Edgar Filing: SINCLAIR BROADCAST GROUP INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2010

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 Incorporation or organization)		(I.R.S. Employer Identification No.)

10706 Beaver Dam Road

Hunt Valley, Maryland 21030

(Address of principal executive office, zip code)

(410) 568-1500

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such file). Yes o No o

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

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

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

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

Title of each class		Number of shares outstanding as of November 1, 2010
Class A Common Stock		49,434,012
Class B Common Stock		30,933,859

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SINCLAIR BROADCAST GROUP, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2010

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION		3

ITEM 1. FINANCIAL STATEMENTS		3

CONSOLIDATED BALANCE SHEETS		3

CONSOLIDATED STATEMENTS OF OPERATIONS		4

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)		5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)		5

CONSOLIDATED STATEMENTS OF CASH FLOWS		6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS		7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		22

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		31

ITEM 4. CONTROLS AND PROCEDURES		31

PART II. OTHER INFORMATION		33

ITEM 1. LEGAL PROCEEDINGS		33

ITEM 1A. RISK FACTORS		33

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		33

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		33

ITEM 4. REMOVED AND RESERVED		33

ITEM 5. OTHER INFORMATION		33

ITEM 6. EXHIBITS		34

SIGNATURE		35

EXHIBIT INDEX		36

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PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data) (Unaudited)

	As of September 30, 2010			As of December 31, 2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	41,497		$	23,224
Current portion of restricted cash	5,121			27,667
Accounts receivable, net of allowance for doubtful accounts of $2,967 and $2,932, respectively	106,032			106,792
Affiliate receivable	56			69
Current portion of program contract costs	47,830			43,741
Income taxes receivable	8,572			8,073
Prepaid expenses and other current assets	6,959			6,130
Deferred barter costs	3,987			2,825
Deferred tax assets	7,277			7,277
Total current assets	227,331			225,798

PROGRAM CONTRACT COSTS, less current portion	11,544			16,417
PROPERTY AND EQUIPMENT, net	278,018			296,227
RESTRICTED CASH, less current portion	223			37,216
GOODWILL	660,017			660,017
BROADCAST LICENSES	51,988			51,988
DEFINITE-LIVED INTANGIBLE ASSETS, net	186,033			193,405
OTHER ASSETS	121,010			116,653
Total assets	$	1,536,164		$	1,597,721

LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	2,605		$	3,746
Accrued liabilities	75,707			60,523
Current portion of notes payable, capital leases and commercial bank financing	20,914			40,632
Current portion of notes and capital leases payable to affiliates	3,323			2,995
Current portion of program contracts payable	83,544			91,995
Deferred barter revenues	3,462			2,810
Total current liabilities	189,555			202,701

LONG-TERM LIABILITIES:
Notes payable, capital leases and commercial bank financing, less current portion	1,201,870			1,297,964
Notes payable and capital leases to affiliates, less current portion	20,270			24,717
Program contracts payable, less current portion	34,206			48,448
Deferred tax liabilities	199,101			177,219
Other long-term liabilities	47,135			48,894
Total liabilities	1,692,137			1,799,943

EQUITY (DEFICIT):
SINCLAIR BROADCAST GROUP SHAREHOLDERS’ EQUITY (DEFICIT):
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 49,349,586 and 47,375,437 shares issued and outstanding, respectively	493			474
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 30,997,859 and 32,453,859 shares issued and outstanding, respectively, convertible into Class A Common Stock	310			325
Additional paid-in capital	609,452			605,340
Accumulated deficit	(770,807		)	(813,876		)
Other comprehensive loss	(3,996		)	(4,213		)
Total Sinclair Broadcast Group shareholders’ deficit	(164,548		)	(211,950		)
Noncontrolling interests	8,575			9,728
Total deficit	(155,973		)	(202,222		)
Total liabilities and equity (deficit)	$	1,536,164		$	1,597,721

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

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SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
REVENUES:
Station broadcast revenues, net of agency commissions	$	158,809		$	136,427		$	465,440		$	400,740
Revenues realized from station barter arrangements	17,812			13,010			50,573			38,827
Other operating divisions revenues	9,831			10,690			25,618			33,570
Total revenues	186,452			160,127			541,631			473,137
OPERATING EXPENSES:
Station production expenses	38,619			34,368			113,182			106,200
Station selling, general and administrative expenses	32,230			28,484			93,426			91,387
Expenses recognized from station barter arrangements	15,716			11,164			44,695			32,685
Amortization of program contract costs and net realizable value adjustments	15,945			17,021			47,162			57,644
Other operating divisions expenses	7,902			11,280			22,259			34,422
Depreciation of property and equipment	9,022			9,995			27,744			32,456
Corporate general and administrative expenses	6,236			6,109			20,063			18,485
Amortization of definite-lived intangible assets and other assets	4,687			6,230			14,087			17,683
Gain on asset exchange	—			(500		)	—			(3,016		)
Impairment of goodwill, intangible and other assets	—			243			—			130,341
Total operating expenses	130,357			124,394			382,618			518,287
Operating income (loss)	56,095			35,733			159,013			(45,150		)
OTHER INCOME (EXPENSE):
Interest expense and amortization of debt discount and deferred financing costs	(31,349		)	(17,466		)	(88,700		)	(53,486		)
(Loss) gain from extinguishment of debt	(3,939		)	—			(4,377		)	18,986
(Loss) income from equity and cost method investments	(1,997		)	453			(2,478		)	471
Other income, net	557			448			1,767			1,561
Total other expense	(36,728		)	(16,565		)	(93,788		)	(32,468		)
Income (loss) from continuing operations before income taxes	19,367			19,168			65,225			(77,618		)
INCOME TAX (PROVISION) BENEFIT	(5,154		)	(3,313		)	(22,932		)	9,129
Income (loss) from continuing operations	14,213			15,855			42,293			(68,489		)
DISCONTINUED OPERATIONS:
(Loss) income from discontinued operations, includes income tax provision of $68, $24, $202 and $241, respectively	(68		)	245			(202		)	28
NET INCOME (LOSS)	14,145			16,100			42,091			(68,461		)
Net loss (income) attributable to the noncontrolling interests	131			(1,162		)	978			527
NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	14,276		$	14,938		$	43,069		$	(67,934	)
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:
Earnings (loss) per share from continuing operations	$	0.18		$	0.18		$	0.54		$	(0.85	)
Earnings (loss) per share	$	0.18		$	0.19		$	0.54		$	(0.85	)
Weighted average common shares outstanding	80,344			79,739			80,204			80,036
Weighted average common and common equivalent shares outstanding	80,627			86,155			80,480			80,036

AMOUNTS ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP COMMON SHAREHOLDERS:
Income (loss) from continuing operations	$	14,344		$	14,693		$	43,271		$	(67,962	)
(Loss) income from discontinued operations	(68		)	245			(202		)	28
Net income (loss)	$	14,276		$	14,938		$	43,069		$	(67,934	)

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

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SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(In thousands) (Unaudited)

	Sinclair Broadcast Group Shareholders
	Class A Common Stock		Class B Common Stock			Additional Paid-In Capital		Accumulated Deficit			Other Comprehensive Loss			Noncontrolling Interests			Total Equity (Deficit)

BALANCE, December 31, 2009	$	474	$	325		$	605,340	$	(813,876	)	$	(4,213	)	$	9,728		$	(202,222	)
Class A Common Stock issued pursuant to employee benefit plans	4		—			4,112		—			—			—			4,116
Class B Common Stock converted into Class A Common Stock	15		(15		)	—		—			—			—			—
Distributions to noncontrolling interest	—		—			—		—			—			(175		)	(175		)
Amortization of net periodic pension benefit costs	—		—			—		—			217			—			217
Net income (loss)	—		—			—		43,069			—			(978		)	42,091
BALANCE, September 30, 2010	$	493	$	310		$	609,452	$	(770,807	)	$	(3,996	)	$	8,575		$	(155,973	)

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) (Unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2010		2009			2010		2009

Net income (loss)	$	14,145	$	16,100		$	42,091	$	(68,461	)
Amortization of net periodic pension benefit costs	72		53			217		158
Comprehensive income (loss)	14,217		16,153			42,308		(68,303		)
Comprehensive loss (income) attributable to the noncontrolling interests	131		(1,162		)	978		527
Comprehensive income (loss) attributable to Sinclair Broadcast Group	$	14,348	$	14,991		$	43,286	$	(67,776	)

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

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SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

	Nine Months Ended September 30,
	2010			2009
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss)	$	42,091		$	(68,461	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Amortization of debt discount, net of debt premium	3,723			8,346
Depreciation of property and equipment	27,938			32,713
Recognition of deferred revenue	(18,039		)	(19,538		)
Impairment of goodwill, intangible and other assets	—			130,341
Amortization of definite-lived intangible and other assets	14,087			17,683
Amortization of program contract costs and net realizable value adjustments	47,162			57,644
Loss (gain) on extinguishment of debt, non-cash portion	3,552			(18,986		)
Deferred tax provision (benefit) related to operations	21,749			(9,100		)
Change in assets and liabilities:
Decrease in accounts receivable, net	757			12,515
(Increase) decrease in income taxes receivable	(499		)	2,016
(Increase) decrease in prepaid expenses and other current assets	(731		)	1,460
Decrease (increase) in other assets	4,230			(123		)
Increase (decrease) in accounts payable and accrued liabilities	25,918			(2,019		)
Decrease in other long-term liabilities	(57		)	(466		)
Payments on program contracts payable	(69,080		)	(60,822		)
Other, net	4,134			372
Net cash flows from operating activities	106,935			83,575
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(9,798		)	(7,023		)
Purchase of alarm monitoring contracts	(7,656		)	(8,876		)
Decrease in restricted cash	59,539			—
Dividends and distributions from equity and cost method investees	894			1,460
Investments in equity and cost method investees	(10,509		)	(9,361		)
Proceeds from the sale of assets	—			102
Loans to affiliates	(102		)	(123		)
Proceeds from loans to affiliates	115			153
Net cash flows from (used in) investing activities	32,483			(23,668		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	33,056			131,767
Repayments of notes payable, commercial bank financing and capital leases	(150,423		)	(169,959		)
Purchase of subsidiary shares from noncontrolling interests	—			(4,000		)
Repurchase of Class A Common Stock	—			(1,454		)
Dividends paid on Class A and Class B Common Stock	—			(16,038		)
Payments for deferred financing costs	(1,304		)	(4,419		)
Noncontrolling interests (distributions) contributions	(175		)	126
Repayments of notes and capital leases to affiliates	(2,299		)	(2,176		)
Net cash flows used in financing activities	(121,145		)	(66,153		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	18,273			(6,246		)
CASH AND CASH EQUIVALENTS, beginning of period	23,224			16,470
CASH AND CASH EQUIVALENTS, end of period	$	41,497		$	10,224

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

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SINCLAIR BROADCAST GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities (VIEs) for which we are the primary beneficiary. Noncontrolling interests represent a minority owner’s proportionate share of the equity in certain of our consolidated entities. All significant intercompany transactions and account balances have been eliminated in consolidation.

Interim Financial Statements

The consolidated financial statements for the three and nine months ended September 30, 2010 and 2009 are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements discussed below.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission (SEC), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

Variable Interest Entities

In June 2009, the Financial Accounting Standards Board (FASB) issued amended guidance on the consolidation of variable interest entities (VIEs). The intent of this guidance is to improve financial reporting by enterprises involved with VIEs and to provide more relevant and reliable information to users of financial statements. The new guidance will require a number of new disclosures and companies are required to perform ongoing reassessments of whether they are the primary beneficiary of a VIE for financial reporting purposes. This guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter.

In determining whether we are the primary beneficiary of a VIE for financial reporting purposes, we consider whether we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and whether we have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. We consolidate VIEs when we are the primary beneficiary. The assets of our consolidated VIEs can only be used to settle the obligations of the VIE. All the liabilities including debt held by our VIEs are non-recourse to us. However the VIE debt of Cunningham Broadcasting Corporation (Cunningham) contains cross-default provisions under our senior secured credit facility (Bank Credit Agreement). See Note 5, Related Person Transactions for more information.

We have a Local Marketing Agreement (LMA) to provide programming, sales and managerial services to Cunningham, the license owner for six television stations. We pay LMA fees to Cunningham and also reimburse all operating expenses. We also have an acquisition agreement in which we have a purchase option to buy the license assets of the television stations which includes the FCC license and certain other assets used to operate the station (License Assets). Our applications to acquire the Federal Communications Commission (FCC) licenses are pending approval. We have determined that the Cunningham stations are VIEs and that based on the terms of the agreements, we are the primary beneficiary of the variable interests because we have the power to direct the activities which significantly impact the economic performance of the VIE through the sales and managerial services we provide and we absorb losses and returns that would be considered significant to Cunningham. See Note 5, Related Person Transactions for more information on our arrangements with Cunningham.

We have outsourcing agreements with other license owners, which we provide certain non-programming related sales, operational and administrative services. We pay a fee to the license owner based on a percentage of broadcast cash flow and we reimburse all operating expenses. We also have a purchase option to buy the License Assets. For the same reasons noted above regarding the LMA, we have determined that the outsourced license station assets are VIEs and we are the primary beneficiary.

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As of the dates indicated, the carrying amounts and classification of the assets and liabilities of the VIEs mentioned above which have been included in our consolidated balance sheets were as follows (in thousands):

	As of September 30, 2010		As of December 31, 2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,994	$	4,127
Income taxes receivable	29		33
Current portion of program contract costs	528		430
Prepaid expenses and other current assets	223		129
Deferred tax assets	27		27
Total current asset	5,801		4,746

PROGRAM CONTRACT COSTS, less current portion	448		649
PROPERTY AND EQUIPMENT, net	7,652		8,239
GOODWILL	6,357		6,357
BROADCAST LICENSES	4,320		4,320
DEFINITE-LIVED INTANGIBLE ASSETS, net	7,141		7,393
OTHER ASSETS	158		213
Total assets	$	31,877	$	31,917

LIABILITIES
CURRENT LIABILITIES:
Accounts payable	$	37	$	37
Accrued liabilities	500		774
Current portion of notes payable, capital leases and commercial bank financing	11,051		11,039
Current portion of program contracts payable	691		576
Total current liabilities	12,279		12,426

LONG-TERM LIABILITIES:
Notes payable, capital leases and commercial bank financing, less current portion	16,250		24,540
Program contracts payable, less current portion	170		444
Deferred tax liabilities	218		218
Total liabilities	$	28,917	$	37,628

The amounts above represent the consolidated assets and liabilities of the VIEs related to our LMA and outsourcing agreements and have been aggregated as they all relate to our broadcast business. In addition the risk and reward characteristics of the VIEs are similar.

Under the previously applicable accounting guidance for consolidation, we had determined that we had a variable interest in four real estate ventures and that we were the primary beneficiary of those VIEs and should consolidate the assets and liabilities of those entities. However, under the new accounting guidance for consolidation which is effective January 1, 2010, we no longer consider one of these investments to be a VIE since the investment does not meet the VIE criteria under the new accounting guidance. We still consolidate the assets and liabilities of this entity pursuant to other accounting guidance based on voting-interests. Under the new accounting guidance for consolidation, we no longer consider ourselves the primary beneficiary of the other three real estate ventures since as the manager of the venture, the other partner holds the power to direct activities that significantly impact the economic performance of the VIE and can participate in returns that would be considered significant to the VIE. The effect of this change is not material to our consolidated financial statements.

We have investments in other real estate ventures and investment companies which are considered VIEs. However, we do not participate in the management of these entities including the day-to-day operating decisions or other decisions which allow us to control the entity, and therefore, we are not considered the primary beneficiary of the VIE. We account for these entities using the equity or cost method of accounting.

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary as of September 30, 2010 and December 31, 2009 are as follows (in thousands):

	As of September 30, 2010				As of December 31, 2009
	Carrying amount		Maximum exposure		Carrying amount		Maximum exposure
Investments in real estate ventures	$	7,734	$	7,734	$	8,796	$	8,796
Investments in investment companies	24,347		24,347		21,108		21,108
Total	$	32,081	$	32,081	$	29,904	$	29,904

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The carrying amounts above are included in other assets in the consolidated balance sheets. The income and loss related to these investments are recorded in (loss) income from equity and cost method investments in the consolidated statement of operations. We recorded income of $0.6 million and $0.3 million in the quarters ended September 30, 2010 and 2009, respectively. We recorded income of $1.1 million and a loss of $0.2 million for the nine months ended September 30, 2010 and 2009, respectively.

Our maximum exposure is equal to the carrying value of our investments. As of September 30, 2010 and December 31, 2009, our unfunded commitments totaled $15.0 million and $16.8 million, respectively.

Recent Accounting Pronouncements

In September 2009, the FASB ratified the Emerging Issues Task Force’s amended guidance on accounting for revenue arrangements with multiple deliverables. The amended guidance allows the use of an estimated selling price for the undelivered units of accounting in transactions in which vendor-specific objective evidence (VSOE) or third-party evidence (TPE) does not exist. The amended guidance no longer allows the use of the residual method when allocating arrangement consideration between the delivered and undelivered units of accounting if VSOE and TPE of selling price does not exist for all units of accounting. Entities are required to estimate the selling price of the deliverables, when VSOE and TPE are not available, and then allocate the consideration based on the relative selling prices of the deliverables. This guidance also requires additional disclosures including the amount of revenue recognized each reporting period and the amount of deferred revenue as of the end of each reporting period under this guidance. This guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning after June 15, 2010 and should be applied on a prospective basis. We have not determined the impact that this guidance will have on our consolidated financial statements.

In January 2010, the FASB amended the guidance on fair value measurements and disclosures to add two new disclosure provisions to the current fair value disclosure guidance, including (1) details of transfers in and out of level 1 and level 2 measurements, and (2) gross presentation of activity within the level 3 roll forward. The guidance also amends two existing fair value disclosure requirements so that entities are required to disclose (1) the valuation techniques and inputs used to develop fair value measurements for assets and liabilities that are measured at fair value on both a recurring basis and nonrecurring basis in periods subsequent to initial recognition and (2) fair value measurement disclosures for each class of assets and liabilities. A class is defined as a subset of assets or liabilities within a line item in the statement of financial position. The guidance is for interim and annual reporting periods beginning after December 15, 2009, except for the changes to the level 3 roll forward which are effective for fiscal years beginning after December 15, 2010. We have added the required disclosures under this guidance to our consolidated financial statements beginning with the first quarter of 2010.

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.

Restricted Cash

In October 2009, we established a cash collateral account with the proceeds from the sale of 9.25% Senior Secured Second Lien Notes due 2017 (the 9.25% Notes). The cash collateral account restricted the use of cash therein to repurchase our 3.0% Convertible Senior Notes due 2027 (the 3.0% Notes) and 4.875% Convertible Senior Notes due 2018 (the 4.875% Notes) upon, or prior to, the expiration of the put periods for such notes in May 2010 and January 2011, respectively. Upon expiration of such put periods, the unused cash is released to us to be used for general corporate purposes. During 2010, we used $53.6 million of restricted cash to redeem the 3.0% and 4.875% Notes. See Note 3, Notes Payable and Commercial Bank Financing for more information. As of September 30, 2010, we held $5.1 million in the restricted cash collateral account to be used for the redemption of the remaining $5.7 million aggregate principal amount of 4.875% Notes. As of September 30, 2010, primarily all of the restricted cash classified as current relates to the January 2011 put option.

Additionally, under the terms of certain lease agreements, as of September 30, 2010, we are required to hold $0.4 million of restricted cash related to the removal of analog equipment from some of our leased towers. As of December 31, 2009, we were required to hold $0.5 million of restricted cash related to the removal of analog tower equipment.

Dividends

In November 2010, our Board of Directors declared a $0.43 per share common stock dividend payable on December 15, 2010 to holders of record on December 1, 2010.

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Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and nine months ended September 30, 2010 and 2009, is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests.

Our effective income tax rate for the three months ended September 30, 2010 was lower than the statutory rate primarily due to a $2.3 million benefit predominantly resulting from a change in estimate related to an increased deduction for the recovery of historical losses attributable to a disposition that took place in 2009. Our effective income tax rate for the nine months ended September 30, 2010 approximated the statutory rate.

In October 2010, we received a $8.4 million federal income tax cash refund.

Reclassifications

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

2. COMMITMENTS AND CONTINGENCIES:

Litigation

We are 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.

FCC License Renewals

In May 2010, the FCC granted the license renewal application of WUCW-TV in Minneapolis/St. Paul, Minnesota.

Network Affiliation Agreements

Our ABC network affiliation agreements were scheduled to expire December 31, 2009. We extended these affiliation agreements until March 31, 2010, while we continued negotiations. On March 25, 2010, we agreed to terms on a renewal of the ABC network affiliation agreements, expiring August 31, 2015. Pursuant to the terms we are required to pay an annual license fee to ABC for network programming.

Our FOX affiliation agreements require us to receive FOX’s consent prior to entering into retransmission consent agreements that include content provided by FOX. FOX has recently begun conditioning its consent on its affiliates agreeing to pay FOX compensation related to such retransmission consent agreements. Sinclair, and other FOX affiliates, are currently negotiating with FOX on this issue. As of September 30, 2010, the net book value of our FOX network affiliation assets was $31.1 million.

On August 31, 2010, the FOX affiliation agreement with KFXA-TV in Cedar Rapids, Iowa, expired. The licensee of KFXA, to which we provide services under an outsourcing agreement, continues to operate the station as a FOX affiliate pursuant to an informal month-to-month extension, while negotiations with FOX continue.

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3. NOTES PAYABLE AND COMMERCIAL BANK FINANCING

Debt Redemptions

During the first quarter of 2010, we completed tender offers to purchase for cash any and all of the outstanding 3.0% Notes and 4.875% Notes at 100% of the face value of such notes. We used $26.6 million of restricted cash to pay for such redemptions. We redeemed approximately $12.3 million and $14.3 million of the 3.0% and 4.875% Notes, respectively. During the second quarter of 2010, the put right period for the 3.0% Notes expired and holders representing $10.0 million in principal amount of the 3.0% Notes exercised their put rights. We used $10.0 million of restricted cash to pay for such exercises. After the expiration of the 3.0% Notes put rights $5.4 million of unused funds from the cash collateral account was released to us for general corporate purposes. During the third quarter of 2010, we redeemed $17.0 million of the 4.875% Notes in a private transaction. We used $17.0 million of restricted cash to pay for the purchase. As of September 30, 2010, the face amount of the outstanding 3.0% and 4.875% Notes was $5.4 million and $5.7 million, respectively.

During the nine months ended September 30, 2010, we repurchased, on the open market, $6.1 million in principal amount of the 6.0% Convertible Debentures, due 2012 (the 6.0% Notes). On September 20, 2010, we commenced tender offers to purchase for cash up to $60.0 million in principal amount of the outstanding 6.0% Notes and any and all of the outstanding 8.0% Senior Subordinated Notes, due 2012 (the 8.0% Notes). We offered to purchase the 6.0% Notes at a purchase price of $987.50 per $1,000 principal amount plus accrued and unpaid interest. We offered to purchase the 8.0% Notes at a purchase price of $1,002.50 per $1,000 principal amount, if tendered within the first ten business days of the tender offer period or $972.50 per $1,000 principal amount if tendered after such time, plus accrued and unpaid interest. The tender offers expired October 19, 2010 and approximately, $58.0 million and $175.7 million principal amount of the 6.0% and 8.0% Notes, respectively, were tendered and purchased. The net proceeds from the offering of the 8.375% Senior Unsecured Notes, due 2018 (the 8.375% Notes), discussed below, were used to fund these tender offers. As of September 30, 2010, the face amount of the outstanding 6.0% and 8.0% Notes was $128.0 million and $224.7 million, respectively, and are classified as long-term in our consolidated balance sheets. We will redeem the remaining $49.0 million of the 8.0% Notes in cash on November 19, 2010 at a purchase price of 100% of the principal amount of the 8.0% Notes plus accrued and unpaid interest.

Bank Credit Agreement

On August 19, 2010, we entered into an amendment (the Amendment) of our Bank Credit Agreement. Under the Amendment, we paid down $35.0 million of the outstanding $305.0 million balance under the Term Loan B facility (Term Loan B) and repriced the remaining $270.0 million outstanding. The final terms of the Amendment are as follows:

· The Term Loan B will initially bear interest at LIBOR plus 4.00% with a 1.5% LIBOR floor and will continue to amortize principal at a rate of 0.25% per quarter commencing on March 31, 2011, continuing until the scheduled final payment on October 29, 2015 with 95.25% due at maturity or upon earlier termination of the Term Loan B pursuant to the terms in the Bank Credit Agreement.

· We have the right to prepay the Term Loan B at any time; provided, however, that if we prepay, reprice downward or otherwise refinance all or any portion of the Term Loan B prior to August 19, 2011, then we will be required to pay the Term Loan B lenders a prepayment premium equal to 1.00% of the aggregate amount prepaid, repriced or otherwise refinanced.

· Provision for additional incremental term loan capacity up to $100.0 million.

· The terms of the Revolving Credit Facility were not materially affected by the Amendment.

8.375% Senior Unsecured Notes, due 2018

On October 4, 2010, we issued $250.0 million aggregate principal amount of 8.375% Notes due October 15, 2018 at 98.567% of their par value pursuant to an indenture, dated as of October 4, 2010 (the Indenture). Interest on the 8.375% Notes will be paid on April 15 and October 15 of each year, beginning April 15, 2011. Prior to October 15, 2014, we may redeem the 8.375% Notes in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 8.375% Notes plus accrued and unpaid interest, plus a “make-whole premium” as set forth in the Indenture. Beginning on October 15, 2014, we may redeem some or all of the 8.375% Notes at any time or from time to time at the redemption prices set forth in the Indenture. In addition, on or prior to October 15, 2013, we may redeem up to 35% of the 8.375% Notes using the proceeds of certain equity offerings. Upon certain changes of control, we must offer to purchase the 8.375% Notes at a price equal to 101% of the face amount of the Notes plus accrued and unpaid interest. The net proceeds from the offering of the 8.375% Notes were used to fund the tender offers for our 6.0% and 8.0% Notes described above. Concurrent to entering into the Indenture we also entered into a registration rights agreement requiring us to complete an offer of an exchange of the 8.375% Notes for registered securities with the SEC by July 1, 2011.

In conjunction with the Amendment of the Bank Credit Agreement, the 8.375% Notes issuance, and the 6.0% and 8.0% Notes tenders, both Moody’s and Standard & Poor’s raised our credit ratings.

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4. EARNINGS (LOSS) PER SHARE

The following table reconciles income (loss) (numerator) and shares (denominator) used in our computations of earnings (loss) per share for the three and nine months ended September 30, 2010 and 2009 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Income (Loss) (Numerator)
Income (loss) from continuing operations	$	14,213		$	15,855		$	42,293		$	(68,489	)
Income impact of assumed conversion of the 4.875% Notes, net of taxes	42			1,049			125			—
Net loss (income) attributable to noncontrolling interests included in continuing operations	131			(1,162		)	978			527
Numerator for diluted earnings (loss) per common share from continuing operations	14,386			15,742			43,396			(67,962		)
(Loss) income from discontinued operations	(68		)	245			(202		)	28
Numerator for diluted earnings (loss) attributable to Sinclair Broadcast Group	$	14,318		$	15,987		$	43,194		$	(67,934	)

Shares (Denominator)
Weighted-average common shares outstanding	80,344			79,739			80,204			80,036
Dilutive effect of stock-settled appreciation rights	28			—			21			—
Dilutive effect of 4.875% Notes	255			6,416			255			—
Weighted-average common and common equivalent shares outstanding	80,627			86,155			80,480			80,036

Potentially dilutive securities representing 7.0 million and 21.8 million for the three months ended September 30, 2010 and 2009, respectively, and 7.0 million and 28.2 million for the nine months ended September 30, 2010 and 2009, respectively, were excluded from the computation of diluted earnings (loss) per common share for these periods because their effect would have been antidilutive. The decrease in potentially dilutive securities is primarily related to the partial redemption of our 3.0% Notes and the inclusion of the 4.875% Notes in dilutive earnings (loss) per share. The net income (loss) per share amounts are the same for Class A and Class B Common Stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation.

5. 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 and some of our Class A Common Stock. Since the end of our last fiscal year, we engaged in the following transactions with them and/or entities in which they have substantial interests.

Cunningham Broadcasting Corporation. We have options from trusts established by Carolyn C. Smith, a parent of our controlling shareholders, 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) or 100% of the capital stock or assets of Cunningham’s individual subsidiaries. Cunningham is the owner-operator and FCC licensee of: WNUV-TV in Baltimore, Maryland; WRGT-TV in Dayton, Ohio; WVAH-TV in Charleston, West Virginia; WTAT-TV in Charleston, South Carolina; WMYA-TV in Anderson, South Carolina; and WTTE-TV in Columbus, Ohio.

We made payments to Cunningham under the LMAs and acquisition agreements of $4.4 million and $1.5 million for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, we made payments to Cunningham of $13.2 million and $4.6 million, respectively, related to the LMAs.

For the three and nine months ended September 30, 2010, Cunningham’s stations provided us with approximately $22.5 million and $67.8 million, respectively, of total revenue. The financial statements for Cunningham are included in our consolidated financial statements for all periods presented. Our Bank Credit Agreement contains certain cross-default provisions with certain material third-party licensees. As of September 30, 2010, Cunningham was the sole material third-party licensee.

Related Person Leases. 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 some or all of the controlling shareholders). Lease payments made to these entities were $1.5 million and $1.2 million for the three months ended

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September 30, 2010 and 2009. Lease payments made to these entities were $3.8 million and $3.5 million for the nine months ended September 30, 2010 and 2009, respectively.

Bay TV. In January 1999, we entered into a LMA with Bay Television, Inc. (Bay TV), which owns the television station WTTA-TV in Tampa/St. Petersburg, Florida market. Our controlling shareholders own a substantial portion of the equity of Bay TV. Payments made to Bay TV were $0.5 million for each of the three months ended September 30, 2010 and 2009, respectively, and $1.2 million and $2.6 million for the nine months ended September 30, 2010 and 2009, respectively. We received $0.1 million for each of the three months ended September 30, 2010 and 2009 and $0.4 million for each of the nine months ended September 30, 2010 and 2009 from Bay TV for certain equipment leases.

Atlantic Automotive Corporation. We sold advertising time to and purchased vehicles and related vehicle services from Atlantic Automotive Corporation (Atlantic Automotive), a holding company which owns automobile dealerships and an automobile leasing company. David Smith, our President and Chief Executive Officer, has a controlling interest in, and is a member of the Board of Directors of Atlantic Automotive. Our stations in Baltimore, Maryland and Norfolk, Virginia received payments for advertising time totaling less than $0.1 million for each of the three months ended September 30, 2010 and 2009. For each of the nine months ended September 30, 2010 and 2009, we received payments for advertising time totaling $0.2 million. We paid $0.2 million and $0.1 million for vehicles and related vehicle services from Atlantic Automotive during the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, we paid $0.5 million and $0.3 million, respectively, for vehicles and related vehicle services.

Thomas & Libowitz P.A. Basil A. Thomas, a member of our Board of Directors, is the father of a partner and founder of Thomas & Libowitz, P.A., a law firm providing legal services to us on an ongoing basis. We paid fees of less than $0.1 million and $0.4 million to Thomas & Libowitz during the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, we paid fees of $0.4 million and $1.0 million to Thomas & Libowitz, respectively.

6. SEGMENT DATA:

We measure segment performance based on operating income (loss). Our broadcast segment includes stations in 35 markets located predominately in the eastern, mid-western and southern United States. Our other operating divisions segment primarily earned revenues from sign design and fabrication; regional security alarm operating and bulk acquisitions; and real estate ventures. All of our other operating divisions are located within the United States. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. Corporate is not a reportable segment. We had $166.4 million and $109.0 million of intercompany loans between the broadcast segment, operating divisions segment and corporate as of September 30, 2010 and 2009, respectively. We had $4.9 million and $3.2 million in intercompany interest expense related to intercompany loans between the broadcast segment, other operating divisions segment and corporate for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, we had $14.4 million and $9.3 million in intercompany interest expense. Intercompany loans and interest expense are excluded from the tables below. All other intercompany transactions are immaterial.

Financial information for our operating segments are included in the following tables for the three and nine months ended September 30, 2010 and 2009 (in thousands).

For the three months ended September 30, 2010	Broadcast		Other Operating Divisions			Corporate			Consolidated
Revenue	$	176,621	$	9,831		$	—		$	186,452
Depreciation of property and equipment	8,220		321			481			9,022
Amortization of definite-lived intangible assets and other assets	3,961		726			—			4,687
Amortization of program contract costs and net realizable value adjustments	15,945		—			—			15,945
General and administrative overhead expenses	5,508		232			496			6,236
Operating income (loss)	56,468		605			(978		)	56,095
Interest expense	—		551			30,798			31,349
Loss from equity and cost method investments	—		(1,997		)	—			(1,997		)

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For the three months ended September 30, 2009	Broadcast		Other Operating Divisions			Corporate			Consolidated
Revenue	$	149,437	$	10,690		$	—		$	160,127
Depreciation of property and equipment	9,242		280			473			9,995
Amortization of definite-lived intangible assets and other assets	5,659		571			—			6,230
Amortization of program contract costs and net realizable value adjustments	17,021		—			—			17,021
Impairment of goodwill, intangible and other assets	—		—			243			243
General and administrative overhead expenses	1,809		237			4,063			6,109
Operating income (loss)	42,401		(1,682		)	(4,986		)	35,733
Interest expense	—		376			17,090			17,466
Income from equity and cost method investments	—		453			—			453

For the nine months ended September 30, 2010	Broadcast		Other Operating Divisions			Corporate			Consolidated
Revenue	$	516,013	$	25,618		$	—		$	541,631
Depreciation of property and equipment	25,460		942			1,342			27,744
Amortization of definite-lived intangible assets and other assets	12,017		2,070			—			14,087
Amortization of program contract costs and net realizable value adjustments	47,162		—			—			47,162
General and administrative overhead expenses	17,771		675			1,617			20,063
Operating income (loss)	162,508		(530		)	(2,965		)	159,013
Interest expense	—		1,299			87,401			88,700
Loss from equity and cost method investments	—		(2,478		)	—			(2,478		)

For the nine months ended September 30, 2009	Broadcast			Other Operating Divisions			Corporate			Consolidated
Revenue	$	439,567		$	33,570		$	—		$	473,137
Depreciation of property and equipment	30,275			755			1,426			32,456
Amortization of definite-lived intangible assets and other assets	16,172			1,511			—			17,683
Amortization of program contract costs and net realizable value adjustments	57,644			—			—			57,644
Impairment of goodwill, intangible and other assets	130,098			—			243			130,341
General and administrative overhead expenses	5,523			823			12,139			18,485
Operating loss	(27,152		)	(3,978		)	(14,020		)	(45,150		)
Interest expense	—			994			52,492			53,486
Income from equity and cost method investments	—			471			—			471

7. FAIR VALUE MEASUREMENTS:

Accounting guidance provides for valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). A fair value hierarchy using three broad levels prioritizes the inputs to valuation techniques used to measure fair value. The following is a brief description of those three levels:

· Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

· Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

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The carrying value and fair value of our financial instruments as of September 30, 2010 and December 31, 2009 were as follows (in thousands):

	September 30, 2010				December 31, 2009
	Carrying Value		Fair Value		Carrying Value		Fair Value
8.0% Senior Subordinated Notes, due 2012	$	225,208	$	224,849	$	225,488	$	220,731
6.0% Convertible Debentures, due 2012	119,670		127,193		122,482		111,991
4.875% Convertible Senior Notes, due 2018	5,685		5,685		37,016		36,091
3.0% Convertible Senior Notes, due 2027	5,400		5,400		27,383		27,044
9.25% Senior Secured Second Lien Notes, due 2017	487,409		535,000		486,519		518,125
Bank Credit Agreement, Term Loan B	264,086		273,370		323,551		314,306
Cunningham Bank Credit Facility	24,675		25,174		32,900		32,900
Active program contracts payable	117,753		108,061		140,443		124,951
Future program liabilities (a)	76,790		61,861		70,038		56,202
Total fair value	$	1,326,676	$	1,366,593	$	1,465,820	$	1,442,341

(a) Future program 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.

Our financial instruments, except the 3.0% and 4.875% Notes are fair valued using Level 1 hierarchy inputs described above. Our Term Loan B and Cunningham’s bank credit facility are fair valued using Level 2 hierarchy inputs described above.

Our 3.0% and 4.875% Notes carrying value approximates fair value. Our estimates of active program contracts payable and future program liabilities were based on discounted cash flows using Level 3 inputs described above. The discount rate represents an estimate of a market participants return and risk applicable to program contracts.

8. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

Sinclair Television Group, Inc. (STG), a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under the Bank Credit Agreement, as amended, the 9.25% Notes and the 8.0% Notes. Our Class A Common Stock, Class B Common Stock, the 6.0% Notes, the 4.875% Notes and the 3.0% Notes remain obligations or securities of SBG and are not obligations or securities of STG. As of September 30, 2010, our consolidated total debt of $1,246.4 million included $1,030.2 million of debt related to STG and its subsidiaries of which SBG guaranteed $978.0 million.

SBG, KDSM LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries), have fully and unconditionally guaranteed all of STG’s obligations. Those guarantees are joint and several. There are certain contractual 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 consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows of SBG, STG, KDSM LLC and the guarantor subsidiaries, 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 SEC Regulation S-X, Rule 3-10.

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CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2010

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated

Cash	$	—		$	25,931		$	233		$	15,333		$	—		$	41,497
Restricted cash — current	—			5,057			64			—			—			5,121
Accounts and other receivables	78			252			110,013			4,451			(134		)	114,660
Other current assets	674			2,529			60,020			3,114			(284		)	66,053
Total current assets	752			33,769			170,330			22,898			(418		)	227,331

Property and equipment, net	10,270			2,507			174,880			97,216			(6,855		)	278,018

Investment in consolidated subsidiaries	—			627,487			—			—			(627,487		)	—
Restricted cash — long-term	—			—			223			—			—			223
Other long-term assets	74,510			318,832			20,974			92,634			(374,396		)	132,554
Total other long-term assets	74,510			946,319			21,197			92,634			(1,001,883		)	132,777

Acquired intangible assets	—			—			835,482			62,158			398			898,038

Total assets	$	85,532		$	982,595		$	1,201,889		$	274,906		$	(1,008,758	)	$	1,536,164

Accounts payable and accrued liabilities	$	605		$	32,128		$	38,200		$	8,330		$	(951	)	$	78,312
Current portion of long-term debt	6,874			2,025			2,851			12,431			56			24,237
Other current liabilities	—			—			86,315			691			—			87,006
Total current liabilities	7,479			34,153			127,366			21,452			(895		)	189,555

Long-term debt	135,780			975,938			49,429			279,773			(218,780		)	1,222,140
Dividends in excess of investment in consolidated subsidiaries	76,642			—			—			—			(76,642		)	—
Other liabilities	30,179			1,825			398,368			44,627			(194,557		)	280,442
Total liabilities	250,080			1,011,916			575,163			345,852			(490,874		)	1,692,137

Common stock	803			—			10			282			(292		)	803
Additional paid-in capital	609,452			208,422			508,766			76,628			(793,816		)	609,452
Accumulated (deficit) earnings	(770,807		)	(235,296		)	119,834			(146,459		)	261,921			(770,807		)
Accumulated other comprehensive loss	(3,996		)	(2,447		)	(1,884		)	(1,397		)	5,728			(3,996		)
Total Sinclair Broadcast Group (deficit) equity	(164,548		)	(29,321		)	626,726			(70,946		)	(526,459		)	(164,548		)
Noncontrolling interests in consolidated subsidiaries	—			—			—			—			8,575			8,575
Total liabilities and equity (deficit)	$	85,532		$	982,595		$	1,201,889		$	274,906		$	(1,008,758	)	$	1,536,164

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CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2009

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated

Cash	$	—		$	10,364		$	217		$	12,643		$	—		$	23,224
Restricted cash — current	—			27,667			—			—			—			27,667
Accounts and other receivables	232			6,014			110,733			4,045			(6,090		)	114,934
Other current assets	639			2,558			54,546			2,513			(283		)	59,973
Total current assets	871			46,603			165,496			19,201			(6,373		)	225,798

Property and equipment, net	11,597			2,135			194,139			95,437			(7,081		)	296,227

Investment in consolidated subsidiaries	—			691,578			—			—			(691,578		)	—
Restricted cash — long-term	—			36,732			484			—			—			37,216
Other long-term assets	69,876			273,806			26,271			58,342			(295,225		)	133,070
Total other long-term assets	69,876			1,002,116			26,755			58,342			(986,803		)	170,286

Acquired intangible assets	—			—			838,998			57,512			8,900			905,410

Total assets	$	82,344		$	1,050,854		$	1,225,388		$	230,492		$	(991,357	)	$	1,597,721

Accounts payable and accrued liabilities	$	2,887		$	20,742		$	32,200		$	19,373		$	(10,933	)	$	64,269
Current portion of long-term debt	28,448			—			2,530			12,646			3			43,627
Other current liabilities	—			—			94,229			576			—			94,805
Total current liabilities	31,335			20,742			128,959			32,595			(10,930		)	202,701

Long-term debt	171,120			1,037,467			53,192			253,138			(192,236		)	1,322,681
Dividends in excess of investment in consolidated subsidiaries	59,402			—			—			—			(59,402		)	—
Other liabilities	32,437			1,979			352,567			37,147			(149,569		)	274,561
Total liabilities	294,294			1,060,188			534,718			322,880			(412,137		)	1,799,943

Common stock	799			—			10			282			(292		)	799
Additional paid-in capital	605,340			279,664			670,863			41,824			(992,351		)	605,340
Accumulated (deficit) earnings	(813,876		)	(286,414		)	21,904			(131,677		)	396,187			(813,876		)
Accumulated other comprehensive loss	(4,213		)	(2,584		)	(2,107		)	(2,817		)	7,508			(4,213		)
Total Sinclair Broadcast Group shareholders’ (deficit) equity	(211,950		)	(9,334		)	690,670			(92,388		)	(588,948		)	(211,950		)
Noncontrolling interests in consolidated subsidiaries	—			—			—			—			9,728			9,728
Total liabilities and equity (deficit)	$	82,344		$	1,050,854		$	1,225,388		$	230,492		$	(991,357	)	$	1,597,721

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated

Net revenue	$	—		$	—		$	176,892		$	12,023		$	(2,463	)	$	186,452

Program and production	—			214			40,551			104			(2,250		)	38,619
Selling, general and administrative	498			5,444			31,649			1,006			(131		)	38,466
Depreciation, amortization and other operating expenses	481			105			43,255			9,422			9			53,272
Total operating expenses	979			5,763			115,455			10,532			(2,372		)	130,357

Operating (loss) income	(979		)	(5,763		)	61,437			1,491			(91		)	56,095

Equity in earnings of consolidated subsidiaries	16,409			32,631			—			—			(49,040		)	—
Interest expense	(3,560		)	(25,969		)	(1,265		)	(5,667		)	5,112			(31,349		)
Other income (expense)	882			2,086			(5,224		)	(3,091		)	(32		)	(5,379		)
Total other income (expense)	13,731			8,748			(6,489		)	(8,758		)	(43,960		)	(36,728		)

Income tax benefit (provision)	1,524			13,215			(21,475		)	1,582			—			(5,154		)
Loss from discontinued operations	—			—			(68		)	—			—			(68		)
Net income (loss)	14,276			16,200			33,405			(5,685		)	(44,051		)	14,145
Net loss attributable to the noncontrolling interests	—			—			—			—			131			131
Net income (loss) attributable to Sinclair Broadcast Group	$	14,276		$	16,200		$	33,405		$	(5,685	)	$	(43,920	)	$	14,276

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated

Net revenue	$	—		$	—		$	149,699		$	12,854		$	(2,426	)	$	160,127

Program and production	—			145			35,999			268			(2,044		)	34,368
Selling, general and administrative	4,270			1,692			27,716			1,032			(117		)	34,593
Depreciation, amortization and other operating expenses	8,595			123			41,930			3,640			1,145			55,433
Total operating expenses	12,865			1,960			105,645			4,940			(1,016		)	124,394

Operating (loss) income	(12,865		)	(1,960		)	44,054			7,914			(1,410		)	35,733

Equity in earnings of consolidated subsidiaries	32,895			28,354			—			—			(61,249		)	—
Interest income	283			11,979			—			275			(12,534		)	3
Interest expense	(9,865		)	(5,720		)	(1,390		)	(13,282		)	12,791			(17,466		)
Other income (expense)	148			4,544			(4,311		)	(321		)	838			898
Total other income (expense)	23,461			39,157			(5,701		)	(13,328		)	(60,154		)	(16,565		)

Income tax benefit (provision)	4,097			504			(9,397		)	1,483			—			(3,313		)
Income from discontinued operations	245			—			—			—			—			245
Net income (loss)	14,938			37,701			28,956			(3,931		)	(61,564		)	16,100
Net income attributable to the noncontrolling interests	—			—			—			—			(1,162		)	(1,162		)
Net income (loss) attributable to Sinclair Broadcast Group	$	14,938		$	37,701		$	28,956		$	(3,931	)	$	(62,726	)	$	14,938

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated

Net revenue	$	—		$	—		$	516,907		$	32,496		$	(7,772	)	$	541,631

Program and production	—			681			119,139			274			(6,912		)	113,182
Selling, general and administrative	1,623			17,649			92,078			2,575			(436		)	113,489
Depreciation, amortization and other operating expenses	1,342			303			127,597			26,734			(29		)	155,947
Total operating expenses	2,965			18,633			338,814			29,583			(7,377		)	382,618

Operating (loss) income	(2,965		)	(18,633		)	178,093			2,913			(395		)	159,013

Equity in earnings of consolidated subsidiaries	50,692			94,189			—			—			(144,881		)	—
Interest expense	(11,371		)	(71,907		)	(3,921		)	(16,547		)	15,046			(88,700		)
Other income (expense)	2,058			12,453			(15,127		)	(4,390		)	(82		)	(5,088		)
Total other income (expense)	41,379			34,735			(19,048		)	(20,937		)	(129,917		)	(93,788		)

Income tax benefit (provision)	4,655			31,199			(62,030		)	3,244			—			(22,932		)
Loss from discontinued operations	—			—			(202		)	—			—			(202		)
Net income (loss)	43,069			47,301			96,813			(14,780		)	(130,312		)	42,091
Net loss attributable to the noncontrolling interests	—			—			—			—			978			978
Net income (loss) attributable to Sinclair Broadcast Group	$	43,069		$	47,301		$	96,813		$	(14,780	)	$	(129,334	)	$	43,069

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated

Net revenue	$	—		$	—		$	440,377		$	39,794		$	(7,034	)	$	473,137

Program and production	—			529			111,279			377			(5,985		)	106,200
Selling, general and administrative	12,342			5,603			89,034			3,266			(373		)	109,872
Depreciation, amortization and other operating expenses	9,548			338			267,628			33,835			(9,134		)	302,215
Total operating expenses	21,890			6,470			467,941			37,478			(15,492		)	518,287

Operating loss	(21,890		)	(6,470		)	(27,564		)	2,316			8,458			(45,150		)

Equity in earnings of consolidated subsidiaries	(46,253		)	(50,926		)	—			—			97,179			—
Interest income	844			17,537			—			747			(19,088		)	40
Interest expense	(29,861		)	(17,877		)	(4,392		)	(21,250		)	19,894			(53,486		)
Other income (expense)	20,461			14,412			(13,772		)	(706		)	583			20,978
Total other expense	(54,809		)	(36,854		)	(18,164		)	(21,209		)	98,568			(32,468		)

Income tax benefit (provision)	8,737			3,710			(3,401		)	83			—			9,129
Income from discontinued operations	28			—			—			—			—			28
Net loss	(67,934		)	(39,614		)	(49,129		)	(18,810		)	107,026			(68,461		)
Net loss attributable to the noncontrolling interests	—			—			—			—			527			527
Net loss attributable to Sinclair Broadcast Group	$	(67,934	)	$	(39,614	)	$	(49,129	)	$	(18,810	)	$	107,553		$	(67,934	)

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(13,966	)	$	(59,095	)	$	183,105		$	(589	)	$	(2,520	)	$	106,935
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	—			(3,351		)	(4,725		)	(1,722		)	—			(9,798		)
Purchase of alarm monitoring contracts	—			—			—			(7,656		)	—			(7,656		)
Distributions from investments	709			—			—			185			—			894
Investment in equity and cost method investees	(2,000		)	—			—			(8,509		)	—			(10,509		)
Change in restricted cash	—			59,342			197			—			—			59,539
Loans to affiliates	(102		)	—			—			—			—			(102		)
Proceeds from loans to affiliates	115			—			—			—			—			115
Net cash flows (used in) from investing activities	(1,278		)	55,991			(4,528		)	(17,702		)	—			32,483

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	—			17,650			—			15,406			—			33,056
Repayments of notes payable, commercial bank financing and capital leases	(56,806		)	(77,687		)	(224		)	(15,706		)	—			(150,423		)
Payments for deferred financing costs	—			(1,304		)	—			—			—			(1,304		)
Distributions to noncontrolling interest	—			—			—			(175		)	—			(175		)
Repayment of notes and capital leases to affiliates	(559		)	—			(1,740		)	—			—			(2,299		)
Increase (decrease) in intercompany payables	72,609			80,012			(176,597		)	21,456			2,520			—
Net cash flows from (used in) financing activities	15,244			18,671			(178,561		)	20,981			2,520			(121,145		)

NET INCREASE IN CASH AND CASH EQUIVALENTS	—			15,567			16			2,690			—			18,273
CASH AND CASH EQUIVALENTS, beginning of period	—			10,364			217			12,643			—			23,224
CASH AND CASH EQUIVALENTS, end of period	$	—		$	25,931		$	233		$	15,333		$	—		$	41,497

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(38,373	)	$	3,953		$	128,443		$	(9,975	)	$	(473	)	$	83,575
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(32		)	(1,000		)	(4,005		)	(1,986		)	—			(7,023		)
Purchase of alarm monitoring contracts	—			—			—			(8,876		)	—			(8,876		)
Distributions from investments	—			—			—			1,460			—			1,460
Investments in equity and cost method investees	(3,130		)	—			—			(6,231		)	—			(9,361		)
Proceeds from sale of assets	—			—			102			—			—			102
Loans to affiliates	(123		)	—			—			—			—			(123		)
Proceeds from loans to affiliates	153			—			—			—			—			153
Net cash flows used in investing activities	(3,132		)	(1,000		)	(3,903		)	(15,633		)	—			(23,668		)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	—			108,963			—			22,804			—			131,767
Repayments of notes payable, commercial bank financing and capital leases	(30,637		)	(124,978		)	(285		)	(14,059		)	—			(169,959		)
Purchase of noncontrolling interests	—			—			—			(4,000		)	—			(4,000		)
Repurchase of Class A Common Stock	(1,454		)	—			—			—			—			(1,454		)
Dividends paid on Class A and Class B Common Stock	(16,193		)	—			—			—			155			(16,038		)
Payments for deferred financing costs	—			(4,261		)	—			(158		)	—			(4,419		)
Contributions from noncontrolling interests	—			—			—			126			—			126
Repayments of notes and capital leases to affiliates	(481		)	—			(1,695		)	—			—			(2,176		)
Increase (decrease) in intercompany payables	90,270			11,861			(121,964		)	19,515			318			—
Net cash flows from (used in) financing activities	41,505			(8,415		)	(123,944		)	24,228			473			(66,153		)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			(5,462		)	596			(1,380		)	—			(6,246		)
CASH AND CASH EQUIVALENTS, beginning of period	—			9,649			227			6,594			—			16,470
CASH AND CASH EQUIVALENTS, end of period	$	—		$	4,187		$	823		$	5,214		$	—		$	10,224

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) and 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 and credit and capital markets;

· consumer confidence;

· the activities of our competitors;

· terrorist acts of violence or war and other geopolitical events;

Industry risks

· the business conditions of our advertisers particularly in the automotive and service industries;

· competition with other broadcast television stations, radio stations, multi-channel video programming distributors (MVPDs) and internet and broadband content providers serving in the same markets;

· availability and cost of programming and the continued viability of networks and syndicators that provide us with programming content;

· the effects of the FCC’s National Broadband Plan and the potential reclamation of some of our broadcasting spectrum;

· 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 and political or other advertising restrictions and regulations;

· labor disputes and legislation and other union activity;

· the broadcasting community’s ability to develop a viable mobile digital broadcast television (mobile DTV) strategy and platform and the consumers appetite for mobile television;

· the operation of low power devices in the broadcast spectrum, which could interfere with our broadcast signals;

· the effects of new ratings system technologies, including “people meters”, and the ability of such technologies to be a reliable standard that can be used by advertisers;

Risks specific to us

· the effectiveness of our management;

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

· our ability to successfully renegotiate retransmission consent agreements;

· our ability to maintain our FCC licenses;

· our ability to maintain our affiliation agreements with our networks and at renewal, to successfully negotiate these agreements with favorable terms;

· the impact of reverse network compensation payments made by us to networks pursuant to our affiliation agreements requiring compensation for network programming and the resulting negative effect on our operating results;

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

· the strength of ratings for our local news broadcasts including our news sharing arrangements;

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

· successful execution of our multi-channel broadcasting initiatives strategy including mobile DTV; and

· the results of prior year tax audits by taxing authorities.

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Other matters set forth in this report and our other reports filed with the SEC, including the Risk Factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010 may also cause actual results in the future to differ materially from those described in the forward-looking statements. However, additional factors and risks not currently known to us or that we currently deem immaterial may also cause actual results in the future to differ materially from those described in the forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. 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.

The following table sets forth certain operating data for the three and nine months ended September 30, 2010 and 2009:

STATEMENTS OF OPERATIONS DATA

(in thousands, except for per share data) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Statement of Operations Data:
Net broadcast revenues (a)	$	158,809		$	136,427		$	465,440		$	400,740
Revenues realized from station barter arrangements	17,812			13,010			50,573			38,827
Other operating divisions revenues	9,831			10,690			25,618			33,570
Total revenues	186,452			160,127			541,631			473,137

Station production expenses	38,619			34,368			113,182			106,200
Station selling, general and administrative expenses	32,230			28,484			93,426			91,387
Expenses recognized from station barter arrangements	15,716			11,164			44,695			32,685
Amortization of program contract costs and net realizable value adjustments	15,945			17,021			47,162			57,644
Depreciation and amortization expenses (b)	13,709			16,225			41,831			50,139
Other operating divisions expenses	7,902			11,280			22,259			34,422
Corporate general and administrative expenses	6,236			6,109			20,063			18,485
Gain on asset exchange	—			(500		)	—			(3,016		)
Impairment of goodwill, intangible and other assets	—			243			—			130,341
Operating income (loss)	56,095			35,733			159,013			(45,150		)

Interest expense and amortization of debt discount and deferred financing costs	(31,349		)	(17,466		)	(88,700		)	(53,486		)
(Loss) gain from extinguishment of debt	(3,939		)	—			(4,377		)	18,986
(Loss) income from equity and cost method investees	(1,997		)	453			(2,478		)	471
Other income, net	557			448			1,767			1,561
Income (loss) from continuing operations before income taxes	19,367			19,168			65,225			(77,618		)
Income tax (provision) benefit	(5,154		)	(3,313		)	(22,932		)	9,129
Income (loss) from continuing operations	14,213			15,855			42,293			(68,489		)
Discontinued operations:
(Loss) income from discontinued operations	(68		)	245			(202		)	28
Net income (loss)	14,145			16,100			42,091			(68,461		)
Net loss (income) attributable to the noncontrolling interests	131			(1,162		)	978			527
Net income (loss) attributable to Sinclair Broadcast Group	$	14,276		$	14,938		$	43,069		$	(67,934	)

Basic and Diluted Earnings (Loss) Per Common Share Attributable to Sinclair Broadcast Group:
Earnings (loss) per share from continuing operations	$	0.18		$	0.18		$	0.54		$	(0.85	)
Earnings (loss) per share	$	0.18		$	0.19		$	0.54		$	(0.85	)

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Balance Sheet Data:	September 30, 2010			December 31, 2009

Cash and cash equivalents	$	41,497		$	23,224
Total assets	$	1,536,164		$	1,597,721
Total debt (c)	$	1,246,377		$	1,366,308
Total equity (deficit)	$	(155,973	)	$	(202,222	)

a) Net broadcast revenues is defined as broadcast revenues, net of agency commissions.

b) Depreciation and amortization includes depreciation and amortization of property and equipment and amortization of definite-lived intangible assets and other assets.

c) Total debt is defined as notes payable, capital leases and commercial bank financing, including the current and long-term portions.

The following Management’s 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 — financial events since June 30, 2010;

Results of Operations — an analysis of our revenues and expenses for the three and nine months ended September 30, 2010 and 2009, including comparisons between quarters and expectations for the three months ended December 31, 2010.

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 and an update of our debt repurchases during the three and nine months ended September 30, 2010.

EXECUTIVE OVERVIEW

Third Quarter 2010 Events

· In August, we entered into an amendment of our Bank Credit Agreement. Under the amendment we paid down $35.0 million of the outstanding $305.0 million balance of our Term Loan B and repriced the remaining outstanding amount of $270.0 million;

· In August, we entered into an agreement with The Country Network, a country music video network, to air programming on 34 of our stations’ secondary digital signals;

· In September, we commenced tender offers to purchase for cash up to $60.0 million in principal amount of the outstanding 6.0% and any and all of the outstanding 8.0% Notes. The tender offers expired October 19, 2010 and approximately, $58.0 million and $175.7 million principal amount of the 6.0% and 8.0% Notes, respectively, were tendered and purchased;

· In September, we redeemed $17.0 million of the 4.875% Notes with restricted cash; and

· Excluding political, local revenues have increased 9.9% and national revenues have increased 13.5% in the third quarter 2010 versus the third quarter 2009 as advertising levels in the automotive sector and retransmission revenues have gained momentum.

Other Events

· In October, we issued $250.0 million aggregate principal amount of 8.375% Notes;

· In October, we announced we will redeem all of the remaining $49.0 million of the 8.0% Notes on November 19, 2010; and

· In November, our Board of Directors declared a $0.43 per share common stock dividend payable on December 15, 2010 to holders of record on December 1, 2010.

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 and analysis to the third quarter of 2010 and 2009 refer to the three months ended September 30, 2010 and 2009, respectively. Additionally, any references to the first, second or fourth quarter are to the three months ended March 31, June 30 and December 31, respectively, for the year being discussed.

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SEASONALITY/CYCLICALITY

Our operating results are usually subject to seasonal fluctuations. Usually, the second and fourth quarter operating results are higher than the first and third quarters because advertising expenditures are increased in anticipation of certain seasonal and holiday spending by consumers.

Our operating results are usually subject to fluctuations from political advertising. In even years, political spending is usually significantly higher than in odd years due to advertising expenditures preceding local and national elections. Additionally, every four years, political spending is elevated further due to advertising expenditures preceding the presidential election.

BROADCAST SEGMENT

Broadcast Revenue

The following table presents our revenues from continuing operations, net of agency commissions, for the three and nine months ended September 30, 2010 and 2009 (in millions):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010		2009		Percent Change		2010		2009		Percent Change

Local revenues:
Non-political	$	111.9	$	101.8	9.9	%	$	340.7	$	300.5	13.4	%
Political	3.0		0.8			(a)	3.8		1.1			(a)
Total local	114.9		102.6		12.0	%	344.5		301.6		14.2	%
National revenues:
Non-political	37.1		32.7		13.5	%	109.6		97.3		12.6	%
Political	6.8		1.1			(a)	11.3		1.8			(a)
Total national	43.9		33.8		29.9	%	120.9		99.1		22.0	%
Total net broadcast revenues	$	158.8	$	136.4	16.4	%	$	465.4	$	400.7	16.1	%

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

Net broadcast revenues. When comparing the third quarter 2010 to the same period in 2009, we showed increases in advertising revenues generated from the automotive, political, services, media and furniture sectors. These increases were partially offset by a decrease in the religion and paid programming sectors. Automotive, which typically is our largest category, represented 18.7% of the quarter’s net time sales and was up 43.9% in the third quarter 2010 compared to the same period in 2009.

The following table presents our time sales revenue from continuing operations, net of agency commissions, by network affiliates for the three and nine months ended September 30, 2010 and 2009:

	# of	Percent of Net Time Sales for the Three months ended September 30,				$ Percent		Percent of Net Time Sales for the Nine months ended September 30,				$ Percent
	Stations	2010		2009		Change		2010		2009		Change
FOX	20	44.3	%	44.0	%	18.4	%	46.2	%	45.3	%	15.6	%
ABC	9	21.5	%	20.2	%	25.7	%	20.4	%	19.2	%	20.9	%
MyNetworkTV	16	17.3	%	17.8	%	14.2	%	16.3	%	17.4	%	6.4	%
The CW	10	13.3	%	14.4	%	9.0	%	13.5	%	14.7	%	4.7	%
CBS	2	2.7	%	2.7	%	19.0	%	2.8	%	2.6	%	24.2	%
NBC	1	0.7	%	0.7	%	23.9	%	0.7	%	0.7	%	4.1	%
Digital	5	0.2	%	0.2	%	(26.7	)%	0.1	%	0.1	%	16.3	%
Total	63

Political Revenues. Political revenues increased by $7.9 million to $9.8 million for the third quarter 2010 when compared to the same period in 2009. For the nine months ended September 30, 2010, political revenues increased by $12.2 million to $15.1 million when compared to the same period in 2009. Political revenues are typically higher in election years such as 2010.

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Local Revenues. Excluding political revenues, our local broadcast revenues, which include local times sales, retransmission revenues and other local revenues, were up $10.1 million for the three months ended September 30, 2010 when compared to 2009. For the nine months ended September 30, 2010 when compared to the same period in 2009, our local broadcast revenues, excluding political revenues were up $40.2 million. The increase is due to an increase in advertising spending particularly in the automotive sector and an increase in retransmission revenues from MVPDs.

National Revenues. Our national broadcast revenues, excluding political revenues, include national time sales and other national revenues. Over the past few years, national revenues have trended downward; however, our third quarter 2010 results were up $4.4 million compared to same period in 2009. For the nine months ended September 30, 2010 when compared to the same period in 2009, our national broadcast revenues, excluding political revenues were up $12.3 million. This was primarily due to the amplified decline in 2009 from the effects of the recent recession and a rebound in advertising spending in 2010 along with assistance from an improved automotive sector.

Broadcast Expenses

The following table presents our significant expense categories in our broadcast segment for the three and nine months ended September 30, 2010 and 2009 (in millions):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010		2009		Percent Change (Increase/ (Decrease))		2010		2009		Percent Change (Increase/ (Decrease))

Station production expenses	$	38.6	$	34.4	12.2	%	$	113.2	$	106.2	6.6	%
Station selling, general and administrative expenses	$	32.2	$	28.5	13.0	%	$	93.4	$	91.4	2.2	%
Amortization of program contract costs and net realizable value adjustments	$	15.9	$	17.0	(6.5	)%	$	47.2	$	57.6	(18.1	)%
Corporate general and administrative expenses	$	5.5	$	1.8	205.6	%	$	17.8	$	5.5	223.6	%
Gain on asset exchange	$	—	$	0.5	(100.0	)%	$	—	$	3.0	(100.0	)%
Impairment of goodwill, intangible and other assets	$	—	$	—	—		$	—	$	130.1	(100.0	)%

Station production expenses. Station production expenses increased during the third quarter 2010 compared to the same period in 2009 primarily due to an increase in fees pursuant to network affiliation agreements, increased compensation expense, increased maintenance costs to remove analog equipment and increases in promotional advertising expenses.

Station production expenses increased during the nine months ended September 30, 2010 compared to the same period in 2009 primarily due to an increase in fees pursuant to network affiliation agreements, increased compensation expense and increased maintenance costs to remove analog equipment. These increases were partially offset by a decrease in electric expenses due to the digital signal conversion in June 2009 and cessation of analog transmission.

Station selling, general and administrative expenses. Station selling, general and administrative expenses increased during the third quarter 2010 compared to same period in 2009, primarily due to increases in bad debt expense and increases in national sales representative and local commissions due to an increase in sales. In 2009, we had increased our bad debt reserves as a result of the GM and Chrysler bankruptcies. The reserves were reversed in the third quarter of 2009.

Station selling, general and administrative expenses increased during the nine months ended September 30, 2010 compared to same period in 2009, primarily due to increases in national sales representative and local commissions costs due to an increase in sales. These increases were partially offset by decreases related to bad debt expense and decreased general and administrative trade expenses.

We expect fourth quarter 2010 station production and station selling, general and administrative expenses, excluding barter, to trend higher than our third quarter 2010 results.

Amortization of program contract costs and net realizable value adjustments. The amortization of program contract costs decreased during the third quarter 2010 and for the nine months ended September 30, 2010 compared to the same periods in 2009. Over the past few years we have purchased barter and short-term program contracts which are less expensive and result in lower contract cost amortization. We expect program contract amortization to trend lower in fourth quarter 2010 compared to third quarter 2010.

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Corporate general and administrative expenses. See explanation under Corporate and Unallocated Expenses.

Gain on asset exchange. During the third quarter 2009 and the nine months ended September 30, 2009, we recognized a non-cash gain of $0.5 million and $3.0 million, respectively, from the exchange of equipment under agreements with Sprint Nextel Corporation and in association with the FCC’s decision to allow Sprint Nextel Corporation to utilize our vacated analog spectrum in exchange for the new digital equipment. We received all applicable equipment pursuant to the agreement in 2009.

Impairment of goodwill, broadcast licenses and other assets. Due to the severity of the economic downturn and the decrease of our market capitalization, we tested our goodwill and broadcast licenses for impairment during the first quarter of 2009. During the first quarter of 2009, we recorded an impairment of $69.5 million and $60.6 million related to our goodwill and broadcast licenses, respectively.

OTHER OPERATING DIVISIONS SEGMENT

The following table presents our other operating divisions segment revenue and expenses related to G1440 Holdings, Inc. (G1440), an information technology staffing, consulting and software development company, Acrodyne Communications, Inc. (Acrodyne), a manufacturer of television transmissions systems, Triangle Sign & Service, LLC. (Triangle), a sign designer and fabricator, Alarm Funding Associates, LLC. (Alarm Funding), a regional security alarm operating and bulk acquisition company, and real estate ventures and other nominal businesses for the three and nine months ended September 30, 2010 and 2009 (in millions):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010		2009		Percent Change (Increase/ (Decrease))		2010		2009		Percent Change (Increase/ (Decrease))
Revenues:
G1440	$	—	$	1.8	(100.0	)%	$	—	$	5.0	(100.0	)%
Acrodyne	$	—	$	0.7	(100.0	)%	$	—	$	4.2	(100.0	)%
Triangle	$	5.1	$	4.8	6.3	%	$	13.0	$	15.9	(18.2	)%
Alarm Funding	$	2.6	$	1.8	44.4	%	$	7.2	$	4.6	56.5	%
Real Estate Ventures and Other	$	2.1	$	1.6	31.3	%	$	5.4	$	3.9	38.5	%

Expenses: (a)
G1440	$	—	$	1.7	(100.0	)%	$	—	$	5.2	(100.0	)%
Acrodyne	$	—	$	2.4	(100.0	)%	$	—	$	6.2	(100.0	)%
Triangle	$	5.0	$	4.8	4.2	%	$	14.2	$	16.1	(11.8	)%
Alarm Funding	$	2.1	$	1.6	31.3	%	$	5.8	$	4.1	41.5	%
Real Estate Ventures and Other	$	2.6	$	2.1	23.8	%	$	7.3	$	6.2	17.7	%

(a) Comprises total expenses of the entity including other operating divisions expenses, depreciation and amortization and applicable other income (expense) items such as interest expense.

G1440 was sold in fourth quarter 2009 and Acrodyne closed its business on September 30, 2009.

The decreases in Triangle’s results for the nine months ended September 30, 2010 are primarily due to a decline in order volume in the early part of 2010; however, in third quarter 2010 sales were up compared to the same period in 2009 as the economy improved. The increases in Alarm Funding’s results are primarily due to the acquisition of new alarm monitoring contracts and the expansion of sales efforts.

(Loss) Income from Equity and Cost Method Investments. Results of our equity and cost method investments in private investment funds and real estate ventures are included in (loss) income from equity and cost method investments in our consolidated statements of operations. During the nine months ended September 30, 2010, we recorded a loss of $4.4 million related to our real estate ventures and income of $1.9 million related to certain private investment funds. During the nine months ended September 30, 2009, we recorded income of $0.5 million primarily related to certain private investment funds.

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CORPORATE AND UNALLOCATED EXPENSES

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2010			2009			Percent Change (Increase/ (Decrease))		2010			2009		Percent Change (Increase/ (Decrease))
Corporate general and administrative expenses	$	0.5		$	4.1		(87.8	)%	$	1.6		$	12.1	(86.8	)%
Interest expense	$	30.8		$	17.1		80.1	%	$	87.4		$	52.5	66.5	%
(Loss) gain from extinguishment of debt	$	(3.9	)	$	—		(100.0	)%	$	(4.3	)	$	19.0	(122.6	)%
Income tax (provision) benefit	$	(5.2	)	$	(3.3	)	57.6	%	$	(22.9	)	$	9.1	(351.6	)%

Corporate general and administrative expenses. In conjunction with our recent debt restructuring activities, we re-examined our corporate overhead cost allocation methodologies and made applicable changes to the way we allocate costs resulting in greater overhead absorption by our broadcast segment. Therefore, rather than examining these costs on a segment basis, we will examine the cost variance on an overall basis excluding only corporate general and administrative costs from our other operating divisions segment which are included in the expenses discussed in the Other Operating Divisions Segment section. The results that follow combine the corporate general and administrative expenses found in the Broadcast Segment with the corporate general and administrative expenses found in this section, Corporate and Unallocated Expenses. Total corporate general and administrative expenses increased to $6.0 million in third quarter 2010 from $5.9 million in 2009. This is primarily due to an increase in compensation expense. These increases were partially offset by decreases in accounting fees and director fees.

Total corporate general and administrative expenses increased to $19.4 million for the nine months ended September 30, 2010 from $17.6 million in 2009. This is primarily due to a 2010 increase in compensation expense and an increase in stock-based compensation from the issuance of stock-settled appreciation rights in first quarter 2010 and the issuance of stock grants to our board of directors at a higher stock price in second quarter 2010. These increases were partially offset by a reduction in health and other insurance costs.

We expect corporate general and administrative expenses to increase in the fourth quarter 2010 compared to third quarter 2010.

Interest expense. Interest expense has increased primarily due to the debt refinancings in fourth quarter 2009 and third quarter 2010. As part of these comprehensive debt refinancings, we issued new 9.25% Notes in fourth quarter 2009 and amended and restated our Bank Credit Agreement in fourth quarter 2009, both of which accrue interest at higher rates than the debt replaced. In the third quarter 2010 we further amended our Bank Credit Agreement. Our interest rate was reduced, however, certain costs associated with the amendment of $3.7 million were expensed as interest. We expect interest expense to decrease in fourth quarter 2010 compared to third quarter 2010.

(Loss) gain from extinguishment of debt. During the nine months ended September 30, 2010, through a combination of tender offers, the exercise of holder put rights, and an open market repurchase we redeemed $31.3 million and $22.3 million of our 4.875% and 3.0% Notes, respectively, resulting in a loss on extinguishment of $0.5 million and $0.1 million, respectively. Additionally, we made a prepayment on our Term Loan B in second quarter 2010 and amended our Term Loan B in third quarter 2010 reducing by $65.6 million the principal amount outstanding of our Term Loan B and resulting in a loss of $3.1 million from extinguishment of debt. Also, we repurchased, in the open market $6.1 million in principal amount of our 6.0% Notes, resulting in a loss of $0.4 million from extinguishment of debt. During the nine months ended September 30, 2009, we repurchased, in the open market, $50.7 million of our 3.0% Notes and $1.0 million of our 6.0% Notes, resulting in a gain of $18.5 million and $0.5 million, respectively from extinguishment of debt.

Income tax (provision) benefit. The effective tax rate for the three months ended September 30, 2010 including the effects of the noncontrolling interest was a provision of 26.4% as compared to a provision of 18.4% during the same period in 2009. The increase in the effective tax rate for the three months ended September 30, 2010 as compared to the same period in 2009 is primarily due to a greater valuation allowance provided for in 2010 partially offset by a $2.3 million 2010 tax benefit predominantly resulting from a change in estimate related to an increased deduction for the recovery of historical losses attributable to a disposition that took place in 2009.

The effective tax rate for the nine months ended September 30, 2010 including the effects of the noncontrolling interest was a provision of 34.6% as compared to a benefit of 11.8% during the same period in 2009. Due to our pre-tax income in 2010 compared to our pre-tax loss in 2009, we incurred a tax provision in 2010 versus a tax benefit in 2009. The difference in the absolute value of the tax rate between 2010 and 2009 is primarily because impairments of certain indefinite-lived intangible assets recorded in 2009 were not deductible for income tax purposes.

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LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2010, we had $41.5 million in unrestricted cash and cash equivalent balances and working capital of approximately $31.8 million excluding restricted cash. Cash generated by our operations and availability under the Revolving Credit Facility are used as our primary source of liquidity. As of September 30, 2010, we had $135.9 million of borrowing capacity available on our Revolving Credit Facility. We anticipate that existing cash and cash equivalents, cash flow from our operations and borrowing capacity under the Revolving Credit Facility will be sufficient to satisfy our debt service obligations, capital expenditure requirements and working capital needs for the next twelve months. For our long-term liquidity needs, in addition to the sources described above, we may rely upon the issuance of long-term debt, the issuance of equity or other instruments convertible into or exchangeable for equity, or the sale of non-core assets. However, there can be no assurance that additional financing or capital or buyers of our non-core assets will be available, or that the terms of any transactions will be acceptable or advantageous to us.

On January 26, 2010, we commenced tender offers to purchase for cash any and all of the outstanding 3.0% and 4.875% Notes at 100% of the face value of such notes. The tender offers expired February 23, 2010 and approximately $12.3 million and $14.3 million principal amount of the 3.0% and 4.875% Notes, respectively, were tendered and purchased. On May 17, 2010 the put right period for the 3.0% Notes expired and holders representing $10.0 million in principal amount of the 3.0% Notes exercised their put rights. Holders of the remaining $5.4 million principal amount of 3.0% Notes can exercise put rights again in May 2017. As of September 30, 2010, the face amount of the outstanding 4.875% Notes was $5.7 million; the 4.875% Notes holders can exercise their put rights on January 15, 2011. As of September 30, 2010, we held $5.1 million in restricted cash to pay holders of the 4.875% Notes if they exercise their put rights.

On August 19, 2010 we entered into an amendment of our Bank Credit Agreement. Under the Amendment, we paid down $35.0 million of the outstanding $305.0 million balance under the Term Loan B and repriced the remaining $270.0 million outstanding. The final terms of the Amendment are as follows:

· Provision for an additional incremental term loan capacity up to $100.0 million.

· The terms of the Revolving Credit Facility were not materially effected by the Amendment.

On September 20, 2010, we commenced tender offers to purchase for cash up to $60.0 million of the outstanding 6.0% and any and all of the outstanding 8.0% Notes. We offered to purchase the 6.0% Notes at a purchase price of $987.50 per $1,000 principal amount plus accrued and unpaid interest. We offered to purchase the 8.0% Notes at a purchase price of $1,002.50 per $1,000 principal amount, if tendered within the first ten business days of the tender offer period or $972.50 per $1,000 principal amount if tendered after such time, plus accrued and unpaid interest. The tender offers expired October 19, 2010 and approximately, $58.0 million and $175.7 million principal amount of the 6.0% and 8.0% Notes, respectively, were tendered and purchased. The net proceeds from the offering of the 8.375% Notes, discussed below, were used to fund these tender offers. As of September 30, 2010, the face amount of the outstanding 6.0% and 8.0% Notes was $128.0 million and $224.7 million, respectively. We will redeem all of the remaining $49.0 million of the 8.0% Notes in cash on November 19, 2010 at a purchase price of 100% of the principal amount of the 8.0% Notes plus accrued and unpaid interest.

On October 4, 2010, we issued $250.0 million aggregate principal amount of 8.375% Notes due October 15, 2018 at 98.567% of their par value. Interest on the 8.375% Notes will be paid on April 15 and October 15 of each year, beginning April 15, 2011. Prior to October 15, 2014, we may redeem the 8.375% Notes in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 8.375% Notes plus accrued and unpaid interest, plus a “make-whole premium” as set forth in the Indenture.

In conjunction with the Amendment of the Bank Credit Agreement, the 8.375% Notes issuance, and the 6.0% and 8.0% Notes tenders, both Moody’s and Standard & Poor’s raised our credit ratings.

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Sources and Uses of Cash

The following table sets forth our cash flows for the three and nine months ended September 30, 2010 and 2009 (in millions):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2010			2009			2010			2009
Net cash flows from operating activities	$	46.8		$	32.1		$	106.9		$	83.6

Cash flows from (used in) investing activities:
Acquisition of property and equipment	$	(5.1	)	$	(2.1	)	$	(9.8	)	$	(7.0	)
Decrease in restricted cash	17.5			—			59.5			—
Dividends and distributions from cost method investees	0.8			0.1			0.9			1.5
Purchase of alarm monitoring contracts	(4.3		)	(1.3		)	(7.7		)	(8.9		)
Investments in equity and cost method investees	(4.1		)	(2.7		)	(10.5		)	(9.4		)
Other	(0.1		)	0.1			0.1			0.1
Net cash flows from (used in) investing activities	$	4.7		$	(5.9	)	$	32.5		$	(23.7	)

Cash flows (used in) from financing activities:
Proceeds from notes payable, commercial bank financing and capital leases	$	24.0		$	17.8		$	33.1		$	131.8
Repayments of notes payable, commercial bank financing and capital leases	(75.8		)	(40.7		)	(150.4		)	(170.0		)
Repurchase of Class A Common Stock	—			—			—			(1.5		)
Payments for deferred financing costs	(0.1		)	(4.3		)	(1.3		)	(4.4		)
Dividends paid on Class A and Class B Common Stock	—			—			—			(16.0		)
Purchase of subsidiary share from noncontrolling interests	—			(1.0		)	—			(4.0		)
Noncontrolling interests (distributions) contributions	(0.1		)	(0.1		)	(0.2		)	0.1
Other	(0.8		)	(0.7		)	(2.3		)	(2.2		)
Net cash flows used in financing activities	$	(52.8	)	$	(29.0	)	$	(121.1	)	$	(66.2	)

Operating Activities

Net cash flows from operating activities increased during the third quarter 2010 and the nine months ended September 30, 2010 compared to the same periods in 2009. During 2010, we received more cash receipts from customers, net of cash payments to vendors, however, we paid more interest and program payments.

In October 2010, we received a $8.4 million federal income tax cash refund.

We expect program payments to decrease in the fourth quarter 2010 compared to the third quarter 2010. We expect net interest expense to decrease in the fourth quarter 2010 compared to the third quarter 2010.

Investing Activities

With the exception of restricted cash, net cash flows used in investing activities increased during the third quarter 2010 compared to the same period in 2009. Our alarm monitoring contract purchases were up from third quarter 2009 primarily due to the timing of deal closings. Acquisitions of property and equipment were primarily driven by station transmitter projects to enhance our digital signals. We decreased our investment in restricted cash in order to use the cash to pay for the tender offers of the 3.0% and 4.875% Notes in first quarter 2010, the put right exercise of the 3.0% Notes in second quarter 2010 and an open market repurchase of 4.875% Notes in third quarter 2010. With the exception of restricted cash, net cash flows used in investing activities increased during the nine months ended September 30, 2010 compared to the same period in 2009 primarily due to an increase in acquisitions of property and equipment related to various station projects.

For fourth quarter 2010, we anticipate incurring more capital expenditures than incurred in the third quarter.

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Financing Activities

Net cash flows used in financing activities increased in the third quarter 2010 and nine months ended September 30, 2010 compared to the same periods in 2009. During 2010, we purchased $59.7 million of our 3.0%, 4.875% and 6.0% Notes pursuant to a combination of tender offers, put rights and open market purchases. We made an early repayment of $25.0 million on our Term Loan B during the second quarter 2010 and paid down $35.0 million on our Term Loan B in the third quarter 2010 when we amended our Bank Credit Agreement. We ceased paying our cash dividend after the first quarter of 2009, however, in November, our Board of Directors declared a $0.43 per share common stock dividend payable on December 15, 2010 to holders of record on December 1, 2010. Under the terms of the Bank Credit Agreement, in certain circumstances we may make up to $40.0 million in unrestricted annual cash payments including but not limited to dividends and other strategic investments.

CONTRACTUAL CASH OBLIGATIONS

As of September 30, 2010, our contractual cash obligations increased from what was previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009 primarily due to changes in our debt, film liabilities and network affiliation agreements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting as of September 30, 2010.

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 provide reasonable assurance 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 SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The term “internal control over financial reporting,” as defined in Rules 13a-15d-15(f) under the Exchange Act, means a process designed by, or under the supervision of our Chief Executive and Chief Financial Officers and effected by our Board of Directors, management and other personnel, 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 (GAAP) and includes those policies and procedures that:

· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made in accordance with authorizations of management or our Board of Directors; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material adverse effect on our financial statements.

Assessment of Effectiveness of Disclosure Controls and Procedures

Based on the evaluation of our disclosure controls and procedures as of September 30, 2010, 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.

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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 the quarter ended September 30, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS

There have been no material changes to the Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the third quarter 2010, we repurchased, in the open market, $17.0 million in principal amount of the 4.875% Notes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit Number		Description

4.1		Indenture, dated as of October 4, 2010, by and among Sinclair Television Group, Inc., the guarantors identified therein and U.S. Bank National Association, as trustee. (Incorporated by reference from Registrant’s Report on Form 8-K filed on October 6, 2010).

4.2		Registration Rights Agreement, dated as of October 4, 2010, by and among Sinclair Television Group, Inc., the guarantors identified therein and J.P. Morgan Securities LLC as representative for Wells Fargo Securities, LLC, Citadel Securities LLC, BNP Paribas Securities Corp. and UBS Securities LLC. (Incorporated by reference from Registrant’s Report on Form 8-K filed on October 6, 2010).

4.3		Twelfth Supplemental Indenture dated as of October 19, 2010, by and among Sinclair Television Group, Inc., Sinclair Broadcast Group, Inc., the guarantors signatory thereto and U.S. Bank National Association, as trustee. (Incorporated by reference from Registrant’s Report on Form 8-K filed on October 19, 2010).

10.1		Amendment No. 1 to the Fourth Amended and Restated Credit Agreement, dated August 19, 2010, by and among Sinclair Television Group, Inc., the guarantors party thereto, JP Morgan Chase Bank, N.A as administrative agent, and the lenders party thereto.

31.1		Certification by David D. Smith, as Chairman and Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).

31.2		Certification by David B. Amy, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).

32.1		Certification by David D. Smith, as Chairman and Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 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 Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on the 5th day of November 2010.

	SINCLAIR BROADCAST GROUP, INC.


	By:	/s/ David R. Bochenek
		David R. Bochenek
		Vice President/Chief Accounting Officer
		(Authorized Officer and Chief Accounting Officer)

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EXHIBIT INDEX

Exhibit Number		Description

4.1		Indenture, dated as of October 4, 2010, by and among Sinclair Television Group, Inc., the guarantors identified therein and U.S. Bank National Association, as trustee. (Incorporated by reference from Registrant’s Report on Form 8-K filed on October 6, 2010).

4.2		Registration Rights Agreement, dated as of October 4, 2010, by and among Sinclair Television Group, Inc., the guarantors identified therein and J.P. Morgan Securities LLC as representative for Wells Fargo Securities, LLC, Citadel Securities LLC, BNP Paribas Securities Corp. and UBS Securities LLC. (Incorporated by reference from Registrant’s Report on Form 8-K filed on October 6, 2010).

4.3		Twelfth Supplemental Indenture dated as of October 19, 2010, by and among Sinclair Television Group, Inc., Sinclair Broadcast Group, Inc., the guarantors signatory thereto and U.S. Bank National Association, as trustee. (Incorporated by reference from Registrant’s Report on Form 8-K filed on October 19, 2010).

10.1		Amendment No. 1 to the Fourth Amended and Restated Credit Agreement, dated August 19, 2010, by and among Sinclair Television Group, Inc., the guarantors party thereto, JP Morgan Chase Bank, N.A as administrative agent, and the lenders party thereto.

31.1		Certification by David D. Smith, as Chairman and Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).

31.2		Certification by David B. Amy, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).

32.1		Certification by David D. Smith, as Chairman and Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 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 Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).