capitalized and are being amortized to interest expense over the life of the debt.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During 2006 and 2005, we repurchased, in the open market, $23.7 million and $8.0 million, respectively, of the 2002 Notes at face value. The $0.4 million and $0.1 million in costs related to these repurchases for the years ended December 31, 2006 and 2005, respectively, have been recorded as a loss from extinguishment of debt in our consolidated statements of operations.

Interest expense was $50.2 million, $51.7 million and $52.0 million for the years ended December 31, 2006, 2005 and 2004, respectively. Based on the quoted market price, the fair market value of the 2002 Notes was $633.8 million at December 31, 2006 and $654.8 million at December 31, 2005.

We may redeem all of these notes on or after March 15, 2007 at a redemption premium of 4.0%, reducing incrementally to 0.0% after March 15, 2010. We may consider making a tender offer to repurchase some or all of these notes.

6% Convertible Debentures, Due 2012

On June 15, 2005, we completed an exchange of our Series D Convertible Exchangeable Preferred Stock (the Preferred Stock) into Convertible Debentures, due 2012. Pursuant to the terms of the Preferred Stock, a holder of the Preferred Stock received $1,000 principal amount of Convertible Debentures for each $1,000 of liquidation preference of Preferred Stock held by such holder at the Exchange Date, plus accrued but unpaid dividends through the Exchange Date. Therefore, the annual interest payments are consistent with the annual dividend payments of the Preferred Stock.

The Convertible Debentures mature September 15, 2012, and bear interest at a rate of 6.0% per annum, payable quarterly on each March 15, June 15, September 15 and December 15, beginning September 15, 2005. The Convertible Debentures are convertible into Class A Common Stock on substantially the same conversion terms as the Preferred Stock at a conversion price of $22.813 per share, subject to adjustment. We recorded the Convertible Debentures at fair value upon issuance and the excess of the carrying amount of the Preferred Stock over the fair value of the Convertible Debentures was added to net earnings to arrive at net earnings available to common shareholders. The difference in the carrying amount of the Preferred Stock and the fair value of the Convertible Debentures was recorded as a discount on the Convertible Debentures and is being amortized over the life of the Convertible Debentures using the effective interest method. Net costs associated with the exchange totaled $0.1 million and these costs were capitalized and are being amortized as interest expense over the life of the debt. In connection with the exchange, we recorded a discount of $31.7 million related to this redemption and we will amortize this amount over the life of the debt using the effective interest method.

F-25

During 2006 and 2005, we repurchased, in the open market, $8.6 million and $5.0 million, respectively, of the Convertible Debentures at a discount. The difference between the cash paid and the net carrying value of the Convertible Debentures of $0.5 million and $0.3 million, has been recorded as a loss from extinguishment of debt, net of expenses, for the years ended December 31, 2006 and 2005, respectively, in our consolidated statements of operations.

We may redeem all of these notes on or after September 15, 2005 at a redemption premium of 1.2%, September 15, 2006 at a redemption premium of 0.6% and reducing to 0.0% on or after September 15, 2007.

Interest expense for the Convertible Debentures was $9.2 million and $7.1 million for the years ended December 31, 2006 and 2005, respectively. Based on the quoted market price, the fair value of the Convertible Debentures as of December 31, 2006 and 2005, was $139.7 million and $140.0 million, respectively.

4.875% Convertible Senior Notes, Due 2018

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · the notes are convertible into shares of our Class A Common Stock at the option of the holder upon certain circumstances. The conversion price is $22.37 until March 31, 2011, at which time the conversion price increases quarterly until reaching $28.07 on July 15, 2018;

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

· the notes bear cash interest at an annual rate of 4.875% until January 15, 2011 and bear cash interest at an annual rate of 2.00% from January 15, 2011 through maturity;

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

· under certain circumstances, we will pay contingent cash interest to the holders of the Convertible Notes during any six month period from January 15 to July 14 and from July 15 to January 14, commencing with the six month period beginning January 15, 2011. This contingent cash interest feature is an embedded derivative which had a negligible fair value as of December 31, 2006.

We used the net proceeds, along with the net proceeds from the issuance on May 29, 2003 of $100.0 million of the 2002 Notes to finance the redemption of the 11.625% High Yield Trust Offered Preferred Securities due 2009, to repay outstanding debt under our Bank Credit Agreement and for general corporate purposes. Net costs associated with the offering totaled $4.6 million. These costs were capitalized and are being amortized as interest expense over the life of the debt.

Interest expense was $7.3 million for each of the years ended December 31, 2006, 2005 and 2004, respectively. Based on the quoted market price, the fair market value of the Convertible Notes was $137.3 million at December 31, 2006 and $129.4 million at December 31, 2005.

Cunningham Term Loan

On April 28, 2006, Cunningham, one of our consolidated VIEs, amended its $33.5 million Term Loan Facility originally entered into on March 20, 2002, with an unrelated third party. The amendment extends the maturity to June 30, 2007. Interest is paid quarterly at a rate of LIBOR plus 1.50%. During 2006, 2005 and 2004, the interest expense relating to the Term Loan was $2.4 million, $1.9 million and $1.7 million, respectively. The Term Loan Facility is nonrecourse to us.

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Summary

Notes payable, capital leases and the Bank Credit Agreement consisted of the following as of December 31, 2006 and 2005 (in thousands):

2006 2005 Bank Credit Agreement, Term Loan A $ 100,000 $ 100,000 Bank Credit Agreement, Revolving Credit Facility 7,500 8.75% Senior Subordinated Notes, due 2011 307,400 307,400 Note payable of consolidated variable interest entity (Cunningham) 33,500 33,500 8% Senior Subordinated Notes, due 2012 618,328 642,000 6% Convertible Debentures, due 2012 153,226 161,812 4.875% Convertible Senior Notes, due 2018 150,000 150,000 Capital leases 49,815 49,692 Installment note for certain real estate, interest at 8% 14 27 1,412,283 1,451,931 Plus: Premium on 8% Senior Subordinated Notes, due 2012 5,366 6,711 Plus: SFAS 133 derivatives, net (3,992) 1,914 Less: Discount on 6% Convertible Debentures, due 2012 (24,493) (29,105)

Indebtedness under the notes payable, capital leases and the Bank Credit Agreement as of December 31, 2006 matures as follows (in thousands):

Notes and Bank Credit Agreement Capital Leases Total 2007 $ 97,914(a) $ 4,649 $ 102,563 2008 5,000 4,810 9,810 2009 15,000 4,970 19,970 2010 15,000 5,144 20,144 2011 308,000 5,316 313,316 2012 and thereafter 921,554 92,586 1,014,140 Total minimum payments 1,362,468 117,475 1,479,943 Plus: Premium on 8% Senior Subordinated Notes, due 2012 5,366 5,366 Plus: SFAS 133 derivatives, net (3,992) (3,992) Less: Discount on 6% Convertible Debentures, due 2012 (24,493) (24,493) Less: Amount representing interest (67,660) (67,660) $ 1,339,349 $ 49,815 $ 1,389,164

(a) The Notes and Bank Credit Agreement amount includes $59.4 million related to the cash paid on January 22, 2007 toward the redemption of our 8.75% Senior Subordinated Notes, due 2011.

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

As of December 31, 2006, we had 25 capital leases with non-affiliates, including 24 tower leases and one building lease. All of our tower leases will expire within the next 30 years and the building lease will expire within the next 10 years. Most of our leases have 5-10 year renewal options and it is expected that these leases will be renewed or replaced within the normal course of business. For more information related to our affiliate notes and capital leases, see Note 12. Related Person Transactions.

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7. PROGRAM CONTRACTS PAYABLE:

Future payments required under program contracts as of December 31, 2006 were as follows (in thousands):

2007 $85,746 2008 41,572 2009 31,060 2010 16,395 2011 and thereafter 8,342 Total 183,115 Less: Current portion (85,746) Long-term portion of program contracts payable $97,369

Included in the current portion amounts are payments due in arrears of $20.2 million. In addition, we have entered into non-cancelable commitments for future program rights aggregating $113.5 million as of December 31, 2006.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We perform a net realizable value calculation quarterly for each of our non-cancelable commitments in accordance with SFAS No. 63, Financial Reporting for Broadcasters. We utilize sales information to estimate the future revenue of each commitment and measure that amount against the commitment. If the estimated future revenue is less than the amount of the commitment, a loss is recorded.

We estimated the fair value of our program contracts payable and non-cancelable commitments at approximately $180.9 million and $111.1 million, respectively, as of December 31, 2006, and $139.9 million and $133.3 million, respectively, as of December 31, 2005. These estimates were based on future cash payments discounted at our current borrowing rate.

8. COMMON STOCK AND PREFERRED STOCK:

Common Stock

Holders of Class A Common Stock are entitled to one vote per share and holders of Class B Common Stock are entitled to ten votes per share, except for votes relating to going private and certain other transactions. The Class A Common Stock and the Class B Common Stock vote together as a single class, except as otherwise may be required by Maryland law, on all matters presented for a vote. Holders of Class B Common Stock may at any time convert their shares into the same number of shares of Class A Common Stock. During 2006, we did not convert Class B Common Stock into Class A Common Stock shares and during 2005, 802,496 Class B Common Stock shares were converted into Class A Common Stock shares.

In May 2004, we declared a quarterly cash dividend on our common stock for the first time in our companys history. For the quarters ended June 30, 2004, September 30, 2004 and December 31, 2004, we paid dividends of $0.025 per share on our common stock. During 2005, the Board of Directors voted to increase the dividend on three occasions. The 2005 dividends declared were as follows:

Quarterly Annual Dividend Dividend For the quarter ended Per Share Per Share Date dividends were paid March 31, 2005 $ 0.050 $ 0.200 April 15, 2005 June 30, 2005 $ 0.075 $ 0.300 July 15, 2005 September 30, 2005 $ 0.075 $ 0.300 October 14, 2005 December 31, 2005 $ 0.100 $ 0.400 January 13, 2006

During 2006, the Board of Directors voted to increase the dividend once. On February 14, 2007, we announced that our Board of Directors approved an increase to our annual dividend to 60.0 cents per share from 50.0 cents per share. We will begin paying this dividend rate beginning in the second quarter 2007 and intend to continue in each future quarter. The 2006 dividends declared were as follows:

Quarterly Annual Dividend Dividend For the quarter ended Per Share Per Share Date dividends were paid March 31, 2006 $ 0.100 $ 0.400 April 13, 2006 June 30, 2006 $ 0.100 $ 0.400 July 13, 2006 September 30, 2006 $ 0.125 $ 0.500 October 12, 2006 December 31, 2006 $ 0.125 $ 0.500 January 12, 2007

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Preferred Stock

During 1997, we completed a public offering of 3,450,000 shares of Series D Convertible Exchangeable Preferred Stock (the Preferred Stock). During 2004, we repurchased 112,967 shares of the Preferred Stock so that on December 31, 2004, 3,337,033 shares were outstanding. The Preferred Stock had a liquidation preference of $50 per share and a stated cumulative dividend of $3.00 per share payable

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document quarterly out of legally available funds and was convertible into shares of Class A Common Stock at the option of the holders thereof at a conversion price of $22.813 per share, subject to adjustment.

On June 15, 2005, we completed a redemption of the Preferred Stock by exchanging the Preferred Stock for 6% Convertible Debentures, due 2012. Pursuant to the terms of the Preferred Stock, a holder of the Preferred Stock received $1,000 principal amount of Convertible Debentures for each $1,000 of liquidation preference of Preferred Stock held by such holder at the Exchange Date, plus accrued but unpaid dividends through the Exchange Date. We recorded a $26.2 million discount that was added to net earnings available to common shareholders representing the excess of the carrying amount of the Preferred Stock over the fair value of the Convertible Debentures. See Note 6. Notes Payable and Commercial Bank Financing, for further description of the 6% Convertible Debentures.

9. DERIVATIVE INSTRUMENTS:

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

In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133 (collectively, SFAS 133), our losses resulting from prior year terminations of fixed to floating interest rate agreements are reflected as a discount on our fixed rate debt and were being amortized to interest expense through December 15, 2007, the original expiration date of the terminated swap agreements. For each of the years ended December 31, 2006, 2005 and 2004, amortization of the discount of $0.5 million was recorded as interest expense.

Also in accordance with SFAS 133, the deferred net losses in prior years related to terminations of floating to fixed interest rate swap agreements are reflected as other comprehensive loss, net of tax effect, and were being amortized to interest expense through June 3, 2004, the expiration dates of the terminated swap agreements. For the year ended December 31, 2004, we amortized $0.9 million from accumulated other comprehensive loss and deferred tax asset to interest expense. The deferred net losses were fully amortized as of June 3, 2004.

As of December 31, 2006, we have two remaining derivative instruments. One of these swap agreements is accounted for as a fair value hedge in accordance with SFAS 133; therefore, any changes in its fair market value are reflected as an adjustment to the carrying value of the underlying debt being hedged. During 2006, one of our swap agreements was undesignated as a fair value hedge due to a reassignment of the counterparty; therefore, any changes in the fair market value are reflected as an adjustment to income. The notional amount of these swap agreements is $300.0 million and they expire on March 15, 2012. The interest we pay is floating based on the three-month London Interbank Offered Rate (LIBOR) plus 2.28% and the interest we receive is at 8%. The fair market value of these agreements is estimated by obtaining quotations from the international financial institution party to the contract. This fair value is an estimate of the net amount that we would pay on December 31, 2006 if we cancelled the contracts or transferred them to other parties and includes net accrued interest receivable. This amount was a net asset of $5.7 million and $10.7 million as of December 31, 2006 and 2005, respectively.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During May 2003, we completed an issuance of $150.0 million aggregate principal amount of 4.875% Convertible Senior Notes, due 2018. Under certain circumstances, we will pay contingent cash interest to the holder of the convertible notes during any six month period from January 15 to July 14 and from July 15 to January 14, commencing with the six month period beginning January 15, 2011. The contingent cash interest feature is an embedded derivative which had a negligible fair value as of December 31, 2006.

10. INCOME TAXES:

We file a consolidated federal income tax return and separate company state tax returns. The provision (benefit) for income taxes consisted of the following for the years ended December 31, 2006, 2005 and 2004 (in thousands):

2006 2005 2004 Provision for income taxes - continuing operations $ 6,970 $ 36,115 $ 11,522 (Benefit) provision for income taxes - discontinued operations (3,502) 1,644 5,915 Provision for income taxes - sale of discontinued operations 885 80,002 $ 4,353 $117,761 $ 17,437 Current: Federal $ (11,706) $ 38,941 $ 173 State (1,597) (844) 310 (13,303) 38,097 483 Deferred: Federal 16,321 71,941 15,908 State 1,335 7,723 1,046 17,656 79,664 16,954 $ 4,353 $117,761 $ 17,437

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

2006 2005 2004 Statutory federal income taxes 35.0% 35.0% 35.0% Adjustments- State income taxes, net of federal effect 2.3% 0.1% 1.9% Non-deductible expense items 1.7% 5.9% 6.4% Change in state tax laws or rates (3.1%) (7.4%) % Release of tax reserves (44.9%) (0.2%) (1.9%) Effect of corporate restructuring on state NOLs % 15.7% % Completion of 1999-2002 IRS audit 9.1% % % Beginning of the year valuation allowance adjustment due to change in judgment 14.9% % % Other (2.5%) 2.2% 2.6% Provision for income taxes 12.5% 51.3% 44.0%

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Temporary differences between the financial reporting carrying amounts and the tax basis of assets and liabilities give rise to deferred taxes. Total deferred tax assets and deferred tax liabilities as of December 31, 2006 and 2005 were as follows (in thousands):

2006 2005 Current and Long-Term Deferred Tax Assets:

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net operating losses $ 93,777 $ 98,554 Other 26,246 23,987 120,023 122,541 Valuation allowance for deferred tax assets (91,817) (87,532) Total deferred tax assets $ 28,206 $ 35,009

Current and Long-Term Deferred Tax Liabilities FCC license $ (70,231) $ (61,278) High Yield Trust Offered Preferred Securities (5,440) (25,833) Fixed assets and intangibles (211,693) (202,796) Variable interest entities net deferred tax liabilities (1,319) (1,520) Other (13,500) (10,442) Total deferred tax liabilities (302,183) (301,869) Net tax liabilities $(273,977) $(266,860)

Our remaining federal and state net operating losses will expire during various years from 2007 to 2026 and, in certain cases, are subject to annual limitations under Internal Revenue Code Section 382 or under Treasury Regulation 1.1502-21 and similar state provisions. The pre- valuation-allowance tax effects of the federal net operating losses were $9.5 million and $16.3 million as of December 31, 2006 and December 31, 2005, respectively. The pre-valuation-allowance tax effects of the state net operating losses were $84.3 million and $82.3 million as of December 31, 2006 and December 31, 2005, respectively. The abovementioned tax attributes were recorded in the deferred tax accounts in the accompanying consolidated balance sheets. During the year ended December 31, 2005, we realized a non-recurring loss of certain state net operating losses, net of applicable valuation allowances, resulting from a corporate restructuring and recorded a reduction of deferred tax assets through our deferred tax provision from continuing operations.

We establish valuation allowances in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. In evaluating our ability to realize the net deferred tax asset, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies and forecasts of future taxable income. In considering these sources of taxable income, we must make certain assumptions and judgments that are based on the plans and estimates used to manage our underlying businesses. A valuation allowance has been provided for deferred tax assets relating to various federal and state net operating losses that are carried forward based on expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that they will be realized in the future. During the year ended December 31, 2006, we increased our valuation allowances by $4.3 million. This change was primarily due to an increase of $8.3 million in the beginning-of-the-year balance of the valuation allowances related to state net operating losses to reflect the change in judgment with respect to realizability of those tax attributes and an increase in other state net operating loss valuation allowances of $2.5 million, offset by a reduction of $6.5 million of valuation allowances related to the utilization of federal net operating losses in the years in which the statute of limitations had expired during 2006. As of December 31, 2006, future reversals of valuation allowances would primarily be made through a reduction of our tax provision rather than goodwill or other noncurrent intangible assets.

We adjusted the net deferred tax liabilities for changes in enacted state tax rates, where applicable. The total amount of the adjustments did not have a significant impact on our consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows, except for the Ohio and Texas tax law changes in 2005 and 2006, respectively. On May 18, 2006, the Governor of the state of Texas signed into law House Bill 3. This bill revises the existing franchise tax by changing the tax base, lowering the rate and extending coverage to all active businesses receiving the state law liability protection. Changes made by the new tax law are effective for 2007 franchise tax reports originally due on or after January 1, 2008. As a result, we recorded a deferred tax benefit of $1.5 million for continuing operations to reflect an adjustment to our net deferred tax liabilities in 2006. On June 30, 2005, the Governor of the state of Ohio signed the Ohio Biennial Budget Bill. The bill replaces the Ohio income and franchise tax with a commercial activity tax, among other changes in Ohio law. As a result, we recorded a deferred tax benefit of $5.2 million for continuing operations to reflect an adjustment to our net deferred tax liabilities in 2005.

Management periodically performs a comprehensive review of our tax positions and accrues amounts for tax contingencies. Based on these reviews, the status of on-going audits and the expiration of applicable statute of limitations, accruals are adjusted as necessary. The resolution of audits is unpredictable and could result in tax liabilities that are significantly higher or lower than for what we have provided.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Amounts accrued for these tax matters are primarily included in long-term liabilities in our consolidated balance sheets. We believe that adequate accruals have been provided for all years.

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During 2006, the statute of limitations expired for the federal income tax returns for 1999 through 2002. As a result, we released $39.9 million of discrete tax and related interest reserves, of which $14.4 million was recorded as a reduction to goodwill, $0.2 million reduced other identifiable intangible assets and $25.3 million was recorded as a reduction of our income tax provision. We have adjusted goodwill and other identifiable intangibles to the extent the statute of limitations expired for the exposures related to items on which reserves were recorded in purchase accounting at the time of the related acquisitions. In addition, during 2006 we received a net refund of approximately $4.3 million related to the abovementioned tax years which resulted in a reduction of goodwill and deferred tax assets of $8.3 million and $0.8 million, respectively, and an increase in income tax provision of $4.8 million.

11. COMMITMENTS AND CONTINGENCIES:

Litigation

FCC License Renewals

In 2004, we filed with the FCC an application for the license renewal of WBFF-TV in Baltimore, Maryland. Subsequently, an individual named Richard DAmato filed a petition to deny the application. In 2004, we also filed with the FCC applications for the license renewal of television stations: WXLV-TV, Winston-Salem, North Carolina; WMYV-TV, Greensboro, North Carolina; WLFL-TV, Raleigh/Durham, North Carolina; WRDC-TV, Raleigh/Durham, North Carolina; WLOS-TV, Asheville, North Carolina and WMMP-TV, Charleston, South Carolina. An organization calling itself Free Press filed a petition to deny the renewal applications of these stations and also the renewal applications of two other stations in those markets, which we program pursuant to LMAs: WTAT-TV, Charleston, South Carolina and WMYA-TV (formerly WBSC-TV), Anderson, South Carolina; that we program pursuant to LMAs. Several individuals and an organization named Sinclair Media Watch also filed informal objections to the license renewal applications of WLOS-TV and WMYA-TV, raising essentially the same arguments presented in the Free Press petition. The FCC is currently in the process of considering these renewal applications and we believe the objections have no merit.

On October 17, 2006, Mediacom Communications Corporation (Mediacom), in connection with a retransmission consent dispute with us, filed a pleading opposing the grant of the pending license renewal applications of thirty-nine stations licensed to us or to which we provide services. On February 2, 2007, we reached a retransmission consent agreement with Mediacom and on February 6, 2007, Mediacom submitted a motion to withdraw and dismiss its pleading with prejudice.

Other FCC Adjudicatory Proceedings

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On July 21, 2005, we filed with the FCC an application to acquire WNAB-TV in Nashville, Tennessee. The Rainbow/PUSH Coalition filed a petition to deny that application and also requested that the FCC initiate a hearing to investigate whether WNAB-TV was improperly operated with WZTV-TV and WUXP-TV, two of our stations located in the same market as WNAB-TV. That proceeding is currently pending and we believe the petition has no merit.

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FOX network, filed oppositions to the NAL. That proceeding is still pending. Although we cannot predict the outcome of that proceeding or the effect of any adverse outcome on the stations license renewal applications, the FOX network has agreed to indemnify its affiliates for the full amount of this liability, if any.

On August 11, 2006, the FCC sent a letter to us requesting information regarding the broadcast of video news releases, by WBFF-TV in Baltimore, Maryland, KOKH-TV in Oklahoma City, Oklahoma, WLFL-TV in Raleigh, North Carolina, WPGH-TV in Pittsburgh, Pennsylvania, WSYX-TV in Columbus, Ohio, WVTV-TV in Milwaukee, Wisconsin and KGAN-TV in Cedar Rapids, Iowa, without proper sponsorship identification in alleged violation of federal law and the FCCs rules. We denied that the stations violated federal law or the FCCs rules. The FCCs inquiry proceeding is currently pending.

In October 2006, Mediacom filed in federal district court in Iowa a complaint and motion for preliminary injunction against a number of stations licensed to us or to which we provide services us, in connection with a retransmission consent dispute with us. The court denied Mediacoms motion for preliminary injunction on October 24, 2006. Mediacom filed an appeal of that denial, but abandoned its appeal in December 2006. On February 2, 2007, we reached a retransmission consent agreement with Mediacom, and on February 5, 2007, prior to the deadline for the submission of our answer to the complaint, Mediacom submitted a notice of dismissal of its complaint.

On October 31, 2006, Mediacom filed with the FCC an emergency retransmission consent complaint and other associated pleadings against us. On January 4, 2007, the Media Bureau of the FCC denied the complaint, and Mediacom filed with the full Commission an application for review of that decision. As a result of the February 2, 2007 retransmission consent agreement, Mediacom on February 5, 2007 filed a motion to withdraw and dismiss with prejudice the application for review and its other associated pleadings.

On November 7, 2006, the FCC sent a letter to us requesting information regarding the broadcast of certain programs, by forty stations licensed to us, without proper sponsorship identification in alleged violation of federal law and the FCCs rules. We denied that the stations violated federal law or the FCCs rules. The inquiry proceeding is currently proceeding.

Operating Leases

We have entered into operating leases for certain property and equipment under terms ranging from three to ten years. The rent expense from continuing operations under these leases, as well as certain leases under month-to-month arrangements, for the years ended December 31, 2006, 2005 and 2004 was approximately $5.5 million, $4.6 million and $4.5 million, respectively.

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2007 $ 3,160 2008 2,757 2009 2,450 2010 2,148 2011 1,875 2012 and thereafter 8,483 $20,873

At December 31, 2006 and 2005, we had outstanding letters of credit of $1.0 million and $1.1 million, respectively, under our revolving credit facility. The letters of credit act as a guarantee of lease payments for the related party property occupied by WTTA-TV in Tampa, Florida, pursuant to the terms and conditions of the lease agreement and as support of the purchase of the license assets of WNYS-TV in Syracuse, New York, pursuant to an Asset Purchase Agreement.

Network Affiliation Agreements

On March 2, 2006, we entered into an agreement with Twentieth Television, Inc. to air MyNetworkTV primetime programming on 17 of our stations. This agreement became effective on September 5, 2006 and expires on September 4, 2011. We have concluded that this represents a network affiliation agreement for accounting purposes. As of December 31, 2006, the net book value of the affiliation agreements related to our former WB and UPN affiliate stations that are now airing

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MyNetworkTV programming was $5.8 million. The estimated fair value of the new affiliation exceeded the net book value of the terminated affiliation agreement and therefore, no loss was recognized.

On May 2, 2006, we entered into an agreement with FOX to renew all of our FOX affiliation agreements. These agreements expire on March 6, 2012. As of December 31, 2006, the net book value of these affiliation agreements was $34.7 million.

On May 2, 2006, we entered into an affiliation agreement with The CW Television Network to air their programming on nine of our stations. This agreement became effective on September 1, 2006 and expires on August 31, 2010. As of December 31, 2006, the net book value of the affiliation agreements related to our stations that are airing CW programming was $2.5 million. The estimated fair value of the new affiliation exceeded the net book value of the terminated affiliation agreements and therefore, no loss was recognized.

Beginning in September 2006, our 58 television stations that we own and operate, or to which we provide programming services or sales services, are affiliated as follows: FOX (19 stations); MyNetworkTV (17 stations); ABC (10 stations); The CW (9 stations); CBS (2 stations) and NBC (1 station). Prior to September 2006, of the 58 television stations that we owned and operated, or to which we provided programming services or sales services, 56 were affiliated as follows: FOX (19 stations); WB (18 stations); ABC (10 stations); UPN (6 stations); CBS (2 stations) and NBC (1 station). The remaining two stations were independent. The networks produce and distribute programming in exchange for each stations commitment to air the programming at specified times and for commercial announcement time during programming. The amount and quality of programming provided by each network varies.

On December 22, 2006, NBC agreed to renew our affiliation agreement for WTWC-TV in Tallahassee, Florida. The agreement has a ten- year term that will expire on December 31, 2016. As of December 31, 2006, the net book value of this affiliation agreement was $2.1 million.

The non-renewal or termination of any of our other network affiliation agreements would prevent us from being able to carry programming of the relevant network. This loss of programming would require us to obtain replacement programming, which may involve higher costs and which may not be as attractive to our target audiences, resulting in reduced revenues. Upon the termination of any of the above affiliation agreements, we would be required to establish a new affiliation agreement with another network or operate as an independent station. At such time, the remaining value of the network affiliation asset could become impaired and we would be required to write down the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document value of the asset. At this time, we cannot predict the final outcome of these negotiations and what impact, if any, they may have on our consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows.

Changes in the Rules on Television Ownership and Local Marketing Agreements

In July 2006, as part of the FCCs statutorily required quadrennial review of its media ownership rules, the FCC released a Further Notice of Proposed Rule Making seeking comment on how to address the issues raised by the Third Circuits decision, among other things, remanding the local television ownership rule. The ultimate outcome of that proceeding could significantly impact our business.

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instead of beginning the review of the grandfathered LMAs in 2004, it should do so in 2006. The FCC did not initiate any review of grandfathered LMAs in 2004 and has not indicated it would do so as part of its 2006 quadrennial review. We do not know when, or if, the FCC will conduct any such review of grandfathered LMAs.

On November 15, 1999, we entered into a plan and agreement of merger to acquire through merger WMYA-TV (formerly WBSC-TV) in Anderson, South Carolina from Cunningham Broadcasting Corporation (Cunningham), but that transaction was denied by the FCC. In light of the change in the 2003 ownership rules, we have filed a petition for reconsideration with the FCC and amended our application to acquire the license of WMYA-TV. We also filed applications in November 2003 to acquire the license assets of the remaining five Cunningham stations: WRGT-TV, Dayton, Ohio; WTAT-TV, Charleston, South Carolina; WVAH-TV, Charleston, West Virginia; WNUV-TV, Baltimore, Maryland; and WTTE-TV, Columbus, Ohio. The Rainbow/PUSH Coalition (Rainbow/PUSH) filed a petition to deny these five applications and to revoke all of our licenses. The FCC dismissed our applications in light of the stay of the 2003 ownership rules and also denied the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Rainbow/PUSH petition. Rainbow/PUSH filed a petition for reconsideration of that denial and we filed an application for review of the dismissal, which may be impacted by the remand of the FCCs 2003 ownership rules. In 2005, we filed a petition with the U. S. Court of Appeals for the D. C. Circuit requesting that the Court direct the FCC to take final action on our applications, but that petition was dismissed. On January 6, 2006, we submitted a motion to the FCC requesting that it take final action on our applications. Both the applications and the associated petition to deny are still pending. We believe the Rainbow/PUSH petition is without merit.

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

License Grant and Renewal

In August 2006, the FCC sent a letter to us requesting information regarding the broadcast of video news releases by seven stations licensed to us without sponsorship identification in alleged violation of federal law and the FCCs rules. In November 2006, the FCC sent a letter to us requesting information regarding the broadcast of video news releases by 44 stations licensed to us without sponsorship identification in alleged violation of federal law and the FCCs rules. We timely responded to both requests for information and denied that the stations violated federal law or the FCCs rules. None of our stations received any form of compensation for airing the video news releases.

WNAB Options

In 2003, we entered into option agreements with an unrelated third party to purchase certain license and non-license television broadcast assets of WNAB-TV in Nashville, Tennessee. On March 25, 2005, we exercised the option agreements to acquire certain license and non- license assets for $5.0 million and $8.3 million, respectively. On May 31, 2005, we completed the purchase of the non-license broadcast assets. The closing on the license assets is pending approval by the FCC. We paid $0.5 million and $4.5 million for the years ended December 31, 2006 and 2005, respectively, for the purchase of the license assets. On August 25, 2005, the Rainbow/PUSH filed a petition with the FCC to deny the transfer of the WNAB-TV broadcast license to us and also requested that the FCC initiate a hearing to investigate whether WNAB-TV was improperly operated with WZTV-TV and WUXP-TV, two of our stations located in the same market as WNAB- TV. The FCC is currently in the process of considering the transfer of the broadcast license and we believe the Rainbow/PUSH petition has no merit.

We have determined that WNAB-TV continues to be a variable interest entity (VIE) and that we remain the primary beneficiary of the variable interest as a result of the terms of our outsourcing agreement and our purchase option. As a result,

F-35

we continue to consolidate the assets and liabilities of WNAB-TV at their fair values, which were adjusted to reflect an appraisal prepared in connection with the closing of the non-license assets in 2005. Goodwill and FCC license book values were increased by $5.8 million and $4.2 million, respectively, upon the closing of the non-license assets in May 2005.

Liquidity Assurance

On May 26, 2005, we entered into a twelve-month limited scope liquidity assurance with Acrodyne Communications, Inc. (Acrodyne), one of our majority-owned consolidated subsidiaries. On July 14, 2006, we extended the liquidity assurance for an additional twelve-month period. Pursuant to this agreement, we will provide to them sufficient funding to cover any necessary working capital needs through May 25,

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2007, should Acrodyne not be able to provide that funding on its own. The exposure to us in this liquidity assurance cannot be estimated nor can its probability of occurrence be estimated. In connection with this liquidity assurance, we established a $0.5 million line of credit for Acrodyne. Interest on any unpaid indebtedness will be calculated on a daily basis at LIBOR plus 225 basis points per annum. As of December 31, 2006, Acrodyne had borrowed $0.3 million under this line of credit. We do not believe the liquidity assurance will have a material impact on our consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows and, therefore, we have not recorded any liability related to it.

12. RELATED PERSON TRANSACTIONS:

David, Frederick, Duncan and Robert Smith (collectively, the controlling shareholders) are brothers and hold substantially all of the Class B Common Stock. During each of the periods presented in the accompanying consolidated financial statements, we engaged in transactions with them, their immediate family members and/or entities in which they have substantial interests (collectively, affiliates).

Notes and capital leases payable to affiliates consisted of the following as of December 31, 2006 and 2005 (in thousands):

2006 2005 Capital lease for building, interest at 7.93% $ 3,125 $ 408 Capital lease for building, interest at 6.62% 3,088 4,125 Capital leases for broadcasting tower facilities, discounted at 9.0% 508 1,435 Capital leases for broadcasting tower facilities, discounted at 10.5% 8,147 3,084 Liability payable to affiliate for local marketing agreement, discounted at 6.20% 3,231 4,703 Liability payable to affiliate for local marketing agreement, discounted at 7.69% 6,116 Capital leases for building and tower, interest at 8.25% 244 5,532 24,459 19,287 Less: Current portion (3,985) (4,135) $ 20,474 $ 15,152

Notes and capital leases payable to affiliates as of December 31, 2006 mature as follows (in thousands):

2007 $ 5,421 2008 4,728 2009 4,102 2010 3,473 2011 3,168 2012 and thereafter 19,240 Total minimum payments due 40,132 Less: Amount representing interest (15,673) $24,459

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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Principal and interest payments on the founders notes were payable in various amounts, each April and October, beginning October 1991 until October 2005, with a balloon payment due at maturity in the amount of $1.5 million. Additionally, monthly interest payments commenced April 1993 and continued until December 1996. The Carolyn C. Smith note was fully paid as of December 31, 2002. On October 1, 2005, we fully redeemed the founders note due to the late Julian S. Smith with a final payment of $1.5 million. Principal and interest paid on the Julian S. Smith note was $2.2 million and $1.4 million for the years ended December 31, 2005 and 2004, respectively. At December 31, 2005, the Julian S. Smith note was fully paid.

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

We entered into five-year LMA agreements (with five-year renewal terms at our option) with Cunningham pursuant to which we provide programming to Cunningham for airing on WNUV-TV, WRGT-TV, WVAH-TV, WTAT-TV, WMYA-TV and WTTE-TV. During the years ended December 31, 2006, 2005 and 2004, we made payments of $11.3 million, $7.0 million and $5.9 million, respectively, to Cunningham under these LMA agreements.

Cunningham accounts for income taxes and deferred taxes using the separate return method and those amounts are consolidated into our income taxes and deferred taxes, which are also calculated using the separate return method. For the year ended December 31, 2006, Cunninghams benefit for income taxes was $0.3 million. For the years ended December 31, 2005 and 2004, Cunninghams provision for income taxes was $0.7 million and $0.5 million, respectively. As of December 31, 2006 and 2005, Cunninghams deferred tax assets were $2.2 million and $1.7 million, respectively and Cunninghams deferred tax liabilities were $5.8 million and $5.5 million, respectively.

From time to time, we charter aircraft owned by certain controlling shareholders. We incurred less than $0.1 million related to these arrangements during the years ended December 31, 2006 and 2005, respectively. During the year ended December 31, 2004, we incurred expenses of $0.1 million related to these arrangements.

Certain assets used by us and our operating subsidiaries are leased from Cunningham Communications Inc., Keyser Investment Group, Gerstell Development Limited Partnership and Beaver Dam, LLC (entities owned by the controlling shareholders). Lease payments made to these entities were $5.4 million, $4.9 million and $4.5 million for the years ended December 31, 2006, 2005 and 2004, respectively.

In January 1999, we entered into a local marketing agreement (LMA) with Bay Television, Inc. (Bay TV), which owns the television station WTTA-TV in Tampa, Florida. Our controlling shareholders own a substantial portion of the equity of Bay TV. The LMA provides that we deliver television programming to Bay TV, which broadcasts the programming in return for a monthly fee to Bay TV of $143,500. We must also make an annual payment equal to 50% of the adjusted annual broadcast cash flow of the station (as defined in the LMA) that is in excess of $1.7 million. The additional payment is reduced by 50% of the adjusted broadcast cash flow of the station that was below zero in prior calendar years until that amount is recaptured. Additional payments of $0.9 million and $0.3 million were made during the years ended December 31, 2006 and 2005, respectively, related to the excess adjusted broadcast cash flow for the prior years. Lease payments made to Bay TV were $1.7 million for each of the years ended December 31, 2006, 2005 and 2004. As of December 31, 2006 and 2005, we secured a letter of credit for $0.7 million and $0.8 million, respectively, in connection with Bay TVs building lease.

In connection with our 1997 negotiations with The WB to obtain affiliation agreements for a number of our stations, we discussed an opportunity to obtain The WB affiliation in Tampa, Florida for WTTA-TV, which is owned by Bay TV as described above. We did this in anticipation of entering into a LMA with Bay TV to program WTTA-TV, which was then operating as a non-affiliated independent television station airing paid programming. In 1998, in order to obtain The WB affiliation for WTTA-TV, we and Bay TV each agreed to make payments in the future to The WB of $10.0 million, or $20.0 million in total. Our agreement to make such payment was conditioned upon Bay TV entering into the aforementioned LMA agreement, which we subsequently entered into in January 1999.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Our obligation to make a $10.0 million payment to The WB was structured as a $5.0 million reduction of each of the payments owed to us by The WB under our multi-station affiliation agreement in January of each of 2006 and 2007, assuming that The WB was still operating a television network at the time such payments were due. Additionally, Bay TV agreed to make $5.0 million cash payments to The WB in January 2006 and January 2007 pursuant to the granting of The WB affiliation for WTTA-TV. Additionally, our multi-station WB affiliation agreement provides that The WBs obligation to make a $5.0 million payment to us in each of January 2006 and 2007 is expressly conditioned upon receipt by The WB of corresponding payments from Bay TV.

After Bay TV failed to make the first $5.0 million payment to The WB on its due date January 16, 2006, The WB withheld $5.0 million from the amount due to us pursuant to our multi-station affiliation agreement. On January 24, 2006, The WB announced that it was combining with the UPN television network to form the CW Television Network. As a result, we entered into negotiations with The WB regarding a number of issues surrounding The WBs announcement, including the impact of the elimination of WTTA-TVs WB network affiliation and the amount we and Bay TV agreed to pay for the affiliation in Tampa.

As a result of such negotiations, on May 2, 2006, we entered into primary affiliation agreements with the CW Television Network. Concurrently, we entered into a release and settlement agreement between us and Bay TV, on one side, and The WB and UPN, on the other side (the Release and Settlement Agreement). Pursuant to the Release and Settlement Agreement, we and Bay TV agreed to release The WB and UPN, and The WB and UPN agreed to release us and Bay TV, from any claims or other liabilities we or Bay TV, or The WB or UPN, may have arising out of or in connection with (a) any agreement, including any affiliation agreements entered into by us or Bay TV with The WB or UPN, and (b) any services previously performed by any one of the parties to the Release and Settlement Agreement for any other party to the Release and Settlement Agreement. In addition, pursuant to the Release and Settlement Agreement, The WB assigned to us all of The WBs rights to receive a $5.0 million payment from Bay TV on January 16, 2006. In connection with executing the Release and Settlement Agreement and entering into the CW Television Network affiliation agreements, The WB and UPN agreed to make a payment to us and, on May 2, 2006, we entered into an agreement with Bay TV (the Bay TV Agreement) in which we agreed to pay Bay TV $750,000, representing Bay TVs share of the payment made to us by The WB and UPN. This payment will be made by reducing by $750,000 Bay TVs obligation to pay us $5.0 million, which obligation was assigned to us by The WB as described above. We received the remaining $4.3 million obligation as of December 31, 2006.

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

On May 31, 2005, we entered into an agreement with Auto Properties LLC, an affiliate of Atlantic Automotive to sell our 17.5% equity interest, or 21.22 shares, in Atlantic Automotive to Auto Properties LLC for approximately $21.5 million in cash. On August 2, 2005, the agreement between us and Auto Properties LLC was nullified and we entered into new stock purchase agreements with David D. Smith and Steven B. Fader, an unrelated third party, and entered into a stock redemption agreement with Atlantic Automotive, totaling approximately $21.5 million. Pursuant to the stock purchase agreements, on August 2, 2005, 9.87 shares were sold to each party for $10.0 million in cash and pursuant to the stock redemption agreements, Atlantic Automotive redeemed the remaining 1.48 shares of our equity interest for $1.5 million in cash.

We sold advertising time to Atlantic Automotive on our stations in Baltimore, Maryland and Norfolk, Virginia and received payments totaling $0.3 million, $0.5 million and $0.4 million during the years ended December 31, 2006, 2005 and 2004, respectively. We paid $1.1 million, $1.0 million and $1.0 million for vehicles and related vehicle services from Atlantic Automotive during years ended December 31, 2006, 2005 and 2004, respectively.

In August 1999, we established a small business investment company called Allegiance Capital Limited Partnership (Allegiance) with an investment of $2.4 million. Our controlling shareholders and our Chief Financial Officer and Executive Vice President are also limited partners in Allegiance, along with Allegiance Capital Management Corporation (ACMC), the general partner. ACMC controls all decision making, investing and management of operations of Allegiance in exchange for a monthly management fee based on actual expenses incurred

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document which currently averages approximately $0.1 million and which is paid by the limited partners. Allegiance distributed $7.0 million and $1.5 million to us during 2006 and 2005, respectively. We have invested $9.2 million as of December 31, 2006 and we are committed to invest up to $14.6 million.

On July 1, 2005, Sinclair Communications, LLC (Sinclair Communications), a subsidiary of Sinclair Broadcast Group, Inc. (SBG), and Cunningham Communications, Inc. (Cunningham Communications) entered into Amendment No. 2 (the Amendment) to an original Lease Agreement (the Lease), dated July 1, 1987, as amended July 1, 1997. The Amendment allows Sinclair Communications to lease tower and building space utilized for digital television transmission. The Amendment became effective July 1, 2005 and expires on June 30, 2007. Cunningham Communications is owned by David D. Smith, SBGs

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President, Chief Executive Officer and Director, as well as Frederick Smith, J. Duncan Smith and Robert Smith, members of SBGs Board of Directors and the controlling shareholders of SBG. The Lease was amended to increase the monthly rent by $25,357 for a total current monthly rent of $82,860. In addition, on July 1, 2005, Sinclair Communications made a lump sum payment of $565,800 to Cunningham Communications as a requirement of the Amendment upon execution. The monthly rent increased in July of 2006 to $86,984. We are currently in negotiations to renew the lease.

In response to the disaster caused by hurricane Katrina, the Sinclair Relief Fund (the Fund) was formed by David D. Smith, Frederick Smith, J. Duncan Smith and Barry M. Faber, our Vice President and General Counsel. The Fund is a qualified charitable organization formed to provide monetary aid and relief to the victims of natural disasters. On September 21, 2005, we made a $50,000 contribution to the Fund. No contributions were made to the fund during the year ended December 31, 2006. This contribution was authorized by the Audit Committee.

13. DISCONTINUED OPERATIONS:

In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we reported the financial position and results of operations for WEMT-TV, KOVR-TV and KSMO-TV as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations. Discontinued operations have not been segregated in the consolidated statements of cash flows and, therefore, amounts for certain captions will not agree with the accompanying consolidated balance sheets and consolidated statements of operations. The operating results of WEMT-TV, KOVR-TV and KSMO-TV are not included in our consolidated results from continuing operations for the years ended December 31, 2006, 2005 and 2004. In accordance with EITF No. 87-24, Allocation of Interest to Discontinued Operations, we have allocated $3.6 million and $7.7 million of interest expense to discontinued operations for the years ended December 31, 2005 and 2004, respectively. No interest expense was allocated for the year ended December 31, 2006. Since we owned the rights to collect the amounts due to us through the closing dates of the non-license television broadcast assets, accounts receivable related to all of our discontinued operations is included in the accompanying consolidated balance sheets, net of allowance for doubtful accounts, for the year ended December 31, 2005. Such amounts were $0.2 million (net of allowance of $0.4 million) as of December 31, 2005. As of December 31, 2006, there were no outstanding accounts receivable related to our discontinued operations.

We recognized a $3.5 million net tax benefit for the year ended December 31, 2006, primarily relating to adjustments of certain tax contingencies and settlements regarding certain tax returns related to discontinued operations.

WEMT Disposition

On May 16, 2005, we entered into an agreement to sell WEMT-TV in Tri-Cities, Tennessee, including the FCC license (the broadcast license) to an unrelated third party for $7.0 million. On the same day, we completed the sale of the WEMT-TV non-license television broadcast assets for $5.6 million of the total $7.0 million sale price and recorded a deferred gain of $3.2 million, which is stated separately on the 2005 consolidated balance sheet. The FCC approved the transfer of the broadcast license to the unrelated third party and we completed the sale of the license assets, including the broadcast license, on February 8, 2006 for a cash price of approximately $1.4 million. We recorded $1.8 million, net of $0.9 million in taxes, as gain from discontinued operations in our consolidated statements of operations for the year ended

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document December 31, 2006. The gain is comprised of the previously deferred gain of $2.1 million and the loss of $0.3 million from the sale of the license assets, net of taxes, respectively. The net cash proceeds were used in the normal course of operations and for capital expenditures.

KOVR Disposition

On December 2, 2004, we entered into an agreement to sell KOVR-TV in Sacramento, California, including the FCC license and our investment in KOVR Joint Venture to an unrelated third party. The FCC approved the transfer of the license to the unrelated third party and we completed the sale on April 29, 2005 for a cash purchase price of $285.0 million. We recorded a gain of $129.5 million, net of $70.0 million of taxes, as a gain from discontinued operations in our consolidated statements of operations for the year ended December 31, 2005. The net proceeds were used to repay bank debt.

KSMO Disposition

On November 12, 2004, we entered into an agreement to sell KSMO-TV in Kansas City, Missouri, including the FCC license (the broadcast license) to an unrelated third party for $33.5 million. On the same day, we completed the sale of the KSMO-TV non-license television broadcast assets for $26.8 million of the total $33.5 million sale price. The FCC approved the transfer of the broadcast license to the unrelated third party and we completed the sale of the license assets, including the broadcast license,

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on September 29, 2005 for a cash price of approximately $6.7 million. We recorded $16.5 million, net of $10.0 million in taxes, as gain from discontinued operations in our consolidated statements of operations for the year ended December 31, 2005. The gain is comprised of the previously deferred gain of $26.1 million and the gain of $0.4 million from the sale of the license assets, net of taxes, respectively. The net cash proceeds were used in the normal course of operations and for capital expenditures.

14. EARNINGS PER SHARE:

The following table reconciles income (numerator) and shares (denominator) used in our computations of earnings per share for the years ended December 31, 2006, 2005 and 2004 (in thousands):

2006 2005 2004 Income (Numerator) Income from continuing operations $ 48,647 $ 34,237 $ 14,681 Preferred stock dividends (5,004) (10,180) Excess of preferred stock carrying value over redemption value 26,201 Numerator for diluted earnings per common share from continuing operations 48,647 55,434 4,501 Income from discontinued operations, including gain on sale of broadcast assets related to discontinued operations, net of taxes 5,330 151,695 9,341 Numerator for diluted earnings per common share $ 53,977 $ 207,129 $ 13,842

Shares (Denominator) Weighted average common shares outstanding 85,680 85,380 85,590 Dilutive effect of outstanding stock options and restricted stock 14 9 151 Weighted average common and common equivalent shares outstanding 85,694 85,389 85,741

We apply the treasury stock method to measure the dilutive effect of our outstanding stock options and restricted stock awards and include the respective common share equivalents in the denominator of the diluted EPS computation. For the years ended December 31, 2006, 2005 and 2004, our 4.875% Convertible Senior Notes, due 2018, were anti-dilutive; therefore, they were not included in the computation of diluted EPS. For the years ended December 31, 2006 and 2005, our 6% Convertible Debentures, due 2012, were anti-dilutive;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document therefore, they were not included in the computation of diluted EPS. For the year ended December 31, 2004, our Series D Convertible Exchangeable Preferred Stock was anti-dilutive; therefore, it was not included in the computation of diluted EPS.

15. SEGMENT DATA:

During 2006, we reevaluated our organization and the nature of our business activities relevant to the divisions of our company and concluded that our view of our internal structure changed in a manner that caused us to disclose separately our broadcast activities from other business activities. We determined that we have one reportable operating segment, Broadcast, that is disclosed separately from our corporate and other business activities. The determination resulted in our disclosure of comparable information for 2005 and 2004. For a description of our broadcast segment see Note 1. Nature of Operations and Summary of Significant Accounting Policies. Corporate and Other primarily includes our costs to operate as a public company and our corporate headquarters location, our investment activity outlined in Note 3. Investments and our other operating divisions activities. Our other operating divisions primarily earn revenues from internet technology and transmitter manufacturing. Transactions between our operating segment and Corporate and Other are not material.

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Financial information for our operating segment is included in the following tables for the years ended December 31, 2006, 2005 and 2004 (in thousands):

Corporate and For the year ended December 31, 2006 Broadcast Other Consolidated Revenue $ 690,528 $ 24,610 $ 715,138 Depreciation of property and equipment 43,955 2,293 46,248 Amortization of definite-lived intangible assets and other assets 18,021 18,021 Amortization of program contract costs and net realizable value adjustments 90,746 90,746 Impairment of intangibles 15,589 15,589 General and administrative overhead expenses 6,947 15,848 22,795 Operating income (loss) 177,453 (18,270) 159,183 Income from equity and cost investees 6,338 6,338 Goodwill 1,005,642 1,626 1,007,268 Assets 2,229,464 43,134 2,272,598 Capital expenditures 16,201 722 16,923

Corporate and For the year ended December 31, 2005 Broadcast Other Consolidated Revenue $ 669,470 $ 22,597 $ 692,067 Depreciation of property and equipment 48,490 1,785 50,275 Amortization of definite-lived intangible assets and other assets 17,922 50 17,972 Amortization of program contract costs and net realizable value adjustments 70,666 70,666 General and administrative overhead expenses 6,598 14,622 21,220 Operating income (loss) 184,862 (15,407) 169,455 Loss from equity and cost investees (1,426) (1,426) Goodwill 1,040,234 1,040,234 Assets 2,242,744 40,561 2,283,305 Capital expenditures 16,350 323 16,673

Corporate and For the year ended December 31, 2004 Broadcast Other Consolidated Revenue $ 692,423 $ 13,054 $ 705,477 Depreciation of property and equipment 45,871 2,288 48,159

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Amortization of definite-lived intangible assets and other assets 18,058 424 18,482 Amortization of program contract costs and net realizable value adjustments 89,152 89,152 Impairment of intangibles 44,055 44,055 General and administrative overhead expenses 6,366 15,130 21,496 Operating income (loss) 134,372 (20,178) 114,194 Income from equity and cost investees 1,100 1,100 Goodwill 1,041,452 1,041,452 Assets 2,398,161 67,502 2,465,663 Capital expenditures 43,535 1,346 44,881

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16. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

Sinclair Television Group, Inc. (STG) is a wholly-owned subsidiary of Sinclair Broadcast Group, Inc. (SBG) and was incorporated in 2003. On September 30, 2003, we completed the creation of a modified holding company structure, whereby we transferred substantially all of our television broadcast assets and liabilities to STG. As such, STG became the primary obligor under our Bank Credit Agreement, the 8.75% Senior Subordinated Notes, due 2011 and the 8% Senior Subordinated Notes, due 2012. Our Class A Common Stock, Class B Common Stock, 6% Convertible Debentures, due 2012 and the 4.875% Convertible Senior Notes, due 2018 remain at SBG and are neither obligations nor securities of STG.

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

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

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CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006 (In thousands)

Guarantor Sinclair Sinclair Subsidiaries Broadcast Television and Non-Guarantor Sinclair Group, Inc. Group, Inc. KDSM, LLC Subsidiaries Eliminations Consolidated Cash $ $ 60,303 $ 4,737 $ 2,368 $ $ 67,408 Accounts and other receivables 8,636 28,863 89,387 9,135 (2,157) 133,864 Other current assets 4,770 9,296 75,679 3,795 (3,447) 90,093 Total current assets 13,406 98,462 169,803 15,298 (5,604) 291,365

Investment in consolidated subsidiaries 540,684 1,446,021 (1,986,705) Other long-term assets 25,795 35,391 52,325 13,299 (42,574) 84,236 Total other long-term assets 566,479 1,481,412 52,325 13,299 (2,029,279) 84,236

Acquired intangible assets 24,555 1,542,550 44,674 10,256 1,622,035

Total assets $ 587,656 $ 1,605,564 $ 2,030,640 $ 98,276 $ (2,049,538) $ 2,272,598

Accounts payable and accrued liabilities $ 17,041 $ 21,957 $ 50,404 $ 44,327 $ (38,167) $ 95,562 Current portion of long-term debt 1,337 64,400 3,013 34,358 (858) 102,250 Other current liabilities 87,632 502 88,134 Total current liabilities 18,378 86,357 141,049 79,187 (39,025) 285,946

Long-term debt 283,830 962,701 64,842 28,570 (28,570) 1,311,373 Other liabilities 6,438 20,854 380,051 1,191 100 408,634 Total liabilities 308,646 1,069,912 585,942 108,948 (67,495) 2,005,953

Common stock 859 11 761 (772) 859 Additional paid-in capital 596,667 281,829 1,111,489 78,544 (1,471,862) 596,667 Accumulated deficit (318,516) 252,173 337,323 (90,231) (509,155) (328,406) Accumulated other comprehensive income (loss) 1,650 (4,125) 254 (254) (2,475) Total shareholders equity 279,010 535,652 1,444,698 (10,672) (1,982,043) 266,645 Total liabilities and shareholders equity $ 587,656 $ 1,605,564 $ 2,030,640 $ 98,276 $ (2,049,538) $ 2,272,598

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CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2005 (In thousands)

Guarantor Sinclair Sinclair Subsidiaries Broadcast Television and Non-Guarantor Sinclair Group, Inc. Group, Inc. KDSM, LLC Subsidiaries Eliminations Consolidated

Cash $ $ 5,043 $ 2,987 $ 1,625 $ $ 9,655 Accounts and other receivables 1,008 29,611 123,611 8,826 (35,129) 127,927 Other current assets 955 12,632 64,496 4,140 (461) 81,762 Assets held for sale 3,678 3,678 Total current assets 1,963 47,286 194,772 14,591 (35,590) 223,022

Property and equipment, net 9,546 1,535 292,579 27,071 (26,376) 304,355

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investment in consolidated subsidiaries 522,486 1,535,132 (2,057,618) Other long-term assets 25,294 39,623 42,368 11,412 (37,296) 81,401 Total other long-term assets 547,780 1,574,755 42,368 11,412 (2,094,914) 81,401

Acquired intangible assets 24,555 1,596,701 44,520 8,751 1,674,527

Total assets $ 559,289 $ 1,648,131 $ 2,126,420 $ 97,594 $ (2,148,129) $ 2,283,305

Accounts payable and accrued liabilities $ 8,629 $ 26,010 $ 79,688 $ 39,638 $ (62,881) $ 91,084 Current portion of long-term debt 1,195 3,242 34,104 (604) 37,937 Other current liabilities 93,681 764 (185) 94,260 Liabilities held for sale 1,407 1,407 Total current liabilities 9,824 26,010 178,018 74,506 (63,670) 224,688

Long-term debt 289,140 1,065,525 58,136 29,458 (29,458) 1,412,801 Other liabilities 42,412 351,554 2,608 (480) 396,094 Total liabilities 298,964 1,133,947 587,708 106,572 (93,608) 2,033,583

Common stock 855 10 761 (772) 854 Additional paid-in capital 593,258 341,182 1,367,425 77,876 (1,786,482) 593,259 Accumulated deficit (333,788) 173,002 171,277 (87,252) (267,630) (344,391) Accumulated other comprehensive loss (363) 363 Total shareholders equity 260,325 514,184 1,538,712 (8,978) (2,054,521) 249,722 Total liabilities and shareholders equity $ 559,289 $ 1,648,131 $ 2,126,420 $ 97,594 $ (2,148,129) $ 2,283,305

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006 (In thousands)

Guarantor Sinclair Sinclair Subsidiaries Broadcast Television and Non-Guarantor Sinclair Group, Inc. Group, Inc. KDSM, LLC Subsidiaries Eliminations Consolidated

Net revenue $ $ $ 692,885 $ 33,806 $ (11,553) $ 715,138

Program and production 1,640 155,136 (8,500) 148,276 Selling, general and administrative 16,302 5,831 138,341 3,198 (298) 163,374 Depreciation, amortization and other operating expenses 2,109 507 216,486 27,190 (1,987) 244,305 Total operating expenses 18,411 7,978 509,963 30,388 (10,785) 555,955

Equity in earnings of subsidiaries 64,073 113,873 (177,946) Interest income 770 2,005 3 (770) 2,008 Interest expense (20,577) (86,633) (5,612) (5,435) 3,040 (115,217) Other income (expense) 23,140 7,797 (20,095) 616 (1,815) 9,643 Total other income (expense) 67,406 37,042 (25,707) (4,816) (177,491) (103,566)

Income tax benefit (provision) 5,237 29,797 (42,774) 470 300 (6,970) Income from discontinued operations, net of taxes 3,556 3,556 Gain from sale of discontinued operations, net of taxes 1,774 1,774 Net income (loss) $ 54,232 $ 58,861 $ 119,771 $ (928) $ (177,959) $ 53,977

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 (In thousands)

Guarantor Sinclair Sinclair Subsidiaries Broadcast Television and Non-Guarantor Sinclair Group, Inc. Group, Inc. KDSM, LLC Subsidiaries Eliminations Consolidated Net revenue $ $ $ 675,690 $ 36,033 $ (19,656) $ 692,067

Program and production 1,583 162,816 (11,628) 152,771 Selling, general and administrative 15,044 6,723 135,222 6,386 (3,851) 159,524 Depreciation, amortization and other operating expenses 1,691 1,650 185,474 25,973 (4,471) 210,317 Total operating expenses 16,735 9,956 483,512 32,359 (19,950) 522,612

Operating (loss) income (16,735) (9,956) 192,178 3,674 294 169,455

Equity in earnings of subsidiaries 196,689 245,857 (442,546) Interest income 507 634 3 7 (501) 650 Interest expense (16,765) (95,585) (5,757) (14,557) 12,662 (120,002) Other income (expense) 16,240 25,798 (18,800) (2,115) (874) 20,249 Total other income (expense) 196,671 176,704 (24,554) (16,665) (431,259) (99,103)

Income tax benefit (provision) 7,668 27,411 (71,255) 5,245 (5,184) (36,115) Income from discontinued operations, net of taxes 5,671 5,671 Gain from sale of discontinued operations, net of taxes 146,024 146,024 Net income (loss) $ 187,604 $ 194,159 $ 248,064 $ (7,746) $ (436,149) $ 185,932

F-46

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (In thousands)

Program and production 1,749 158,971 3 (5,447) 155,276 Selling, general and administrative 15,387 6,202 145,262 2,840 (1,822) 167,869 Depreciation, amortization and other operating expenses 2,072 1,074 251,485 21,219 (7,712) 268,138 Total operating expenses 17,459 9,025 555,718 24,062 (14,981) 591,283

Operating (loss) income (17,459) (9,025) 138,381 (603) 2,900 114,194

Equity in earnings of subsidiaries 26,837 74,213 (101,050) Interest income 3,938 163 16 (3,926) 191 Interest expense (8,660) (104,625) (5,362) (7,130) 5,377 (120,400) Other income (expense) 21,047 45,783 (29,208) (4,718) (686) 32,218 Total other income (expense) 43,162 15,534 (34,554) (11,848) (100,285) (87,991)

Income tax (provision) benefit 240 23,173 (37,956) 4,410 (1,389) (11,522) Income from discontinued operations, net of taxes 9,341 9,341 Net income (loss) $ 25,943 $ 29,682 $ 75,212 $ (8,041) $ (98,774) $ 24,022

F-47

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2006 (In thousands)

Guarantor Sinclair Sinclair Subsidiaries Broadcast Television and Non-Guarantor Sinclair Group, Inc. Group, Inc. KDSM, LLC Subsidiaries Eliminations Consolidated NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (1,525) $ (75,319) $ 231,323 $ 2,365 $ (1,511) $ 155,333 CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: Acquisition of property and equipment (370) (90) (16,319) (232) 88 (16,923) Payment for acquisition of television stations (1,710) (1,710) Investments in equity and cost investees (174) (165) (339) Proceeds from the sale of property 2,420 10 2,430

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Proceeds from the sale of broadcast assets related to discontinued operations 1,400 1,400 Proceeds from insurance settlements Loans to affiliates (143) (143) Proceeds from loans to affiliates 141 141 Net cash flows (used in) from investing activities (546) (90) (14,374) (222) 88 (15,144)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing and capital leases 75,000 75,000 Repayments of notes payable, commercial bank financing and capital leases (7,220) (106,172) (183) (789) (114,364) Proceeds from exercise of stock options 1,065 1,065 Payments for derivative termination (3,750) (3,750) Increase (decrease) in intercompany payables 45,325 165,591 (211,728) (766) 1,578 Dividends paid on Class A and Class B Common Stock (36,062) (36,062) Repayments of notes and capital leases to affiliates (1,037) (3,288) (634) 634 (4,325) Net cash flows from (used in) financing activities 2,071 130,669 (215,199) (1,400) 1,423 (82,436)

NET INCREASE IN CASH AND CASH EQUIVALENTS 55,260 1,750 743 57,753 CASH AND CASH EQUIVALENTS, beginning of period 5,043 2,987 1,625 9,655 CASH AND CASH EQUIVALENTS, end of period $ $ 60,303 $ 4,737 $ 2,368 $ $ 67,408

F-48

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2005 (In thousands)

Guarantor Sinclair Sinclair Subsidiaries Broadcast Television and Non-Guarantor Sinclair Group, Inc. Group, Inc. KDSM, LLC Subsidiaries Eliminations Consolidated NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (37,564) $ (135,135) $ 234,985 $ (2,878) $ (4,797) $ 54,611 CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: Acquisition of property and equipment (279) (111) (16,243) (5,756) 5,716 (16,673) Payment for acquisition of television stations (15,540) (15,540) Investments in equity and cost investees (670) (300) (970) Proceeds from the sale of property 66 66

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Proceeds from the sale of broadcast assets related to discontinued operations 295,190 295,190 Proceeds from the sale of equity investees 21,500 21,500 Proceeds from insurance settlements 1,193 1,193 Loans to affiliates (126) (5,088) 5,088 (126) Proceeds from loans to affiliates 125 125 Net cash flows from (used in) investing activities 20,550 (111) 259,578 (6,056) 10,804 284,765

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing and capital leases 52,000 52,000 Repayments of notes payable, commercial bank financing and capital leases (5,170) (355,100) (108) 11 (360,367) Proceeds from exercise of stock options 178 178 Payments for deferred financing costs (100) (1,679) (134) (1,913) Increase (decrease) in intercompany payables 49,259 438,960 (490,292) 3,117 (1,044) Dividends paid on Series D Convertible Exchangeable Preferred Stock (5,004) (5,004) Dividends paid on Class A and Class B Common Stock (19,201) (19,201) Proceeds from notes and capital leases to affiliates 5,088 (5,088) Repayments of notes and capital leases to affiliates (2,948) (2,957) (114) 114 (5,905) Net cash flows from (used in) financing activities 17,014 134,181 (493,357) 7,957 (6,007) (340,212)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,065) 1,206 (977) (836) CASH AND CASH EQUIVALENTS, beginning of period 6,108 1,781 2,602 10,491 CASH AND CASH EQUIVALENTS, end of period $ $ 5,043 $ 2,987 $ 1,625 $ $ 9,655

F-49

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2004 (In thousands)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Acquisition of property and equipment (1,249) (1,228) (43,385) (8,587) 9,568 (44,881) Consolidation of variable interest entities 239 239 Investments in equity and cost investees (2,465) (3,084) (5,549) Proceeds from the sale of property 39 39 Proceeds from the sale of broadcast assets related to discontinued operations 28,561 28,561 Proceeds from insurance settlements 2,521 2,521 Loans and other financing to affiliates (5,233) (20,628) 25,718 (143) Proceeds from loans to affiliates 1,511 1,511 Net cash flows (used in) from investing activities (7,436) (4,312) (32,892) (8,348) 35,286 (17,702)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing and capital leases 533,000 533,000 Repayments of notes payable, commercial bank financing and capital leases (62) (618,900) (130) (1,500) 192 (620,400) Proceeds from exercise of stock options 1,152 1,152 Payments for deferred financing costs (6) (818) (129) (953) Increase (decrease) in intercompany payables 15,012 86,687 (96,552) (763) (4,384) Dividends paid on Series D Convertible Preferred Stock (10,180) (10,180) Repurchase of Series D Convertible Exchangeable Preferred Stock (4,752) (4,752) Repurchase of Class A Common Stock (9,550) (9,550) Dividends paid on Class A and Class B Common Stock (4,274) (4,274) Proceeds from notes and capital leases to affiliates 25,718 (25,718) Repayment of notes and capital leases to affiliates (1,957) (2,736) (482) 482 (4,693) Net cash flows (used in) from financing activities (14,617) (31) (99,418) 22,844 (29,428) (120,650)

NET DECREASE IN CASH AND CASH EQUIVALENTS (15,951) (1,644) (644) (18,239) CASH AND CASH EQUIVALENTS, beginning of period 22,059 3,425 3,246 28,730 CASH AND CASH EQUIVALENTS, end of period $ $ 6,108 $ 1,781 $ 2,602 $ $ 10,491

F-50

17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

For the Quarter Ended 03/31/06 06/30/06 09/30/06 (a) 12/31/06

Total revenues, net $ 163,467 $ 185,092 $ 168,458 $ 198,121 Operating income $ 35,356 $ 47,181 $ 38,055 $ 38,591 Income from continuing operations $ 7,076 $ 10,793 $ 20,506 $ 10,272 Income (loss) from discontinued operations $ 1,168 $ (510) $ (275) $ 3,173 Gain from sale of discontinued operations $ 1,774 $ $ $ Net income available to common shareholders $ 10,018 $ 10,283 $ 20,231 $ 13,445 Basic earnings per share from continuing operations $ 0.08 $ 0.13 $ 0.24 $ 0.12 Basic earnings (loss) per share from discontinued operations $ 0.03 $ (0.01) $ $ 0.04 Basic earnings per share $ 0.11 $ 0.12 $ 0.24 $ 0.16 Diluted earnings per share from continuing operations $ 0.08 $ 0.13 $ 0.23 $ 0.12 Diluted earnings (loss) per share from discontinued operations $ 0.03 $ (0.01) $ $ 0.04 Diluted earnings per share $ 0.11 $ 0.12 $ 0.23 $ 0.16

For the Quarter Ended 03/31/05 06/30/05 09/30/05 12/31/05

Total revenues, net $ 163,860 $ 183,633 $ 165,790 $ 178,784 Operating income $ 32,575 $ 52,340 $ 40,291 $ 44,249 Income (loss) from continuing operations $ 8,448 $ 15,349 $ 13,020 $ (2,580) Income from discontinued operations $ 2,861 $ 1,279 $ 701 $ 830 Gain from sale of discontinued operations $ $ 128,516 $ 17,508 $ Net income (loss) available to common shareholders $ 8,807 $ 168,843 $ 31,229 $ (1,750) Basic earnings (loss) per share from continuing operations $ 0.07 $ 0.46 $ 0.15 $ (0.03) Basic earnings per share from discontinued operations $ 0.04 $ 1.52 $ 0.21 $ 0.01 Basic earnings (loss) per share $ 0.11 $ 1.98 $ 0.36 $ (0.02) Diluted earnings per share from continuing operations $ 0.07 $ 0.43 $ 0.15 $ (0.03) Diluted earnings per share from discontinued operations $ 0.04 $ 1.31 $ 0.21 $ 0.01 Diluted earnings (loss) per share $ 0.11 $ 1.74 $ 0.36 $ (0.02) (a) Amounts here on have been adjusted pursuant to our SAB 108 disclosure included in Note 1, Nature of Operations and Summary of Significant Accounting Policies, to properly exclude a $2.3 million tax adjustment related to the over-accrual of tax reserves that was reflected in our cumulative effect adjustment of $0.2 million to beginning retained earnings.

F-51

18. SUBSEQUENT EVENTS:

Redemption of 8.75% Notes

On December 21, 2006, we amended and restated the Bank Credit Agreement. As part of the amendment, in addition to the Term Loan A and the Revolver, the Credit Agreement now includes a Term Loan A-1 facility (the Term Loan A-1) of $225.0 million maturing on December 31, 2012. On January 19, 2007, we received net proceeds of $225.0 million under our Term Loan A-1. See Note 6. Notes Payable and Commercial Bank Financing, for additional information.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document approximately $15.7 million representing the redemption premium and write-off of certain debt acquisition costs during the first quarter of 2007. The redemption of the 2001 Notes and payment of accrued interest was funded from the net proceeds of the $225.0 million Term Loan A-1, described above, additional borrowings under the Revolver of $23.0 million and cash on hand of $59.4 million. As of December 31, 2006, $59.4 million of the aggregate principal amount of the 2001 Notes has been classified as short-term debt. See Note 6. Notes Payable and Commercial Bank Financing, for additional information.

F-52

SINCLAIR BROADCAST GROUP, INC.

INDEX TO SCHEDULES

Schedule II - Valuation and Qualifying Accounts S-2

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

S-1

SCHEDULE II

SINCLAIR BROADCAST GROUP, INC.

VALUATION ALLOWANCES FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 (In thousands)

ALLOWANCE FOR DOUBTFUL ACCOUNTS Balance at Balance beginning Charges to Cost Charges to other at end Year of period and Expenses Accounts Deductions of period 2004 $ 4,909 $ 1,606 $ $ 1,997 $ 4,518 2005 4,518 1,157 1,079 4,596 2006 4,596 1,205 1,816 3,985

S-2

EXECUTION COPY

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

December 21, 2006

between

SINCLAIR TELEVISION GROUP, INC.

The GUARANTORS Party Hereto

The LENDERS Party Hereto

JPMORGAN CHASE BANK, N.A., as Administrative Agent

WACHOVIA BANK, NATIONAL ASSOCIATION and DEUTSCHE BANK TRUST COMPANY AMERICAS as Syndication Agents

BNP PARIBAS and THE ROYAL BANK OF SCOTLAND PLC as Documentation Agents

TABLE OF CONTENTS

Page ARTICLE I DEFINITIONS 1

SECTION 1.01. Defined Terms 1 SECTION 1.02. Classification of Loans and Borrowings 29 SECTION 1.03. Call Letters for Stations 29 SECTION 1.04. Terms Generally 29 SECTION 1.05. Accounting Terms; GAAP 30

ARTICLE II THE CREDITS

SECTION 2.01. The Credits 31 SECTION 2.02. Loans and Borrowings 35 SECTION 2.03. Requests for Borrowings 35 SECTION 2.04. Letters of Credit 36 SECTION 2.05. Funding of Borrowings 40 SECTION 2.06. Interest Elections 41 SECTION 2.07. Termination and Reduction of the Commitments 43 SECTION 2.08. Repayment of Loans; Evidence of Debt 44 SECTION 2.09. Prepayment of Loans 47 SECTION 2.10. Fees 48 SECTION 2.11. Interest 49 SECTION 2.12. Alternate Rate of Interest 50 SECTION 2.13. Increased Costs 51 SECTION 2.14. Break Funding Payments 52

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SECTION 2.15. Taxes 52 SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs 53 SECTION 2.17. Mitigation Obligations; Replacement of Lenders 55

ARTICLE III GUARANTEE

SECTION 3.01. The Guarantee 56 SECTION 3.02. Obligations Unconditional 57 SECTION 3.03. Reinstatement 57 SECTION 3.04. Subrogation 58 SECTION 3.05. Remedies 58 SECTION 3.06. Instrument for the Payment of Money 58 SECTION 3.07. Continuing Guarantee 58 SECTION 3.08. Rights of Contribution 58 SECTION 3.09. General Limitation on Guarantee Obligations 59

ARTICLE IV REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Organization; Powers 59

SECTION 4.02. Authorization; Enforceability 60 SECTION 4.03. Governmental Approvals; No Conflicts 60 SECTION 4.04. Financial Condition; Material Adverse Change 60 SECTION 4.05. Properties 61 SECTION 4.06. Litigation and Environmental Matters 61 SECTION 4.07. Compliance with Laws and Agreements 62 SECTION 4.08. Investment Company Status 62 SECTION 4.09. Taxes 62 SECTION 4.10. ERISA 62 SECTION 4.11. Disclosure 62 SECTION 4.12. Use of Credit 63 SECTION 4.13. Indebtedness and Liens 63 SECTION 4.14. Subsidiaries and Investments 63 SECTION 4.15. Broadcast Licenses 64 SECTION 4.16. Solvency 64

ARTICLE V CONDITIONS

SECTION 5.01. Amendment and Restatement Effective Date 65 SECTION 5.02. Each Credit Event 66 SECTION 5.03. Each Incremental Loan 67

ARTICLE VI AFFIRMATIVE COVENANTS

SECTION 6.01. Financial Statements and Other Information 68 SECTION 6.02. Notices of Material Events 70

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SECTION 6.03. Existence; Conduct of Business 70 SECTION 6.04. Payment of Obligations 71 SECTION 6.05. Maintenance of Properties; Insurance 71 SECTION 6.06. Books and Records; Inspection Rights 71 SECTION 6.07. Compliance with Laws and Contractual Obligations 71 SECTION 6.08. Use of Proceeds and Letters of Credit 72 SECTION 6.09. Certain Obligations Respecting Subsidiaries; Intermediate Holding Company 72 SECTION 6.10. Designated SBG Subsidiaries 74

ARTICLE VII NEGATIVE COVENANTS

SECTION 7.01. Indebtedness 76 SECTION 7.02. Liens 77 SECTION 7.03. Mergers, Consolidations, Etc. 79 SECTION 7.04. Acquisitions 80 SECTION 7.05. Dispositions 81 SECTION 7.06. Lines of Business 83 SECTION 7.07. Investments 83 SECTION 7.08. Restricted Payments 84 SECTION 7.09. Transactions with Affiliates 85 SECTION 7.10. Restrictive Agreements 85

SECTION 7.11. Certain Financial Covenants 86 SECTION 7.12. Certain Other Indebtedness 86 SECTION 7.13. Modifications of Certain Documents 86 SECTION 7.14. License Subsidiaries 87 SECTION 7.15. Program Services Agreements and Outsourcing Agreements 88 SECTION 7.16. Limitation on Cure Rights 89 SECTION 7.17. Sale and Leaseback Transactions 89 SECTION 7.18. Covenants Applicable to Holding Company 89

ARTICLE VIII EVENTS OF DEFAULT

ARTICLE IX THE ADMINISTRATIVE AGENT

ARTICLE X MISCELLANEOUS

SECTION 10.01. Notices 96 SECTION 10.02. Waivers; Amendments 98 SECTION 10.03. Expenses; Indemnity; Damage Waiver 99 SECTION 10.04. Successors and Assigns 100 SECTION 10.05. Survival 103 SECTION 10.06. Counterparts; Integration; Effectiveness 103 SECTION 10.07. Severability 104 SECTION 10.08. Right of Setoff 104 SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process 104

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SECTION 10.10. WAIVER OF JURY TRIAL 105 SECTION 10.11. Headings 105 SECTION 10.12. Confidentiality 105 SECTION 10.13. Cure of Defaults by the Administrative Agent or the Lenders 106 SECTION 10.14. USA PATRIOT Act 107 SECTION 10.15. Effect of Amendment and Restatement 107

iii

SCHEDULE 1.01(a) Designated SBG Subsidiaries SCHEDULE 1.01(b) Commitments SCHEDULE 1.01(c) Existing Senior Subordinated Note Indentures SCHEDULE 1.01(d) Unrestricted Subsidiaries SCHEDULE 1.03 Owned and Contract Stations SCHEDULE 4.01 Organization; Powers SCHEDULE 4.06(a) Litigation SCHEDULE 4.06(b) Environmental Matters SCHEDULE 4.13(a) Material Indebtedness SCHEDULE 4.13(b) Liens SCHEDULE 4.14(a) Subsidiaries SCHEDULE 4.14(b) Investments SCHEDULE 4.15 Broadcast Licenses SCHEDULE 7.01(b) Existing Indebtedness SCHEDULE 7.04 Approved Acquisitions SCHEDULE 7.05 Approved Dispositions SCHEDULE 7.10 Restrictive Agreements

EXHIBIT A Form of Security Agreement EXHIBIT B-1 Form of Borrower Subsidiary Guarantor Assumption Agreement EXHIBIT B-2 Form of SBG Subsidiary Guarantor Assumption Agreement EXHIBIT C Form of Assignment and Assumption EXHIBIT D Form of Consent and Agreement EXHIBIT E-1 Form of Opinion of Counsel to the Obligors EXHIBIT E-2 Form of Opinion of Special FCC Counsel to the Obligors EXHIBIT F Form of Opinion of Special New York Counsel to JPMCB EXHIBIT G Form of Lender Addendum

THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 21, 2006 between SINCLAIR TELEVISION GROUP, INC., the GUARANTORS party hereto, the LENDERS party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

The Borrower, the Holding Company and the Subsidiary Guarantors are parties to the Second Amended and Restated Credit Agreement dated as of May 12, 2005 (as heretofore modified and supplemented and in effect on the date hereof, the Existing Credit

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Agreement) with several banks and other financial institutions or entities parties as lenders thereto and JPMorgan Chase Bank, N.A., as administrative agent. The parties to the Existing Credit Agreement have agreed to amend the Existing Credit Agreement in certain respects and to restate the Existing Credit Agreement as so amended as provided in this Agreement (and, in that connection, certain lenders not currently party to the Existing Credit Agreement shall become a party as lenders hereunder), effective upon the satisfaction of certain conditions precedent set forth in Section 5.01. Accordingly, the parties hereto agree that on the Third Restatement Effective Date (as defined below) the Existing Credit Agreement shall be amended and restated as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

ABR, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

Acquisitions means the Approved Acquisitions and the Other Acquisitions.

Additional Subordinated Notes has the meaning assigned to such term in Section 7.01(c).

Adjusted LIBO Rate means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

Administrative Agent means JPMCB, in its capacity as administrative agent for the Lenders hereunder.

Schedule 7.10 to Third Amended and Restated Credit Agreement

Administrative Questionnaire means an Administrative Questionnaire in a form supplied by the Administrative Agent.

Affiliate means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate solely by reason of his or her being a director, officer or employee of the Borrower or any of its Subsidiaries and the Borrower and its Subsidiaries shall not be deemed to be Affiliates of each other.

Aggregate Consideration means, in connection with any Acquisition, the aggregate consideration, in whatever form (including cash payments, the principal amount of promissory notes and Indebtedness assumed, the aggregate amounts payable to acquire, extend and exercise any option, the aggregate amount payable under non-competition agreements and management agreements, and the fair market value of other property delivered) paid, delivered or assumed by the Borrower and its Subsidiaries for such Acquisition.

Alternate Base Rate means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

Applicable Percentage means (a) with respect to any Revolving Lender for purposes of Section 2.01(d) or 2.04 or in respect of any indemnity claim under Section 10.03(c) arising out of an action or omission of the Swing Line Lender or the Issuing Lender under this Agreement, the percentage of the total Revolving Commitments represented by such Revolving Lenders Revolving Commitment, and (b) with respect to any Lender in respect of any indemnity claim under Section 10.03(c) arising out of an action or omission of the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Administrative Agent under this Agreement, the percentage of the total Commitments or Loans of each of the Classes hereunder represented by the aggregate amount of such Lenders Commitments or Loans of each of the Classes hereunder. If the Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments.

Applicable Rate means, for any day, with respect to any ABR Revolving Loan (including any Swing Line Loan), Eurodollar Revolving Loan, ABR Tranche A Term Loan, Eurodollar Tranche A Term Loan, ABR Tranche A-1 Term Loan or Eurodollar Tranche A-1 Term Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption Revolving ABR Spread, Revolving Eurodollar Spread, Tranche A ABR Spread, Tranche A Eurodollar Spread, Tranche A-1 ABR Spread, Tranche A-1 Eurodollar Spread or Commitment Fee Rate, respectively, based upon the Total Indebtedness Ratio as of the most recent determination date; provided that, notwithstanding anything herein to the contrary, during any period that a Post-Default Condition shall have occurred and be continuing, the Applicable Rate with respect to any ABR Revolving Loan, Eurodollar Revolving Loan, ABR Tranche A Term Loan, Eurodollar

Tranche A Term Loan, ABR Tranche A-1 Term Loan or Eurodollar Tranche A-1 Term Loan, as the case may be, shall be the highest rate set forth below under the caption Revolving ABR Spread, Revolving Eurodollar Spread, Tranche A ABR Spread, Tranche A Eurodollar Spread, Tranche A-1 ABR Spread or Tranche A-1 Eurodollar Spread, respectively:

Revolving Revolving Tranche A Tranche A Tranche A-1 Tranche A-1 ABR Eurodollar ABR Eurodollar ABR Eurodollar Commitment Spread Spread Spread Spread Spread Spread Fee Rate Total Indebtedness Ratio: (%) (%) (%) (%) (%) (%) (%) Level I: Greater than or equal to 6.00 to 1 0.25 1.25 0.25 1.25 0.25 1.25 0.375 Level II: Less than 6.00 to 1 and greater than or equal to 5.50 to 1 0 1.00 0 1.00 0.25 1.25 0.375 Level III: Less than 5.50 to 1 and greater than or equal to 5.00 to 1 0 0.875 0 0.875 0.25 1.25 0.25 Level IV Less than 5.00 to 1 0 0.75 0 0.75 0 1.00 0.25

For purposes of the foregoing (but subject to the proviso above), (A) the Total Indebtedness Ratio shall be determined as of the end of each fiscal quarter of the Borrowers fiscal year based upon the Borrowers consolidated financial statements delivered pursuant to Section 6.01(a) or (b) (and as set forth in the related certificate of a Financial Officer delivered pursuant to Section 6.01(c)) and (B) each change in the Applicable Rate resulting from a change in the Total Indebtedness Ratio shall be effective on the date three Business Days after the receipt by the Administrative Agent of such certificate and shall remain effective until the effective date of the next such change; provided that, notwithstanding the foregoing, the Applicable Rate shall not as a consequence of this proviso be reduced for any period during which an Event of Default shall have occurred and be continuing. Notwithstanding the foregoing, the Applicable Rate with respect to any Incremental Loan and any Incremental Loan Commitment means the rate per annum for such Incremental Loan and Incremental Loan Commitment agreed to by the Borrower and the respective Incremental Lender in the related Incremental Loan Amendment. As of the Third Restatement Effective Date, the Applicable Rate falls within Level IV.

Approved Acquisitions means the acquisitions identified in Schedule 7.04.

Approved Fund means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Assignment and Assumption means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04), and accepted by the Administrative Agent, in the form of Exhibit C or any other form approved by the Administrative Agent.

Average Life to Maturity means, as at any day with respect to any Indebtedness, the quotient obtained by dividing (a) the sum of the products of (i) the number of years from such day to the date or dates of each successive principal or redemption payment of such Indebtedness multiplied by (ii) the amount of each such principal or redemption payment by (b) the sum of all such principal or redemption payments. The Average Life to Maturity of commitment reductions shall be determined in like manner as if the relevant commitments were at all times fully drawn.

BCF Percentage means, at any date, the ratio, expressed as a percentage, obtained by dividing (a) the portion of Broadcast Cash Flow attributable to Contract Stations for the twelve month period ending on, or most recently ended prior to such date by (b) Broadcast Cash Flow for such period.

Board means the Board of Governors of the Federal Reserve System of the United States of America.

Borrower means Sinclair Television Group, Inc., a Maryland corporation.

Borrower Subsidiary Guarantor Assumption Agreement means a Guarantee Assumption Agreement substantially in the form of Exhibit B-1 (or other instrument satisfactory to the Administrative Agent) by a Subsidiary of the Borrower that, pursuant to Section 6.09, is required to become a Subsidiary Guarantor hereunder.

Borrowing means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

Borrowing Request means a request by the Borrower for a Borrowing in accordance with Section 2.03.

Broadcast Cash Flow means, for any period, the sum of EBITDA plus Corporate Expense for such period; provided that, for the purposes of the definition of Unrestricted Subsidiary, Broadcast Cash Flow shall refer to EBITDA and Corporate Expense as if each reference therein to Borrower and its Subsidiaries included Unrestricted Subsidiaries.

Broadcast Licenses means (a) the licenses, permits, authorizations or certificates to construct, own or operate the Stations granted by the FCC, and all extensions, additions and renewals thereto or thereof, and (b) the licenses, permits, authorizations or certificates which are necessary to construct, own or operate the Stations granted by administrative law courts or any state, county, city, town, village or other local government authority, and all extensions, additions and renewals thereto or thereof.

Business Day means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term Business Day shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

Capital Expenditures means, for any period, expenditures (including the aggregate amount of Capital Lease Obligations incurred during such period) made by the Borrower or any of its Subsidiaries to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements, but excluding repairs) during such period computed in accordance with GAAP, but excluding any such expenditures made as part of any Acquisition.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Capital Lease Obligations of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

Capital Stock means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation).

Change in Law means (a) the adoption of any law, rule or regulation after the date hereof, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lenders or the Issuing Lenders holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

Class, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Swing Line Loans, Tranche A Term Loans, Tranche A-1 Term Loans, Incremental Revolving Loans or Incremental

Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, a Tranche A-1 Term Loan Commitment, an Incremental Revolving Commitment or an Incremental Term Loan Commitment.

Code means the Internal Revenue Code of 1986, as amended from time to time.

Collateral Account has the meaning assigned to such term in Section 4.01 of the Security Agreement.

Commitment means a Revolving Commitment, a Tranche A-1 Term Loan Commitment, an Incremental Revolving Commitment or an Incremental Term Loan Commitment, or any combination thereof (as the context requires).

Confidential Information Memorandum means the Confidential Information Memorandum dated November 2006 with respect to the syndication of the credit facilities provided herein.

Consent and Agreement means a Consent and Agreement substantially in the form of Exhibit D.

Contract Station means (a) each television or radio station identified as such in Schedule 1.03, (b) each television or radio station that is the subject of an acquisition referred to in clause (b) of the definition of Other Acquisition in this Section consummated by the Borrower or any Subsidiary on or after the date hereof and (c) any television or radio station with which the Borrower or any Subsidiary has entered into any Program Services Agreement, Outsourcing Agreement or other similar agreement on or after the date hereof, in each case until such time, if any, as the Borrower or any Subsidiary acquires the Broadcast License of such television or radio station and such station becomes an Owned Station.

Contractual Obligations of any Person means any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise; provided that, in any event, any Person which owns directly or indirectly 5% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation, partnership or other Person. Controlling and Controlled have meanings correlative thereto.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Corporate Expense means, for any period, (a) all general and administrative expenses of the Borrower (including all general and administrative expenses of the Holding Company in respect of the Borrower) for such period and (b) without duplication, Holding

Company Corporate Expense but only to the extent exceeding $15,000,000 in the aggregate for any period of twelve consecutive full calendar months.

Cunningham means Cunningham Broadcasting Corporation, a Maryland corporation.

Cunningham Options means options for the purchase of all of the issued and outstanding voting and non-voting stock of Cunningham.

Debt Service means, for any period, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all scheduled payments of principal of Indebtedness (including the principal component of any payments in respect of Capital Lease Obligations, but excluding any optional or mandatory prepayments) scheduled to be made during such period plus (b) all Interest Expense for such period plus (c) fees and other expenses payable in connection with this Agreement for such period (excluding such fees and expenses constituting transaction costs payable on the Third Restatement Effective Date, but including agency fees).

Default means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

Designated SBG Subsidiary means (a) each Subsidiary of the Holding Company listed on Schedule 1.01(a) and (b) each other Subsidiary of the Holding Company that is designated as a Designated SBG Subsidiary after the date hereof pursuant to Section 6.10(a), in each case so long as such Subsidiary remains a Designated SBG Subsidiary hereunder.

Disposition means any sale, assignment, transfer or other disposition of any property (whether now owned or hereafter acquired) by the Borrower or any of its Subsidiaries to any other Person other than any sale, assignment, transfer or other disposition of any property sold or disposed of in the ordinary course of business and on ordinary business terms.

dollars or $ refers to lawful money of the United States of America.

EBITDA means, for any period, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following for such period (subject to Section 1.05(d)): (a) net income for such period; plus (b) the sum of, to the extent deducted in determining net income for such period, (i) provision for taxes, (ii) depreciation and amortization (including film amortization), (iii) Interest Expense, (iv) Permitted Termination Payments (or to the extent the same shall be included in determining Corporate Expense pursuant to clause (c)(ii) below for such period), (v) Restricted Payments made by the Borrower and its Subsidiaries as permitted by Section 7.08 (or to the extent the same shall be included in determining Corporate Expense pursuant to clause (c)(ii) below for such period), (vi) extraordinary losses (including non-cash losses on sales of property outside the ordinary course of business of the Borrower and its Subsidiaries) and (vii) all other non-cash charges (including non-cash losses on derivative transactions);

minus (c) the sum of, to the extent included in net income for such period, (i) non-cash revenues, (ii) Corporate Expense (but only to the extent already not deducted in determining net income for such period), (iii) interest and other income, (iv) extraordinary gains (including non-cash gains on sales of assets outside the ordinary course of business), (v) benefit from taxes and (vi) non-cash gains on derivative transactions; minus (d) Film Cash Payments made or scheduled to be made during such period.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EBITDA Percentage means, as of the date of the consummation of any sale, disposition or exchange of assets (or Capital Stock) contemplated by Section 7.05(c), the ratio, expressed as a percentage, obtained by dividing (a) the portion of EBITDA attributable to such assets (or Capital Stock) for the twelve month period ending on, or most recently ended prior to, such date by (b) EBITDA for such period.

Environmental Laws means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

Environmental Liability means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Equity Issuance means (a) any issuance or sale by the Borrower or any of its Subsidiaries after the Third Restatement Effective Date of (i) any Capital Stock, (ii) any warrants or options exercisable in respect of Capital Stock (other than any warrants or options relating to Capital Stock of the Borrower issued to directors, officers or employees of the Borrower or any of its Subsidiaries pursuant to employee benefit plans established in the ordinary course of business and any Capital Stock of the Borrower issued upon the exercise of such warrants or options) or (iii) any other security or instrument representing an ownership interest (or the right to obtain any ownership interest) in the Borrower or any of its Subsidiaries or (b) the receipt by the Borrower or any of its Subsidiaries after the Third Restatement Effective Date of any capital contribution (whether or not evidenced by any equity security issued by the recipient of such contribution); provided that Equity Issuance shall not include (x) any such issuance or sale by any Subsidiary of the Borrower to the Borrower or any Wholly Owned Subsidiary of the Borrower, (y) any capital contribution by the Borrower or any Wholly Owned Subsidiary of the Borrower to any Subsidiary of the Borrower or (z) any split-up, revision, reclassification or other like change of any outstanding Capital Stock.

Equity Rights means, with respect to any Person, any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any shareholders or voting trust agreements) for the issuance, sale, registration or voting of, or securities convertible into, any additional shares of Capital Stock of any class of, or of any type in, such Person.

ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

ERISA Affiliate means any trade or business (including Unrestricted Subsidiaries and whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event means (a) any reportable event, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an accumulated funding deficiency (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

Eurodollar, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

Event of Default has the meaning assigned to such term in Article VIII.

Excluded Non-Media Subsidiary means, at any time, a Non-Media Subsidiary of the Borrower or the Holding Company which at such time is not required to be a Subsidiary Guarantor or an Obligor pursuant to the last paragraph of Section 6.09(a) or the last paragraph of Section 6.10(b), respectively.

Excluded Taxes means, with respect to the Administrative Agent, any Lender, the Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any

Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement or is attributable to such Foreign Lenders failure or inability to comply with Section 2.15(e), except to the extent that such Foreign Lenders assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a).

Existing Credit Agreement has the meaning assigned to such term in the second paragraph of this Agreement.

Existing Letters of Credit has the meaning assigned to such term in Section 2.04(a).

Existing Revolving Loans means the Revolving Loans (as defined in the Existing Credit Agreement) made thereunder and outstanding as of the Third Restatement Effective Date.

Existing Senior Subordinated Indebtedness means the Indebtedness evidenced or provided by the Existing Senior Subordinated Note Indentures (including the senior subordinated notes issued by the Borrower from time to time thereunder and the Guarantees of such Indebtedness provided by any Subsidiary Guarantor thereunder).

Existing Senior Subordinated Note Indentures means the indentures in effect on the Third Restatement Effective Date and described in Schedule 1.01(c).

Existing Tranche A Term Loans means the Tranche A Term Loans (as defined in the Existing Credit Agreement) made thereunder and outstanding as of the Third Restatement Effective Date.

FCC means the Federal Communications Commission or any governmental authority substituted therefor.

Federal Funds Effective Rate means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Film Cash Payments means, for any period, the sum (determined on a consolidated basis and without duplication) of all payments by the Borrower and its Subsidiaries

made or scheduled to be made during such period in respect of Film Obligations; provided that amounts applied to the prepayment of Film Obligations owing under any contract evidencing a Film Obligation under which the amount owed by the Borrower or any of its Subsidiaries exceeds the remaining value of such contract to the Borrower or such Subsidiary, as reasonably determined by the Borrower shall not be deemed to be Film Cash Payments.

Film Obligations means obligations in respect of the purchase, use, license or acquisition of programs, programming materials, films, and similar assets used in connection with the business and operations of the Borrower and its Subsidiaries.

FIN 46 means Interpretation No. 46, Consolidation of Variable Interest Entities, issued by FASB, as amended from time to time.

Final FCC Order means an order of the FCC that is no longer subject to reconsideration or review by the FCC or by any court or administrative body.

Financial Officer means the chief financial officer or treasurer of the Borrower or the Holding Company, as applicable.

Fixed Charges Ratio means, as at any date, the ratio of (a) EBITDA for the period of the four fiscal quarters ending on or most recently ended prior to such date to (b) the sum for such period of (i) Debt Service plus (ii) Capital Expenditures (but excluding Capital Expenditures relating to the implementation of digital television) except to the extent financed through Capital Lease Obligations permitted under clause (b), (h) or (k) of Section 7.01 plus (iii) the aggregate amount of Federal and state income taxes paid by the Borrower and its Subsidiaries (excluding any such taxes resulting from gains on the sale of any property), net of refunds, during such period plus (iv) Restricted Payments made as permitted by Section 7.08(d) during such period.

Foreign Lender means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

GAAP means generally accepted accounting principles in the United States of America.

Governmental Authority means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

Guarantee of or by any Person (the guarantor) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the primary obligor) in

any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) any Program Services Agreement or any obligations thereunder.

Guarantee Assumption Agreement means a Borrower Subsidiary Guarantor Assumption Agreement or a SBG Subsidiary Guarantor Assumption Agreement, as applicable.

Guaranteed Obligations has the meaning assigned to such term in Section 3.01.

Guarantors means, collectively, (a) the Holding Company, (b) the Subsidiary Guarantors and (c) each other Subsidiary of the Holding Company that becomes a Guarantor after the date hereof pursuant to Section 6.09 or Section 6.10.

Hazardous Materials means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Hedging Agreement means any swap agreement, cap agreement, collar agreement, put or call, futures contract, forward contract or similar agreement or arrangement entered into to protect against or mitigate the effect of fluctuations in the price of the Borrowers publicly issued common stock or in interest rates, foreign exchange rates or prices of commodities used in the business of the Borrower and its Subsidiaries and any master agreement relating to any of the foregoing.

Holding Company means Sinclair Broadcast Group, Inc., a Maryland corporation.

Holding Company Corporate Expense means, for any period, all general and administrative expenses of the Holding Company funded by dividends pursuant to Section 7.08(c) or by management fees or royalty fee payments from the Borrower or any of its Subsidiaries to the Holding Company (excluding all such expenses in respect of the Borrower and its Subsidiaries) for such period.

Immaterial Broadcast Licenses means (a) Broadcast Licenses (other than main transmitter licenses, auxiliary transmitter licenses (to the extent in existence on the date hereof and necessary for the continued operation of the Stations) and studio transmitter links (to the

extent necessary for the continued operation of the Stations), in each case granted by the FCC, and extensions and renewals thereto or thereof) the absence of which individually or together could not have a Material Adverse Effect and (b) either a paired digital channel or a paired analog channel (but not both) which is returned to the FCC pursuant to the FCCs plan for transition to digital television broadcasting.

Incremental Lender means a Lender with an Incremental Loan Commitment or an outstanding Incremental Loan.

Incremental Loan means an Incremental Revolving Loan or an Incremental Term Loan.

Incremental Loan Amendment means any amendment to this Agreement pursuant to which Incremental Loan Commitments of any Series are established pursuant to Section 2.01(c).

Incremental Loan Commitment means an Incremental Revolving Commitment or an Incremental Term Loan Commitment. The aggregate amount of the Incremental Loan Commitments on the Third Restatement Effective Date is zero and at any time thereafter shall not exceed $500,000,000.

Incremental Revolving Commitment means, with respect to each Incremental Lender of any Series, the commitment, if any, of such Lender to make Incremental Revolving Loans of such Series hereunder. The initial amount of each Lenders Incremental

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Revolving Commitment of any Series will be specified in the Incremental Loan Amendment for such Series, or will be set forth in the Assignment and Assumption pursuant to which such Lender shall have assumed its Incremental Revolving Commitment of such Series.

Incremental Revolving Loan has the meaning assigned to such term in Section 2.01(c).

Incremental Revolving Maturity Date means, with respect to the Incremental Revolving Loans of any Series, the maturity date for such Incremental Revolving Loans of such Series as specified in the Incremental Loan Amendment for such Series.

Incremental Term Loan has the meaning assigned to such term in Section 2.01(c).

Incremental Term Loan Commitment means, with respect to each Incremental Lender of any Series, the commitment, if any, of such Lender to make Incremental Term Loans of such Series hereunder. The initial amount of each Lenders Incremental Term Loan Commitment of any Series will be specified in the Incremental Loan Amendment for such Series, or will be set forth in the Assignment and Assumption pursuant to which such Lender shall have assumed its Incremental Term Loan Commitment of such Series.

Incremental Term Loan Maturity Date means, with respect to the Incremental Term Loans of any Series, the maturity date for such Incremental Term Loans of such Series as specified in the Incremental Loan Amendment for such Series.

Incremental Term Loan Principal Payment Date means, for each Series of Incremental Term Loans, the date or dates for repayment of such Incremental Term Loans as specified in the Incremental Loan Amendment for such Series.

Indebtedness means of any Person (without duplication): (a) indebtedness created, issued or incurred by such Person for borrowed money (whether by loan or the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; (f) Indebtedness of others guaranteed by such Person; (g) if the Aggregate Consideration payable by such Person to extend and exercise any option acquired in connection with any Other Acquisition (an Extension and Exercise Price) exceeds 20% of the Aggregate Consideration payable in connection with such Other Acquisition, such Extension and Exercise Price; (h) any Put Obligations, but only to the extent that such Put Obligations (other than the Put Obligations in existence on the Third Restatement Effective Date relating to WNAB-TV (Nashville, Tennessee)), whether arising under the same or different agreements, exceeding $25,000,000 in the aggregate shall not have been approved by the Administrative Agent (such approval not to be unreasonably withheld) prior to the incurrence thereof; and (i) obligations of such Person in respect of surety and appeals bonds or performance bonds or other similar obligations; provided that the term Indebtedness shall not include (i) Film Obligations of such Person, (ii) obligations of such Person under any Program Services Agreement, Outsourcing Agreement or other similar agreement, (iii) any liability shown on such Persons balance sheet in respect of the fair value of Interest Rate Protection Agreements, (iv) any Put Obligations (other than those Put Obligations included as Indebtedness under clause (h) of this definition) and (v) any liability shown on the balance sheet of such Person solely as a result of the application of FIN 46 and for which such Person is not primarily or contingently liable for payment.

Indemnified Taxes means Taxes other than Excluded Taxes.

Initial FCC Order means an order of the FCC that is not a Final FCC Order.

Interest Election Request means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.06.

Interest Expense means, for any period, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued or capitalized during such period (whether or not actually paid during such period plus (b) the net amounts payable (or minus the net amounts receivable) under Interest Rate Protection Agreements accrued during such period (whether or not actually paid or received during such period) minus (c) all cash interest income received during such period; provided that in no event shall the term Interest Expense for any period include, to the extent included in interest expense in accordance with GAAP, (i) the amortization of deferred financing fees during such period, (ii) the amortization during such period to interest expense of losses on previously terminated or modified Interest Rate Protection Agreements and (iii) gains or losses from the extinguishment of debt. Any reference herein to calculating Interest Expense for any period on a pro forma basis means that, for purposes of the clause (a) above, (i) the Indebtedness on the basis of which Interest Expense is so calculated shall mean Indebtedness outstanding as of the relevant date of calculation after giving effect to any repayments and any incurrence of Indebtedness on such date and (ii) such calculation shall be made applying the respective rates of interest in effect for such Indebtedness on such date.

Interest Payment Date means (a) with respect to any ABR Loan (other than Swing Line Loans), each Quarterly Date, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months duration, each day prior to the last day of such Interest Period that occurs at intervals of three months duration after the first day of such Interest Period and (c) with respect to any Swing Line Loan, the day that such Loan is required to be repaid.

Interest Period means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine months) thereafter, as the Borrower may elect; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

Interest Rate Protection Agreement means a Hedging Agreement providing for the transfer or mitigation of interest risks either generally or under specific contingencies.

Investment means, for any Person, (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement

to make any such acquisition (including any short sale or any sale of any securities at a time when such securities are not owned by the Person entering into such sale), (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding 90 days arising in connection with the sale of programming or advertising time by such Person in the ordinary course of business or (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.

Issuing Lender means JPMCB, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.04(j). The Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Affiliates of the Issuing Lender, in which case the term Issuing Lender shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

JPMCB means JPMorgan Chase Bank, N.A.

LC Disbursement means a payment made by the Issuing Lender pursuant to a Letter of Credit.

LC Exposure means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

Lender Addendum means, with respect to any Lender, a Lender Addendum substantially in the form of Exhibit G, executed by such Lender and delivered pursuant to Section 5.01(a).

Lender Affiliate means (a) with respect to any Lender, (i) an Affiliate of such Lender or (ii) any Person (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender and (b) with respect to any Lender that is a fund that invests in bank loans, any other fund or trust or entity that invests in bank loans and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

Lenders means the Persons listed on Schedule 1.01(b), the Incremental Lenders (if any) and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term Lenders includes the Swing Line Lender.

Letter of Credit means any letter of credit issued pursuant to this Agreement and shall include the Existing Letters of Credit.

Letter of Credit Documents means, with respect to any Letter of Credit, collectively, any application therefor and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations, each as the same may be modified and supplemented and in effect from time to time.

LIBO Rate means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the LIBO Rate with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. The Administrative Agent will furnish a copy of such Page 3750 or other documentation evidencing the contents thereof to the Borrower upon its request.

License Subsidiaries means (a) with respect to each Station that is an Owned Station on the date hereof, the Subsidiary of the Borrower listed on Schedule 1.03 as the holder of the Broadcast Licenses for such Owned Station and (b) with respect to any Owned Station hereafter acquired by the Borrower or any of its Subsidiaries, the Subsidiary of the Borrower formed, created, or acquired after the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document date hereof that holds the Broadcast Licenses for such Owned Station, and in each case any other Subsidiary into which any such License Subsidiary may be merged pursuant to Section 7.03.

Lien means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

Loan Documents means, collectively, this Agreement, the promissory notes (if any) issued pursuant to Section 2.08(g), the Letter of Credit Documents, the Guarantee Assumption Agreements (if any), each Consent and Agreement and the Security Documents.

Loans means the loans made by the Lenders to the Borrower pursuant to Section 2.01, and shall include Incremental Loans unless the context otherwise requires.

Margin Stock means margin stock within the meaning of Regulations T, U and X of the Board.

Material Adverse Effect means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries taken as a whole, (b) the ability of any Obligor to perform any of its obligations under this Agreement or any of the other Loan Documents to which it is a party or (c) the rights of or benefits available to the Lenders under this Agreement or any of the other Loan Documents.

Material Third-Party Licensee means any Person holding a Broadcast License for one or more Contract Stations for which the Broadcast Cash Flow attributable to such Stations, either individually or in the aggregate, for the most recent twelve month period is equal to or greater than three percent of the Broadcast Cash Flow for such period.

Moodys means Moodys Investors Service, Inc.

Multiemployer Plan means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

Net Available Proceeds means (a) in the case of any Disposition, an amount (not less than zero) equal to the amount of Net Cash Payments received by the Borrower and its Subsidiaries in connection with such Disposition and (b) in the case of any Equity Issuance, the aggregate amount of all cash received by the Borrower and its Subsidiaries in respect thereof, net of reasonable expenses incurred by the Borrower and its Subsidiaries in connection therewith.

Net Cash Payments means, with respect to any Disposition, the aggregate amount of all cash payments (including all cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received) received by the Borrower or its Subsidiaries directly or indirectly in connection with such Disposition; provided that (a) Net Cash Payments shall be net of (i) the amount of any legal, title and recording tax expenses, commissions and other fees and expenses paid by the Borrower and its Subsidiaries in connection with such Disposition and (ii) any Federal, state and local income or other taxes estimated to be payable by the Borrower and its Subsidiaries as a result of such Disposition (but only to the extent that such estimated taxes are in fact paid to the relevant Governmental Authority not later than twelve months after the date of such Disposition) and (b) Net Cash Payments shall be net of any repayments by the Borrower or any of its Subsidiaries of Indebtedness to the extent that (i) such Indebtedness is secured by a Lien on the property that is the subject of such Disposition and (ii) the transferee of (or holder of a Lien on) such property requires that such Indebtedness be repaid as a condition to the Disposition of such property.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Non-Media Subsidiary means any direct or indirect Subsidiary of the Borrower or the Holding Company that is not engaged in, and does derive any income from, any of the businesses or activities described in clauses (a), (b) and/or (c) of Section 7.06.

Non-Recourse Indebtedness means Indebtedness (a) as to which neither the Borrower nor any Subsidiary (other than any Unrestricted Subsidiary) is directly or indirectly liable (by virtue of the Borrower or any such Subsidiary being the primary obligor on, guarantor of, or otherwise liable in any respect to, such Indebtedness) and (b) which, upon the occurrence of a default with respect thereto, does not result in, or permit any holder of any other Indebtedness of the Borrower or any Subsidiary (other than any Unrestricted Subsidiary) to declare, a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity.

Note Indentures means, collectively, the Senior Subordinated Note Indentures and the Senior Note Indentures.

Obligors means, collectively, (a) the Borrower, (b) the Holding Company and (c) each other Guarantor.

Operating Subsidiary has the meaning assigned to such term in Section 7.14(a).

Other Acquisition means (a) the acquisition by the Borrower or any of its Subsidiaries in accordance with the terms hereof of substantially all of the assets (including Broadcast Licenses) of (i) a television or radio station in the United States in a single transaction (i.e., not by means of the acquisition of an option for such assets and the subsequent exercise of such option) or (ii) any business engaged in an activity permitted under Section 7.06, (b) (i) the acquisition by the Borrower or any of its Subsidiaries in accordance with the terms hereof of (x) substantially all of the assets (other than Broadcast Licenses and other property required pursuant to the rules and regulations of the FCC to be sold in connection with the transfer of such Broadcast Licenses) of a television or radio station in the United States and (y) an option to acquire the Broadcast Licenses and such other assets of such television or radio station and (ii) the entering into by the Borrower or any of its Subsidiaries of an agreement contemplated by clause (b) of the definition of Program Services Agreement in this Section with respect to such station, (c) the consummation of the acquisition of assets by the Borrower or any of its Subsidiaries pursuant to the exercise of an option referred to in the preceding clause (b)(i)(y), together with the termination of the related Program Services Agreement referred to in the preceding clause (b)(ii), and (d) the acquisition of assets or Capital Stock of any Person pursuant to an exchange permitted by Section 7.05(c); provided that the term Other Acquisition shall not include any Approved Acquisition. As used in this definition, the acquisition of assets shall be deemed to include reference to the acquisition of the voting Capital Stock of the Person that owns such assets and references to the acquisition and exercise of an option to acquire assets shall be deemed to include the acquisition and exercise of the option to acquire voting Capital Stock of the Person that owns such assets.

Other Taxes means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

Outsourcing Agreements means (a) any agreement to which the Borrower or any of its Subsidiaries is a party which provides for the Borrower or any of its Subsidiaries to deliver or receive non-programming related management and/or consulting services of any television station, and (b) any put or option agreement entered into in connection with any agreement referred to in clause (a) above that provides for the Borrower or any of its Subsidiaries to acquire or sell the license or non-license assets of the related television station.

Owned Station means (a) each television or radio station identified as such in Schedule 1.03 and (b) any television or radio station the Broadcast Licenses of which are owned or held by the Borrower or any of its Subsidiaries on or after the date hereof.

Passive BCF Percentage means, as at any date, the ratio, expressed as a percentage, obtained by dividing (a) the portion of Broadcast Cash Flow attributable to all Passive Stations for the twelve month period ending on, or most recently ended prior to, such date by (b) Broadcast Cash Flow for such period.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Passive LMA means a local marketing agreement, time brokerage agreement, program services agreement or similar agreement (but excluding any Outsourcing Agreement or other similar agreement) providing for any Person other than the Borrower or any of its Subsidiaries to program or sell advertising time on all or any portion of the broadcast time of any Station.

Passive Station means a Station that is the subject of a Passive LMA.

PBGC means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

Permitted Investments means, for any Person: (a) direct obligations of the United States of America, or of any agency (which shall include, but not be limited to, Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, General Services Administration, and Government National Mortgage Association) or instrumentality (which shall include, but not be limited to, The Federal National Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperative and the Farm Credit System, and The Student Loan Marketing Association) thereof, or obligations guaranteed or insured as to principal and interest by the United States of America, or any agency or instrumentality thereof, in either case maturing not more than 90 days from the date of acquisition thereof by such Person; (b) domestic and Eurodollar time deposits, overnight deposits, certificates of deposit and bankers acceptances issued or guaranteed by entities rated A-2 or better by S&P or P-2 or better by Moodys, maintained at or issued by any office or branch of any bank or trust company organized or licensed under the laws of the United States of America or any State thereof which bank or trust company has capital, surplus and undivided profits of at least $500,000,000, maturing not more than 90 days from the date of acquisition

thereof by such Person; (c) commercial paper, auction rate notes and commercial paper master notes issued or guaranteed by entities rated A-2 or better by S&P or P-2 or better by Moodys, maturing not more than 90 days from the acquisition thereof by such Person (provided that a security without its own rating will be considered to be rated and to have the same rating as any debt obligation that is issued by the same issuer which is comparable in priority, maturity and security to the subject security or, if it is guaranteed by another issuer, to be rated and to have the same rating as any debt obligation that is issued by the guarantor which is comparable in priority, security, and maturity to the subject security); (d) tax-exempt commercial paper or variable rate tax exempt demand notes, rated A-1 or better by S&P or MIG1/VMIG1 or better by Moodys, maturing not more than 90 days from the acquisition thereof by such Person; (e) fully collateralized repurchase agreements with a term of not more than 30 days entered into with any bank qualifying under clause (b) above, any broker-dealer subsidiary or affiliate of any such bank or any Primary Dealer of United States Government securities and relating to: (i) marketable direct obligations issued or unconditionally guaranteed or insured by the United States of America or any agency or instrumentality thereof listed in clause (a) above; (ii) securities issued by The Federal National Mortgage Association, Federal Farm Credit Banks, Federal Home Loan Banks or The Student Loan Marketing Association or other entities listed in clause (a) above; or (iii) mortgage-backed securities issued by The Federal National Mortgage Association or The Federal Home Loan Mortgage Corporation or issued or guaranteed by the Government National Mortgage Association or other entities listed in clause (a) above; and (f) money market mutual funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moodys and (iii) have portfolio assets of at least $5,000,000,000.

Permitted Reinvestment means (a) an acquisition permitted under Section 7.04(e), (b) Capital Expenditures or (c) an Investment permitted under Section 7.07.

Permitted Termination Payments has the meaning assigned to such term in Section 7.15.

Person means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Plan means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an employer as defined in Section 3(5) of ERISA.

Post-Default Condition means (a) the failure by the Borrower to pay when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise) any principal amount of any Loan or in respect of any LC Exposure, (b) the failure by the Borrower to pay when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise) any other amount payable by the Borrower hereunder for more than three Business Days or (c) the existence of any Event of Default under clauses (d) or (e) of Article VIII.

Post-Default Rate means a rate per annum equal to the Alternate Base Rate as in effect from time to time plus the Applicable Rate plus 2%; provided that, as applied to principal of a Eurodollar Loan, the Post-Default Rate shall be the interest rate for such Eurodollar Loan as provided in Section 2.11(b) plus 2%.

Prime Rate means the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

Program Services Agreements means any agreement having a term of not less than three years with an option to extend such term for an additional three years or more entered into by the Borrower or any of its Subsidiaries (other than License Subsidiaries) in accordance with Section 7.15 relating to a Contract Station, pursuant to which agreement the Borrower or any of its Subsidiaries (other than License Subsidiaries) will obtain the right to program and sell advertising on a substantial portion of such Contract Stations inventory of broadcast time.

PSA Counterparty means Cunningham, Bay Television, Inc. and/or any other Person reasonably acceptable to the Administrative Agent.

Put Obligations means the obligations of the Borrower or any of its Subsidiaries to purchase certain assets of any Station with respect to which the Borrower or such Subsidiary shall have entered into an Outsourcing Agreement.

Qualifying Cash Balances means, as at any date, (a) cash balances on deposit on such date in any account maintained by the Borrower or any of its Subsidiaries up to but not exceeding $35,000,000 and (b) (without duplication) cash balances on deposit on such date in an account maintained by the Borrower or any of its Subsidiaries with the Administrative Agent in which the Administrative Agent has been granted a perfected first priority security interest, provided that withdrawal of funds from any such account under clause (b) by the Borrower or such Subsidiary, as the case may be, shall be permitted only (i) so long as no Default shall have occurred and be continuing and (ii) upon delivery by the Borrower or such Subsidiary, as the case may be, to the Administrative Agent of a certificate to that effect.

Quarterly Dates means the last Business Day of March, June, September and December in each year, the first of which shall be the first such day after the date hereof.

Receivables means, as at any date, the unpaid portion of the obligation, as stated on the respective billing statement, of a customer of the Borrower or any Subsidiary Guarantor in respect of the sale of advertising time or other services provided or goods sold by the Borrower or any Subsidiary Guarantor, as the case may be, to such customer.

Receivables and Related Assets means Receivables and any instruments, documents, chattel paper, obligations, general intangibles and other similar assets, in each case, relating to such Receivables.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Receivables Financing means the sale of Receivables and Related Assets on terms and pursuant to documentation satisfactory in form and substance to the Administrative Agent.

Receivables Subsidiary means a Wholly Owned Subsidiary of the Borrower established for the limited purpose of acquiring and financing Receivables and Related Assets pursuant to any Receivables Financing.

Reinvestment Deferred Amount means, with respect to any Reinvestment Event, the aggregate Net Cash Payments received by the Borrower or any of its Subsidiaries in connection therewith that are not applied to prepay the Loans pursuant to Section 2.09(b) as a result of the delivery of a Reinvestment Notice.

Reinvestment Event means any Disposition in respect of which the Borrower has delivered a Reinvestment Notice.

Reinvestment Notice means a written notice executed by a Financial Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Payments of a Disposition to make a Permitted Reinvestment.

Reinvestment Prepayment Amount means, with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to make a Permitted Reinvestment.

Reinvestment Prepayment Date means, with respect to any Reinvestment Event, the earlier of (a) the date occurring one year after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets useful in the business of the Borrower or any of its Subsidiaries with all or any portion of the relevant Reinvestment Deferred Amount.

Related Parties means, with respect to any specified Person, such Persons Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Persons Affiliates.

Required Lenders means, at any time, subject to the last paragraph of Section 10.02(b), Lenders having Revolving Exposures, outstanding Term Loans, outstanding Incremental Loans and unused Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Term Loans, outstanding Incremental Loans and unused Commitments at such time. The Required Lenders of a particular Class of Loans means Lenders having Revolving Exposures, outstanding Term Loans, outstanding Incremental Loans and unused Commitments of such Class representing more than 50% of the total Revolving Exposures, outstanding Term Loans, outstanding Incremental Loans and unused Commitments of such Class at such time (e.g., Required Revolving Lenders means, at any time, the Revolving Lenders having Revolving Exposures and unused Revolving Commitments representing more than 50% of the total Revolving Exposures and total unused Revolving Commitments at such time).

Restricted Payment means (a) any dividend or other distribution (whether in cash, securities or other property but excluding dividends payable solely in additional shares of common stock of the Borrower) with respect to any shares of any class of Capital Stock of the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of Capital Stock of the Borrower or any option, warrant or other right to acquire any such shares of Capital Stock of the Borrower and (b) any management fee or royalty fee payable by the Borrower or any Subsidiary to the Holding Company.

Revolving Availability Period means the period from and including the Third Restatement Effective Date to but excluding the earlier of (a) the Revolving Maturity Date and (b) the date of termination of the Revolving Commitments.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Revolving Commitment means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Swing Line Loans and Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lenders Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lenders Revolving Commitment is set forth on Schedule 1.01(b) or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The aggregate amount of the Lenders Revolving Commitments on the Third Restatement Effective Date is $175,000,000.

Revolving Exposure means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lenders Revolving Loans and its LC Exposure and Swing Line Exposure at such time.

Revolving Lender means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.

Revolving Loan means a Loan made pursuant to Section 2.01(a).

Revolving Maturity Date means the Business Day falling on or nearest to June 30, 2011.

Rule 144 A means Rule 144A of the Securities Act of 1933, as amended from time to time.

S&P means Standard & Poors Ratings Services.

SBG Subsidiary Guarantor means (a) each Subsidiary of the Holding Company listed on Schedule 1.01(a) and (b) each other Subsidiary of the Holding Company that becomes a Subsidiary Guarantor after the date hereof pursuant to Section 6.10(b), in each case so long as such Subsidiary remains a SBG Subsidiary Guarantor hereunder.

SBG Subsidiary Guarantor Assumption Agreement means a Guarantee Assumption Agreement substantially in the form of Exhibit B-2 (or other instrument satisfactory to the Administrative Agent) by a Subsidiary of the Holding Company that, pursuant to Section 6.10, becomes, a SBG Subsidiary Guarantor hereunder.

SEC means the Securities and Exchange Commission, or any regulatory body that succeeds to the functions thereof.

Security Agreement means the Second Amended and Restated Security Agreement substantially in the form of Exhibit A between the Borrower, the Holding Company, the Subsidiary Guarantors and the Administrative Agent.

Security Documents means, collectively, the Security Agreement, any other pledge, security or similar agreement entered into by any Obligor in connection with this Agreement, and all Uniform Commercial Code financing statements required hereby or thereby to be filed with respect to the security interests in personal property created pursuant thereto.

Senior Indebtedness means as at any date, the sum of (a) Indebtedness (other than Subordinated Indebtedness) on such date of the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) minus all Qualifying Cash Balances on such date.

Senior Indebtedness Ratio means, as at any date, the ratio of (a) Senior Indebtedness outstanding on such date to (b) EBITDA for the period of the four fiscal quarters ending on or most recently ended prior to such date.

Senior Note Documents means the agreements and instruments evidencing or providing for the Senior Notes.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Senior Note Indentures means the indenture or indentures under which the Senior Notes shall be issued.

Senior Notes means the Indebtedness of the Borrower issued pursuant to Section 7.01(j) (including the senior unsecured Guarantees of such Indebtedness provided by any Subsidiary Guarantor thereunder).

Senior Subordinated Note Indentures means the Existing Senior Subordinated Note Indentures and, after the respective issuances of the Additional Subordinated Notes, the respective indentures under which the same are issued.

Series has the meaning assigned to such term in Section 2.01(c).

Smith Brothers means Frederick G. Smith, David D. Smith, J. Duncan Smith and Robert E. Smith.

Stations means the Owned Stations and the Contract Stations.

Statutory Reserve Rate means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as Eurocurrency Liabilities in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Subordinated Debt Documents means the agreements and instruments evidencing or providing for Subordinated Indebtedness.

Subordinated Film Indebtedness means Film Obligations of the Borrower and its Subsidiaries which are subordinated to the obligations of the Borrower and its Subsidiaries hereunder on terms and conditions, and the other provisions of which are, satisfactory to the Administrative Agent.

Subordinated Indebtedness means (a) the Existing Senior Subordinated Indebtedness, (b) Subordinated Film Indebtedness and (c) Indebtedness evidenced by the Additional Subordinated Notes.

Subsidiary means, with respect to any Person (the parent) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parents consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled or by the parent and/or one or more subsidiaries of the parent. Wholly Owned Subsidiary means any such corporation, partnership or other entity of which all of such securities or other ownership interests (other than, in the case of a corporation, directors qualifying shares) are so owned or controlled. Notwithstanding anything contained herein to the contrary, (i) no Unrestricted Subsidiary shall be deemed to be a Subsidiary of the Borrower or of a Subsidiary of the Borrower for the purpose of this Agreement except as otherwise expressly provided herein, (ii) each Designated SBG Subsidiary shall be deemed to be a Subsidiary of the Borrower for all purposes of this Agreement (including

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Articles IV, VI, VII and VIII (unless the context otherwise requires)) and shall comply with the provisions of Section 6.09 or Section 6.10, as applicable, and (iii) each Excluded Non-Media Subsidiary shall be a Subsidiary of the Borrower for all purposes of this Agreement. Unless otherwise specified, Subsidiary means a Subsidiary of the Borrower.

Subsidiary Guarantor means, collectively, (a) each of the Subsidiaries of the Borrower and each of the Designated SBG Subsidiaries identified under the caption SUBSIDIARY GUARANTORS on the signature pages hereto, (b) each Subsidiary of the Borrower that becomes a Subsidiary Guarantor after the date hereof pursuant to Section 6.09(a) and (c) each other SBG Subsidiary Guarantor.

Swing Line Exposure means, at any time, the aggregate principal amount of all Swing Line Loans outstanding at such time. The Swing Line Exposure of any Lender at any time shall be its Applicable Percentage of the total Swing Line Exposure at such time.

Swing Line Lender means JPMCB, in its capacity as lender of Swing Line Loans hereunder.

Swing Line Loan means a Loan made pursuant to Section 2.01(d).

Taxes means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

Term Loan Lender means a Lender with a Tranche A -1 Term Loan Commitment or an outstanding Term Loan.

Term Loan Maturity Date means (a) with respect to the Tranche A Term Loans, the Quarterly Date falling on or nearest to December 31, 2011 and (b) with respect to the Tranche A-1 Term Loans, the Quarterly Date falling on or nearest to December 31, 2012.

Term Loan Principal Payment Dates means the Quarterly Dates falling on or nearest to March 31, June 30, September 30 and December 31 of each year, commencing with March 31, 2007.

Term Loans means, collectively, the Tranche A Term Loans and the Tranche A-1 Term Loans.

Third Restatement Effective Date means the date on which the conditions specified in Section 5.01 are satisfied (or waived in accordance with Section 10.02).

Total Indebtedness means, as at any date, all Indebtedness of the Borrower and its Subsidiaries outstanding on such date (determined on a consolidated basis without duplication in accordance with GAAP), net of Qualifying Cash Balances on such date.

Total Indebtedness Ratio means, as at any date, the ratio of (a) Total Indebtedness on such date to (b) EBITDA for the period of four fiscal quarters ending on or most recently ended prior to such date.

Tranche A Term Loan means a Loan made pursuant to Section 2.01(b) of the Existing Credit Agreement, which may be an ABR Loan and/or a Eurodollar Loan. The aggregate amount of the Lenders Tranche A Term Loans on the Third Restatement Effective Date is $100,000,000.

Tranche A Term Loan Lender means a Lender with an outstanding Tranche A Term Loan.

Tranche A-1 Availability Period means the period from and including the Third Restatement Effective Date to but excluding the date which is 60 days thereafter.

Tranche A-1 Term Loan means a Loan made pursuant to Section 2.01(b)(ii), which shall initially be an ABR Loan but thereafter may be an ABR Loan and/or a Eurodollar Loan.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Tranche A-1 Term Loan Commitment means, with respect to each Lender, the commitment, if any, of such Lender to make a Tranche A-1 Term Loan to the Borrower hereunder in a principal amount equal to the amount set forth under the heading Tranche A-1 Commitment opposite such Lenders name on Schedule 1.01(b) or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Tranche A-1 Term Loan Commitment, as applicable, as the same may be changed from time to time pursuant to the terms hereof. The aggregate amount of the Lenders Tranche A-1 Term Loan Commitments on the Third Restatement Effective Date is $225,000,000.

Tranche A-1 Term Loan Lender means a Lender with an outstanding Tranche A-1 Term Loan Commitment or an outstanding Tranche A-1 Term Loan.

Transactions means the execution, delivery and performance by each Obligor of this Agreement and the other Loan Documents to which such Obligor is intended to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

Type, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

Unrestricted Subsidiary means (a) any Subsidiary (which term, for purposes of this definition, shall refer only to a Subsidiary of Sinclair Television Group, Inc.) which at the time of determination shall be an Unrestricted Subsidiary (as designated by the board of directors of the Borrower, as provided below) and (b) any Subsidiary of an Unrestricted Subsidiary. After the Third Restatement Effective Date, the Board of Directors of the Borrower may designate any Subsidiary of the Borrower (including any newly acquired or newly formed

Subsidiary) to be an Unrestricted Subsidiary if all of the following conditions apply: (i) such Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Non-Recourse Indebtedness and has not guaranteed or otherwise provided credit support at the time of such designation for any Indebtedness of the Borrower or any of its Subsidiaries (other than an Unrestricted Subsidiary); (ii) any Investment in such Subsidiary made as a result of designating such Subsidiary an Unrestricted Subsidiary shall not violate the provisions of Section 7.07; (iii) any designation of a Subsidiary as an Unrestricted Subsidiary shall be treated as a Disposition of the assets of such Subsidiary and shall not violate the provisions of Section 7.05(c) or Section 7.09 and (iv) after giving pro forma effect to the designation of any Subsidiary as an Unrestricted Subsidiary, the Broadcast Cash Flow attributable to all assets of the Unrestricted Subsidiaries for the twelve month period ending on, or most recently ended prior to, the date of such designation shall not exceed 25% of the Broadcast Cash Flow for the Borrower and its Subsidiaries (including the Unrestricted Subsidiaries) for such period. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes hereof. Any such designation of an Unrestricted Subsidiary by the Board of Directors of the Borrower shall be evidenced to the Administrative Agent by filing with the Administrative Agent a board resolution giving effect to such designation and an officers certificate certifying that such designation complies with the foregoing conditions. The Board of Directors of the Borrower may remove the designation of Unrestricted Subsidiary by giving notice thereof to the Administrative Agent; provided that immediately after giving effect to the removal of such designation (x) no Default shall have occurred or be continuing and (y) said removal of such designation shall not violate the provisions of Section 7.04. The Unrestricted Subsidiaries (if any) as of the Third Restatement Effective Date are those entities specified in Schedule 1.01(d).

Wholly Owned Subsidiary has the meaning assigned to such term in the definition of Subsidiary in this Section.

Withdrawal Liability means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a Revolving Loan, a Swing Line Loan, a Term Loan or an Incremental Loan) or by Type (e.g., a

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Eurodollar Loan) or by Class and Type (e.g., an ABR Revolving Loan). Borrowings also may be classified and referred to by Class (e.g., a Revolving Borrowing) or by Type (e.g., a Eurodollar Borrowing) or by Class and Type (e.g., an ABR Revolving Borrowing).

SECTION 1.03. Call Letters for Stations. Each use of call letters for any Station herein shall refer to the Station with such call letters, and servicing the market, identified in Schedule 1.03.

SECTION 1.04. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words include, includes and including shall be deemed to be followed by the phrase without limitation. The phrase unreasonably withheld shall be deemed to be followed by the phrase or delayed. The word will shall be construed to have the same meaning and effect as the word shall. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Persons successors and assigns, (c) the words herein, hereof and hereunder, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words asset and property shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.05. Accounting Terms; GAAP.

(a) Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at the time of delivery thereof in the manner described in paragraph (b) of this Section) be prepared, in accordance with generally accepted accounting principles applied on a basis consistent with that used in the preparation of the latest financial statements furnished to the Lenders hereunder (which, prior to the first financial statements delivered under Section 6.01, shall mean the financial statements referred to in Section 4.04). All calculations made for the purposes of determining compliance with the terms of this Agreement shall (except as otherwise expressly provided herein) be made by application of generally accepted accounting principles applied on a basis consistent with that used in the preparation of the annual or quarterly financial statements furnished to the Lenders pursuant to Section 6.01 (or, prior to the first financial statements delivered under Section 6.01, used in the preparation of the financial statements referred to in Section 4.04) unless (i) the Borrower shall have objected to determining such compliance on such basis at the time of delivery of such financial statements or (ii) the Required Lenders shall so object in writing within 30 days after delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 6.01, shall mean the financial statements referred to in Section 4.04). Notwithstanding anything in this Section to the contrary, all income derived by any Subsidiary or property held for sale (and accounted for as such under GAAP) shall be included in calculating EBITDA for the period prior to the consummation of the sale thereof.

(b) The Borrower shall deliver to the Lenders at the same time as the delivery of any annual or quarterly financial statement under Section 6.01 a description in reasonable detail of any material variation between the application of accounting principles employed in the preparation of such statement and the application of accounting principles employed in the preparation of the next preceding annual or quarterly financial statements as to which no objection has been made in accordance with the last sentence of paragraph (a) of this Section, and reasonable estimates of the difference between such statements arising as a consequence thereof.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (c) To enable the ready and consistent determination of compliance with the covenants set forth in Article VII, the Borrower will not change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively.

(d) Except as expressly provided herein, (i) all calculations made with respect to any period during which an Acquisition is consummated shall be calculated on a pro forma basis as if such Acquisition had been consummated on the first day of such period and as if any Indebtedness incurred or assumed in connection with such Acquisition were outstanding throughout such period, using such reasonable estimates and pro forma adjustments effected in accordance with generally accepted accounting principles as the Borrower shall propose and the Administrative Agent or Required Lenders shall approve and (ii) all calculations made with respect to any period during which a Disposition is consummated shall be calculated on a pro forma basis as if any such Disposition had been consummated on the first day of such period and as if any prepayments actually made in connection therewith had occurred on the first day of such period using such reasonable estimates and pro forma adjustments effected in accordance with generally accepted accounting principles as the Borrower shall propose and the Administrative Agent shall approve; provided that if the Borrower proposes any such adjustments referred to in the foregoing clause (i) resulting from pro forma expense savings with respect to EBITDA or Broadcast Cash Flow as a result of an Acquisition (x) if the Administrative Agent or Required Lenders do not object to such proposal within 30 days after their receipt thereof, such proposal shall be deemed accepted and (y) if the Administrative Agent or the Required Lenders do object to such proposal within 30 days after their receipt thereof, EBITDA or Broadcast Cash Flow, as the case may be, for the relevant period shall be deemed for purposes hereof to be equal to the sum of EBITDA or Broadcast Cash Flow, as the case may be, for the Borrower and its Subsidiaries for such period plus the corresponding accounting items for the Person or assets that are the subject of such Acquisition. Notwithstanding the foregoing, if, prior to giving effect to any proposed pro forma adjustments arising from pro forma expense savings, a Default would occur as a result of an Acquisition, such adjustment shall require approval of the Required Lenders prior to the consummation of such Acquisition.

ARTICLE II

THE CREDITS

SECTION 2.01. The Credits.

(a) Revolving Loans. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in (i) such Lenders Revolving Exposure exceeding such Lenders Revolving Commitment or (ii) the total Revolving

Exposures exceeding the total Revolving Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. All Existing Revolving Loans shall remain outstanding as of the Third Restatement Effective Date (with the then existing Interest Periods, if any, therefor) and shall be Revolving Loans for all purposes of this Agreement and the other Loan Documents.

(b) Term Loans. (i) Subject to the terms and conditions set forth herein, all Existing Tranche A Term Loans as of the Third Restatement Effective Date (with the then existing Interest Periods, if any, therefor) shall remain outstanding and shall be the Tranche A Term Loans hereunder. Amounts prepaid in respect of Tranche A Term Loans may not be reborrowed.

(ii) Subject to the terms and conditions set forth herein (including Section 5.02), each Tranche A-1 Term Loan Lender agrees to make a single Tranche A-1 Term Loan to the Borrower, on any Business Day during the Tranche A-1 Availability Period, in a principal amount equal to such Lenders Tranche A-1 Term Loan Commitment. Amounts prepaid in respect of Tranche A-1 Term Loans may not be reborrowed.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (c) Incremental Loans. The Borrower and one or more of the Lenders (or any other Person which shall become a Lender pursuant to an assumption agreement in form and substance satisfactory to the Administrative Agent, for the purpose of providing an Incremental Loan Commitment) may, with the consent of the Administrative Agent, at any time and from time to time during the period from and including the Third Restatement Effective Date to but excluding December 31, 2012 agree that such Lender shall become an Incremental Lender with an Incremental Loan Commitment by executing and delivering to the Administrative Agent an Incremental Loan Amendment (in form reasonable satisfactory to the Administrative Agent), specifying (i) whether such Incremental Loan Commitment shall be comprised of a commitment to make revolving loans (each an Incremental Revolving Loan) or term loans (each an Incremental Term Loan), (ii) the Type and amount of such Incremental Loan Commitment of such Lender, (iii) with respect to an Incremental Revolving Commitment, the period of availability thereof and the Incremental Revolving Maturity Date therefor, (iv) with respect to an Incremental Term Loan Commitment, the date(s) on which such Incremental Term Loans shall be available to be made, the Incremental Term Loan Maturity Date therefor and the Incremental Term Loan Principal Payment Dates thereof (if any), (v) the Applicable Rate that will apply to Incremental Loans made under such Incremental Loan Commitment, and (vi) the rate of the commitment fee, if any, payable by the Borrower in respect of such Incremental Loan Commitment, and otherwise duly completed. Nothing in this Agreement shall be construed to obligate any Lender to provide any Incremental Loan Commitment. The Incremental Loans to be made pursuant to any such agreement between the Borrower and one or more Persons in response to any such request by the Borrower shall each be deemed to be a separate Series of Incremental Loans for all purposes of this Agreement, and in any case an Incremental Revolving Commitment and an Incremental Term Loan Commitment provided pursuant to the same Incremental Loan Amendment shall be deemed to be separate Series of Incremental Loan Commitments.

Anything herein to the contrary notwithstanding, the following additional provisions shall be applicable to the Incremental Loan Commitments and Incremental Loans:

(i) the minimum aggregate amount of Incremental Loan Commitments of any Series entered into pursuant to any such request (and, accordingly, the minimum aggregate principal amount of Incremental Loans of such Series) shall be $15,000,000,

(ii) the Incremental Revolving Maturity Date of the Incremental Revolving Commitments of any Series shall not be earlier than the Revolving Maturity Date (but the scheduled commitment termination date of such Incremental Revolving Commitments may be accelerated pursuant to Section 2.07(b)), and the Average Life to Maturity of the Incremental Revolving Loans shall be greater than the Average Life to Maturity of the Revolving Loans, and

(iii) the Incremental Term Loan Maturity Date of the Incremental Term Loans of any Series shall not be earlier than the Term Loan Maturity Date for the Tranche A-1 Term Loans (but the scheduled final maturity of such Incremental Term Loans may be accelerated pursuant to Section 2.08(b)), and the Average Life to Maturity of the Incremental Term Loans shall be greater than the Average Life to Maturity of the Term Loans (except that Incremental Term Loans shall be entitled to participate, to the extent provided in Section 2.09(b), in mandatory prepayments).

Following execution and delivery by the Borrower, one or more Incremental Lenders and the Administrative Agent as provided above of an Incremental Loan Amendment then, subject to the terms and conditions set forth herein:

(x) if such Incremental Loans are to be Incremental Revolving Loans, each Incremental Lender of such Series agrees to make Incremental Revolving Loans of such Series to the Borrower from time to time during the availability period for such Loans set forth in such Incremental Loan Amendment, in an aggregate principal amount that will not result in such Lenders Incremental Revolving Loans of such Series exceeding such Lenders Incremental Revolving Commitment of such Series; within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow Incremental Revolving Loans of such Series; and

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (y) if such Incremental Loans are to be Incremental Term Loans, each Incremental Lender of such Series agrees to make Incremental Term Loans of such Series to the Borrower from time to time during the availability period for such Loans set forth in such Incremental Loan Amendment, in a principal amount up to but not exceeding such Lenders Incremental Term Loan Commitment of such Series; amounts prepaid in respect of Incremental Term Loans may not be reborrowed.

Proceeds of Incremental Loans shall be available only for any use permitted under the applicable provisions of Section 6.08.

(d) Swing Line Loans. Subject to the terms and conditions set forth herein, the Swing Line Lender agrees to make Swing Line Loans to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swing Line Loans exceeding

$10,000,000 or (ii) the total Revolving Exposures exceeding the total Revolving Commitments; provided that the Swing Line Lender shall not be required to make a Swing Line Loan to refinance an outstanding Swing Line Loan. Each Swing Line Loan shall be an ABR Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swing Line Loans.

To request a Swing Line Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 12:00 noon, New York City time, on the day of a proposed Swing Line Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swing Line Loan. The Administrative Agent will promptly advise the Swing Line Lender of any such notice received from the Borrower. The Swing Line Lender shall make each Swing Line Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swing Line Lender (or, in the case of a Swing Line Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.04(f), by remittance to the Issuing Lender) by 3:00 p.m., New York City time, on the requested date of such Swing Line Loan.

The Swing Line Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swing Line Loans outstanding. Such notice to the Administrative Agent shall specify the aggregate amount of Swing Line Loans in which Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lenders Applicable Percentage of such Swing Line Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above in this paragraph, to pay to the Administrative Agent, for account of the Swing Line Lender, such Lenders Applicable Percentage of such Swing Line Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swing Line Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swing Line Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swing Line Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swing Line Loan shall be made to the Administrative Agent and not to the Swing Line Lender. Any amounts received by the Swing Line Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swing Line Loan after receipt by the Swing Line Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swing Line Lender, as their interests may appear. The purchase of participations in a Swing Line Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

SECTION 2.02. Loans and Borrowings.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) Obligations of Lenders. Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lenders failure to make Loans as required.

(b) Type of Loans. Subject to Section 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) Minimum Amounts; Limitation on Number of Borrowings. At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount of $1,000,000 or a larger multiple of $100,000. At the time that each ABR Borrowing (including each Swing Line Borrowing) is made, such Borrowing shall be in an aggregate amount equal to $1,000,000 or a larger multiple of $100,000; provided that an ABR Borrowing (including a Swing Line Borrowing) may be in an aggregate amount that is equal to the entire unused balance of the total Commitments of the applicable Class or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(f). Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of ten Eurodollar Borrowings outstanding.

SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing (other than a Swing Line Borrowing), not later than 10:00 a.m., New York City time, one Business Day before the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) whether the requested Borrowing is to be a Revolving Borrowing or Term Borrowing;

(ii) the aggregate amount of the requested Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term Interest Period; and

(vi) the location and number of the Borrowers account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing (other than a Swing Line Borrowing). If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one months duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lenders Loan to be made as part of the requested Borrowing.

SECTION 2.04. Letters of Credit.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) General. Subject to the terms and conditions set forth herein, in addition to the Loans provided for in Section 2.01, the Borrower may request the Issuing Lender to issue, at any time and from time to time during the Revolving Availability Period, Letters of Credit for its own account in such form as is acceptable to the Issuing Lender in its reasonable determination. Letters of Credit issued hereunder shall constitute utilization of the Revolving Commitments. The letters of credit issued by JPMCB and outstanding under the Existing Credit Agreement on the Third Restatement Effective Date (the Existing Letters of Credit) shall be deemed to be Letters of Credit for all purposes of this Agreement and the other Loan Documents.

(b) Notice of Issuance, Amendment, Renewal or Extension. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Lender) to the Issuing Lender and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (d) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Lender, the Borrower also shall submit a letter of credit application on the Issuing Lenders standard form in connection with any request for a Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(c) Limitations on Amounts. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the aggregate LC Exposure of the Issuing Lender (determined for these purposes without giving effect to the participations therein of the Revolving Lenders pursuant to paragraph (e) of this Section) shall not exceed $25,000,000 and (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments.

(d) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date twelve months after the date of issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, twelve months after the then-current expiration date of such Letter of Credit, so long as such renewal or extension occurs within three months of such then-current expiration date) and (ii) the date that is five Business Days prior to the Revolving Maturity Date, provided that, notwithstanding clause (i) above (but subject to clause (ii) above), a Letter of Credit may have an expiration date of longer than twelve months if it shall be requested by the Borrower to support an obligation having a corresponding term (provided that the Issuing Lender may require that such Letter of Credit include customary early termination rights (which shall in any event permit the respective beneficiary thereof to draw the full amount of such Letter of Credit upon receipt of notice of termination from the Issuing Lender)).

(e) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) by the Issuing Lender, and without any further action on the part of the Issuing Lender or the Lenders, the Issuing Lender hereby grants to each Lender, and each Lender hereby acquires from the Issuing Lender, a participation in such Letter of Credit equal to such Lenders Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit on the terms provided herein or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Lender, such Lenders Applicable Percentage of each LC Disbursement made by the Issuing Lender promptly upon the request of the Issuing Lender at any time from the time of such LC Disbursement until such LC Disbursement is reimbursed by the Borrower or at any time after any reimbursement payment is required to be refunded to the Borrower for

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any reason. Each such payment shall be made in the same manner as provided in Section 2.08 with respect to Loans made by such Lender (and Section 2.08 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to paragraph (f) of this

Section, the Administrative Agent shall distribute such payment to the Issuing Lender or, to the extent that the Lenders have made payments pursuant to this paragraph to reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Lender for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Reimbursement. If the Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse the Issuing Lender in respect of such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 1:00 p.m., New York City time, on (i) the Business Day that the Borrower receives notice of such LC Disbursement, if such notice is received prior to 10:00 a.m., New York City time, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time, provided that, if such LC Disbursement is not less than $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Revolving Borrowing or a Swing Line Loan in an equivalent amount and, to the extent so financed, the Borrowers obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swing Line Loan.

If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lenders Applicable Percentage thereof.

(g) Obligations Absolute. The Borrowers obligation to reimburse LC Disbursements as provided in paragraph (f) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Lender under a Letter of Credit against presentation of a draft or other document that does not comply strictly with the terms of such Letter of Credit, and (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrowers obligations hereunder.

Neither the Administrative Agent, the Lenders nor the Issuing Lender, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit by the Issuing Lender or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Lender; provided that the foregoing shall not be construed to excuse the Issuing Lender from liability to the Borrower to the extent of any direct damages (as opposed to consequential

damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Lenders gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that:

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) the Issuing Lender may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

(ii) the Issuing Lender shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

(iii) this sentence shall establish the standard of care to be exercised by the Issuing Lender when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

(h) Disbursement Procedures. The Issuing Lender shall, within a reasonable time following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Lender shall promptly after such examination notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Lender has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Lender and the Lenders with respect to any such LC Disbursement.

(i) Interim Interest. If the Issuing Lender shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (f) of this Section, then Section 2.11(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Lender, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (f) of this Section to reimburse the Issuing Lender shall be for the account of such Lender to the extent of such payment.

(j) Replacement of the Issuing Lender. The Issuing Lender may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Lender and the successor Issuing Lender. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Lender. At the time any such replacement shall

become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Lender pursuant to Section 2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Lender shall have all the rights and obligations of the replaced Issuing Lender under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term Issuing Lender shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require. After the replacement of an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(k) Cash Collateralization. If an Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing more than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall immediately deposit into a Collateral Account of the Borrower an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon and any accrued and unpaid fees under Section 2.10(b); provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (g) or (h) of Article VIII. Such deposit shall be held by the Administrative Agent in such Collateral Account as collateral in the first instance for the LC Exposure under this Agreement and thereafter for the payment of the Secured Obligations under and as defined in the Security Agreement, and for these purposes the Borrower

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document hereby grants a security interest to the Administrative Agent for the benefit of the Lenders in such Collateral Account and in any financial assets (as defined in the Uniform Commercial Code) or other property held therein.

(l) Deliveries. Promptly following the end of each calendar quarter, the Issuing Lender shall deliver (through the Administrative Agent) to each Revolving Lender and the Borrower a notice describing the aggregate amount of all Letters of Credit outstanding at the end of such quarter. Upon the request of any Revolving Lender from time to time, the Issuing Lender shall deliver any other information reasonably requested by such Revolving Lender with respect to each Letter of Credit then outstanding.

SECTION 2.05. Funding of Borrowings.

(a) Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders, provided that Swing Line Loans shall be made as provided in Section 2.01(d). The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Borrowings made to finance the reimbursement of an LC Disbursement as provided in Section 2.04(f) shall be remitted by the Administrative Agent to the Issuing Lender.

(b) Presumption by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lenders share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lenders Loan included in such Borrowing.

SECTION 2.06. Interest Elections.

(a) Elections by the Borrower for Borrowing. Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swing Line Borrowings, which may not be converted or continued.

(b) Notice of Elections. To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c) Information in Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) of this paragraph shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term Interest Period.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one months duration.

(d) Notice by the Administrative Agent to Lenders. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lenders portion of each resulting Borrowing.

(e) Failure to Elect; Events of Default. If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing (other than a Swing Line Borrowing). Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing (other than a Swing Line Borrowing) at the end of the Interest Period applicable thereto.

(f) Limitations on Lengths of Interest Periods. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert to or continue as a Eurodollar Borrowing: (i) any Revolving Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date; (ii) any Term Borrowing if the Interest Period requested with respect thereto would end after the Term Loan Maturity Date; (iii) any Term Loan if the Interest Period therefor would commence before and end after any Term Loan Principal Payment Date unless, after giving effect thereto, the aggregate principal amount of the Term Loans having Interest Periods that end after such Term Loan Principal Payment Date shall be equal to or less than the aggregate principal amount of the Term Loans permitted to be outstanding after giving effect to the payments of principal required to be made on such Term Loan Principal Payment Date; (iv) any Incremental Revolving Borrowing of any Series if the Interest Period requested with respect thereto would end after the Incremental Revolving Maturity Date for such Series; (v) any Incremental Term Borrowing of any Series if the Interest Period requested with respect thereto would end after the Incremental Term Loan Maturity Date for such Series; or (vi) any Incremental Term Loan of any Series if the Interest Period therefor would commence before and end after any Incremental Term Loan Principal

Payment Date for such Series unless, after giving effect thereto, the aggregate principal amount of the Incremental Term Loans of such Series having Interest Periods that end after such Incremental Term Loan Principal Payment Date shall be equal to or less than the aggregate principal amount of the Incremental Term Loans of such Series permitted to be outstanding after giving effect to the payments of principal required to be made on such Incremental Term Loan Principal Payment Date.

SECTION 2.07. Termination and Reduction of the Commitments.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) Scheduled Termination. Unless previously terminated, (i) the Tranche A-1 Term Loan Commitments shall terminate at 5:00 p.m., New York City time, on the earlier of the date of the making of the Tranche A-1 Term Loans and the last day of the Tranche A-1 Availability Period, (ii) the Revolving Commitments shall terminate on the Revolving Maturity Date and (iii) each Incremental Loan Commitment of any Series shall terminate on the applicable commitment termination date for such Series specified in the Incremental Loan Amendment for such Series.

(b) Test Date Reductions. Notwithstanding anything to the contrary in this Agreement, if on any date (the Test Date) the maturity date for any of the then outstanding Indebtedness evidenced or provided by the Existing Senior Subordinated Note Indentures, the Additional Subordinated Notes or the Senior Notes shall fall within six months of the Test Date, then all Commitments shall automatically reduce to zero on the Test Date.

(c) Voluntary Termination or Reduction. The Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class pursuant to this Section shall be in an amount that is $5,000,000 or a larger multiple of $1,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.09, the total Revolving Exposures would exceed the total Revolving Commitments. The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments of any Class under this paragraph (c) at least two Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(d) Effect of Termination or Reduction. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

SECTION 2.08. Repayment of Loans; Evidence of Debt.

(a) Repayment. The Borrower hereby unconditionally promises to pay the Loans as follows:

(i) to the Administrative Agent for the account of each Revolving Lender the outstanding principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date;

(ii) to the Administrative Agent for the account of each Tranche A Term Loan Lender the outstanding principal amount of the Tranche A Term Loan of such Lender on each Term Loan Principal Payment Date for the Tranche A Term Loans set forth below in an aggregate principal amount equal to the percentage of the aggregate principal amount of the Tranche A Term Loans outstanding as of the Third Restatement Effective Date set forth opposite such Term Loan Principal Payment Date (subject to adjustment pursuant to paragraph (b) of this Section):

Term Loan Principal Payment Date Falling on or Nearest to: Amounts (%): March 31, 2007 1.25 June 30, 2007 1.25 September 30, 2007 1.25 December 31, 2007 1.25 March 31, 2008 1.25 June 30, 2008 1.25 September 30, 2008 1.25

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document December 31, 2008 1.25 March 31, 2009 3.75 June 30, 2009 3.75 September 30, 2009 3.75 December 31, 2009 3.75 March 31, 2010 3.75 June 30, 2010 3.75 September 30, 2010 3.75 December 31, 2010 3.75 March 31, 2011 15.00 June 30, 2011 15.00 September 30, 2011 15.00 December 31, 2011 15.00

(iii) to the Administrative Agent for the account of each Tranche A-1 Term Loan Lender the outstanding principal amount of the Tranche A-1 Term Loan of such Lender on each Term Loan Principal Payment Date for the Tranche A-1 Term Loans set forth below in an aggregate principal amount equal to the percentage of the aggregate original principal amount of the Tranche A-1 Term Loans set forth opposite such Term Loan Principal Payment Date (subject to adjustment pursuant to paragraph (b) of this Section):

Term Loan Principal Payment Date Falling on or Nearest to: Amounts (%): March 31, 2007 0 June 30, 2007 0 September 30, 2007 0 December 31, 2007 0 March 31, 2008 0 June 30, 2008 0 September 30, 2008 0 December 31, 2008 0 March 31, 2009 1.25 June 30, 2009 1.25 September 30, 2009 1.25 December 31, 2009 1.25 March 31, 2010 2.50 June 30, 2010 2.50 September 30, 2010 2.50 December 31, 2010 2.50 March 31, 2011 3.75 June 30, 2011 3.75 September 30, 2011 3.75 December 31, 2011 3.75 March 31, 2012 17.50 June 30, 2012 17.50 September 30, 2012 17.50 December 31, 2012 17.50

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iv) to the Administrative Agent for the account of each Incremental Lender of any Series, the outstanding principal amount of each Incremental Loan of such Lender on the Incremental Loan Principal Payment Dates for such Series and in such amounts as shall be agreed upon pursuant to Section 2.01(c) at the time the Incremental Loan Commitments of such Series are established (subject to adjustment pursuant to paragraph (b) of this Section); and

(v) to the Swing Line Lender the then outstanding principal amount of each Swing Line Loan on the earlier of the Revolving Maturity Date and the first date after such Swing Line Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swing Line Loan is made, provided that on each date a Revolving Borrowing is made, the Borrower shall repay all Swing Line Loans then outstanding.

(b) Adjustment of Amortization Schedule. (i) Notwithstanding anything to the contrary in this Agreement, if on any date (the Test Date) the maturity date for any of the then outstanding Indebtedness evidenced or provided by the Existing Senior Subordinated Note

Indentures, the Additional Subordinated Notes or the Senior Notes shall fall within six months of the Test Date, then the Revolving Maturity Date, the Term Loan Maturity Date, each Incremental Revolving Maturity Date and each Incremental Term Loan Maturity Date shall automatically be accelerated to the Test Date and all of the Loans shall thereupon be due and payable on the Test Date, together with all interest and fees accrued thereon or in respect thereof and any amounts payable pursuant hereto, including Sections 2.13, 2.14 and 2.15.

(ii) Any prepayment of a Term Loan or an Incremental Term Loan shall be applied ratably to the respective remaining scheduled installments thereof. To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date. To the extent not previously paid, all Incremental Term Loans of any Series shall be due and payable on the Incremental Term Loan Maturity Date for such Series.

(c) Manner of Payment. Prior to any repayment or prepayment of any Borrowings of either Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be paid and shall notify the Administrative Agent (and, in the case of repayment or prepayment of a Swing Line Loan, the Swing Line Lender) by telephone (confirmed by telecopy) of such selection not later than 10:00 a.m., New York City time, three Business Days before the scheduled date of such repayment; provided that each repayment of Borrowings of either Class shall be applied to repay any outstanding ABR Borrowings of such Class before any other Borrowings of such Class. If the Borrower fails to make a timely selection of the Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay any outstanding ABR Borrowings of the applicable Class and, second, to other Borrowings of such Class in the order of the remaining duration of their respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid first). Each payment of a Borrowing shall be applied ratably to the Loans included in such Borrowing.

(d) Maintenance of Loan Accounts by Lenders. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(e) Maintenance of Loan Accounts by the Administrative Agent. The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lenders share thereof.

(f) Effect of Loan Accounts. The entries made in the accounts maintained pursuant to paragraph (d) or (e) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(g) Promissory Notes. Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.09. Prepayment of Loans.

(a) Optional Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section. Any prepayment of the Term Loans or the Incremental Term Loans pursuant to this paragraph shall be applied ratably to the then outstanding Term Loans and Incremental Term Loans and, in each case, ratably to the respective remaining installments thereof. Any partial prepayment shall be in an amount that is $1,000,000 or a larger multiple of $100,000.

(b) Mandatory Prepayments. The Borrower will prepay the Term Loans and the Incremental Term Loans, as follows:

(i) Sale of Assets. If the Borrower or any of its Subsidiaries shall receive Net Available Proceeds from any Disposition (excluding any Disposition permitted by clauses (a), (b), and (only with respect to exchange of assets) (c) of Section 7.05) (the Current Disposition), which taken together with the Net Available Proceeds for all prior such Dispositions as to which a prepayment has not yet been made under this paragraph, shall exceed $5,000,000 in the aggregate (such excess amount, the Excess Disposition Proceeds), then (unless a Reinvestment Notice shall have been delivered in respect thereof) such Excess Disposition Proceeds shall be applied within five Business Days following such receipt toward the prepayment of the Loans as set forth in paragraph (b)(ii) of this Section. Notwithstanding the foregoing, on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward the prepayment of the Loans as set forth in said paragraph (b)(ii).

(ii) Application. Each such prepayment pursuant to this paragraph (b) shall be applied ratably to the then outstanding Term Loans and Incremental Term Loans and, in each case, ratably to the respective remaining installments thereof.

(c) Notices, Etc. The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any optional prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 10:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 10:00 a.m., New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment;

provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.07, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.07. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the relevant Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.11 and shall be made in the manner specified in Section 2.08(c).

SECTION 2.10. Fees.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) Commitment Fee. The Borrower agrees to pay to the Administrative Agent (i) for the account of each Revolving Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily unused amount of the Revolving Commitment of such Lender during the period from and including the Third Restatement Effective Date to but excluding the earlier of the date such Revolving Commitment terminates and the Revolving Maturity Date and (ii) for the account of each Tranche A-1 Term Loan Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily unused amount of the Tranche A-1 Term Loan Commitment of such Lender during the period from and including the Third Restatement Effective Date to but excluding the date such Tranche A-1 Term Loan Commitment terminates. Accrued commitment fees shall be payable in arrears on each Quarterly Date and, in the case of the commitment fee in respect of the Revolving Commitment, the earlier of the date the Revolving Commitment terminates and the Revolving Maturity Date, commencing on the first such date to occur after the date hereof; provided that all accrued and unpaid commitment fees in respect of the Revolving Commitments under (and as defined in) the Existing Credit Agreement as of the Third Restatement Effective Date shall be payable on the first Quarterly Date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees, the Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans, LC Exposure of such Lender and, with respect to the outstanding Swing Line Loans (if any), the aggregate amount of participations therein that have been funded by the Lenders in accordance with the last paragraph of Section 2.01(d).

(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at a rate per annum equal to the Applicable Rate applicable to interest on Eurodollar Revolving Loans on the average daily amount of such Lenders LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Third Restatement Effective Date to but excluding the later of the date on which such Lenders Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Lender a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Borrower and the Issuing Lender on the average daily amount of the LC Exposure

(excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Third Restatement Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Lenders standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including each Quarterly Date shall be payable on the third Business Day following such Quarterly Date, commencing on the first such date to occur after the Third Restatement Effective Date; provided that (i) all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand and (ii) all accrued and unpaid participation and fronting fees in respect of the Existing Letters of Credit as of the Third Restatement Effective Date shall be payable on the third Business Day following the first Quarterly Date to occur after the date hereof. Any other fees payable to the Issuing Lender pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d) Payment of Fees. All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Lender, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.

SECTION 2.11. Interest.

(a) ABR Loans. The Loans comprising each ABR Borrowing (including each Swing Line Loan) shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Rate.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c) Default Interest. Notwithstanding the foregoing, during any period that a Post-Default Condition exists (whether or not the same is thereafter cured), the Borrower hereby promises to pay to the Administrative Agent for account of each Lender interest at the applicable Post-Default Rate on any principal of any Loan made by such Lender (whether or not then due), on any reimbursement obligation in respect of an LC Disbursement owing to such Lender and on any other amount then due and payable by the Borrower hereunder.

(d) Payment of Interest. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans and the Incremental Revolving Loans, upon termination of the Revolving Commitments and the

Incremental Revolving Commitments, respectively; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of (x) an ABR Revolving Loan prior to the Revolving Maturity Date or (y) an ABR Incremental Revolving Loan prior to the applicable Incremental Revolving Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Borrowing prior to the end of the current Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

(e) Computation. All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

(b) if such Borrowing is of a particular Class of Loans, the Administrative Agent is advised by the Required Lenders of such Class that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing (other than a Swing Line Borrowing).

SECTION 2.13. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Lender; or

(ii) impose on any Lender or the Issuing Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lenders of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Lender of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or the Issuing Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lenders or the Issuing Lenders capital or on the capital of such Lenders or the Issuing Lenders holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lenders or the Issuing Lenders holding company could have achieved but for such Change in Law (taking into consideration such Lenders or the Issuing Lenders policies and the policies of such Lenders or the Issuing Lenders holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lenders or the Issuing Lenders holding company for any such reduction suffered.

(c) Certificates from Lenders. A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lenders or the Issuing Lenders right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs or reductions incurred more than 45 days prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lenders or the Issuing Lenders intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 45-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.14. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under Section 2.09(c) and is revoked in accordance herewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.17, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender would pay for a deposit equal to the principal amount of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document continue, the duration of the Interest Period that would have resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount of interest that such Lender would earn on such principal amount for such period if such Lender were to invest such principal amount for such period at the interest rate that would be bid by such Lender (or an Affiliate of such Lender) for dollar deposits from other banks in the eurodollar market at the commencement of such period. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.15. Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) Payment of Other Taxes by the Borrower. In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent, such Lender or the Issuing Lender, as the case may

be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Foreign Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) Payments by the Obligors. Each Obligor shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or under Section 2.13, 2.14 or 2.15, or otherwise) or under any other Loan Document (except to the extent otherwise provided therein) prior to 1:00 p.m., New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except as otherwise expressly provided in the relevant Loan Document, and except payments to be made directly to the Issuing Lender or the Swing Line Lender as expressly provided herein and except that payments pursuant to Sections 2.13, 2.14, 2.15 and 10.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder or under any other Loan Document (except to the extent otherwise provided therein) shall be made in dollars.

(b) Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among the parties entitled

thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, to pay principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) Pro Rata Treatment. Except to the extent otherwise provided herein: (i) each Borrowing of a particular Class shall be made from the relevant Lenders, each payment of commitment fee under Section 2.10 shall be made for account of the relevant Lenders, and each termination or reduction of the amount of the Commitments of a particular Class under Section 2.07 shall be applied to the respective Commitments of such Class of the relevant Lenders, pro rata according to the amounts of their respective Commitments of such Class; (ii) each Borrowing of any Class shall be allocated pro rata among the relevant Lenders according to the amounts of their respective Commitments of such Class (in the case of the making of Loans) or their respective Loans of such Class (in the case of conversions and continuations of Loans); (iii) each payment or prepayment of principal of Revolving Loans, Term Loans and Incremental Loans by the Borrower shall be made for account of the relevant Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans of such Class held by them; and (iv) each payment of interest on Revolving Loans, Term Loans and Incremental Loans by the Borrower shall be made for account of the relevant Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders.

(d) Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or Swing Line Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and Swing Line Loans and accrued interest thereon then due than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and Swing Line Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements and Swing Line Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Obligor pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements or Swing Line Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Obligor consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Obligor rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Obligor in the amount of such participation.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) Presumptions of Payment. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate.

(f) Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(e) or (f), 2.05(b) or 2.16(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent hereunder for the account of such Lender to satisfy such Lenders obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.17. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, or if any Lender does not agree to any request by the Borrower for a consent, approval, amendment or waiver hereunder that requires the consent or approval of all of the Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Lender and the Swing Line Lender), which consent shall not be unreasonably withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and

participations in LC Disbursements and Swing Line Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

GUARANTEE

SECTION 3.01. The Guarantee. The Guarantors hereby jointly and severally guarantee to each Lender and the Administrative Agent and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Loans made by the Lenders to the Borrower, all reimbursement obligations of the Borrower in respect of any LC Disbursement and all other amounts from time to time owing to the Lenders or the Administrative Agent by the Borrower under this Agreement and by any Obligor (other than the respective Guarantor) under any of the other Loan Documents, and all obligations of the Borrower or any of its Subsidiaries to any of the Lenders and their respective Affiliates in respect of any Hedging Agreement, in each case strictly in accordance with the terms thereof and including all interest and expenses accrued or incurred subsequent to the commencement of any bankruptcy or insolvency proceeding with respect to the Borrower, whether or not such interest or expenses are allowed as a claim in such proceeding (such obligations being herein collectively called the Guaranteed Obligations). The Guarantors hereby further jointly and severally agree that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

SECTION 3.02. Obligations Unconditional. The obligations of the Guarantors under Section 3.01 are absolute and unconditional, and joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of the Borrower under this Agreement or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section that the obligations of the Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and several, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the

occurrence of any one or more of the following shall not alter or impair the liability of any of the Guarantors hereunder, which shall remain absolute and unconditional as described above:

(i) at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(ii) any of the acts mentioned in any of the provisions of this Agreement or any other agreement or instrument referred to herein shall be done or omitted;

(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement or any other agreement or instrument referred to herein shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or

(iv) any lien or security interest granted to, or in favor of, the Administrative Agent or any Lender or Lenders as security for any of the Guaranteed Obligations shall fail to be perfected.

The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against the Borrower under this Agreement or any other agreement or instrument referred to herein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SECTION 3.03. Reinstatement. The obligations of the Guarantors under this Article shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the Guarantors jointly and severally agree that they will indemnify the Administrative Agent and each Lender on demand for all reasonable costs and expenses (including fees of counsel) incurred by the Administrative Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

SECTION 3.04. Subrogation. The Guarantors hereby jointly and severally agree that until the payment and satisfaction in full of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement they shall not exercise any right or remedy arising by reason of any performance by them of their guarantee in Section 3.01, whether by subrogation or otherwise, against the Borrower or any other guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.

SECTION 3.05. Remedies. The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement may be declared to be forthwith due and payable as provided in Article VIII (and shall be deemed to have become automatically due and payable in the circumstances provided in Article VIII) for purposes of Section 3.01 notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 3.01.

SECTION 3.06. Instrument for the Payment of Money. Each Guarantor hereby acknowledges that the guarantee in this Article constitutes an instrument for the payment of money, and consents and agrees that any Lender or the Administrative Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring motion-action under New York CPLR Section 3213.

SECTION 3.07. Continuing Guarantee. The guarantee in this Article is a continuing guarantee, and shall apply to all Guaranteed Obligations whenever arising.

SECTION 3.08. Rights of Contribution. The Subsidiary Guarantors hereby agree, as between themselves, that if any Subsidiary Guarantor shall become an Excess Funding Guarantor (as defined below) by reason of the payment by such Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the next sentence), pay to such Excess Funding Guarantor an amount equal to such Subsidiary Guarantors Pro Rata Share (as defined below and determined, for this purpose, without reference to the properties, debts and liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of such Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor to any Excess Funding Guarantor under this Section shall be subordinate and subject in right of payment to the prior payment in full of the obligations of such Subsidiary Guarantor under the other provisions of this Article and such Excess Funding Guarantor shall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations.

For purposes of this Section, (i) Excess Funding Guarantor means, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii) Excess Payment means, in respect of any Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and (iii) Pro Rata Share means, for any Subsidiary Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the aggregate present fair saleable value of all properties of such Subsidiary Guarantor (excluding any shares of stock of any other Subsidiary Guarantor) exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such Subsidiary Guarantor hereunder and any obligations of any other Subsidiary

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Guarantor that have been Guaranteed by such Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable value of all properties of all of

the Subsidiary Guarantors exceeds the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of the Borrower and the Subsidiary Guarantors hereunder and under the other Loan Documents) of all of the Subsidiary Guarantors, determined (A) with respect to any Subsidiary Guarantor that is a party hereto on the Third Restatement Effective Date, as of the Third Restatement Effective Date, and (B) with respect to any other Subsidiary Guarantor, as of the date such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.

SECTION 3.09. General Limitation on Guarantee Obligations. In any action or proceeding involving any state corporate law, or any state or Federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Subsidiary Guarantor under Section 3.01 would otherwise, taking into account the provisions of Section 3.08, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 3.01, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by such Subsidiary Guarantor, any Lender, the Administrative Agent or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Each of the Borrower (as to itself and its Subsidiaries only) and the Holding Company represents and warrants to the Lenders that:

SECTION 4.01. Organization; Powers. Except as set forth in Schedule 4.01, each of the Holding Company, the Borrower and the Borrowers Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 4.02. Authorization; Enforceability. The Transactions are within each Obligors corporate powers and have been duly authorized by all necessary corporate and, if required, by all necessary shareholder or member action. This Agreement has been duly executed and delivered by each Obligor and constitutes, and each of the other Loan Documents to which it is a party when executed and delivered by such Obligor will constitute, a legal, valid and binding obligation of such Obligor, enforceable against each Obligor in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

SECTION 4.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except for (i) such as have been obtained or made and are in full force and effect, (ii) filings in respect of the Liens created pursuant to the Security Agreement, (iii) the filing with the FCC of certain of

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Loan Documents as required by Section 73.3613 of the FCCs rules and (iv) the approval by the FCC of the acquisition of any Broadcast License, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Holding Company, the Borrower or any of the Borrowers Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Holding Company, the Borrower or any of the Borrowers Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) except for the Liens created pursuant to the Security Agreement, will not result in the creation or imposition of any Lien on any asset of the Holding Company, the Borrower or any of the Borrowers Subsidiaries.

SECTION 4.04. Financial Condition; Material Adverse Change.

(a) Financial Condition. The Borrower has heretofore furnished to the Lenders (i) its consolidated balance sheets and statements of income, stockholders equity and cash flows as of and for the fiscal years ended December 31, 2004 and December 31, 2005, reported on by Ernst & Young LLP, independent public accountants and (ii) its unaudited consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal quarter ended September 30, 2006, certified by a Financial Officer of the Borrower. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its Subsidiaries as of such respective dates and for such respective fiscal years or fiscal quarter, as the case may be, on a consolidated basis in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the financial statements referred to in clause (ii) of the first sentence of this paragraph.

The Holding Company has heretofore furnished to the Lenders (i) its consolidated balance sheets and statements of income, stockholders equity and cash flows as of and for the fiscal years ended December 31, 2004 and December 31, 2005, reported on by Ernst & Young LLP, independent public accountants and (ii) its unaudited consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal quarter ended September 30, 2006, certified by a Financial Officer of the Holding Company. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Holding Company and its Subsidiaries as of such respective dates and for such respective fiscal years or fiscal quarter, as the case may be, on a consolidated basis in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the financial statements referred to in clause (ii) of the first sentence of this paragraph.

(b) No Material Adverse Change. Since December 31, 2005, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.

SECTION 4.05. Properties.

(a) Property Generally. Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject only to Liens permitted by Section 7.02 and except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b) Intellectual Property. Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 4.06. Litigation and Environmental Matters.

(a) Actions, Suits and Proceedings. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Borrower, threatened against or affecting the Holding Company, the Borrower or any of the Borrowers Subsidiaries (including the Unrestricted Subsidiaries) (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than any such action, suit or proceeding disclosed in Schedule 4.06(a)) or (ii) that involve this Agreement or the Transactions.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Environmental Matters. Except for the matters disclosed in Schedule 4.06(b) and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (including Unrestricted Subsidiaries) (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

(c) Disclosed Matters. Since the date hereof, there has been no change in the status of the matters disclosed in Schedules 4.06(a) and 4.06(b) that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

SECTION 4.07. Compliance with Laws and Agreements. Each of the Holding Company, the Borrower and the Borrowers Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

SECTION 4.08. Investment Company Status. None of the Holding Company, the Borrower or any of the Borrowers Subsidiaries is an investment company as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 4.09. Taxes. Each of the Holding Company, the Borrower and the Borrowers Subsidiaries has timely filed or caused to be filed all United States Federal and all other material Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 4.10. ERISA. The Holding Company, the Borrower and the ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or any Plan or Multiemployer Plan (other than to make contributions in the ordinary course of business).

SECTION 4.11. Disclosure. The Obligors have disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Obligors to the Lender in connection with the negotiation of this Agreement and the other Loan Documents (including the information set forth in the Confidential Information Memorandum) or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower and the Holding Company represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

SECTION 4.12. Use of Credit. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock.

SECTION 4.13. Indebtedness and Liens.

(a) Material Indebtedness. Schedule 4.13(a) is a complete and correct list of each credit agreement, loan agreement, indenture, purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Borrower or any of its Subsidiaries outstanding on the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document date hereof the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $5,000,000, and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement is correctly described in Schedule 4.13(a).

(b) Liens. Schedule 4.13(b) is a complete and correct list of each Lien securing Indebtedness of any Person outstanding on the date hereof the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $1,000,000 and covering any property of the Borrower or any of its Subsidiaries, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien is correctly described in Schedule 4.13(b).

SECTION 4.14. Subsidiaries and Investments.

(a) Subsidiaries. Set forth in Schedule 4.14(a) is a complete and correct list of all of the Subsidiaries of the Borrower as of the date hereof, together with, for each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary and (iii) the nature of the ownership interests held by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests. Each of the Borrower and its Subsidiaries owns, free and clear of Liens (other than Liens created pursuant to the Security Agreement), and has the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in Schedule 4.14(a), all of the issued and outstanding Capital Stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable, and there are no outstanding Equity Rights with respect to such Person.

(b) Investments. Set forth in Schedule 4.14(b) is a complete and correct list of all Investments (other than Investments disclosed in Schedule 4.14(a) and other than Investments of the types referred to in clauses (b), (c), (e) and (f) of Section 7.07) in an amount exceeding $1,000,000 held by the Borrower or any of its Subsidiaries in any Person on the date hereof and, for each such Investment, (x) the identity of the Person or Persons holding such Investment and (y) the nature of such Investment. Except as disclosed in Schedule 4.14(b), each of the Borrower and its Subsidiaries owns, free and clear of all Liens (other than Liens created pursuant to the Security Agreement), all such Investments.

(c) Subsidiaries Not Subject to Certain Restrictions. None of the Subsidiaries of the Borrower is, on the date hereof, subject to any indenture, agreement, instrument or other arrangement of the type prohibited under Section 7.10.

SECTION 4.15. Broadcast Licenses.

(a) Schedule 4.15 accurately and completely lists, as of the date hereof, for each Owned Station, all Broadcast Licenses granted or assigned to the Borrower or any of its Subsidiaries, or under which the Borrower and its Subsidiaries have the right to operate such Owned Station. The Broadcast Licenses listed in Schedule 4.15 with respect to any Owned Station include all material authorizations, licenses and permits issued by the FCC that are required or necessary for the operation of such Owned Station, and the conduct of the business of the Borrower and its Subsidiaries with respect to such Owned Station, as now conducted or

proposed to be conducted. The Broadcast Licenses listed in Schedule 4.15 are issued in the name of the respective License Subsidiary for the Owned Station being operated under authority of such Broadcast Licenses and are on the date hereof validly issued and in full force and effect, and the Borrower and its Subsidiaries have fulfilled and performed in all material respects all of their obligations with respect thereto and have full power and authority to operate thereunder.

(b) Schedule 4.15 accurately and completely lists, as of the date hereof, for each Contract Station, all Broadcast Licenses granted or assigned to the Material Third-Party Licensee for such Contract Station, or under which the Material Third-Party Licensee for such Contract Station has the right to operate such Contract Station. The Broadcast Licenses listed in Schedule 4.15 with respect to any Contract

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Station include all material authorizations, licenses and permits issued by the FCC that are required or necessary for the operation of such Contract Station, and the conduct of the business of the Material Third-Party Licensee for such Contract Station with respect to such Contract Station, as now conducted or proposed to be conducted. The Broadcast Licenses listed in Schedule 4.15 are issued in the name of the Material Third-Party Licensee for the Contract Station being operated under authority of such Broadcast Licenses and are on the date hereof validly issued and in full force and effect, and, to the best of the Borrowers knowledge, the Material Third-Party Licensee for such Contract Station has fulfilled and performed in all material respects all of its obligations with respect thereto and has full power and authority to operate thereunder.

SECTION 4.16. Solvency. As of the date hereof (and after giving effect to the extensions of credit hereunder and to the other transactions contemplated hereby), (i) the aggregate value of all properties of the Borrower and its Subsidiaries at their present fair saleable value (i.e., the amount that may be realized within a reasonable time, considered to be six to eighteen months, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained for the properties in question within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions), exceeds the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Borrower and its Subsidiaries, (ii) the Borrower and its Subsidiaries will not, on a consolidated basis, have unreasonably small capital with which to conduct their business operations as heretofore conducted and (iii) the Borrower and its Subsidiaries will have, on a consolidated basis, sufficient cash flow to enable them to pay their debts as they mature.

ARTICLE V

CONDITIONS

SECTION 5.01. Amendment and Restatement Effective Date. The amendment and restatement of the Existing Credit Agreement provided for hereby and the obligations of the Lenders to make Loans and of the Issuing Lender to issue Letters of Credit hereunder shall not become effective until the date on which the Administrative Agent shall have received each of the following documents, each of which shall be satisfactory to the Administrative Agent (and to

the extent specified below, to each Lender) in form and substance (or such condition shall have been waived in accordance with Section 10.02):

(a) Third Amended and Restated Credit Agreement. (i) Counterparts of this Agreement signed on behalf of each Obligor, the Issuing Lender, the Swing Line Lender the Administrative Agent and (ii) duly executed Lender Addenda from Lenders under (and as defined in) the Existing Credit Agreement constituting the Required Lenders thereunder (and as defined therein) and from each Lender providing a Tranche A-1 Term Loan Commitment as of the Third Restatement Effective Date (or, in each case, written evidence satisfactory to the Administrative Agent, which may include telecopy transmission of, as applicable, a signed signature page of this Agreement or a Lender Addendum).

(b) Opinions of Counsel to the Obligors. Favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Third Restatement Effective Date) of (i) Thomas & Libowitz, P.A., counsel for the Obligors, substantially in the form of Exhibit E-1 and (ii) Pillsbury Winthrop Shaw Pittman LLP, special FCC counsel for the Obligors, substantially in the form of Exhibit E-2 (and each Obligor hereby instructs such counsel to deliver such opinions to the Lenders and the Administrative Agent).

(c) Opinion of Special New York Counsel to JPMCB. An opinion, dated the Third Restatement Effective Date, of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to JPMCB, substantially in the form of Exhibit F (and JPMCB hereby instructs such counsel to deliver such opinion to the Lenders).

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) Corporate Documents. Such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of each Obligor, the authorization of the Transactions and any other legal matters relating to the Obligors, the Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

(e) Officers Certificates. A certificate, dated the Third Restatement Effective Date and signed by the President, a Vice President, a Financial Officer, or Secretary of each of the Borrower and the Holding Company, confirming compliance with the conditions set forth in the lettered clauses of the first sentence of Section 5.02.

(f) Security Agreement. The Security Agreement, duly executed and delivered by each of the parties thereto, and the certificates identified under the name of such Obligor in Annex 1 thereto, in each case accompanied by undated stock or similar powers executed in blank. In addition, each Obligor party to the Security Agreement shall have taken such other action (including delivering to the Administrative Agent, for filing, appropriately completed and duly executed copies of Uniform Commercial Code financing statements) as the Administrative Agent shall have requested in order to perfect the security interests created pursuant to the Security Agreement.

(g) Insurance. A certificate of a Financial Officer of the Borrower setting forth the insurance obtained by it in accordance with the requirements of Section 6.05 and stating that such insurance is in full force and effect and that all premiums then due and payable thereon have been paid.

(h) Other Documents. Such other documents as the Administrative Agent or any Lender or special New York counsel to JPMCB may reasonably request.

The obligation of any Lender to make the Loans and other initial extensions of credit hereunder on the Third Restatement Effective Date is also subject to the payment by the Borrower of such fees as the Borrower shall have agreed to pay to any Lender or the Administrative Agent in connection herewith, including the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to JPMCB, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Loan Documents and the extensions of credit hereunder (to the extent that statements for such expenses have been delivered to the Borrower not less than two days prior to the Third Restatement Effective Date).

The Administrative Agent shall notify the Borrower and the Lenders of the Third Restatement Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the amendment and restatement of the Existing Credit Agreement provided for hereby and the obligations of the Lenders to make Loans and of the Issuing Lender to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 10.02) on or prior to 3:00 p.m., New York City time, on December 22, 2006.

SECTION 5.02. Each Credit Event. The obligation of each Lender to make or maintain a Loan (including an Incremental Loan) on the occasion of any Borrowing, and of the Issuing Lender to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a) the representations and warranties of the Borrower and the Holding Company set forth in this Agreement, and of each Obligor in each of the other Loan Documents to which it is a party, shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (or, if any such representation and warranty is expressly stated to have been made as of a specific date, as of such specific date);

(b) at the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing; and

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the preceding sentence.

SECTION 5.03. Each Incremental Loan. The obligation of each Incremental Lender to make an Incremental Loan is subject to the satisfaction of the following additional conditions:

(a) after giving pro forma effect to the making of such Incremental Loan, the Borrower shall be in compliance with each of the covenants set forth in Section 7.11; and

(b) receipt by the respective Incremental Lender and the Administrative Agent of a certificate, dated the date of the making of such Incremental Loan and signed by the President, a Vice President, a Financial Officer, or Secretary of the Borrower, demonstrating in reasonable detail compliance with the foregoing clause (a) of this Section.

ARTICLE VI

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each of the Borrower (as to itself and its Subsidiaries only) and the Holding Company covenants and agrees with the Lenders that:

SECTION 6.01. Financial Statements and Other Information. The Borrower or the Holding Company, as applicable, will furnish to the Administrative Agent:

(a) (i) in the case of the Borrower, within 120 days after the end of each fiscal year of the Borrower, the audited consolidated balance sheet and related statements of operations, stockholders equity and cash flows of the Borrower and its Subsidiaries (excluding Unrestricted Subsidiaries) as of the end of and for such year and (ii) in the case of the Holding Company, within the earlier of (A) 10 days after the date on which the same shall have been filed with the SEC and (B) 100 days after the end of each fiscal year of the Holding Company, the audited consolidated balance sheet and related statements of operations, stockholders equity and cash flows of the Holding Company and its Subsidiaries as of the end of and for such year, in each case setting forth in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young, LLP or other independent public accountants of recognized national standing (without a going concern or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries (excluding Unrestricted Subsidiaries), or the Holding Company and its Subsidiaries, as the case may be, on a consolidated basis in accordance with GAAP consistently applied;

(b) (i) in the case of the Borrower, within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, the consolidated balance sheet and related statements of operations, stockholders equity and cash flows of the Borrower and its Subsidiaries (excluding Unrestricted Subsidiaries) as of the end of and for such fiscal quarter and the then elapsed portion of such fiscal year and (ii) in the case of the Holding Company, within the earlier of (A) 10 days after the date on which the same shall have been filed with the SEC and (B) 50 days after the end of each of the first three fiscal quarters of each fiscal year of the Holding Company, the consolidated balance sheet and related statements of operations, stockholders equity and cash flows of

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Holding Company and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of such fiscal year, in each case setting forth in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a Financial Officer of the Borrower or the Holding Company, as the case may be, as presenting fairly in all material respects the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries (excluding Unrestricted Subsidiaries), or the Holding Company and its Subsidiaries, as the case may be, on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of financial statements under clause (a) or (b) of this Section, a certificate of a Financial Officer of the Borrower and (as to subclauses (i) and (ii) below only) the Holding Company (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 4.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate, and (iii) setting forth reasonably detailed calculations demonstrating compliance with Sections 7.01(g) through (l), 7.06, 7.07, 7.08 and 7.11;

(d) promptly after the same become publicly available, copies of all periodic and other material reports (including reports on Form 8-K), registration statements and proxy statements filed by the Holding Company or the Borrower with the SEC, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Holding Company or the Borrower to its shareholders generally or to the holders of any class or issue of securities of the Holding Company or the Borrower generally, as the case may be, and promptly upon the receipt thereof by the Holding Company or the Borrower, copies of any material notices, reports or other communications from any holder of any Indebtedness evidenced or provided by the Senior Subordinated Notes or the Senior Notes (or, in either case, any agent or trustee therefor);

(e) promptly upon their becoming available, copies of any and all periodic or special reports filed by the Holding Company, the Borrower or any of the Borrowers Subsidiaries with the FCC or with any other Federal, state or local governmental authority, if such reports indicate any material adverse change in the business, operations, affairs or condition of the Borrower or any of its Subsidiaries or if copies thereof are requested by any Lender or the Administrative Agent, and copies of any and all material notices and other material communications from the FCC or from any other Federal, state or local governmental authority with respect to the Borrower, any of its Subsidiaries or any Station;

(f) promptly following delivery thereof to or by the Borrower or any of its Subsidiaries, copies of all material notices (including notices of default), financial statements, reports, approvals and other material communications that are received by the Holding Company, the Borrower or any of the Borrowers Subsidiaries from or on behalf of any Material Third-Party Licensee or Affiliate of any Material Third-Party Licensee or furnished by the Holding Company, the Borrower or any of the Borrowers Subsidiaries to any Material Third-Party Licensee or Affiliate of any Material Third-Party Licensee;

(g) as soon as available and in any event on or before December 31 of each fiscal year, a budget for the Borrower and its Subsidiaries for the next following fiscal year setting forth anticipated income, expense and capital expenditure items for each quarter during such fiscal year; and

(h) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Holding Company, the Borrower or any of the Borrowers Subsidiaries, any Unrestricted Subsidiary (including its financial statements), any Station (including copies of network affiliation agreements entered into by such Station), any Material Third-Party Licensee or any Person that owns the Capital Stock of any Material Third-Party Licensee, or compliance with the terms of this Agreement and the other Loan Documents, as the Administrative Agent or any Lender may reasonably request.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SECTION 6.02. Notices of Material Events. The Borrower and/or the Holding Company will furnish to the Administrative Agent prompt written notice of the following:

(a) the occurrence of any Default or (in the case of the Holding Company only) any Default relating to the Holding Company;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Holding Company, the Borrower or any of the Borrowers Subsidiaries or any of their respective assets, franchises or licenses (including the Broadcast Licenses for Owned Stations) that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect, or against or affecting any Material Third-Party Licensee for a Contract Station or any Broadcast License for such Contract Station that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect or the loss of any Broadcast License (other than an Immaterial Broadcast License) for such Contract Station;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Holding Company, the Borrower and its Subsidiaries (including Unrestricted Subsidiaries) in an aggregate amount exceeding $25,000,000;

(d) the assertion of any environmental matter by any Person against, or with respect to the activities of, the Holding Company, the Borrower or any of the Borrowers Subsidiaries and any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations, other than any environmental matter or alleged violation that could reasonably be expected to result in liability of the Holding Company, the Borrower and the Borrowers Subsidiaries (including Unrestricted Subsidiaries) in an aggregate amount exceeding $25,000,000; and

(e) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower or the Holding Company, as applicable, setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 6.03. Existence; Conduct of Business. Each of the Borrower and the Holding Company will, and will cause each of the Borrowers Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises (including the Broadcast Licenses, but excluding Immaterial Broadcast Licenses, for Owned Stations); provided that the foregoing shall not prohibit (a) any merger, consolidation, liquidation or dissolution permitted under Section 7.03 or (b) any merger or consolidation involving the Holding Company (but not involving the Borrower or any of its Subsidiaries).

SECTION 6.04. Payment of Obligations. Each of the Borrower and the Holding Company will, and will cause each of the Borrowers Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Holding Company, the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 6.05. Maintenance of Properties; Insurance. Each of the Borrower and the Holding Company will, and will cause each of the Borrowers Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations, provided that the Borrower will in any event maintain (with respect to itself, each of its Subsidiaries and each Owned Station), and will use its reasonable best efforts to cause the Material Third-Party Licensee for each Contract Station (or the Person that owns the Capital Stock of such Material Third-Party Licensee) to maintain (with respect to itself and such Contract Station), casualty insurance and insurance against claims and damages with respect to defamation, libel, slander, privacy or other similar injury to person or reputation (including misappropriation of personal likeness), in such amounts as are then customary for Persons engaged in the same or similar business similarly situated.

SECTION 6.06. Books and Records; Inspection Rights. Each of the Borrower and the Holding Company will, and will cause each of the Borrowers Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Each of the Borrower and the Holding Company will, and will cause each of the Borrowers Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

SECTION 6.07. Compliance with Laws and Contractual Obligations. Each of the Borrower and the Holding Company will, and will cause each of the Borrowers Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including Environmental Laws) and all of its Contractual Obligations, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 6.08. Use of Proceeds and Letters of Credit. The proceeds of the Revolving Loans and the proceeds of the Incremental Loans (if any) will be used for the general corporate purposes of the Borrower and its Subsidiaries, including working capital requirements, Capital Expenditures, and acquisitions and Investments to the extent permitted hereunder (in each case, in compliance with all applicable legal and regulatory requirements). Letters of Credit will be issued only for general corporate purposes of the Borrower and its Subsidiaries as specified above. The proceeds of the Tranche A-1 Term Loans will be used solely to redeem in full the Borrowers 8-¾% Senior Subordinated Notes due 2011 outstanding under an indenture dated as of December 10, 2001 (and to pay accrued interest and premium thereon to the date of such redemption). Neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any of proceeds of any Loan. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X.

SECTION 6.09. Certain Obligations Respecting Subsidiaries; Intermediate Holding Company.

(a) Subsidiary Guarantors. The Borrower will take such action, and will cause each of its Subsidiaries to take such action, from time to time as shall be necessary to ensure that

all Subsidiaries of the Borrower are Subsidiary Guarantors hereunder. Without limiting the generality of the foregoing, in the event that the Borrower or any of its Subsidiaries shall form or acquire any new Subsidiary that shall constitute a Subsidiary hereunder, the Borrower and its Subsidiaries will cause such new Subsidiary, to (i) become a Subsidiary Guarantor hereunder, and an Obligor under the Security Agreement pursuant to a Borrower Subsidiary Guarantor Assumption Agreement, duly completed and executed by such Subsidiary, (ii) deliver certificates (if any) of ownership interests of any Subsidiaries of such new Subsidiary in each case accompanied by undated stock or other similar powers executed in blank and (iii) deliver such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by each Obligor pursuant to Section 5.01 on the Third Restatement Effective Date or as the Administrative Agent shall have requested.

Notwithstanding the foregoing, the Borrower shall not be required to cause any Non-Media Subsidiary of the Borrower (or any of such Subsidiarys Non-Media Subsidiaries) to become a Subsidiary Guarantor hereunder or an Obligor under the Security

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Documents, so long as the following requirements are satisfied: (a) such Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Non-Recourse Indebtedness and has not guaranteed or otherwise provided credit support at the time of such designation for any Indebtedness of the Borrower or any of its Subsidiaries (other than the Subsidiaries of such Subsidiary); (b) such Subsidiary is directly owned by a Guarantor hereunder which is a Wholly Owned Subsidiary and the Capital Stock of such Guarantor has been pledged in favor of the Administrative Agent pursuant to the Security Agreement and (c) at the time of acquisition of such Subsidiary by the Borrower, the entering into of a Borrower Subsidiary Guarantor Assumption Agreement by such Subsidiary (and its Subsidiaries) would violate any provision of applicable law or any agreement to which such Subsidiary is a party; provided that if at any time thereafter such Subsidiary (or any of its Subsidiaries) shall cease to be subject to the prohibitions referred to in clause (c) above, the Borrower will take such action, and will cause each of its Subsidiaries to take such action, promptly to ensure that such Subsidiary (and/or the relevant Subsidiary or Subsidiaries of such Subsidiary) become Subsidiary Guarantors hereunder and/or Obligors under the Security Documents, as applicable, and in that connection to satisfy the requirements under the immediately succeeding paragraph. In addition, notwithstanding anything herein to the contrary, the Borrower shall not be required to, or to cause any of its Subsidiaries to, pledge the Capital Stock of any Non-Media Subsidiary owned by the Borrower and its Subsidiaries that is not required to become a Subsidiary Guarantor pursuant to the immediately preceding sentence, if, at the time of the acquisition of such Non-Media Subsidiary by the Borrower, such pledge would violate any provision of applicable law or any agreement to which such Non-Media Subsidiary is a party.

(b) Ownership of Subsidiaries. The Borrower will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that each of its Subsidiaries is (i) if such Subsidiary is a Non-Media Subsidiary, at least a majority-owned Subsidiary and (ii) otherwise, a Wholly Owned Subsidiary. In the event that any additional Capital Stock shall be issued by any Subsidiary (other than by any Subsidiary the Capital Stock of which is not required to be pledged pursuant to the second paragraph of Section 6.09(a)), the respective Obligor agrees forthwith to deliver to the Administrative Agent pursuant to the Security Agreement the certificates (if any) evidencing such Capital Stock, accompanied by undated stock or other similar powers executed in blank and to take such other action as the Administrative Agent shall request to perfect the security interest created therein pursuant to the Security Agreement.

(c) Intermediate Holding Company. In the event the Holding Company shall at any time wish to cause the Borrower to become an indirectly Wholly Owned Subsidiary of the Holding Company, the Holding Company shall promptly notify the Administrative Agent thereof and, as conditions precedent thereto, shall cause the Subsidiary of the Holding Company that shall become the direct owner of 100% of the Capital Stock of the Borrower (an Intermediate Holding Company) (i) to become (x) a Guarantor hereunder pursuant to a written agreement in form and substance satisfactory to the Administrative Agent and (y) the pledgor of the Capital Stock of the Borrower under the Security Agreement pursuant to an amendment thereto in form and substance satisfactory to the Administrative Agent, (ii) to deliver to the Administrative Agent such proof of corporate action, incumbency of officers, opinions of counsel and other documents with respect to such Intermediate Holding Company as is consistent with those delivered by each Obligor pursuant to Section 5.01 on the Third Restatement Effective Date or as the Administrative Agent shall have requested and (iii) to take such other action as the Administrative Agent shall have requested to perfect the security interest created in such Capital Stock pursuant to such amendment. Without limiting the foregoing, in the event that at any time the Borrower shall become a directly Wholly Owned Subsidiary of an Intermediate Holding Company in accordance with the immediately preceding sentence, the Holding Company shall at all times remain a Guarantor hereunder and, at such time, shall pledge the Capital Stock of such Intermediate Holding Company under the Security Agreement pursuant to an amendment thereto in form and substance satisfactory to the Administrative Agent. Notwithstanding anything herein or in the other Loan Documents to the contrary, the Lenders hereby authorize the Administrative Agent to enter into each such agreement and amendment contemplated by this paragraph without any further authorization or action by the Lenders in order to effect the foregoing.

SECTION 6.10. Designated SBG Subsidiaries.

(a) Designation. The Holding Company and the Borrower may, at any time or from time to time upon not less than five Business Days notice to the Administrative Agent (or such shorter period which is acceptable to the Administrative Agent), designate any Subsidiary of the Holding Company (other than the Borrower or any of its directly and indirectly owned Subsidiaries) (including any newly acquired or newly formed Subsidiary of the Holding Company) to be a Designated SBG Subsidiary for purposes of this Agreement. The designation by the Holding Company of any Subsidiary of the Holding Company as a Designated SBG Subsidiary hereunder shall be effective

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document subject to satisfaction of the following conditions: (i) immediately before and after giving effect to such designation, no Default shall have occurred or be continuing, (ii) except as provided in the last paragraph of paragraph (b) of this Section, such Subsidiary shall have complied with the requirements of the first paragraph of such paragraph (b) and (iii) the Administrative Agent shall have received a certificate of a senior officer of the Holding Company and the Borrower certifying that the conditions to the designation of such Designated SBG Subsidiary under this Section have been satisfied.

(b) SBG Subsidiary Guarantors. Subject to the immediately succeeding paragraph, the Holding Company will cause each Designated SBG Subsidiary to (i) become a Subsidiary Guarantor hereunder and an Obligor under the Security Agreement pursuant to a SBG Subsidiary Guarantor Assumption Agreement, duly completed and executed by such Designated SBG Subsidiary (and each of its Subsidiaries), the Holding Company and the Borrower, (ii) deliver certificates (if any) of ownership interests of such Designated SBG Subsidiary and each of its Subsidiaries in each case accompanied by undated stock or other similar powers executed in blank, pursuant to the Security Agreement and (iii) deliver such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by each Obligor pursuant to Section 5.01 on the Third Restatement Effective Date or as the Administrative Agent shall have requested.

Notwithstanding the foregoing, any Designated SBG Subsidiary that is a Non-Media Subsidiary (and its Non-Media Subsidiaries, if any) shall not be required to become a Subsidiary Guarantor hereunder or an Obligor under the Security Documents, so long as the following requirements are satisfied: (a) such Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Non-Recourse Indebtedness and has not guaranteed or otherwise provided credit support at the time of such designation for any Indebtedness of the Borrower or any of its Subsidiaries (other than the Subsidiaries of such Subsidiary); (b) such Subsidiary is directly owned by a Guarantor hereunder which is a Wholly Owned Subsidiary and the Capital Stock of such Guarantor has been pledged in favor of the Administrative Agent pursuant to the Security Agreement and (c) at the time of acquisition of such Subsidiary by the Holding Company, the entering into of a SBG Subsidiary Guarantor Assumption Agreement by such Subsidiary (and its Subsidiaries) would violate any provision of applicable law or any agreement to which such Subsidiary is a party; provided that if at any time thereafter such Subsidiary (or any of its Subsidiaries) shall cease to be subject to the prohibitions referred to in clause (c) above, the Holding Company will take such action, and will cause each of its Subsidiaries to take such action, promptly to ensure that such Subsidiary (and/or the relevant Subsidiary or Subsidiaries of such Subsidiary) become Subsidiary Guarantors hereunder and/or Obligors under the Security Documents, as applicable, and in that connection to satisfy the requirements under the immediately succeeding paragraph. In addition, notwithstanding anything herein to the contrary, the Holding Company shall not be required to, or to cause any of its Subsidiaries to, pledge the Capital Stock of any Non-Media Subsidiary owned by the Holding Company and its Subsidiaries that is not required to become a Subsidiary Guarantor pursuant to the immediately preceding sentence, if, at the time of the acquisition of such Non-Media Subsidiary by the Holding Company, such pledge would violate any provision of applicable law or any agreement to which such Non-Media Subsidiary is a party.

(c) Removal. The Holding Company and the Borrower may, at any time or from time to time upon not less than five Business Days notice to the Administrative Agent (or such shorter period which is acceptable to the Administrative Agent), remove any Designated SBG Subsidiary as a Subsidiary and, in the case of any SBG Subsidiary Guarantor, a Guarantor and an Obligor hereunder and under the other Loan Documents if all of the following conditions apply as of the date specified for the effectiveness of such removal: (i) immediately before and after giving effect to such removal, no Default shall have occurred or be continuing; (ii) after giving effect to such removal, such Designated SBG Subsidiary is not liable, directly or

indirectly, with respect to any Indebtedness other than Non-Recourse Indebtedness and has not guaranteed or otherwise provided credit support at the time of such removal for any Indebtedness of the Borrower or any of its Subsidiaries; (iii) any Investment in such Designated SBG Subsidiary made as a result of such removal shall not violate the provisions of Section 7.07; (iv) such removal shall be treated as a Disposition of the assets of such Designated SBG Subsidiary and shall not violate the provisions of Section 7.05(c) or Section 7.09; and

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (vi) any such removal shall be evidenced to the Administrative Agent by furnishing the Administrative Agent a senior officers certificate of the Holding Company and the Borrower certifying that such removal complies with the foregoing conditions. Upon the satisfaction of such conditions, such Designated SBG Subsidiary (and each of its Subsidiaries) shall cease to be a Subsidiary hereunder and, in the case of any SBG Subsidiary Guarantor, a Subsidiary Guarantor and an Obligor hereunder and under the other Loan Documents and shall be released from all (and shall cease to have any) obligations as such hereunder and under the other Loan Documents.

(d) Ownership of Designated SBG Subsidiaries. The Holding Company will take such action, and will cause each Designated SBG Subsidiary, so long as it shall remain a Designated SBG Subsidiary hereunder, to take such action from time to time as shall be necessary to ensure that such Designated SBG Subsidiary (and each of its Subsidiaries) is (i) if such Designated SBG Subsidiary (and each of its Subsidiaries) is a Non-Media Subsidiary, at least a majority-owned Subsidiary of the Holding Company and (ii) otherwise, a Wholly Owned Subsidiary of the Holding Company.

ARTICLE VII

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, each of the Borrower (other than with respect to Section 7.18) and the Holding Company (solely with respect to each of the Designated SBG Subsidiaries and Section 7.18) covenants and agrees with the Lenders that:

SECTION 7.01. Indebtedness. The Borrower will not, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except:

(a) Indebtedness to the Lenders hereunder (including in respect of Incremental Loans) and under the other Loan Documents;

(b) Indebtedness outstanding on the Third Restatement Effective Date and identified in Schedule 7.01(b);

(c) unsecured, senior subordinated or subordinated Indebtedness of the Borrower (which may be guaranteed on a subordinated basis by any Subsidiary Guarantor) (such Indebtedness and/or guarantees being collectively referred to as the Additional Subordinated Notes), provided that (i) no scheduled payments, prepayments, redemptions or sinking fund or like payments in respect of such Indebtedness shall be required prior to December 31, 2013, (ii) the terms and conditions of such Indebtedness shall not be more restrictive on the Borrower and its Subsidiaries than the terms and conditions customarily found in subordinated debt of a similar type issued by similar issuers under Rule 144A or in a public offering as reasonably determined by the Administrative Agent, and the terms of subordination thereof shall also extend to cover obligations of the Borrower and its Subsidiaries in respect of any Hedging Agreements to which the Borrower and any of the Lenders and their respective Affiliates are parties and (iii) no Default shall have occurred and be continuing at the time of incurrence of such Indebtedness or would result therefrom;

(d) Indebtedness of Subsidiaries of the Borrower owing to the Borrower or to other Subsidiaries of the Borrower and Indebtedness of the Borrower owing to any of the Designated SBG Subsidiaries;

(e) Subordinated Film Indebtedness of the Borrower and its Subsidiaries in an aggregate principal amount not exceeding $30,000,000 at any one time outstanding, provided that the terms and conditions of each agreement or instrument evidencing or governing such Indebtedness shall be satisfactory to the Administrative Agent;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (f) Guarantees by one or more of the Borrower and the Subsidiary Guarantors of the obligations of other Persons (including Affiliates); provided that the aggregate principal amount of Indebtedness so guaranteed may not exceed $75,000,000 at any one time outstanding;

(g) Indebtedness (including Indebtedness of the Receivables Subsidiary) incurred in connection with any Receivables Financing on terms satisfactory to the Administrative Agent, provided that after giving effect thereto the aggregate face amount of Receivables of the Borrower and its Subsidiaries (other than any Receivables Subsidiary) that have not been sold or financed shall be at least $100,000,000;

(h) Indebtedness incurred in connection with capital leases in respect of broadcast towers or equipment of the Borrower or any of its Subsidiaries, provided that the aggregate principal amount of such Indebtedness may not exceed $25,000,000 at any one time outstanding;

(i) off-balance sheet Indebtedness incurred by the Borrower or any of its Subsidiaries to finance broadcast towers or equipment on terms satisfactory to the Administrative Agent; provided that the aggregate principal amount of such Indebtedness may not exceed $50,000,000 at any one time outstanding;

(j) senior unsecured Indebtedness of the Borrower issued after the date hereof in an aggregate principal amount not exceeding $300,000,000 at any one time outstanding; provided that (i) no scheduled payments, prepayments, redemptions or sinking fund or like payments on such Indebtedness shall be required prior to December 31, 2013, (ii) the

terms and conditions of such Indebtedness shall not be more restrictive on the Borrower and its Subsidiaries than the terms and conditions customarily found in senior unsecured notes of similar issuers issued under Rule 144A or in a public offering as reasonably determined by the Administrative Agent and (iii) no Default shall have occurred and be continuing at the time of incurrence of such Indebtedness or would result therefrom;

(k) additional unsecured Indebtedness of the Borrower in an aggregate principal amount not exceeding $100,000,000 at any one time outstanding, provided that no Default shall have occurred and be continuing at the time of incurrence of such Indebtedness or would result therefrom; and

(l) Indebtedness of the Non-Media Subsidiaries incurred after the date hereof in an aggregate principal amount not exceeding $110,000,000 at any one time outstanding, provided that no Default shall have occurred and be continuing at the time of incurrence of such Indebtedness or would result therefrom.

SECTION 7.02. Liens. The Borrower will not, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Liens created pursuant to the Security Documents;

(b) Liens imposed by any Governmental Authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower or any of its Subsidiaries, as the case may be, in accordance with GAAP;

(c) carriers, warehousemens, mechanics, materialmens, repairmens or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings and Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under clause (j) of Article VIII;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) pledges or deposits under workers compensation, unemployment insurance and other social security legislation;

(e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(f) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

(g) Liens on the Capital Stock of Cunningham owned by Carolyn C. Smith acquired by the Borrower or any of its Subsidiaries pursuant to the exercise of the Cunningham Options, to the extent such Liens are in existence on the date of such acquisition;

(h) Liens on the property of the Borrower and the Subsidiary Guarantors securing Guarantees referred to in Section 7.01(f), provided that the aggregate Indebtedness secured thereby shall not exceed $75,000,000 at any one time outstanding;

(i) Liens resulting from the defeasance (but only to extent permitted under Section 7.12) of the Indebtedness under the Note Indentures in accordance therewith;

(j) Liens upon real and/or personal property existing on the date hereof, provided that the aggregate Indebtedness and/or other obligations secured thereby shall not exceed $15,000,000;

(k) additional Liens upon real and/or personal property created after the date hereof, provided that the aggregate Indebtedness and/or other obligations secured thereby and incurred on and after the date hereof shall not exceed $5,000,000 in the aggregate at any one time outstanding;

(l) Liens (if any) created in connection with any Receivables Financing permitted under Section 7.01(g);

(m) Liens upon property of any Non-Media Subsidiary securing Indebtedness of such Non-Media Subsidiary permitted under Section 7.01(l), provided that the aggregate Indebtedness secured by Liens upon property of all Non-Media Subsidiaries permitted under this clause (m) shall not exceed $110,000,000 in the aggregate at any one time outstanding; and

(n) any extension, renewal or replacement of the foregoing, provided that the Liens permitted hereunder shall not be spread to cover any additional Indebtedness or property (other than a substitution of like property).

SECTION 7.03. Mergers, Consolidations, Etc. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except:

(a) any Subsidiary may be merged or consolidated with or into any other Subsidiary; provided that:

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) if any such transaction shall be between a Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned Subsidiary shall be the continuing or surviving entity;

(ii) if any such transaction shall be between a Subsidiary Guarantor and a Subsidiary not a Subsidiary Guarantor, and such Subsidiary Guarantor is not the continuing or surviving entity, then the continuing or surviving entity shall have assumed all of the obligations of such Subsidiary Guarantor hereunder and under the other Loan Documents;

(b) any License Subsidiary may be merged or consolidated with or into (i) any other License Subsidiary or (ii) a newly formed Subsidiary of the Borrower (which may be organized as a limited liability company) established for the purpose of becoming a License Subsidiary, provided that such newly formed Subsidiary (x) if it is the continuing or surviving entity, it shall have assumed all of the obligations of such Subsidiary hereunder and under the other Loan Documents and (y) shall be in compliance with Section 7.14;

(c) any Subsidiary may be merged or consolidated with or into any other Person to effect an Acquisition permitted under Section 7.04, provided that the continuing or surviving entity shall be a Subsidiary of the Borrower and, if not a Subsidiary Guarantor prior to such merger or consolidation, such continuing or surviving entity shall have assumed all of the obligations of such Subsidiary hereunder and under the Loan Documents; and

(d) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower, provided that the Borrower shall be the continuing or surviving entity.

SECTION 7.04. Acquisitions. The Borrower will not, nor will it permit any of its Subsidiaries to, acquire any business or property from, or Capital Stock of, or be a party to any acquisition of, any Person, or acquire any option to make any such acquisition, except:

(a) purchases of inventory, programming rights and other property to be sold or used in the ordinary course of business;

(b) Investments permitted under Section 7.07;

(d) Capital Expenditures of the Borrower and its Subsidiaries;

(e) the Borrower and its Subsidiaries may consummate each Approved Acquisition and any Other Acquisition (including the exercise of the Cunningham Options), provided that, if applicable:

(i) both immediately prior after giving effect to such Acquisition, no Default shall have occurred and be continuing (and, in the case of such Acquisition, the Borrower shall be in compliance with the Total Indebtedness Ratio under Section 7.11(c), calculated on a pro forma basis as if such Acquisition had been consummated on the first day of the relevant period);

(ii) each assignment or transfer of control of Broadcast Licenses to the Borrower or any of its Subsidiaries shall have been approved by

(A) an Initial FCC Order, in the case of any such Approved Acquisition or if the aggregate consideration for any Other Acquisition and all Other Acquisitions permitted under this clause (e) and consummated after the date hereof which have not been approved by a Final FCC Order is equal to or less than $300,000,000 in the aggregate or

(B) a Final FCC Order, in all other cases (including the exercise of the Cunningham Options);

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) if the Administrative Agent or the Required Lenders shall have so requested, the Administrative Agent shall have received an opinion of FCC counsel satisfactory to the Administrative Agent or the Required Lenders, as the case may be, in its (or their) reasonable judgment to the effect that such transfer shall have been so approved by an Initial FCC Order or a Final FCC Order, as the case may be, and that such Broadcast Licenses have been validly assigned to the Borrower or such Subsidiary;

(iv) if the Aggregate Consideration for such Acquisition is equal to or greater than $75,000,000, the Borrower shall furnish to the Lenders a certificate showing calculations (after giving effect to borrowings and prepayments hereunder to be made on such date and calculated on a pro forma basis as if such Acquisition had been consummated on the first day of the period of four fiscal quarters of the Borrower ending on or most recently ended prior to such date) in reasonable detail that demonstrate that such Acquisition will not result in a Default under Section 7.11 or sub-clause

(vi) of this clause (e);

(v) if the Aggregate Consideration for such Acquisition is equal to or greater than $75,000,000, no later than the date falling ten Business Days (or such shorter period as the Administrative Agent may agree) prior to the date that such Acquisition is consummated, the Borrower shall have delivered to the Administrative Agent drafts or executed counterparts of such of the respective agreements or instruments (including Program Services Agreements) pursuant to which such Acquisition is to be consummated (together with any related option or other material agreements), any schedules or other material ancillary documents to be executed or delivered in connection therewith, all of which shall be satisfactory in form and substance to the Administrative Agent; and

(vi) promptly following request therefor, copies of such information or documents relating to such Acquisition as the Administrative Agent or any Lender (through the Administrative Agent) shall have reasonably requested; and

(f) the acquisition of property in connection with any exchanges permitted under Section 7.05.

SECTION 7.05. Dispositions. The Borrower will not, nor will it permit any of its Subsidiaries to, without the prior written consent of the Required Lenders, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or a substantial part of its business or property, whether now owned or hereafter acquired including receivables and leasehold interests, except:

(a) the Disposition of any inventory or other property in the ordinary course of business and on ordinary business terms;

(b) the Disposition of obsolete or worn-out property, tools or equipment no longer used or useful in its business so long as the amount thereof sold in any single fiscal year by the Borrower and its Subsidiaries shall not have a fair market value in excess of $10,000,000;

(c) the Borrower or any of its Subsidiaries may dispose of assets (including by way of an exchange for assets of equal or greater value, as determined in good faith by the Board of Directors of the Borrower or such Subsidiary), including assets relating to any Owned Station that is a television broadcasting station or a radio broadcasting station (or the Capital Stock of the Subsidiary of the Borrower that owns such assets if such Subsidiary does not own property related to any other Owned Station not included in such Disposition), provided that:

(i) both immediately prior to such Disposition and, after giving effect thereto, no Default shall have occurred and be continuing;

(ii) such Disposition is a sale to any Person for cash or in exchange for assets, in each case. in an amount not less than the fair market value of the assets being disposed of;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) in the case of the Disposition (including an exchange) of assets relating to any Owned Station that is a television broadcasting station or a radio broadcasting station (or the Capital Stock of the Subsidiary of the Borrower that owns such assets if such Subsidiary does not own property related to any other Owned Station not included in such Disposition):

(A) the EBITDA Percentage attributable to such assets together with the EBITDA Percentage attributable to all other such assets sold or exchanged pursuant to this clause (iii) during the immediately preceding twelve month period shall not exceed 25%;

(B) the EBITDA Percentage attributable to all other such assets sold or exchanged pursuant to this clause (iii) since the Third Restatement Effective Date shall not exceed 50%;

(C) in the case of any such exchange of assets, the acquisition of such assets of such Person pursuant to such exchange shall comply with the provisions of Section 7.04(e); and

(D) the Borrower shall have furnished to the Lenders, not later than the date falling five Business Days (or such shorter period as the Administrative Agent may agree) prior to the date of such Disposition a certificate in form and detail satisfactory to the Administrative Agent stating (and setting forth calculations in reasonable detail demonstrating) the EBITDA Percentage attributable to such Disposition and all other such assets so sold or exchanged for the relevant periods under clauses (A) and (B) above; and

(iv) the Borrower shall have furnished to the Lenders such other information or documents relating to such Disposition as the Administrative Agent or any Lender or Lenders (through the Administrative Agent) shall have reasonably requested; and

(d) the Borrower or any of its Subsidiaries may dispose of additional property for fair market value, provided that the aggregate fair market value of such additional property disposed of by the Borrower and its Subsidiaries in any fiscal year may not exceed $100,000,000;

(e) the Borrower and its Subsidiaries may transfer Receivables in connection with any Receivables Financing permitted under Section 7.01(g);

(f) any Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of any or all of its property to the Borrower or a Wholly Owned Subsidiary of the Borrower (other than a License Subsidiary); provided that if any such sale is by a Subsidiary Guarantor to another Subsidiary which is not a Subsidiary Guarantor, then such Subsidiary shall have become a Subsidiary Guarantor hereunder and assumed all of the obligations of such Subsidiary Guarantor hereunder and under the other Loan Documents; and

(g) Approved Dispositions.

SECTION 7.06. Lines of Business. The Borrower will not permit at any time EBITDA for the most recent period of twelve consecutive full calendar months derived from (a) the business of owning and operating the Stations (and related retransmission facilities), (b) the commercial utilization of frequencies licensed, granted or leased to the Borrower or any of its Subsidiaries by the FCC, any other Governmental Authority or any other Person in

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document connection with the television or radio broadcasting businesses and/or (c) the business of managing and/or consulting to television stations other than the Owned Stations, to less than 66-⅔% of EBITDA for such period.

SECTION 7.07. Investments. The Borrower will not, nor will it permit any of its Subsidiaries to, make or permit to remain outstanding any Investments except:

(a) operating deposit accounts with banks;

(b) Permitted Investments;

(c) (i) Investments by the Borrower and its Subsidiaries in Capital Stock of Subsidiaries of the Borrower (other than any Excluded Non-Media Subsidiaries) and (ii) advances by the Borrower and its Subsidiaries to any of the Subsidiary Guarantors, and advances by any of the Designated SBG Subsidiaries to the Borrower, in the ordinary course of business permitted to be incurred by Section 7.01(d);

(d) Investments outstanding on the date hereof (other than Investments permitted under clauses (a), (b) and (c) of this Section) and identified in Schedule 4.14(b);

(e) the acquisition of the Capital Stock of Persons or the formation of Wholly Owned Subsidiaries of the Borrower for the acquisition of Capital Stock of Persons, resulting in such Persons becoming Wholly Owned Subsidiaries of the Borrower, in each case for the purpose of enabling the Borrower and its Subsidiaries to consummate acquisitions permitted by Section 7.04;

(f) Guarantees by Subsidiary Guarantors of Indebtedness of the Borrower to the extent such guarantees are permitted under Section 7.01;

(g) Guarantees permitted under Section 7.01(f);

(h) Investments by the Borrower and its Subsidiaries in any Receivables Subsidiary in connection with any Receivables Financing permitted under Section 7.01(g); and

(i) additional Investments, provided that no Default shall have occurred and be continuing at the time of the making of each such Investment or would result therefrom;

SECTION 7.08. Restricted Payments. The Borrower will not, nor will it permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except that, so long as no Default exists at the time of making such Restricted Payment or would result therefrom:

(a) the Borrower may pay cash dividends on its common stock (i) in an aggregate amount not to exceed $100,000,000 or (ii) without regard to amount, if at the time of the declaration and making of, and after giving effect to, such dividends, the Total Indebtedness Ratio shall not be greater than 5.00 to 1;

(b) the Borrower may pay cash dividends on its common stock that will be used by the Holding Company solely for the purpose of repaying, repurchasing and/or redeeming the Holding Companys 6% Convertible Subordinated Debentures due 2012 in existence on the Third Restatement Effective Date;

(c) the Borrower may pay cash dividends on its common stock, pay management fees and/or make royalty fee payments to the Holding Company that will be used by the Holding Company solely to pay general and administrative expenses of the Holding Company in an aggregate amount not to exceed $15,000,000 for any period of twelve consecutive full calendar months; and

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) the Borrower may pay cash dividends on its common stock if, at the time of the declaration and making of, and after giving effect to, each such dividend, the Borrower shall be in pro forma compliance Section 7.11(a).

Nothing herein shall be deemed to prohibit the payment of any dividends or distributions by any Wholly Owned Subsidiary of the Borrower to the Borrower or any other such Wholly Owned Subsidiary; provided that, notwithstanding anything in the Loan Documents to the contrary, no Designated SBG Subsidiary shall be permitted to make any dividend or other distributions, in cash or property (other than in its additional ownership interests), to the Holding Company or any Subsidiary of the Holding Company that directly owns the ownership interests of such Designated SBG Subsidiary, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such ownership interests or any option, warrant or other right to acquire any such ownership interests.

SECTION 7.09. Transactions with Affiliates. The Borrower will not, nor will it permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except:

(a) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arms-length basis from unrelated third parties;

(b) transactions between or among the Borrower and its Subsidiaries not involving any other Affiliate;

(d) any Affiliate who is an individual may serve as a director, officer or employee of the Borrower or any of its Subsidiaries and receive reasonable compensation for his or her services in such capacity.

SECTION 7.10. Restrictive Agreements. The Borrower will not, nor will it permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its Capital Stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 7.10 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to (x) secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness or (y) Indebtedness permitted under clause (c), (d) or (j) of Section 7.01 but only to the extent that such restrictions are no more onerous on the Borrower and its Subsidiaries than the restrictions contained in the Existing Senior Subordinated Note Indentures and (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.

SECTION 7.11. Certain Financial Covenants.

(a) Fixed Charges Ratio. The Borrower will not permit the Fixed Charges Ratio on any date to be less than 1.05 to 1.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Senior Indebtedness Ratio. The Borrower will not permit the Senior Indebtedness Ratio on any date to be greater than 5.50 to 1.

(c) Total Indebtedness Ratio. The Borrower will not permit the Total Indebtedness Ratio on any date to be greater than the ratio set forth below opposite the period during which such date falls:

Period Ratio From the Third Restatement Effective Date through December 31, 2007 7.00 to 1

From January 1, 2008 through December 31, 2008 6.75 to 1

From January 1, 2009 and at all times thereafter 6.50 to 1

SECTION 7.12. Certain Other Indebtedness. The Borrower will not, nor will it permit any of its Subsidiaries to, purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for, the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, any Subordinated Indebtedness or any Senior Notes, except for: (a) regularly scheduled payments of principal and interest in respect thereof required pursuant to the instruments evidencing such Indebtedness; and (b) the purchase, redemption, retirement or other acquisition or defeasance of any Subordinated Indebtedness or Senior Notes (together with any premium and accrued interest payable therein), provided that no Default shall have occurred and be continuing at the time of such purchase, redemption, retirement or other acquisition or defeasance or would result therefrom.

SECTION 7.13. Modifications of Certain Documents. Without the prior written consent of the Required Lenders, the Borrower will not, nor will it permit any of its Subsidiaries to, consent to any modification, supplement, waiver or termination of any of the provisions of any Program Services Agreement, Outsourcing Agreement, Subordinated Debt Document or Senior Note Document, if such modification, supplement, waiver or termination could reasonably be expected to be materially adverse to the interests of the Lender (subject to, in the case any of the Subordinated Debt Documents and the Senior Note Documents, the reasonable judgment of the Administrative Agent). The Borrower will not, nor will it permit any of its Subsidiaries to, designate any Indebtedness (other than the Senior Notes and the Guarantees of any Subsidiary Guarantor in respect thereof) as Designated Senior Indebtedness or Designated Guarantor Senior Indebtedness (or equivalent terms), in each case under and as defined in any Senior Subordinated Note Indenture.

SECTION 7.14. License Subsidiaries.

(a) Whenever the Borrower or any of its Subsidiaries acquires any Broadcast License after the Third Restatement Effective Date, the Borrower shall (without limiting its obligations under Section 6.09) cause such acquisition to take place as follows in accordance with all applicable laws and regulations, including pursuant to approvals from the FCC: (i) each Broadcast License so acquired shall be transferred to and held by a Wholly Owned Subsidiary of the Borrower that is a License Subsidiary (provided that any License Subsidiary shall be permitted to hold one or more Broadcast Licenses); (ii) the related operating assets shall be transferred to and held by an operating company that is a Subsidiary of the Borrower (an Operating Subsidiary); and (iii) the Borrower shall deliver or cause to be delivered (if not theretofore delivered) to the Administrative Agent in pledge under the Security Agreement all Capital Stock of such License Subsidiary and such Operating Subsidiary (and, if reasonably requested by the Administrative Agent, furnish to the Administrative Agent evidence that the foregoing transactions have been so effected).

(b) Notwithstanding anything herein to the contrary, the Borrower shall not permit any License Subsidiary to: (i) create, incur, assume or have outstanding any Indebtedness or other liabilities or obligations except for obligations under the Loan Documents and the

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document contractual agreements with one or more Operating Subsidiaries entered into in the ordinary course of business solely with respect to the management of the relevant Stations operations; (ii) own any right, franchise or other asset, except for Broadcast Licenses transferred to it by the

Borrower of which it is a Wholly Owned Subsidiary, Broadcast Licenses acquired in the ordinary course of business and rights under any such agreements with one or more Operating Subsidiaries; (iii) enter into any transaction of merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution); (iv) create, incur or permit to exist any Lien (other than the Lien created by the Security Agreement) on or in respect of, or sell, lease, assign, transfer or otherwise dispose of, any of its rights, franchises or other assets; (v) engage in any business other than holding Broadcast Licenses, such agreements with Operating Subsidiaries and incidental activities thereto; or (vi) make or hold any Investment.

(c) Notwithstanding anything in this Section to the contrary, the Borrower and the Subsidiary Guarantors shall not be obligated to effect any transaction contrary to law or the rules, regulations or policies of the FCC, and shall be permitted to unwind the transactions contemplated by this Section to the extent necessary to comply with a ruling of the FCC; provided that the Borrower shall and shall cause each of the Subsidiary Guarantors to use its best efforts to carry out the provisions of this Section consistent with all laws and all rules, regulations and policies of the FCC, including pursuing any necessary approval or consents of the FCC.

(d) The Borrower will cause all Broadcast Licenses for Owned Stations at all times to be held in the name of the respective License Subsidiary for the Owned Station being operated under authority of such Broadcast Licenses.

SECTION 7.15. Program Services Agreements and Outsourcing Agreements. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into (i) any local marketing agreement, time brokerage agreement, program services agreement or other similar agreement or (ii) any outsourcing agreement, servicing agreement or other similar agreement providing for:

(a) the Borrower or any of its Subsidiaries to program or sell advertising time on all or any portion of the broadcast time of any television or radio station;

(b) any Person other than the Borrower or any of its Subsidiaries to program or sell advertising time on all or any portion of the broadcast time of any Station; or

(c) the Borrower or any of its Subsidiaries to deliver or receive non-programming related management and/or consulting services to or from any television station.

Notwithstanding the preceding sentence, (A) the Borrower or any of its Subsidiaries (other than License Subsidiaries) may enter into any Program Services Agreement with any other Person (including Affiliates), provided that (i) the aggregate amount payable by the Borrower and its Subsidiaries under all Program Services Agreements during any fiscal year of the Borrower, excluding Permitted Termination Payments (as defined in the next sentence) shall not exceed the Maximum Amount (as defined in the next sentence) for such fiscal year and (ii) after entering into any such Program Services Agreement, the BCF Percentage shall not exceed 30%, (B) the Borrower or any of its Subsidiaries may enter into any Passive LMA, provided that after giving effect thereto the Passive BCF Percentage shall not exceed 15% and (C) the Borrower or

any of its Subsidiaries (other than License Subsidiaries) may enter into any Outsourcing Agreement with any other Person (including Affiliates), provided that after entering into any such Outsourcing Agreement, the BCF Percentage shall not exceed 30%. For purposes of the preceding sentence, (i) a Permitted Termination Payment means a payment owing by the Borrower or any of its Subsidiaries by reason of

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the early termination of a Program Services Agreement relating to any of the television stations referred to below, provided that the amount of such payment shall not exceed the amount set forth below opposite the name of such television station:

Station Termination Payment

WTTE-TV $ 32,750,000 WNUV-TV $ 21,850,000 WRGT-TV $ 8,450,000 WTAT-TV $ 6,700,000 WVAH-TV $ 1,950,000 Other (as defined below) $ 5,000,000;

(ii) the Maximum Amount for any fiscal year of the Borrower means (x) for its fiscal year ending in 2006, $50,000,000 and (y) for any of its fiscal years thereafter, an amount equal to the Maximum Amount for its preceding fiscal year increased (or decreased, as the case may be) by the percentage of the increase (or decrease, as the case may be) in the Consumer Price Index for all Urban Consumers (as published by the U.S. Department of Labor) for the twelve month period ending in September of such preceding fiscal year; and (iii) Other means any other broadcasting television station (x) sold by the Borrower or any of its Subsidiaries as permitted by Section 7.05(c) or (y) which is covered by a Program Services Agreement.

SECTION 7.16. Limitation on Cure Rights. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into any agreement (a Cure Right Agreement) with or for the benefit of any other Person that limits the ability of the Borrower or such Subsidiary to exercise any rights or remedies under any agreement pursuant to which an Acquisition is to be consummated (an Acquisition Agreement); provided that the Borrower or any of its Subsidiaries may enter into or suffer to exist any Cure Right Agreement for the benefit of the lenders to any PSA Counterparty, as the case may be, to the extent that such lenders (or an agent on behalf of such lenders) has a security interest in the Acquisition Agreement to which such Cure Right Agreement relates.

SECTION 7.17. Sale and Leaseback Transactions. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into any arrangement with any other Person providing for the leasing by the Borrower or any of its Subsidiaries of real or personal property that has been or is to be sold or transferred by the Borrower or any of its Subsidiaries to such other Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or any of its Subsidiaries, other than such transactions not exceeding an aggregate sale price of $25,000,000.

SECTION 7.18. Covenants Applicable to Holding Company.

(a) Restrictive Agreements. The Holding Company will not, nor will it permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (i) the ability of the Holding Company to create, incur or permit to exist any Lien upon the Collateral (as defined in the Security Agreement) owned by the Holding Company as provided herein and in the Security Agreement, (ii) the ability of any Designated SBG Subsidiary or any of its Subsidiaries to create, incur or permit to exist any Lien upon any of its property or assets or (iii) the ability of any Subsidiary of any Designated SBG Subsidiary to pay dividends or other distributions to such Designated SBG Subsidiary with respect to its ownership interests or to Guarantee Indebtedness of the Borrower or any Subsidiary of the Borrower or the ability of any Designated SBG Subsidiary or any of its Subsidiaries to make loans or advances to the Borrower or any Subsidiary of the Borrower or to Guarantee Indebtedness of the Borrower or any Subsidiary of the Borrower; provided that the foregoing clauses (ii) and (iii) shall not apply to (x) restrictions and conditions imposed by law or by the Loan Documents and (y) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale (so long as such restrictions and conditions apply only to the Person that is to be sold and such sale is permitted under the Loan Documents).

(b) Guarantees by Holding Company. The Holding Company will not, nor will it permit any of the Designated SBG Subsidiaries to, guarantee any Subordinated Indebtedness of the Borrower or any of its Subsidiaries unless each such guarantee (i) is

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document unsecured and subordinated in right of payment to the Holding Companys or such Designated SBG Subsidiarys guarantee (if any) under Article III on terms not less favorable to the Lenders than those contained in the Existing Senior Subordinated Note Indentures and (ii) contains other terms and conditions not more restrictive on the Holding Company and its Subsidiaries than those contained herein and in the Existing Senior Subordinated Note Indentures.

ARTICLE VIII

EVENTS OF DEFAULT

If any of the following events (Events of Default) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; or

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three or more Business Days; or

(c) any representation or warranty made or deemed made by or on behalf of any Obligor in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall prove to have been incorrect in any material respect when made or deemed made; or

(d) the Borrower or the Holding Company shall fail to observe or perform any covenant, condition or agreement contained in Section 6.02(a), 6.03 (with respect to the existence of the Borrower or the Holding Company, as applicable), 6.08, 6.09 or 6.10 or in Article VII, or any Obligor shall default in the performance of any of its obligations contained in Section 4.02 or 5.02 of the Security Agreement; or

(e) any Obligor shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) or any other Loan Document to which it is a party and such failure shall continue unremedied for a period of 30 or more days after notice thereof from the Administrative Agent (given at the request of any Lender) to the Borrower; or

(f) the Borrower, any Guarantor or any other Designated SBG Subsidiary shall default in the payment when due of any principal of or interest on any of its other Indebtedness aggregating $25,000,000 or more (for all such Persons), or in the payment when due of any amount under any Hedging Agreement for a notional principal amount exceeding $25,000,000 (for all such Persons); or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness or any event specified in any Hedging Agreement shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity or to have the interest rate thereon reset to a level so that securities evidencing such Indebtedness trade at a level specified in relation to the par value thereof or, in the case of a Hedging Agreement, to permit the payments owing under such Hedging Agreement to be liquidated; or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower, any Guarantor, any other Designated SBG Subsidiary or any Material Third- Party Licensee or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower, any Guarantor, any other Designated SBG Subsidiary or any Material Third-Party Licensee or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for a period of 60 or more days or an order or decree approving or ordering any of the foregoing shall be entered; or

(h) the Borrower, any Guarantor, any other Designated SBG Subsidiary or any Material Third-Party Licensee shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower, any Guarantor, any other Designated SBG Subsidiary or any Material Third-Party Licensee or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; or

(i) the Borrower, any Guarantor, any other Designated SBG Subsidiary or any Material Third-Party Licensee shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; or

(j) one or more judgments for the payment of money in an aggregate amount in excess of $25,000,000 shall be rendered against the Borrower, any Guarantor or any other Designated SBG Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower, any Guarantor or any other Designated SBG Subsidiary to enforce any such judgment; or

(k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; or

(l) the Smith Brothers shall cease at any time collectively to own, directly or indirectly, legally or beneficially, shares of Capital Stock of the Holding Company representing at least 51% of the voting power of the Holding Company (other than by reason of death or disability), or the Holding Company shall cease at any time to own, directly or indirectly, 100% of the Capital Stock of the Borrower; or

(m) during any period of 25 consecutive calendar months, individuals who were directors of the Holding Company or the Borrower on the first day of such period shall no longer constitute a majority of the Board of Directors of the Holding Company or the Borrower, as the case may be; or

(n) the Borrower shall deliver any Change of Control Purchase Notice (or any similar notice) under and as defined in any Senior Subordinated Note Indenture or Senior Note Indenture; or

(o) any Broadcast License (other than an Immaterial Broadcast License) shall be terminated, forfeited or revoked or shall fail to be renewed for any reason whatsoever, or shall be modified in a manner materially adverse to the Borrower, or for any other

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document reason (i) any License Subsidiary shall at any time cease to be a licensee under any Broadcast License (other than an Immaterial Broadcast License) relating to the Owned Station to which such Broadcast Licenses have been granted or the Subsidiary of the Borrower that owns 100% of the Capital Stock of such License Subsidiary shall otherwise fail to have all required authorizations, licenses and permits to construct, own, operate or promote such Owned Station, or (ii) any Material Third-Party Licensee for any Contract Station shall fail to preserve and maintain its legal existence or any of its material rights, privileges or franchises (including the Broadcast Licenses (other than an Immaterial Broadcast Licenses) for such Contract Station (other than by reason of such Contract Station becoming an Owned Station)); or

(p) with respect to any Owned Station, the License Subsidiary with respect to such Owned Station shall at any time cease to be a Wholly Owned Subsidiary of the Subsidiary of the Borrower that owns the operating assets related to the Broadcast Licenses for such Owned Station; or the Borrower shall cease at any time to own all of the issued shares of the Capital Stock of any such Subsidiary; or

(q) any transfer of any common stock or other ownership interests of the Borrower or any of its Subsidiaries or any right to receive such common stock or other ownership interests in the Borrower or any such Subsidiary, as the case may be, shall be transferred and either (i) such transfer shall fail to comply with any applicable provision of the Federal Communications Act of 1934, as amended from time to time, or any applicable FCC rule, regulation or policy, or (ii) the Administrative Agent shall not have received prior to such transfer an opinion reasonably satisfactory to the Required Lenders of counsel reasonably satisfactory to the Required Lenders to the effect that such transfer does so comply; or

(r) the Liens created by any of the Security Documents shall at any time not constitute a valid and perfected Lien on the collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of the Administrative Agent, free and clear of all other Liens (other than Liens permitted under Section 7.02 or under any of the Security Documents), or, except for expiration in accordance with its terms, any of the Security Documents or any of the Guarantees of the Guarantors under Article III shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by any Obligor; or

(s) any Program Services Agreement shall be terminated prior to the stated expiration date thereof (other than in connection with the Borrowers or any Subsidiarys acquisition of the Contract Station subject thereto) and the Obligor party thereto shall not have entered into a replacement agreement relating to the Contract Station to which such Program Services Agreement relates that contains substantially similar payment terms as those set forth in such Program Services Agreement, or any party to any of the Program

Services Agreements shall default in any of its respective obligations thereunder and the Broadcast Cash Flow attributable to the Contract Station(s) subject to such Program Services Agreement(s), either individually or in the aggregate, for the most recent twelve month period is equal to or greater than 10% of Broadcast Cash Flow for such period; or

(t) there shall have been asserted against the Borrower, any Guarantor, any other Designated SBG Subsidiary or any Unrestricted Subsidiary any claim with respect to any Environmental Liability that, in the judgment of the Required Lenders, is reasonably likely to be determined adversely to the Borrower or the affected Guarantor, other Designated SBG Subsidiary or Unrestricted Subsidiary, as the case may be, and the amount thereof could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect (insofar as such amount is payable by any of the Borrower, the Guarantors, the other Designated SBG Subsidiaries or the Unrestricted Subsidiaries after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons jointly and severally liable thereof); or

(u) any party to any Consent and Agreement shall default in the performance of any of its obligations thereunder, if such default, individually or together with other such defaults, could reasonably be expected to result in a Material Adverse Effect;

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document then, and in every such event (other than an event with respect to any Obligor described in clause (g) or (h) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Obligors accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Obligor; and in case of any event with respect to any Obligor described in clause (g) or (h) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Obligors accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Obligor.

ARTICLE IX

THE ADMINISTRATIVE AGENT

Each of the Lenders and the Issuing Lender hereby irrevocably appoints the Administrative Agent as its agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders, and (c) except as expressly set forth herein and in the other Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article V or elsewhere herein or therein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for an Obligor), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and

exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Lender and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower so long as no Default shall exist, to appoint a successor from among the Lenders. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Lender, appoint a successor Administrative Agent which shall be a bank with a minimum capital and surplus of $500,000,000 and with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agents resignation hereunder, the provisions of this Article and Section 10.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

Except as otherwise provided in Section 10.02(b) with respect to this Agreement, the Administrative Agent may, with the prior consent of the Required Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the Loan Documents, provided that, without the prior consent of each Lender, the Administrative Agent shall not (except as provided herein or in the Security Agreement) release all or substantially all of the collateral or terminate any Lien with respect thereto under the Security Agreement or alter the relative priorities of the obligations entitled to the benefits of the Liens created under the Security Agreement, except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering property that is the subject of either a Disposition of property permitted hereunder or a Disposition to which the Required Lenders have consented.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Notwithstanding anything herein to the contrary, the Sole Lead Arranger and Sole Bookrunner, the Syndication Agents and the Documentation Agents named on the cover page of this Agreement shall have no duties or responsibilities hereunder except in their respective capacity, if any, as a Lender.

ARTICLE X

MISCELLANEOUS

SECTION 10.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower or any Subsidiary Guarantor, to it at Sinclair Television Group, Inc., 10706 Beaver Dam Road, Cockeysville, Maryland 21030, Attention of David B. Amy and Barry Faber (Telecopy No. (410) 568-1588); with a copy to Thomas & Libowitz, P.A., 100 Light Street, Baltimore, Maryland 21202, Attention of Steven Thomas (Telecopy No. (410) 752-2046);

(ii) if to the Holding Company, to it at Sinclair Broadcast Group, Inc., 10706 Beaver Dam Road, Cockeysville, Maryland 21030, Attention of David B. Amy and Barry Faber (Telecopy No. (410) 568-1588); with a copy to Thomas & Libowitz, P.A., 100 Light Street, Baltimore, Maryland 21202, Attention of Steven Thomas (Telecopy No. (410) 752-2046);

(iii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., 1111 Fannin Street, 10th Floor, Houston, Texas 77002-6925, Attention of Loan and Agency Services (Telephone No. (713) 750-7919; Telecopy No. (713) 750-2358), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York 10017, Attention of Tracey Ewing (Telephone No. (212) 270-8916; Telecopy No. (212) 270-5127);

(iv) if to the Issuing Lender, to JPMorgan Chase Bank, N.A., 10420 Highland Manor Drive, 4th Floor, Tampa, Florida 33610, Attention of Gina Thomas (Telephone No. (813) 432-6356; Telecopy No. (813) 432-5161), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York 10017, Attention of Tracey Ewing (Telephone No. (212) 270-8916; Telecopy No. (212) 270-5127);

(v) if to the Swing Line Lender, to JPMorgan Chase Bank, N.A., 1111 Fannin Street, 10th Floor, Houston, Texas 77002-6925, Attention of Loan and Agency Services (Telephone No. (713) 750-7919; Telecopy No. (713) 750-2358), with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York 10017, Attention of Tracey Ewing (Telephone No. (212) 270-8916; Telecopy No. (212) 270-5127); and

(vi) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the Issuing Lender or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Lender and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Obligor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Lender may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.16(c) or (d) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of Required Lenders or any other provision hereof specifying the number or percentage of Lenders required to waive, amend

or modify any rights hereunder or make any determination or grant any consent or waiver hereunder, without the written consent of each Lender, or (vi) release all or substantially all of the Subsidiary Guarantors from any of their guarantee obligations under Article III without the written consent of each Lender (except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Subsidiary Guarantor from such obligations that is the subject of a Disposition permitted hereunder or to which the Required Lenders have consented or to release any SBG Subsidiary Guarantor from such obligations in accordance with its removal as a Guarantor hereunder pursuant to Section 6.10); and provided, further, that (x) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Lender or the Swing Line Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Lender or the Swing Line Lender, as the case may be, (y) any modification or supplement of Article III shall require the consent of each Subsidiary Guarantor and (z) to the extent specified in Section 2.01(c), this Agreement may be amended to establish Incremental Loan Commitments of any Series pursuant to an Incremental Loan Amendment executed between the Borrower, the relevant Lenders of such Series and the Administrative Agent, and any such Incremental Loan Amendment shall not require the consent of any other party to this Agreement.

Anything in this Agreement to the contrary notwithstanding, no waiver or modification of any provision of this Agreement that has the effect (either immediately or at some later time) of enabling the Borrower to satisfy a condition precedent to the making of a Revolving Loan shall be effective against the Revolving Lenders for purposes of the Revolving Commitments unless the Required Revolving Lenders shall have concurred with such waiver or modification.

SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Issuing Lender or any Lender, including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Lender or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including in connection with any workout, restructuring or negotiations in respect thereof and (iv) all costs, expenses, taxes, assessments and other charges incurred in connection with any filing,

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document registration, recording or perfection of any security interest contemplated by the Security Agreement or any other document referred to therein.

(b) The Borrower shall indemnify the Administrative Agent, the Issuing Lender and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an Indemnitee) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Issuing Lender or the Swing Line Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Lender or the Swing Line Lender, as the case may be, such Lenders Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Lender or the Swing Line Lender in its capacity as such.

(d) To the extent permitted by applicable law, no Obligor shall assert, and each Obligor hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable promptly after written demand therefor.

SECTION 10.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Lender that issues any Letter of Credit), except that (i) no Obligor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by any Obligor without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Lender that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Lender and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

(A) the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;

(B) with respect to an assignment of a Revolving Lenders Revolving Commitment or a Revolving Lenders obligations in respect of its LC Exposure or Swing Line Exposure, the Issuing Lender and the Swing Line Lender; and

(C) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of any Term Loan or Incremental Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lenders Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 (or, in the case of Term Loans or Incremental Term Loans, $1,000,000) and, after giving effect to such assignment, the assigning Lender shall not have Commitment(s) and/or Loan(s) less than $5,000,000, unless, in each case, each of the Borrower and the Administrative Agent otherwise consent, provided that (i) no such consent of the Borrower shall be required if an Event of Default under Article VIII has occurred and is continuing and (ii) in the event of concurrent assignments to two or more funds that are advised or managed by the same investment advisor, all such concurrent assignments shall be aggregated in determining compliance with this minimum assignment requirement;

(B) each partial assignment of Commitments or Loans of any Class shall be made as an assignment of a proportionate part of all the assigning Lenders rights and obligations in respect of its Commitment and Loans of such Class under this Agreement, provided that this clause shall not be construed to prohibit assignment of a proportionate part of all the assigning Lenders rights and obligations in respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lenders rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 10.03). Any assignment or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the Register). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Lender and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignees completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

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(c)(i) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Lender or the Swing Line Lender, sell participations to one or more banks or other entities (a Participant) in all or a portion of such Lenders rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lenders obligations under this Agreement and the other Loan Documents shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lenders rights and obligations under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 10.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided that such Participant agrees to be subject to Section 2.16(d) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.13 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as though it were a Lender.

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(e) Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan or LC Exposure held by it hereunder to the Borrower or any of its Affiliates or Subsidiaries without the prior consent of each Lender.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SECTION 10.05. Survival. All covenants, agreements, representations and warranties made by the Obligors herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Lender or any Lender may have had notice or knowledge of any Default or incorrect

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representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15, 3.03 and 10.03 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Upon the effectiveness of this Agreement as provided in Section 5.01, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 10.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 10.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of any Obligor against any of and all the obligations of any Obligor now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each Obligor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of

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or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Lender or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Obligor or its properties in the courts of any jurisdiction.

(c) Each Obligor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 10.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 10.12. Confidentiality. Each of the Administrative Agent, the Issuing Lender and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Agreement, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or under any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Lender or any Lender on a nonconfidential basis from a source other than an Obligor. For the purposes of this Section, Information means all information received from any Obligor relating to the Holding Company, the Borrower, any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, the Issuing Lender or any Lender on a nonconfidential basis prior to disclosure by an Obligor; provided that, in the case of information received from an Obligor after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THIS SECTION) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS. ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

SECTION 10.13. Cure of Defaults by the Administrative Agent or the Lenders. Notwithstanding anything contained herein to the contrary, the Administrative Agent or any Lender may in its sole discretion, but shall not be obligated to, (a) cure any monetary default under any Program Services Agreement or (b) cure, by monetary payment or by performance, any default under any lease or option agreement to which the Borrower or any Subsidiary is a

104

party. In each case referred to in the foregoing clauses (a) and (b), the Borrower shall reimburse the Administrative Agent or such Lender for any such payment, and shall indemnify the Administrative Agent or such Lender for any and all costs and expenses (including the fees and expenses of counsel) incurred by the Administrative Agent or such Lender in connection with any such performance, in each case with interest, at the Alternate Base Rate plus the Applicable Rate, payable from the date of such payment or performance by the Administrative Agent or such Lender to the date of reimbursement by the Borrower. Without limiting the generality of the foregoing, the Administrative Agent or any Lender may in its sole discretion, but shall not be obligated to, cure, by monetary payment or by performance, any default as permitted by any Consent and Agreement and the Borrower shall reimburse the Administrative Agent or such Lender for any such payment, and shall indemnify the Administrative Agent or such Lender for any and all costs and expenses (including the fees and expenses of counsel) incurred by the Administrative Agent or such Lender in connection with any such performance, in each case with interest, at the Alternate Base Rate plus the Applicable Rate, payable from the date of such payment or performance by the Administrative Agent or such Lender to the date of reimbursement by the Borrower.

SECTION 10.14. USA PATRIOT Act. Each Lender hereby notifies the Obligors that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it may be required to obtain, verify and record

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document information that identifies the Obligors, which information includes the name and address of the Obligors and other information that will allow such Lender to identify the Obligors in accordance with said Act.

SECTION 10.15. Effect of Amendment and Restatement. On the Third Restatement Effective Date, the Existing Credit Agreement shall be amended and restated in its entirety. The parties hereto acknowledge and agree that (i) this Agreement and the other Loan Documents, whether executed and delivered in connection herewith or otherwise, do not constitute a novation, payment and reborrowing, or termination of the obligations under the Existing Credit Agreement as in effect immediately prior to the Third Restatement Effective Date and which remain outstanding, (ii) such obligations are in all respects continuing (as amended and restated hereby), (iii) the Liens and security interests as granted under the Security Documents securing payment of such obligations are in all respects continuing and in full force and effect and (iv) references in the Security Documents to the Credit Agreement (or words of like import) shall be deemed to be references to this Agreement, and to the extent necessary to effect the foregoing, each such Security Document is hereby deemed amended accordingly.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BORROWER

SINCLAIR TELEVISION GROUP, INC.

By /s/ David B. Amy Name: David B. Amy Title: Secretary

Address for the Borrower: 10706 Beaver Dam Road Cockeysville, Maryland 21030

Tax I.D. Number for the Borrower: 55-0829972

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HOLDING COMPANY

SINCLAIR BROADCAST GROUP, INC.

By /s/ David B. Amy

Address for the Holding Company: 10706 Beaver Dam Road Cockeysville, Maryland 21030

Tax I.D. Number for the Holding Company: 52-1494660

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SUBSIDIARY GUARANTORS

KSMO, INC. WCGV, INC. SINCLAIR ACQUISITION IV, INC. WLFL, INC. SINCLAIR MEDIA I, INC. WSMH, INC. SINCLAIR MEDIA II, INC. WSTR LICENSEE, INC. WGME, INC. SINCLAIR MEDIA III, INC. WTTO, INC. WTVZ, INC. WYZZ, INC. KOCB, INC. KSMO LICENSEE, INC. WDKY, INC. WYZZ LICENSEE, INC. KLGT, INC. SINCLAIR TELEVISION COMPANY II, INC. WSYX LICENSEE, INC. WGGB, INC. WTWC, INC. SINCLAIR COMMUNICATIONS II, INC. SINCLAIR HOLDINGS I, INC. SINCLAIR HOLDINGS II, INC. SINCLAIR HOLDINGS III, INC. SINCLAIR TELEVISION COMPANY, INC. SINCLAIR TELEVISION OF BUFFALO, INC. SINCLAIR TELEVISION OF CHARLESTON, INC. SINCLAIR TELEVISION OF NASHVILLE, INC. SINCLAIR TELEVISION OF NEVADA, INC.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SINCLAIR TELEVISION OF TENNESSEE, INC. SINCLAIR TELEVISION LICENSE HOLDER, INC. SINCLAIR TELEVISION OF DAYTON, INC. SINCLAIR ACQUISITION VII, INC. SINCLAIR ACQUISITION VIII, INC. SINCLAIR ACQUISITION IX, INC. SINCLAIR ACQUISITION X, INC. MONTECITO BROADCASTING CORPORATION CHANNEL 33, INC. WNYO, INC.

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NEW YORK TELEVISION, INC. BIRMINGHAM (WABM-TV) LICENSEE, INC. RALEIGH (WRDC-TV) LICENSEE, INC. SAN ANTONIO (KRRT-TV) LICENSEE, INC. WVTV LICENSEE, INC. SINCLAIR PROPERTIES, LLC SINCLAIR PROPERTIES II, LLC

KBSI LICENSEE L.P. WMMP LICENSEE L.P. WSYT LICENSEE L.P.

By: Sinclair Properties, LLC, General Partner

WEMT LICENSEE L.P. WKEF LICENSEE L.P.

By: Sinclair Properties II, LLC, General Partner

WGME LICENSEE, LLC

By: WGME, Inc., Member

WICD LICENSEE, LLC WICS LICENSEE, LLC KGAN LICENSEE, LLC

By: Sinclair Acquisition IV, Inc., Member

WSMH LICENSEE, LLC

By: WSMH, Inc., Member

WPGH LICENSEE, LLC KDNL LICENSEE, LLC

By: Sinclair Media I, Inc., Member

WTVZ LICENSEE, LLC

By: WTVZ, Inc., Member

KLGT LICENSEE, LLC

By: KLGT, Inc., Member

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WCGV LICENSEE, LLC

By: WCGV, Inc., Member

SCI INDIANA LICENSEE, LLC KUPN LICENSEE, LLC WEAR LICENSEE, LLC WFGX LICENSEE, LLC

By: Sinclair Media II, Inc., Member

WLFL LICENSEE, LLC WRDC, LLC

By: WLFL, Inc., Member

WTTO LICENSEE, LLC

By: WTTO, Inc., Member

WTWC LICENSEE, LLC

By: WTWC, Inc., Member

WGGB LICENSEE, LLC

By: WGGB, Inc., Member

KOCB LICENSEE, LLC

By: KOCB, Inc., Member

WDKY LICENSEE, LLC

By: WDKY, Inc., Member

KOKH LICENSEE, LLC,

By: KOKH, LLC, Member of KOKH Licensee, LLC

By: WDKY, Inc., Member of KOKH, LLC

WUPN LICENSEE, LLC WUTV LICENSEE, LLC WXLV LICENSEE, LLC

By: Sinclair Television of Buffalo, Inc., Member

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WUXP LICENSEE, LLC

By: Sinclair Television of Tennessee, Inc., Member

WCHS LICENSEE, LLC

By: Sinclair Media III, Inc., Member

SINCLAIR FINANCE, LLC

By: KLGT, Inc., Member

WZTV LICENSEE, LLC WVAH LICENSEE, LLC WNAB Licensee, LLC

By: Sinclair Television of Nashville, Inc., Member

WMSN LICENSEE, LLC WUHF LICENSEE, LLC

By: Sinclair Television Company, Inc., Member

WTAT LICENSEE, LLC WRLH LICENSEE, LLC

WRGT LICENSEE, LLC

By: Sinclair Television of Dayton, Inc., Member

SINCLAIR NEWSCENTRAL, LLC CHESAPEAKE TELEVISION LICENSEE, LLC KABB LICENSEE, LLC SCI-SACRAMENTO LICENSEE, LLC WLOS LICENSEE, LLC SAN ANTONIO TELEVISION, LLC

By: Sinclair Communications, LLC, Sole Member

By: Sinclair Television Group, Inc., Sole Member of Sinclair Communications, LLC

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SINCLAIR PROGRAMMING COMPANY, LLC SINCLAIR COMMUNICATIONS, LLC INTERNET PROJECTS, LLC

By: Sinclair Television Group, Inc., Member

KDSM, LLC

By: Sinclair Broadcast Group, Inc., Member

KDSM LICENSEE, LLC

By: KDSM, LLC, Sole Member of KDSM Licensee, LLC

By: Sinclair Broadcast Group, Inc., Sole Member of KDSM, LLC

WDKA LICENSEE, LLC WNYS LICENSEE, LLC

By: Sinclair Properties, LLC, Member

By: /s/ David B. Amy

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document David B. Amy, in his capacity as Executive Vice President, Secretary or Manager, as the case may be

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JPMORGAN CHASE BANK, N.A., as Swing Line Lender, as Issuing Lender and as Administrative Agent

By: /s/ Tracey Navin Ewing Name: Tracey Navin Ewing Title: Vice President

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Schedule 1.01(a)

SBG Subsidiary Guarantors

1. KDSM, LLC

2. KDSM Licensee, LLC

Schedule 1.01(c)

Existing Senior Subordinated Note Indentures

1. Indenture, dated as of December 10, 2001, as heretofore amended, among Sinclair Television Group, Inc. (as issuer), the Guarantors named therein (as guarantors) and First Union National Bank (as trustee).

2. Indenture, dated as of March 14, 2002, as heretofore amended, among Sinclair Television Group, Inc. (as issuer), the Guarantors named therein (as guarantors) and First Union National Bank (as trustee).

Unrestricted Subsidiaries

1. Sinclair Radio of St. Louis, Inc. 2. Tuscaloosa Broadcasting, Inc. 3. Highwoods Joint Venture

Schedule 1.03

Owned And Contract Stations

Market Stations Status Channel Affiliation License Subsidiary Minneapolis/St. Paul, WUCW (f/k/a Owned 23 CW KLGT Licensee, LLC Minnesota KMWB)

Tampa, Florida WTTA Contract 38 MNT N/A

Pittsburgh, Pennsylvania WPGH Owned 53 FOX WPGH Licensee, LLC

WPMY (f/k/a Owned 22 MNT WCWB Licensee, LLC WCWB)

St. Louis, Missouri KDNL Owned 30 ABC KDNL Licensee, LLC

Baltimore, Maryland WBFF Owned 45 FOX Chesapeake Television Licensee, LLC

WNUV Contract 54 CW N/A

Market Stations Status Channel Affiliation License Subsidiary Raleigh/Durham, NorthCarolina WLFL Owned 22 CW WLFL Licensee, LLC

WRDC Owned 28 MNT Raleigh (WRDC-TV) Licensee, Inc.

Cincinnati, Ohio WSTR Owned 64 MNT WSTR Licensee, Inc.

Milwaukee, Wisconsin WCGV Owned 24 MNT WCGV Licensee, LLC

WVTV Owned 18 CW WVTV Licensee, Inc.

Nashville, Tennessee WZTV Owned 17 FOX WZTV Licensee, LLC

WNAB Contract/ 58 CW N/A Ownership Pending

Columbus, Ohio WTTE Contract 28 FOX N/A

WSYX Owned 6 ABC WSYX Licensee, Inc.

Market Stations Status Channel Affiliation License Subsidiary Asheville, North Carolina WMYA (f/k/a Contract/ 40 MNT N/A and Greenville/ Spartanburg/ WBSC) Owner-ship Anderson, Pending South Carolina

WLOS Owned 13 ABC WLOS Licensee, LLC

San Antonio, Texas KABB Owned 29 FOX KABB Licensee, LLC

KMYS (f/k/a Owned 35 MNT San Antonio (KRRT-TV) KRRT) Licensee, Inc.

Norfolk, Virginia WTVZ Owned 33 MNT WTVZ Licensee, LLC

Buffalo, New York WUTV Owned 29 FOX WUTV Licensee, LLC

WNYO Owned 49 MNT New York Television, Inc.

Oklahoma City, Oklahoma KOCB Owned 34 CW KOCB Licensee, LLC

KOKH Owned 25 FOX KOKH Licensee, LLC

Market Stations Status Channel Affiliation License Subsidiary Greensboro/Winston-Salem/High WXLV Owned 45 ABC WXLV Licensee, LLC Point, North Carolina

WMYV (f/k/a Owned 48 MNT WUPN Licensee, LLC WUPN)

Birmingham, Alabama WTTO Owned 21 CW WTTO Licensee, LLC

WABM Owned 68 MNT Birmingham (WABM-TV) Licensee, Inc.

WRGT Contract 45 FOX N/A

Charleston/Huntington, WCHS Owned 8 ABC WCHS Licensee, LLC West Virginia

WVAH Contract 11 FOX N/A

Richmond, Virginia WRLH Owned 35 FOX WRLH Licensee, LLC

Market Stations Status Channel Affiliation License Subsidiary Las Vegas, Nevada KVMY (f/k/a Owned 21 MNT KUPN Licensee, LLC KVWB)

KVCW (f/k/a Owned 33 CW Channel 33, Inc. KFBT)

Mobile, Alabama and WEAR Owned 3 ABC WEAR Licensee, LLC Pensacola, Florida

WFGX Owned 35 MNT WFGX Licensee, LLC

Flint/Saginaw/Bay WSMH Owned 66 FOX WSMH Licensee, LLC City, Michigan

Lexington, Kentucky WDKY Owned 56 FOX WDKY Licensee, LLC

Des Moines, Iowa KDSM Owned 17 FOX KDSM Licensee, LLC

Syracuse, New York WSYT Owned 68 FOX WSYT Licensee L.P.

WNYS Contract 43 MNT N/A

Rochester, New York WUHF Owned 31 FOX WUHF Licensee, LLC

Market Stations Status Channel Affiliation License Subsidiary Paducah, Kentucky and Cape KBSI Owned 23 FOX KBSI Licensee L.P. Girardeau, Missouri

WDKA Contract 49 MNT N/A

Portland, Maine WGME Owned 13 CBS WGME Licensee, LLC

Madison, Wisconsin WMSN Owned 47 FOX WMSN Licensee, LLC

Springfield, Massachusetts WGGB Owned 40 ABC WGGB Licensee, LLC

Peoria/Bloomington, Illinois WYZZ Owned 43 FOX WYZZ Licensee, Inc.

Charleston, South Carolina WMMP Owned 36 MNT WMMP Licensee L.P.

WTAT Contract 24 FOX N/A

Tallahassee, Florida WTWC Owned 40 NBC WTWC Licensee, LLC

Tuscaloosa, Alabama WDBB Contract 17 CW N/A

Springfield/Champaign, Illinois WICS Owned 20 ABC WICS Licensee, LLC

WICD Owned 15 ABC WICD Licensee, LLC

Schedule 4.01

Exceptions to Good Standing

1. Sinclair Television of Tennessee, Inc., a Delaware corporation qualified to do business in the state of Tennessee.

2. Sinclair Television of Nashville, Inc., a Tennessee corporation qualified to do business in the state of West Virginia.

Sinclair Television of Tennessee, Inc. and Sinclair Television of Nashville, Inc., are not in good standing in the state of Tennessee due to an audit by the Tennessee Department of Revenue on their franchise tax returns for the periods from 2001 to 2004. As a result of the audit the Tennessee Department of Revenue assessed both companies additional franchise taxes which both companies are currently contesting. The companies will not be put back into good standing until the matter is resolved.

Schedule 4.06(a)

Litigation

Certain of our stations have entered into Local Marketing Agreements (LMAs). In 1999, the FCC implemented new local television ownership rules and decided to attribute LMAs for ownership purposes. The FCC grandfathered our LMAs that were entered into prior to November 5, 1996, permitting the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCCs 2004 biennial review of its ownership rules. The FCC stated it would conduct a case-by-case review of grandfathered LMAs at that time and assess the appropriateness of extending the grandfathering periods. Subsequently, the FCC invited comments as to whether, instead of beginning the review of the grandfathered LMAs in 2004, it should do so in 2006. The FCC did not initiate any review of grandfathered LMAs in 2004 and has not indicated it would do so as part of its 2006 quadrennial review. We cannot predict when, or if, the FCC will conduct any such review of grandfathered LMAs.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Some of our non-grandfathered LMAs would be required to be terminated under the 1999 rules, but the termination of those LMAs was stayed by the U.S. Court of Appeals for the D.C. Circuit. Under the FCC ownership rules adopted in 2003, we would be allowed to continue to program most of the stations with which we have an LMA. In the absence of a waiver, the 2003 rules would require us to terminate or modify three of our LMAs in markets where both the station we own and the station with which we have an LMA are ranked among the top four stations in their particular designated market area. The FCCs 2003 ownership rules include specific provisions permitting waivers of this top four restriction. Although there can be no assurances, we have studied the application of the 2003 rules to our markets and believe we are qualified for waivers. The 2003 rules have been stayed by the U.S. Court of Appeals for the Third Circuit and are on remand to the FCC. Because the 2003 ownership rules have been remanded, it is not clear if we will be required to terminate or modify our LMAs in markets where we have such arrangements.

On April 22, 2003 an EEOC charge was filed by Richard Enderwood, a former KOKH research director claiming age discrimination after he was terminated for cause. The charge resulted in a lawsuit which we received on December 29, 2003. We were granted a motion to dismiss in part on May 24, 2004 and a motion for summary judgment on June 8, 2006. On August 10, 2006 a Motion for Costs was granted in amount of $7,370.24 in our favor and we will begin the garnishment process. On November 2006 appellate briefs were filed and a decision is pending.

On June 1, 2006 a complaint from Holiday Organization, Inc. was received against Builder1440 and co-defendant Builder MT alleging that the software sold to plaintiff did not work properly. Holiday Organization, Inc. is demanding a $125,000 refund and $1,000,000 in damages to its operations. On July 28, 2006 an answer and counterclaim for unpaid maintenance fees was filed and in October 2006 initial disclosures were filed and discovery commenced.

On May 2, 2006 a complaint against KDSM and SBG by Sun Media claimed copyright infringement, breach of contract, and misappropriation of trade secrets. On May 12, 2006 Sun Media offered to settle for $550,000. A trial is scheduled for February 18, 2008 and initial disclosures have been filed.

In 2003, we filed with the FCC applications and associated waiver requests to acquire WRGT-TV, WTAT-TV, WVAH-TV, WNUV(TV), and WTTE(TV). We also have pending a petition for reconsideration of the 2001 dismissal of an application to acquire WBSC-TV. The Rainbow/PUSH Coalition (Rainbow) filed a petition to deny the five 2003 applications and to revoke all of our licenses. The FCCs Media Bureau denied the Rainbow petition, and Rainbow filed a petition for reconsideration, which is still pending. The Media Bureau dismissed our applications in light of the Third Circuits stay of the FCCs 2003 ownership rules and because the applications were not facially consistent with the 1999 local television ownership rule. We filed with the full Commission an application for review of the dismissal, which is still pending before the FCC.

We timely filed with the FCC applications for the license renewal of television stations WXLV-TV, WUPN-TV, WLFL(TV), WRDC(TV), WLOS(TV), and WMMP(TV), all of which are located in either North or South Carolina. On November 1, 2004, an organization calling itself Free Press filed a petition to deny the renewal applications of these stations. Several individuals and an organization named Sinclair Media Watch also filed informal objections to the license renewal applications of WLOS(TV) and WBSC-TV, raising essentially the same arguments presented in the Free Press petition. We opposed the petition to deny and informal objections against those stations, and the renewal applications are currently pending.

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

On October 12, 2004, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) in the amount of $7,000 per station to virtually every Fox station, including sixteen Fox affiliates licensed to us at that time. The NAL alleged that the stations broadcast indecent material contained in an episode of a Fox network program that aired on April 7, 2003. The Fox network and we filed oppositions to the NAL. The proceeding is still pending.

FCC staff in the Investigations and Hearings Division of the FCCs Enforcement Bureau have informed us that there are one or more formal or informal complaints currently pending against television stations WTTO(TV), WLFL(TV) and WLOS(TV) and certain of our other

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document stations. We received a copy of a letter to WLFL Licensee, LLC dated May 9, 2005, from FCC staff in the Investigations and Hearings Division of the FCCs Enforcement Bureau informing us that the Enforcement Bureau is investigating allegations contained in a complaint about the broadcast of indecent material on television station WLFL(TV).

On July 21, 2005, we filed an application to acquire WNAB(TV). Rainbow filed a petition to deny that application and also requested that the FCC initiate a hearing to investigate whether WNAB(TV) was improperly operated with WZTV(TV) and WUXP(TV), two stations licensed to us and located in the same market as WNAB(TV). We and the licensee of WNAB(TV) opposed Rainbows filing, and the proceeding is currently pending.

On August 1, 2005, we timely filed with the FCC applications requesting renewal of the broadcast licenses for WICS-TV and WICD-TV in Springfield/Champaign, Illinois. Subsequently, various viewers filed informal objections requesting that the FCC deny these renewal applications. On August 1, 2005, we also timely filed with the FCC applications requesting renewal of the broadcast licenses for WCGV-TV and WVTV-TV in Milwaukee, Wisconsin. On November 1, 2005, the Milwaukee Public Interest Media Coalition filed with the FCC a petition to deny these renewal applications. On September 30, 2005, we timely filed with the FCC an application for the renewal of the broadcast license for KGAN-TV in Cedar Rapids, Iowa. On December 28, 2005, an organization calling itself Iowans for Better Local Television filed a petition to deny that application. We opposed the above-mentioned objections and petitions to deny, and the renewal applications are currently pending.

On March 15, 2006, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) in the amount of $32,500 per station to a number of CBS affiliated and owned and operated stations, including KGAN-TV in Cedar Rapids, Iowa, which is licensed to us. The NAL alleged that the stations broadcast indecent material contained in an episode of Without a Trace, a CBS network program that aired on December 31, 2004 at 9:00 pm. CBS opposed the NAL on behalf of its affiliates, and the NAL proceeding is still pending.

On August 11, 2006, the FCC sent a letter to us requesting information regarding the broadcast of video news releases, by seven stations licensed to us, without proper sponsorship identification in alleged violation of the Communications Laws. We responded and denied that the stations violated the Communications Laws. This matter is currently pending.

In October 2006, Mediacom Communications Corporation (Mediacom) filed a complaint and motion for preliminary injunction in a federal district court in Iowa asserting that the we had violated the federal antitrust laws, conducted tortious interference with contracts and business expectations, and engaged in unfair competition. We opposed the motion. Subsequently, the court issued an order denying Mediacoms motion for preliminary injunction, and Mediacom filed an appeal of that order, which it subsequently withdrew. An answer to the complaint is currently due on December 28, 2006. On October 31, 2006, Mediacom filed with the FCC an Emergency Retransmission Consent Complaint and other associated pleadings, essentially alleging the same violations described above and also arguing that we failed to negotiate retransmission consent in good faith, as required by the Communications Laws. Mediacom also separately filed a pleading with the FCC opposing the grant of the license renewal applications of thirty-nine stations licensed to us or receiving services from us, for the reasons stated above. We opposed all of Mediacoms FCC filings. The FCC complaint proceeding and the license renewal proceedings are currently pending.

On November 7, 2006, the FCC sent a letter to us requesting information regarding the broadcast of certain programs, by over thirty stations licensed to us, without proper sponsorship identification in alleged violation of the Communications Laws. A response to this request is currently due December 22, 2006.

Schedule 4.06(b)

Environmental Matters

Schedule 4.13(a)

Material Indebtedness

1. Second Amended and Restated Credit Agreement, dated as of May 12, 2005, between Sinclair Television Group, Inc. (as borrower), various subsidiaries of Sinclair Broadcast Group, Inc. party thereto and Sinclair Broadcast Group, Inc. (as guarantors), various lenders (as lenders) and JPMorgan Chase Bank (as agent).

2. $21.0 million Master Lease Agreement, dated December 1, 2000, between Sinclair Communications, Inc. (as lessee) and American Tower L.P. (as lessor) for tower space.

3. $7.0 million Lease Agreement, dated May 25, 2000, between Sinclair Broadcast Group, Inc. (as lessee) and Beaver Dam Limited Liability Company (as lessor) for building space located at 10706 Beaver Dam Rd, Cockeysville, MD.

4. (With #3, above) $7.0 million Lease Agreement, dated December 18, 1998, between Sinclair Communications, Inc. (as lessee) and Beaver Dam Limited Liability Company (as lessor) for building space located at 10706 Beaver Dam Rd, Cockeysville, MD.

5. $310.0 million 8.75% Indenture, dated as of December 10, 2001, as heretofore amended, among Sinclair Television Group, Inc. (as borrower), the Guarantors named therein (as guarantors) and Wachovia Bank, National Association (formerly First Union National Bank) (as trustee), of which $307.4 million is currently outstanding.

6. Mark to market of existing interest rate derivative transactions.

7. $300.0 million 8.0% Indenture, dated as of March 14, 2002, as heretofore amended, among Sinclair Television Group, Inc. (as issuer), the Guarantors named therein (as guarantors) and Wachovia Bank, National Association (formerly First Union National Bank) (as trustee); Add-on issuances of $125.0 million dated as of November 8, 2002, $125.0 million dated as of December 31, 2002 and $100.0 million dated as of May 29, 2003, of which $618.3 million is currently outstanding.

8. $34.5 million Credit Agreement, dated March 20, 2003 between Cunningham Broadcasting Corporation. (as borrower), the Subsidiary Guarantors named therein (as guarantors) and JP Morgan Chase (as administrative agent), as amended.

9. $150.0 million 4.875% Convertible Indenture, dated July 15, 2003 among Sinclair Broadcast Group, Inc. (as issuer), the Guarantors named therein and Wachovia Bank, National Association (formerly First Union National Bank) as trustee.

10. $172.5 million 6.0% Convertible Indenture, as amended, dated September 1997 among Sinclair Broadcast Group, Inc. (as issuer), the Guarantors named therein and Wachovia Bank, National Association (formerly First Union National Bank) as trustee.

Schedule 4.13(b)

Liens filed in favor of JPMorgan Chase Bank, N.A. pursuant to the Credit Agreement dated as of May 12, 2005, among the Borrower (as assignee of the Holding Company), the Subsidiary Guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for said lenders (as heretofore modified and supplemented and in effect on the date hereof.

Liens filed in favor of the State of Tennessee for the payment of franchise taxes, interest, penalties and fees, pending decision by taxing authority.

Schedule 4.14(a)

Subsidiaries

Company State of Organization Ownership Nature of Ownership Birmingham (WABM-TV) Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Licensee, Inc. Acquisition IX, Inc. outstanding stock

Channel 33, Inc. Nevada Wholly owned Subsidiary of 100% of issued and Montecito Broadcasting Corporation outstanding stock

Chesapeake Television Maryland Wholly owned Subsidiary of Sinclair 100% of membership Licensee, LLC Communications, LLC interest

Internet Projects, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Television Group, Inc. interest

KABB Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Communications, LLC interest

KBSI Licensee L.P. Virginia General Partner, Sinclair Properties, 98%, Sinclair Properties, LLC LLC

Limited Partner, Sinclair 2%, Sinclair Communications, LLC Communications, LLC

KDNL Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media I, Inc. interest

KGAN Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Acquisition IV, Inc. interest

KLGT, Inc. (formerly known as Lakeland Minnesota Wholly owned Subsidiary of Sinclair 100% of issued and Group Television, Inc.) Communications, LLC outstanding stock

KLGT Licensee, LLC Maryland Wholly owned Subsidiary of KLGT, 100% of membership Inc. interest

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document KOCB, Inc. (formerly known as Superior Oklahoma Wholly owned Subsidiary of Sinclair 100% of issued and Communications of a Oklahoma, Inc.) Communications, LLC outstanding stock

KOCB Licensee, LLC Maryland Wholly owned Subsidiary of KOCB, 100% of membership Inc. interest

Company State of Organization Ownership Nature of Ownership KOKH Licensee, LLC Maryland Wholly owned Subsidiary of KOKH, 100% of membership LLC interest

KOKH, LLC Nevada Wholly owned Subsidiary of WDKY, 100% of issued and Inc. outstanding stock

KSMO, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

KSMO Licensee, Inc. Delaware Wholly owned Subsidiary of KSMO, 100% of issued and Inc. outstanding stock

KUPN Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media II, Inc. interest

Montecito Broadcasting Corporation Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

New York Television, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

Raleigh (WRDC-TV) Licensee, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Acquisition VIII, Inc. outstanding stock

San Antonio (KRRT-TV) Licensee, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Acquisition X, Inc. outstanding stock

San Antonio Television, LLC Delaware Wholly owned Subsidiary of Sinclair 100% of membership Communications, LLC interest

SCI-Indiana Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media II, Inc. interest

SCI- Sacramento Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Communications, LLC interest

Sinclair Acquisition IV, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and (f/k/a WDBB, Inc.) Communications, LLC outstanding stock

Sinclair Acquisition VII, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications II, Inc. outstanding stock

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company State of Organization Ownership Nature of Ownership Sinclair Acquisition VIII, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications II, Inc. outstanding stock

Sinclair Acquisition IX, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications II, Inc. outstanding stock

Sinclair Acquisition X, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications II, Inc. outstanding stock

Sinclair Communications, LLC Maryland Wholly owned subsidiary of Sinclair 100% of issued and Television Group, Inc. outstanding stock

Sinclair Communications II, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Television Group, Inc. outstanding stock

Sinclair Finance, LLC Minnesota Wholly owned Subsidiary of KLGT, 100% of membership Inc. interest

Sinclair Holdings I, Inc. Virginia Wholly owned Subsidiary of Sinclair 100% of issued and (f/k/a Max Radio, Inc.) Communications, LLC outstanding stock

Sinclair Holdings II, Inc. Virginia 69% owned by Sinclair 69% of issued and (f/k/a/ MTR Holding Corp) Communications, LLC outstanding stock owned by Sinclair Communications, LLC

31% owned by Sinclair Holdings I, 31% of issued and Inc. outstanding stock owned by Sinclair Holdings I, Inc.

Sinclair Holdings III, Inc. Virginia Wholly owned Subsidiary of Sinclair 100% of issued and (f/k/a/ Max Investors, Inc.) Communications, LLC outstanding stock

Sinclair Media I, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and (formerly known as WPGH, Inc.) Communications, LLC outstanding stock

Company State of Organization Ownership Nature of Ownership Sinclair Media II, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and (formerly known as WTTE, Channel 28, Communications, LLC outstanding stock Inc.)

Sinclair Media III, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and (formerly known as WSTR, Inc.) Communications, LLC outstanding stock

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Sinclair NewsCentral, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Communications, LLC interest

Sinclair Programming Company, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Television Group, Inc. interest

Sinclair Properties, LLC Virginia 26.4% by Sinclair Holdings I, Inc. 26.4% of membership interest

45.8% by Sinclair Communications, 45.8% of membership LLC interest

26.9% by Sinclair Holdings III, Inc. 26.9% of membership interest .

.9% by Sinclair Holdings II, Inc. .9% membership interest

Sinclair Properties II, LLC Virginia Wholly owned Subsidiary of Sinclair 100% of membership Communications, LLC interest

Sinclair Television Company, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Communications II, Inc. outstanding stock

Sinclair Television Company II, Inc. (f/ Delaware Wholly owned Subsidiary of Sinclair 100% of issued and k/a Sullivan Broadcasting Company II, Television Group, Inc. outstanding stock Inc.)

Sinclair Television of Buffalo, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Television of Nevada, Inc. outstanding stock

Sinclair Television of Charleston, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Television of Nevada, Inc. outstanding stock

Company State of Organization Ownership Nature of Ownership Sinclair Television of Dayton, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Television of Nevada, Inc. outstanding stock

Sinclair Television of Nashville, Inc. Tennessee Wholly owned Subsidiary of Sinclair 100% of issued and Television of Nevada, Inc. outstanding stock

Sinclair Television of Nevada, Inc. Nevada Wholly owned Subsidiary of Sinclair 100% of issued and Television Company, Inc. outstanding stock

Sinclair Television of Tennessee, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and Television of Nashville, Inc. outstanding stock

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Sinclair Television License Holder, Inc. Nevada 85.2% - Sinclair Television of Nevada, 85.2% of issued and Inc. outstanding stock

5.5% - Sinclair Television of 5.5% of issued and Nashville, Inc. outstanding stock

1.8% - Sinclair Television of Buffalo, 1.8% of issued and Inc. outstanding stock

1.8% - Sinclair Television of Dayton, 1.8% of issued and Inc. outstanding stock

1.8% - Sinclair Television Company, 1.8% of issued and Inc. outstanding stock

3.7% - Sinclair Television of 3.7% of issued and Charleston, Inc. outstanding stock

WCGV, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

WCGV Licensee, LLC Maryland Wholly owned Subsidiary of WCGV, 100% of membership Inc. interest

WCHS Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media III, Inc. interest

WCWB Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media I, Inc. interest

WDKA Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Properties, LLC interest

Company State of Organization Ownership Nature of Ownership WDKY, Inc. Delaware 45.92% owned by Sinclair 45.92% of issued and Communications, LLC outstanding stock

54.08% owned by Sinclair Television 54.08% of issued and of Nevada, Inc. outstanding stock

WDKY Licensee, LLC Maryland Wholly owned Subsidiary of WDKY, 100% of membership Inc. interest

WEAR Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media II, Inc. interest

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document WEMT Licensee L.P. Virginia General Partner - Sinclair Properties II, 98% Sinclair Properties, (f/k/a Max Television of Tri-Cities, L.P.) LLC II LLC

Limited Partner - Sinclair 2% Sinclair Communications, LLC Communications, LLC

WFGX Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Media II, LLC interest

WGGB, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and (f/k/a Sinclair Radio of Albuquerque, Communications, LLC outstanding stock Inc.)

WGGB Licensee, LLC Maryland Wholly owned Subsidiary of WGGB, 100% of membership Inc. interest

WGME, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and (f/k/a WSYX, Inc.) Communications, LLC outstanding stock

WGME Licensee, LLC Maryland Wholly owned Subsidiary of WGME, 100% of membership Inc. interest

WICD Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Acquisition IV, Inc. interest

WICS Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Acquisition IV, Inc. interest

WKEF Licensee L.P. Virginia General Partner - Sinclair Properties II, 98% Sinclair Properties (f/k/a Max Television of Dayton, L.P. LLC II, LLC

Limited Partner - Sinclair 2% Sinclair Communications, LLC Communications, LLC

WLFL, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

Company State of Organization Ownership Nature of Ownership WLFL Licensee, LLC Maryland Wholly owned Subsidiary of WLFL, 100% of membership Inc. interest

WLOS Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Communications, LLC interest

WMMP Licensee L.P. Virginia General Partner - Sinclair Properties, 98% - Sinclair Properties, LLC LLC

Limited Partner - Sinclair 2% - Sinclair Communications, LLC Communications, LLC

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document WMSN Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television Company, Inc. interest

WNAB Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television of Nashville, Inc. interest

WNYO, Inc. Delaware Wholly owned Subsidiary of Sinclair 100% of issued and (f/k/a Grant Television, Inc.) Communications, LLC outstanding stock

WNYS Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Properties, LLC interest

WPGH Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Media I, Inc. interest

WRDC, LLC Nevada Wholly owned Subsidiary of WLFL, 100% of membership Inc. interest

WRGT Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of issued and Television of Dayton, Inc. outstanding stock

WRLH Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television of Charleston, Inc. interest

WSMH, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

Company State of Organization Ownership Nature of Ownership WSMH Licensee, LLC Maryland Wholly owned Subsidiary of WSMH, 100% of membership Inc. interest

WSTR Licensee, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Media III, Inc. outstanding stock

WSYT Licensee L.P. Virginia General Partner - Sinclair Properties, 98% - Sinclair Properties, LLC LLC

Limited Partner - Sinclair 2% - Sinclair Communications, LLC Communications, LLC

WSYX Licensee, Inc. Maryland Wholly owned Subsidiary of Sinclair 100%of issued and Media II, Inc. outstanding stock

WTAT Licensee, Inc, Nevada Wholly owned Subsidiary of Sinclair 100% of issued and Television of Charleston, Inc. outstanding stock

WTTO, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document WTTO Licensee, LLC Maryland Wholly owned Subsidiary of WTTO, 100% of membership Inc. interest

WTVZ, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

WTVZ Licensee, LLC Maryland Wholly owned Subsidiary of WTVZ, 100% of membership Inc. interest

WTWC, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

WTWC Licensee, LLC Maryland Wholly owned Subsidiary of WTWC, 100% of membership Inc. interest

WUHF Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television Company, Inc. interest

WUPN Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Television of Buffalo, Inc. interest

WUTV Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television of Buffalo, Inc. interest

Company State of Organization Ownership Nature of Ownership WUXP Licensee, LLC Maryland Wholly owned Subsidiary of Sinclair 100% of membership Television of Tennessee, Inc. interest

WVAH Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of issued and Television of Nashville, Inc. outstanding stock

WVTV Licensee, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Acquisition VII, Inc. outstanding stock

WXLV Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television of Buffalo, Inc. interest

WYZZ, Inc. Maryland Wholly owned Subsidiary of Sinclair 100% of issued and Communications, LLC outstanding stock

WYZZ Licensee, Inc. Delaware Wholly owned Subsidiary of WYZZ, 100% of issued and Inc. outstanding stock

WZTV Licensee, LLC Nevada Wholly owned Subsidiary of Sinclair 100% of membership Television of Nashville, Inc. interest

Committed Investments Outstanding

Notes Receivable G1440, Inc. $ 1,911,585 ($1,911,585 outstanding) Acrodyne Communications, Inc. $ 697,241 Acrodyne Communications, Inc. $ 500,000 ($310,949 drawn) Acrodyne Communications, Inc. $ 3,500,000 ($2,600,000 drawn)

Purchase Options by Third parties Lambert Purchase Option $ 36,250,000 ($35,750,000 paid)

Investments Allegiance Capital, LP. $ 14,580,000 ($9,234,490 invested) G1440, Inc. $ 11,113,083 Sterling Venture partners, LP. $ 5,000,000 ($3,798,336 invested) Acrodyne Recapitalization $ 8,380,691 Jadoo Power Systems $ 4,737,893 VisionAir $ 3,469,579

Schedule 7.01(b)

Existing Indebtedness

1. Lease Agreement, dated January 1, 1991, between Chesapeake Television, Inc. (as lessee) and Keyser Investment Group, Inc. (as lessor), for space located at 2000-2008 W. 41st Street, Baltimore, MD.

2. Lease Agreement, dated April 2, 1987, as amended, between Chesapeake Television, Inc. (as lessee) and Cunningham Communications, Inc. (as lessor), for space located on the primary Baltimore broadcasting tower at 3900 Hooper Avenue, Baltimore, MD.

3. Lease Agreement, dated March 16, 1988, between Chesapeake Television, Inc. (as lessee) and Cunningham Communications, Inc. (as lessor), for space located on the back-up Baltimore broadcasting tower at 1200 N. Rolling Road, Baltimore, MD.

4. Lease Agreement, dated September 23, 1993, as amended, between WPGH, Inc. (as lessee) and Gerstell Development Limited Partnership (as lessor), for building space located at 750 Ivory Avenue, Pittsburgh, PA.

5. Credit Agreement, dated as of May 12, 2005, between Sinclair Television Group, Inc. (as borrower), various subsidiaries of Sinclair Broadcast Group, Inc. party thereto (as guarantors), various lenders (as lenders) and JPMorgan Chase Bank (as agent).

6. Lease Agreement, dated August 12, 1999, between KMWB, Inc. (as lessee) and Telefarm, Inc. (as lessor) for tower and land space located at 960 County Rd F W, Shoreview, Minnesota.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7. Master Lease Agreement, dated December 1, 2000, between Sinclair Communications, Inc. (as lessee) and American Tower L.P. (as lessor) for tower space.

8. Lease Agreement, dated December 18, 1998, between Sinclair Communications, Inc. (as lessee) and Beaver Dam Limited Liability Company (as lessor) for building space located at 10706 Beaver Dam Rd, Cockeysville, MD.

9. Real Estate Lien Note, dated October 10, 1997, between Chesapeake Television, Inc. (as maker) and Joy B. Moul (as payee) for land space for a tower site located at 12480 Adkins-Elmendorf Rd, San Antonio, TX.

10. $310.0 million 8.75% Indenture, dated as of December 10, 2001, as heretofore amended, among Sinclair Television Group, Inc. (as issuer), the Guarantors named therein (as guarantors) and Wachovia Bank, National Association (formerly First Union National Bank) (as trustee), of which $307.4 million is currently outstanding.

11. Lease Agreement, dated, February 13, 2001, between WPTT, Inc. (as lessee) and Gerstell Development Limited Partnership (as lessor), for tower space located at 750 Ivory Avenue, Pittsburgh, PA.

12. Letter of credit for the benefit of Liberty Property Ltd., dated October 12, 2000 supporting the building lease for WTTA in Tampa, Florida.

13. $300.0 million 8.0% Indenture, dated as of March 14, 2002, as heretofore amended, among Sinclair Television Group, Inc. (as issuer), the Guarantors named therein (as guarantors) and Wachovia Bank, National Association (formerly First Union National Bank) (as trustee); Add-on issuances of $125.0 million dated as of November 8, 2002, $125.0 million dated as of December 31, 2002 and $100.0 million dated as of May 29, 2003, of which $618.3 million is currently outstanding.

14. Lease Agreement, dated December 2, 1999, between WLFL, Inc. (as lessee) and Capitol Broadcasting Company (as lessor), for tower space in Garner, NC.

15. Lease Agreement, dated December 2, 1999, between WRDC, Inc. (as lessee) and Capitol Broadcasting Company (as lessor), for tower space near Garner, NC.

16. Ground Lease Agreement, October 19, 1990, Auburn Tower Partnership, (comprised of Capital Broadcasting Company, Inc. and Durham Broadcasting, Inc.) Landlord, to Durham Life Broadcasting, Inc., Tenant.

17. Tower Space Lease Agreement, August 1, 1990, Auburn Tower Partnership, Landlord, to Durham Life Broadcasting, Inc., Tenant.

18. First Amendment to Tower Space Lease Agreement, January 15, 1991, Auburn Tower Partnership, Landlord, and Durham Life Broadcasting, Inc., Tenant.

19. Second Amendment to Tower Space Lease, July 30, 1991, by and between Auburn Tower Partnership and FSF TV, Inc., (assignee of Broadcast Merger Corporation, which was the successor by merger of Durham Life Broadcasting, Inc.).

20. Memorandum of Assignment of Both Ground and Tower Space Leases, July 30, 1991, Broadcast Merger Corporation to FSF TV, Inc., Wake County Register of Deeds, Book 4959, Page 0211.

21. Assignment of Lease, March 31, 1995, FSF TV, Inc. to Raleigh (WRDC-TV), Inc., Wake County Register of Deeds, Book 6497, Page 0139

22. Lease Agreement, dated October 30, 2001, between WTWC, Inc. (as lessee) and SpectraSite Broadcast Towers, Inc. (as lessor), for tower space located at coordinates Lat:30-40-51N and Long: 083-58-21W in Metcalf, GA.

23. Lease Agreement, dated November 1, 2002 between WRLH, Inc. (as lessee) and Spectrasite Broadcast Towers, Inc. (as lessor) for tower and antenna space in Richmond, VA.

24. Lease Agreement, dated August 30, 2004 between Sinclair Properties, LLC (as lessee) and Media General Operation, Inc. (as lessor) for tower and ground space in Charleston County, SC.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 25. Letter of credit for the benefit of RKM Media, Inc., dated July 15, 2005 in support of the purchase of the licensed assets for WNYS in Syracuse, New York.

26. Letter of credit for the benefit of Clipper Mill Federal, LLC, dated June 5, 2006 in support of the building lease for G1440, LLC in Baltimore, Maryland.

27. $172.5 million 6.0% Convertible Indenture, as amended, dated September 1997 among Sinclair Broadcast Group, Inc. (as issuer), the Guarantors named therein and Wachovia Bank, National Association (formerly First Union National Bank) as trustee.

28. $150.0 million 4.875% Convertible Indenture, dated July 15, 2003 among Sinclair Broadcast Group, Inc. (as issuer), the Guarantors named therein and Wachovia Bank, National Association (formerly First Union National Bank) as trustee.

29. $34.5 million Credit Agreement, dated March 20, 2002 between Cunningham Broadcasting Corporation. (as borrower), the Subsidiary Guarantors named therein (as guarantors) and JP Morgan Chase (as administrative agent).

Schedule 7.04

Approved Acquisitions

1. Sinclair Acquisition XI, Inc., a subsidiary of Borrower intends to acquire television broadcast station WBSC-TV (formerly WFBC-TV), Anderson, South Carolina from a subsidiary of Cunningham pursuant to that certain Plan and Agreement of Merger dated November 15, 1999, as heretofore amended. FCC approval is pending.

2. Sinclair Television of Nashville, Inc., a subsidiary of Borrower has the option to acquire all of the license and non-license assets of television broadcast station WNAB-TV Channel 28, Nashville, Tennessee, pursuant to two (2) Option Agreements and two (2) Put Agreements each dated May 1, 2002.

3. Sinclair Acquisition XIII, Inc., a subsidiary of Borrower intends to acquire television broadcast station WTTE-TV, Columbus, Ohio, from a subsidiary of Cunningham pursuant to that certain Plan and Agreement of Merger dated July 3, 2002.

4. Sinclair Acquisition XIV, Inc., a subsidiary of Borrower intends to acquire television broadcast station WNUV-TV, Baltimore, Maryland, from a subsidiary of Cunningham pursuant to that certain Plan and Agreement of Merger dated July 3, 2002.

5. Borrower, Sinclair Television of Dayton, Inc. and WRGT Licensee, LLC, each a subsidiary of Borrower, intend to acquire television broadcast station WRGT-TV, Dayton, Ohio, from subsidiary of Cunningham pursuant to that certain Asset Purchase Agreement dated July 3, 2002.

6. Borrower, Sinclair Television of Charleston, Inc. and WTAT Licensee, LLC, each a subsidiary of Borrower, intend to acquire television broadcast station WTAT-TV, Charleston, South Carolina, from subsidiaries of Cunningham pursuant to that certain Asset Purchase Agreement dated July 3, 2002.

7. Borrower, Sinclair Properties, LLC, a subsidiary of Borrower, intend to acquire television broadcast station WNYS-TV, Syracuse, New York, from RKM Media, Inc. pursuant to that certain Asset Purchase Agreement dated July 2005.

8. Borrower, Sinclair Television of Nashville, Inc. and WVAH Licensee, LLC each a subsidiary of Borrower, intend to acquire television broadcast station WVAH-TV, Charleston, West Virginia, from subsidiaries of Cunningham pursuant to that certain Asset Purchase Agreement dated July 3, 2002.

9. Borrower and Sinclair Properties, LLC, a subsidiary of Borrower, intend to acquire television broadcast station WDKA-TV, Paducah, Kentucky, from WDKA Acquisition Corp. pursuant to that certain Asset Purchase Agreement dated December 22, 2005.

Approved Dispositions

WTTA-TV, Tampa, Florida (contract station)

Schedule 7.10

Restrictive Agreements

1. Indenture Dated December 10, 2001, as heretofore amended, by and between Sinclair Television Group, Inc. (as issuer), certain of its subsidiaries and First Union National Bank (as trustee) relating to 8 ¾% Senior Subordinated Notes due 2011.

2. Indenture Dated March 14, 2002, as heretofore amended, by and between Sinclair Television Group, Inc. (as issuer), certain of its subsidiaries and First Union National Bank (as trustee) relating to 8% Senior Subordinated Notes due 2012.

SINCLAIR BROADCAST GROUP, INC AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, 2004, 2003, and 2002 (DOLLARS IN THOUSANDS)

2006 2005 2004 2003 2002 Income (loss) before provision (benefit) for income taxes from continuing operations $ 55,617 $ 70,352 $ 26,203 $ 26,959 $ (17,626) Fixed charges (a) 115,217 120,002 120,400 121,165 118,114 Earnings available for fixed charges 170,834 190,354 146,603 148,124 100,488 Fixed charges (a) 115,217 120,002 120,400 121,165 118,114 Excess of earnings over fixed charges (b) $ 55,617 $ 70,352 $ 26,203 $ 26,959 $ (17,626)

Ratio of earnings to fixed charges 1.48 1.59 1.22 1.22 Earnings available for combined fixed charges and preferred stock dividends $ 170,834 $ 198,632 $ 162,265 $ 164,047 $ 116,411 Combined fixed charges and preferred stock dividends (c) 115,217 128,280 136,062 137,088 134,037 Excess of earnings over combined fixed charges and preferred stock dividends (d) $ 55,617 $ 70,352 $ 26,203 $ 26,959 $ (17,626) Ratio of earnings to combined fixed charges and preferred stock dividends 1.48 1.55 1.19 1.20 (a) Fixed charges consist of interest expense, which includes interest on all debt and amortization of debt discount, capitalized interest and amortization of deferred financing costs.

(b) Earnings were inadequate to cover fixed charges for the year ended December 31, 2002. Additional earnings of $17,626 would have been required to cover fixed charges in the year ended December 31, 2002.

(c) Combined fixed charges and preferred stock dividends consist of interest expense, which includes interest on all debt and amortization of debt discount and premium, capitalized interest and deferred financing costs and preferred stock dividends. Preferred stock dividends are divided by (1 effective tax rate) with the tax rate being 39.55% for the year ended December 31, 2005 and 35.00% for the years ended December 31, 2004, 2003, and 2002. On June 15, 2005, we completed an exchange of our Series D Convertible Exchangeable Preferred Stock into Convertible Debentures, due 2012. Accordingly, there were no preferred stock dividends paid in 2006.

(d) Earnings were inadequate to cover fixed charges and preferred stock dividends for the year ended December 31, 2002. Additional earnings of $17,626 would have been required to cover fixed charges and preferred stock dividends in the year ended December 31, 2002.

SINCLAIR BROADCAST GROUP, INC. List of Subsidiaries as of March 5, 2007

Acrodyne Communications, Inc. (Delaware Corporation) 82.31% Acrodyne Industries, Inc. (Pennsylvania Corporation)

Allegiance Capital L.P. (Maryland Limited Partnership) 96.96%

KDSM, LLC (Maryland LLC) KDSM Licensee, LLC (Maryland LLC)

Keyser Capital, LLC (Maryland LLC)

Sinclair Acquisition XI, Inc. (Maryland Corporation)

Sinclair Acquisition XII, Inc. (Delaware Corporation)

Sinclair Acquisition XIII, Inc. (Maryland Corporation)

Sinclair Acquisition XIV, Inc. (Maryland Corporation)

Sinclair Acquisition XV, Inc. (Maryland Corporation)

Sinclair Investment Group, LLC (Maryland LLC)

Sinclair Ventures, Inc. (Maryland Corporation) G1440 Holdings, Inc. (Maryland Corporation) 93.95% Builder 1440, LLC (Maryland LLC) G1440, LLC (Maryland LLC) I1440, LLC (Maryland LLC)

Sinclair Television Group, Inc. (Maryland Corporation) Sinclair Television Company II, Inc. (Delaware Corporation) Sinclair Programming Company, LLC (Maryland, LLC) Sinclair Communications, LLC (Maryland LLC) WLFL, Inc. (Maryland Corporation) WLFL Licensee, LLC (Maryland LLC) WRDC, LLC (Nevada LLC) Highwoods Joint Venture (North Carolina Partnership) 60% Sinclair Media I, Inc. (Maryland Corporation) WPGH Licensee, LLC (Maryland LLC) KDNL Licensee, LLC (Maryland LLC) WCWB Licensee, LLC (Maryland LLC) Sinclair Media III, Inc. (Maryland Corporation) WSTR Licensee, Inc. (Maryland Corporation) WCHS Licensee, LLC (Maryland LLC) KSMO, Inc. (Maryland Corporation) KSMO Licensee, Inc. (Delaware Corporation) WYZZ, Inc. (Maryland Corporation)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document WYZZ Licensee, Inc. (Delaware Corporation) WSMH, Inc. (Maryland Corporation) WSMH Licensee, LLC (Maryland LLC)

WTVZ, Inc. (Maryland Corporation) WTVZ Licensee, LLC (Maryland LLC) KLGT, Inc. (Minnesota Corporation) KLGT Licensee, LLC (Maryland LLC) Sinclair Finance, LLC (Minnesota LLC) WGME, Inc. (Maryland Corporation) WGME Licensee, LLC (Maryland LLC) Sinclair Acquisition IV, Inc. (Maryland Corporation) KGAN Licensee, LLC (Maryland LLC) WICD Licensee, LLC (Maryland LLC) WICS Licensee, LLC (Maryland LLC) WTTO, Inc. (Maryland Corporation) WTTO Licensee, LLC (Maryland LLC) WCGV, Inc. (Maryland Corporation) WCGV Licensee, LLC (Maryland LLC) Sinclair Media II, Inc. (Maryland Corporation) SCI-Indiana Licensee, LLC (Maryland LLC) KUPN Licensee, LLC (Maryland LLC) WEAR Licensee, LLC (Maryland LLC) WSYX Licensee, Inc. (Maryland Corporation) WFGX Licensee, LLC (Nevada LLC) San Antonio Television, LLC (Delaware LLC) Chesapeake Television Licensee, LLC (Maryland LLC) SCI-Sacramento Licensee, LLC (Maryland LLC) KABB Licensee, LLC (Maryland LLC) WLOS Licensee, LLC (Maryland LLC) Sinclair Radio of St. Louis, Inc. (Maryland Corporation) WGGB, Inc. (Maryland Corporation) WGGB Licensee, LLC (Maryland LLC) KOCB, Inc. (Oklahoma Corporation) KOCB Licensee, LLC (Maryland LLC) Tuscaloosa Broadcasting, Inc. (Maryland Corporation) WTWC, Inc. (Maryland Corporation) WTWC Licensee, LLC (Maryland LLC) Sinclair Holdings I, Inc. (Virginia Corporation) Sinclair Holdings II, Inc. (Virginia Corporation) Sinclair Holdings III, Inc. (Virginia Corporation) Sinclair Properties, LLC (Virginia LLC) KBSI Licensee L.P. (Virginia Limited Partnership) WMMP Licensee L.P. (Virginia Limited Partnership) WSYT Licensee L.P. (Virginia Limited Partnership) WNYS Licensee, LLC (Nevada LLC) WDKA Licensee, LLC (Nevada LLC) Sinclair Properties II, LLC (Virginia LLC) WKEF Licensee, L.P. (Virginia Limited Partnership) WEMT Licensee, L.P. (Virginia Limited Partnership)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document New York Television, Inc. (Maryland Corporation) Montecito Broadcasting Corporation (Delaware Corporation) Channel 33, Inc. (Nevada Corporation) WNYO, Inc. (Delaware Corporation) Sinclair News Central, LLC (Maryland LLC)

Sinclair Communications II, Inc. (Delaware Corporation) Sinclair Television Company, Inc. (Delaware Corporation) WMSN Licensee, LLC (Nevada LLC) WUHF Licensee, LLC (Nevada LLC) Sinclair Television of Nevada, Inc. (Nevada Corporation) Sinclair Television License Holder, Inc. (Nevada Corporation) Sinclair Television of Dayton, Inc. (Delaware Corporation) WRGT Licensee, LLC (Nevada LLC) Sinclair Television of Charleston, Inc. (Delaware Corporation) WRLH Licensee, LLC (Nevada LLC) WTAT Licensee, LLC (Nevada LLC) Sinclair Television of Nashville, Inc. (Tennessee Corporation) WZTV Licensee, LLC (Nevada LLC) WVAH Licensee, LLC (Nevada LLC) WNAB Licensee, LLC (Nevada LLC) Sinclair Television of Tennessee, Inc. (Delaware Corporation) WUXP Licensee, LLC (Maryland LLC) Sinclair Television of Buffalo, Inc. (Delaware Corporation) WUPN Licensee, LLC (Maryland LLC) WUTV Licensee, LLC (Nevada LLC) WXLV Licensee, LLC (Nevada LLC) WDKY, Inc. (Delaware Corporation) WDKY Licensee, LLC (Maryland LLC) KOKH LLC, (Nevada LLC) KOKH Licensee, LLC (Maryland LLC) Sinclair Acquisition VII, Inc. (Maryland Corporation) WVTV Licensee, Inc. (Maryland Corporation) Sinclair Acquisition VIII, Inc. (Maryland Corporation) Raleigh (WRDC-TV) Licensee, Inc. (Maryland Corporation) Sinclair Acquisition IX, Inc. (Maryland Corporation) Birmingham (WABM-TV) Licensee, Inc. (Maryland Corporation) Sinclair Acquisition X, Inc. (Maryland Corporation) San Antonio (KRRT-TV) Licensee, Inc. (Maryland Corporation)

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements of Sinclair Broadcast Group, Inc. of our reports dated March 8, 2007, with respect to the consolidated financial statements and schedule of Sinclair Broadcast Group, Inc., Sinclair Broadcast Group, Inc.s managements assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Sinclair Broadcast Group, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2006.

Registration Statement Number Description

333-58135 Form S-8 333-12257 Form S-3 333-12255 Form S-3 333-43047 Form S-8 333-31569 Form S-8 333-31571 Form S-8 333-103528 Form S-8 333-129615 Form S-8 333-86712 Form S-3 333-49543 Form S-3

/s/ Ernst & Young LLP

Baltimore, Maryland March 8, 2007

CERTIFICATION

I, David D. Smith, certify that:

1. I have reviewed this annual report on Form 10-K of Sinclair Broadcast Group, Inc.;

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

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

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

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

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

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

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

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

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

B) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

Date: March 9, 2007

/s/ David D. Smith Signature: David D. Smith Chief Executive Officer

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EXHIBIT 31.2

CERTIFICATION

I, David B. Amy, certify that:

1. I have reviewed this annual report on Form 10-K of Sinclair Broadcast Group, Inc.;

B) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

Date: March 9, 2007

/s/ David B. Amy Signature: David B. Amy Chief Financial Officer

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

In connection with the annual report on Form 10-K of Sinclair Broadcast Group, Inc. (the Company) for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David D. Smith, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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

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

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

/s/ David D. Smith David D. Smith Chief Executive Officer March 9, 2007

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

In connection with the annual report on Form 10-K of Sinclair Broadcast Group, Inc. (the Company) for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David B. Amy, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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

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

/s/ David B. Amy David B. Amy Chief Financial Officer March 9, 2007