Saga Communications - 10-Q quarterly report FY

 

(Mark One)

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

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 files). 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

     The number of shares of the registrant’s Class A Common Stock, $.01 par value, and Class B Common Stock, $.01 par value, outstanding as of August 3, 2009 was 3,664,507 and 599,614, respectively.

 

 

Note: The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See notes to unaudited condensed consolidated financial statements.

See notes to unaudited condensed consolidated financial statements.

See notes to unaudited condensed consolidated financial statements.

     Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements.

     In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of June 30, 2009 and the results of operations for the three and six months ended June 30, 2009 and 2008. Results of operations for the six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

     For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. Annual Report on Form 10-K for the year ended December 31, 2008.

     The Company has evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2009, for items that should potentially be recognized in these financial statements. The evaluation was conducted through August 7, 2009, the date these financial statements were available to be issued.

     Earnings Per Share Information and Reverse Stock Split

     On January 27, 2009 the Company declared a one-for-four reverse stock split of its Class A and Class B Common Stock, effective January 28, 2009. The reverse stock split reduced the Company’s issued and outstanding shares of common stock from approximately 14,425,104 shares of Class A Common Stock and 2,402,338 shares of Class B Common Stock to approximately 3,606,932 and 600,585 shares, respectively.

     All 2008 share and per share information in the accompanying financial statements has been restated retroactively to reflect the reverse stock split. The common stock and additional paid-in capital accounts at December 31, 2008 reflect the retroactive capitalization of the 2009 reverse stock split.

     The number of stock options outstanding that had an antidilutive effect on our earnings per share calculation was 390,000 for the three and six months ended June 30, 2009 and 669,000 for the three and six months ended June 30, 2008. The actual effect of these shares, if any, on the diluted earnings per share calculation will vary significantly depending on the fluctuation in the stock price.

     Change in Accounting Estimate

     In the second quarter of 2008, the Company reviewed the estimated useful lives of its television analog equipment. This review was performed because of the Federal Communications Commission’s (“FCC”) mandatory requirement that all television stations convert from analog to digital spectrum by June 2009. As a result of this review, the Company’s depreciation rate of its analog equipment was increased to reflect the estimated period during which these assets will remain in service. In accordance with Statement of Financial Accounting Standards (“SFAS”) No.154,Accounting Changes and Error Corrections, this change of estimated useful lives is deemed as a change in accounting estimate and has been accounted for prospectively, effective April 1, 2008. The effect of this change in estimate was to decrease net income approximately $74,000 and $277,000, and decrease earnings per share (basic and diluted) by $.02 and $.07, for the three and six months ended June 30, 2009, respectively. For the three and six months ended June 30, 2008, net income decreased approximately $115,000 and basic and diluted earnings per share decreased by $.04, as a result of this change in estimate.

     Revenue Recognition

     Revenue from the sale of commercial broadcast time to advertisers is recognized when commercials are broadcast. Revenue is reported net of advertising agency commissions. Agency commissions, when applicable, are based on a stated percentage applied to gross billing. All revenue is recognized in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Topic 13, Revenue Recognition Revised and Updated.

     Income Taxes

     Our effective tax rate is higher than the federal statutory rate as a result of the inclusion of state taxes in the income tax amount.

     Time Brokerage Agreements

     We have entered into Time Brokerage Agreements (“TBAs”) or Local Marketing Agreements (“LMA’s”) in certain markets. In a typical TBA/LMA, the FCC licensee of a station makes available, for a fee, blocks of air time on its station to another party that supplies programming to be broadcast during that air time and sells their own commercial advertising announcements during the time periods specified. We account for TBA’s/LMA’s under SFAS No. 13, Accounting for Leases and related interpretations. Revenue and expenses related to TBA’s/LMA’s are included in the accompanying unaudited Condensed Consolidated Statements of Income.

     Nonmonetary Asset Exchanges

     In 2006, the FCC granted to Sprint Nextel Corporation (“Nextel”) the right to reclaim from broadcasters in each market across the country the 1.9 GHz spectrum to use for an emergency communications system. In order to reclaim this signal, Nextel must replace all analog equipment currently using this spectrum with digital equipment. All broadcasters have agreed to use the digital substitute that Nextel will provide. The exchange of equipment will be completed on a market by market basis. As the equipment is exchanged and put into service in each of our markets we have and expect to continue to record gains to the extent that the fair market value of the equipment we receive exceeds the book value of the analog equipment we exchange. See Note 8, Gain on Asset Exchange.

     Effective July 1, 2009, the Financial Accounting Standards Board (“FASB”) SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162 (“ASC”) became the single official source of authoritative, nongovernmental GAAP. The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the SEC. All other literature became non-authoritative. ASC is effective for financial statements issued for interim and annual periods ending after September 15, 2009. As ASC was not intended to change or alter existing GAAP, it will not have any impact on our consolidated financial position, results of operations and cash flows.

     In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS 167”). SFAS 167 amends certain requirements of FASB Interpretation No. 46 (revised December 2003),Consolidation of Variable Interest Entities. Among other accounting and disclosure requirements, SFAS 167 replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. The Company will adopt SFAS 167 in its first quarter of 2010. We do not expect the adoption of SFAS 167 to have a material impact on our consolidated financial position, results of operations and cash flows.

     In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (“SFAS 166”). SFAS 166 improves the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a continuing interest in transferred financial assets. In addition, SFAS 166 amends various concepts addressed by FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement No. 125, including removing the concept of qualified special purpose entities. SFAS 166 must be applied to transfers occurring on or after the effective date. The Company will adopt SFAS 166 in its first quarter of 2010. We do not expect the adoption of SFAS 166 to have a material impact on our consolidated financial position, results of operations and cash flows.

     In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”), which establishes general standards of accounting for disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS 165 provides guidance on the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in it s financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The Company adopted SFAS 165 during the second quarter of 2009, and its application had no impact on our consolidated financial position, results of operations and cash flows.

     In April 2009, the FASB issued three FASB Staff Positions (“FSP”) intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. FSP No.157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides additional guidelines for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements. FSP No. 115-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance related to the disclosure of impairment losses on securities and the accounting for impairment losses on debt securities. FSP No. 115-2 does not amend existing guidance related to other-than-temporary impairments of equity securities. FSP No. 107-1 and Accounting Principles Board (“APB”) Opinion No. 28-1, Interim Disclosures about Fair Value of Financial Instruments, increases the frequency of fair value disclosures. The Company adopted these three FSPs during the second quarter of 2009, and the adoption had no impact on our consolidated financial position, results of operations and cash flows.

     In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). The FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. The intent of the FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under other accounting principles generally accepted in the United States of America. The guidance for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after the effective date. Certain disclosure requirements shall be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. We adopted FSP FAS 142-3 effective January 1, 2009, which did not have a material impact on our consolidated financial position, results of operations and cash flows.

     In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141R”), which changes the principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effect of the business combination. We adopted SFAS 141R effective January 1, 2009, which did not have a material impact on our consolidated financial position, results of operations and cash flows.

     On January 1, 2009, we adopted the provisions of SFAS No. 157, Fair Value Measurements (“SFAS 157”), related to nonfinancial assets and liabilities on a prospective basis. SFAS 157 establishes the authoritative definition of fair value, sets out a framework for measuring fair value and expands the required disclosures about fair value measurement. On January 1, 2008, we adopted the provisions of SFAS 157 related to financial assets and liabilities as well as other assets and liabilities carried at fair value on a recurring basis. The adoption of the provisions of SFAS 157 did not have a material impact on our consolidated financial position, results of operations and cash flows.

     Under SFAS No. 142, Accounting for Goodwill and Other Intangible Assets, (“SFAS 142”) goodwill and intangible assets deemed to have indefinite lives are not amortized and are subject to impairment tests which are conducted annually, or more frequently if impairment indicators arise.

     We consider FCC broadcast licenses to have indefinite lives. Factors that we considered in evaluating that the radio and television FCC licenses are indefinite-lived intangible assets under SFAS 142 include the following:

     Based on the above, we believe cash flows from our radio and television licenses are expected to continue indefinitely. If actual market conditions are less favorable than those estimated by the Company or if economic conditions continue to deteriorate, the fair value of the Company’s broadcast licenses could decline and the Company may be required to recognize impairment charges in future periods. Such a charge could have a material effect on the consolidated financial statements.

     Separate intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the lives of the leases. Other intangibles are amortized over one to eleven years.

     The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through June 30, 2009:

     We have a Stock Buy-Back Program to allow us to purchase up to $60,000,000 of our Class A Common Stock. From its inception in 1998 through June 30, 2009, we have repurchased 1,382,085 shares of our Class A Common Stock for approximately $45,482,000. The terms of the Credit Agreement, as amended on March 9, 2009, restrict our ability to repurchase our Class A Common Stock.

     In March 2009, we used 62,243 shares of treasury stock to fund the 2008 employer contribution under our 401(k) Plan.

     The unaudited condensed consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total costs were allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill, which is deductible for tax purposes.

     2008 Acquisitions

     On September 5, 2008, in connection with a city of license change for WJZK(FM), we exchanged $242,000 in cash and a tower, antenna, and transmitter with a fair market value (which approximates cost) of approximately $1,591,000, with another radio station for a broadcast license.

     On January 21, 2004, we entered into agreements to acquire an FM radio station (WOXL-FM) serving the Asheville, North Carolina market. On November 1, 2002 we began providing programming under a Sub-Time Brokerage Agreement to WOXL-FM, and on January 31, 2008 we closed on the acquisition for approximately $9,463,000 of which approximately $9,354,000 was paid in 2008 and $109,000 was paid in prior years. Since WOXL was operated under a TBA and we recognized the related interest expense, there is no pro forma effect of this acquisition.

     On January 31, 2008, we paid $1,350,000 in connection with the 2006 acquisition of one FM radio station (WTMT-FM) serving the Tazewell, Tennessee market.

     2005 Incentive Compensation Plan

     On May 9, 2005, our stockholders approved the 2005 Incentive Compensation Plan (the “2005 Plan”) which replaced our 2003 Stock Option Plan (the “2003 Plan”) as to future grants. The 2005 Plan extends through March 2015 and allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to officers and a select number of employees.

     Stock-Based Compensation

     The Company accounts for stock-based awards under the provisions of SFAS No. 123R, Share-Based Payment (“SFAS 123R”). Compensation expense of approximately $216,000 and $418,000, respectively, and related tax benefits of $95,000 and $184,000, respectively, was recognized for the three and six months ended June 30, 2009. For the three and six months ended June 30, 2008, the Company recognized compensation expense of approximately $242,000 and $495,000, respectively, and related tax benefits of $99,000 and $203,000, respectively. Compensation expense is reported in corporate general and administrative expenses in our results of operations.

     The following summarizes the stock option transactions for the 2005 and 2003 Plans and the 1992 Stock Option Plan (the “1992 Plan”) for the six months ended June 30, 2009:

     The following summarizes the non-vested stock option transactions for the 2005, 2003 and 1992 Plans for the six months ended June 30, 2009:

     The following summarizes the restricted stock transactions for the six months ended June 30, 2009:

     For the three and six months ended June 30, 2009 and the three and six months ended June 30, 2008, we had approximately $126,000, $252,000, $112,000 and $225,000, respectively, of total compensation expense related to restricted stock-based compensation arrangements.

     1997 Non-Employee Director Stock Option Plan

     In 1997, we adopted the 1997 Non-Employee Director Stock Option Plan (the “Directors Plan”) pursuant to which our directors who are not our employees were eligible to receive options. Options granted under the Directors Plan were non-qualified stock options, were immediately vested and become exercisable at the written election of the director. The options expire on the earlier of (i) 10 years from the date of grant or (ii) the March 16th following the calendar year in which they first become exercisable. This plan expired on May 12, 2007.

     Effective January 1, 2007, each director who is not an employee receives cash for his or her services as a director.

     The following summarizes the stock option transactions for the Directors Plan for the six months ended June 30, 2009:

     Long-term debt consisted of the following:

     Our Credit Agreement is a $150,000,000 reducing revolving line of credit maturing on July 29, 2012. On September 30, 2009, the Revolving Commitments (as defined in the Credit Agreement) will be permanently reduced by $1,250,000 and will continue to be permanently reduced at the end of each calendar quarter thereafter in amounts ranging from 4.375% to 12.5% of the original total Revolving Commitment of $200,000,000. In addition, the Revolving Commitments shall be further reduced by specified percentages of Excess Cash Flow (as defined in the Credit Agreement) based on leverage ratios. Any outstanding balance under the Credit Agreement will be due on the maturity date of July 29, 2012.

     On March 9, 2009, we amended our Credit Agreement to (i) exclude certain items from the definition of Fixed Charges effective December 31, 2008, (ii) increase the minimum Fixed Charge Coverage ratio effective December 31, 2008, (iii) increase the maximum Leverage Ratio effective December 31, 2008, (iv) reduce the Revolving Commitments to $150,000,000, (v) revise the interest rates and commitment fees and (vi) impose certain other limitations on the Company with respect to restricted payments, acquisitions and stock purchases. In addition, we agreed to pay each lender a fee. The lender fee plus amendment costs were approximately $1 million, which were capitalized as deferred financing costs and will be amortized over the remaining life of the Credit Agreement.

     Our indebtedness under the Credit Agreement is secured by a first priority lien on substantially all of our assets and of our subsidiaries, by a pledge of our subsidiaries’ stock and by a guarantee of our subsidiaries. We have approximately $17,650,000 of unused borrowing capacity under the Credit Agreement at June 30, 2009.

     The Credit Agreement contains a number of financial covenants (all of which we were in compliance with at June 30, 2009) that, among other things, requires us to maintain specified financial ratios and impose certain limitations on us with respect to (i) the incurrence of additional indebtedness; (ii) acquisitions, except under specified conditions; (iii) the incurrence of additional liens, except those relating to capital leases and purchase money indebtedness; (iv) the disposition of assets; (v) the payment of cash dividends; (vi) repurchases of our Class A Common Stock; and (vii) mergers, changes in business and management, investments and transactions with affiliates. The financial covenants become more restrictive over the life of the Credit Agreement.

     Approximately $1,061,000 of secured debt of affiliate was refinanced in April 2009 for a term of one year. At June 30, 2009, there was $1,078,000 of secured debt of affiliate outstanding.

     In 2006, the FCC granted to Nextel the right to reclaim from broadcasters in each market across the country the 1.9 GHz spectrum to use for an emergency communications system. In order to reclaim this signal, Nextel must replace all analog equipment currently using this spectrum with digital equipment. We have agreed to accept the substitute equipment that Nextel will provide and in turn we must relinquish our existing equipment to Nextel. This arrangement is accounted for as an exchange of assets in accordance with Accounting Principles Board No. 29, Accounting for Nonmonetary Transactions, as amended by SFAS No. 153, Exchanges of Nonmonetary Assets.

     The equipment we receive under this arrangement is recorded at its estimated fair market value and depreciated over estimated useful lives ranging from 5 to 15 years. Fair market value is derived from quoted prices obtained from manufacturers and vendors for the specific equipment acquired. As the equipment is exchanged and put into service in each of our markets we have and expect to continue to record gains to the extent that the fair market value of the equipment we receive exceeds the book value of the analog equipment we exchange. For the three and six months ended June 30, 2008, we recognized a gain of approximately $224,000 from the exchange of this equipment. There were no asset exchanges in the six months ended June 30, 2009.

     We evaluate the operating performance of our markets individually. For purposes of business segment reporting, we have aligned operations with similar characteristics into two business segments: Radio and Television.

     The Radio segment includes twenty-three markets, which includes all ninety-one of our radio stations and five radio information networks. The Television segment includes three markets and consists of five television stations and four low power television (“LPTV”) stations. The Radio and Television segments derive their revenue from the sale of commercial broadcast inventory. The category “Corporate general and administrative” represents the income and expense not allocated to reportable segments.

     The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto of Saga Communications, Inc. and its subsidiaries contained elsewhere herein and the audited financial statements and Management Discussion and Analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2008. The following discussion is presented on both a consolidated and segment basis. Corporate general and administrative expenses, interest expense, other (income) expense, and income tax expense are managed on a consolidated basis and are reflected only in our discussion of consolidated results.

     For purposes of business segment reporting, we have aligned operations with similar characteristics into two business segments: Radio and Television. The Radio segment includes twenty-three markets, which includes all ninety-one of our radio stations and five radio information networks. The Television segment includes three markets and consists of five television stations and four LPTV stations. The discussion of our operating performance focuses on segment operating income because we manage our segments primarily on operating income. Operating performance is evaluated for each individual market.

     We are a broadcast company primarily engaged in developing and operating radio and television stations.

     Our radio segment’s primary source of revenue is from the sale of advertising for broadcast on our stations. Depending on the format of a particular radio station, there are a predetermined number of advertisements available to be broadcast each hour.

     Most advertising contracts are short-term and generally run for a few weeks only. The majority of our revenue is generated from local advertising, which is sold primarily by each radio markets’ sales staff. For the six months ended June 30, 2009 and 2008, approximately 88% and 86%, respectively, of our radio segment’s gross revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales representative firms that specialize in national sales for each of our broadcast markets.

     Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which include the first quarter of each year. The downturn in the U.S. economy has had a significant adverse effect on our revenue for the first half of 2009. We expect the current environment to continue, and we do not expect any improvements in revenue until the U.S. economy improves substantially.

     In 2008 we had a considerable increase in revenue due to political advertising. Since 2009 is not an election year, we expect political revenue to significantly decline in 2009.

     Our net operating revenue, station operating expense and operating income varies from market to market based upon the market’s rank or size which is based upon population and the available radio advertising revenue in that particular market.

     Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers. In a number of our markets this is measured by periodic reports generated by independent national rating services. In the remainder of our markets it is measured by the results advertisers obtain through the actual running of an advertising schedule. Advertisers measure these results based on increased demand for their goods or services and/or actual revenues generated from such demand. Various factors affect the rate a station can charge, including the general strength of the local and national economies, population growth, ability to provide popular programming, local market competition, target marketing capability of radio compared to other advertising media and signal strength.

     When we acquire and/or begin to operate a station or group of stations we generally increase programming and advertising and promotion expenses to increase our share of our target demographic audience. Our strategy sometimes requires levels of spending commensurate with the revenue levels we plan on achieving in two to five years. During periods of economic downturns, or when the level of advertising spending is flat or down across the industry, this strategy may result in the appearance that our cost of operations are increasing at a faster rate than our growth in revenues, until such time as we achieve our targeted levels of revenue for the acquired station or group of stations.

     The number of advertisements that can be broadcast without jeopardizing listening levels (and the resulting ratings) is limited in part by the format of a particular radio station. Our stations strive to maximize revenue by constantly managing the number of commercials available for sale and adjusting prices based upon local market conditions and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of the day, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is generally the result of inventory sell out ratios and pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.

     Our radio stations employ a variety of programming formats. We periodically perform market research, including music evaluations, focus groups and strategic vulnerability studies. Because reaching a large and demographically attractive audience is crucial to a station’s financial success, we endeavor to develop strong listener loyalty. Our stations also employ audience promotions to further develop and secure a loyal following. We believe that the diversification of formats on our radio stations helps to insulate us from the effects of changes in musical tastes of the public on any particular format.

     The primary operating expenses involved in owning and operating radio stations are employee salaries (including commissions), depreciation, programming expenses, and advertising and promotion expenses.

     Although the slowing global economy has negatively affected advertising revenues for a wide variety of media businesses, radio revenue growth has been declining or stagnant over the last several years, primarily in major markets that are dependent on national advertising. We believe that this decline in major market radio advertising revenue is the result of a lack of pricing discipline by radio operators and new technologies and media (such as the Internet, satellite radio, and MP3 players). These recent technologies and media are gaining advertising share against radio and other traditional media.

     We have begun several initiatives to offset the declines in revenue. We are continuing to expand our interactive initiative to provide a seamless audio experience across numerous platforms to connect with our listeners where and when they want, and have added online components including streaming our stations over the Internet and on-demand options. We are seeing development potential in this area and believe that revenues from our interactive initiatives will continue to increase.

     We also continue the rollout of HD Radio™. HD Radio utilizes digital technology that provides improved sound quality over standard analog broadcasts and also allows for the delivery of additional channels of diversified programming or data streams in each radio market. It is unclear what impact HD Radio will have on the industry and our revenue as the availability of HD receivers, particularly in automobiles, is not widely available.

     In response to the declining trend in revenue caused by the global economic slowdown, we have continued to evaluate and reduce operating expenses. We have made reductions in our workforce, implemented a companywide 5% salary decrease, renegotiated and/or eliminated certain contracts, and are continuing to evaluate every area of our operations for additional savings in expenses.

     During the six months ended June 30, 2009 and 2008 and the years ended December 31, 2008 and 2007, our Columbus, Ohio; Manchester, New Hampshire; Milwaukee, Wisconsin; and Norfolk, Virginia markets, when combined, represented approximately 30%, 32%, 30% and 32%, respectively, of our consolidated net operating revenue.

     A significant decline in the total available radio advertising dollars in our major markets has resulted in a significant decline in our net operating revenue for the six months ended June 30, 2009 as compared to the corresponding period of 2008. This decrease in net operating revenue has directly affected the operating income of our radio stations in these markets. We do not expect any significant improvements in revenue until there are considerable improvements in the U.S. economy.

     The following tables describe the percentage of our consolidated net operating revenue represented by each of these markets:

     We use certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States of America (GAAP) to assess our financial performance. For example, we evaluate the performance of our markets based on “station operating income” (operating income plus corporate general and administrative expenses, depreciation and amortization). Station operating income is generally recognized by the broadcasting industry as a measure of performance, is used by analysts who report on the performance of the broadcasting industry and it serves as an indicator of the market value of a group of stations. In addition, we use it to evaluate individual stations, market-level performance, overall operations and as a primary measure for incentive based compensation of executives and other members of management. Station operating income is not necessarily indicative of amounts that may be available to us for debt service requirements, other commitments, reinvestment or other discretionary uses. Station operating income is not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to, and not a substitute for our results of operations presented on a GAAP basis.

     During the six months ended June 30, 2009 and 2008 and the years ended December 31, 2008 and 2007, the radio stations in our four largest markets when combined, represented approximately 35%, 37%, 37% and 40%, respectively, of our consolidated station operating income. The following tables describe the percentage of our consolidated station operating income represented by each of these markets:

     Our television segment’s primary source of revenue is from the sale of advertising for broadcast on our stations. The number of advertisements available for broadcast on our television stations is limited by network affiliation and syndicated programming agreements and, with respect to children’s programs, federal regulation. Our television stations’ local market managers determine the number of advertisements to be broadcast in locally produced programs only, which are primarily news programming and occasionally local sports or information shows.

     Our net operating revenue, station operating expense and operating income vary from market to market based upon the market’s rank or size, which is based upon population, available television advertising revenue in that particular market, and the popularity of programming being broadcast.

     Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by periodic reports by independent national rating services. Various factors affect the rate a station can charge, including the general strength of the local and national economies, population growth, ability to provide popular programming through locally produced news, sports and weather and as a result of syndication and network affiliation agreements, local market competition, the ability of television broadcasting to reach a mass appeal market compared to other advertising media, and signal strength including cable/satellite coverage, and government regulation and policies.

     For the period commencing on January 1, 2009, we have engaged in negotiations with cable and satellite providers as to the terms of their carriage of our television stations and the compensation we will receive for granting such carriage rights. We have entered into retransmission consent agreements with certain of these providers and expect these executed agreements will generate approximately $600,000 of new revenue in 2009.

     Our stations strive to maximize revenue by constantly adjusting prices for our commercial spots based upon local market conditions, demand for advertising and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of the day, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is generally the result of pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.

     Because audience ratings in the local market are crucial to a station’s financial success, we endeavor to develop strong viewer loyalty by providing locally produced news, weather and sports programming. We believe that this emphasis on the local market provides us with the viewer loyalty we are trying to achieve.

     Most of our revenue is generated from local advertising, which is sold primarily by each television markets’ sales staff. For the six months ended June 30, 2009 and 2008, approximately 84% and 80%, respectively, of our television segment’s gross revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales representatives that specialize in national sales for each of our television markets.

     Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which include the first quarter of each year. The downturn in the U.S. economy has had a significant adverse effect on our revenue for the first half of 2009. We expect the current environment to continue, and we do not expect any improvements in revenue until the U.S. economy improves substantially.

     In 2008 we had a considerable increase in revenue due to political advertising. Since 2009 is not an election year, we expect political revenue to significantly decline in 2009.

     The primary operating expenses involved in owning and operating television stations are employee salaries (including commissions), depreciation, programming expenses, including news production and the cost of acquiring certain syndicated programming, and advertising and promotion expenses.

     Our television market in Joplin, Missouri represented approximately 10%, 13%, 14% and 9%, respectively, of our consolidated operating income (excluding non-cash impairment charge) for the six months ended June 30, 2009 and 2008 and the years ended December 31, 2008 and 2007.

     Results of Operations

     The following tables summarize our results of operations for the three months ended June 30, 2009 and 2008.

     Reconciliation of segment operating income to consolidated operating income:

     Consolidated

     For the three months ended June 30, 2009, consolidated net operating revenue was $31,637,000 compared with $37,342,000 for the three months ended June 30, 2008, a decline of approximately $5,705,000 or 15%. We had a decrease of approximately $6,089,000 in net operating revenue generated by stations that we owned or operated for the comparable period in 2008 (“same station”), and an increase in net operating revenue of approximately $384,000 attributable to stations we did not own and operate for the entire comparable period. Same station gross national revenue and same station gross local revenue decreased approximately $1,840,000 and $4,959,000, respectively. Same station gross political revenue decreased approximately $236,000. The decrease in both gross national and gross local revenue was primarily the result of revenue downturns in most of our markets. There were considerable revenue declines in our Columbus, OH (25%), Manchester, NH (31%), Milwaukee, WI (20%), Norfolk, VA (30%), and Portland, ME (24%) markets. Our revenue has been directly affected by the ongoing economic conditions. There has been an overall decline in advertising revenue as a result of the slowdown in the economy and advertising spending in general. We expect this trend to continue throughout 2009. The decrease in gross political revenue was directly attributable to advertising in the prior year for the 2008 presidential, congressional, senatorial and local races.

     Station operating expense was $23,295,000 for the three months ended June 30, 2009, compared with $27,246,000 for the three months ended June 30, 2008, a decrease of $3,951,000 or 15%. Same station operating expense decreased $4,123,000 from the prior year quarter. The decrease in same station operating expense primarily resulted from cost reduction initiatives implemented in the first quarter, and reduced commission expense as a result of the decline in net operating revenue. These reductions were partially offset by increased depreciation expense as a result of a change in estimated useful lives of television analog equipment. Station operating expense increased approximately $172,000 from stations that we did not own or operate for the comparable period in 2008.

     Operating income for the three months ended June 30, 2009 was $6,184,000 compared to $7,746,000 for the three months ended June 30, 2008, a decrease of approximately $1,562,000. The decrease was the result of the significant declines in net operating revenue and station operating expense, described in detail above. Additionally, operating income in the prior year quarter included a $224,000 gain recognized from the exchange of equipment under an arrangement the Company has with Sprint Nextel Corporation. Current year operating income was positively affected by a $416,000 or 16% decrease in corporate general and administrative charges. The decrease in corporate general and administrative charges was primarily attributable to reductions in travel and travel related expenses, including cost savings from the cancellation of the Company’s annual managers meeting.

     We generated net income of approximately $2,674,000 ($.63 per share on a fully diluted basis) during the three months ended June 30, 2009, compared with $3,460,000 ($.70 per share on a fully diluted basis) for the three months ended June 30, 2008, a decrease of approximately $786,000. The decrease was primarily the result of a decline in operating income of $1,562,000, offset by decreases in interest expense and income tax expense of $446,000 and $295,000, respectively. The decrease in interest expense was attributable to a reduction in average market interest rates of approximately 1.6% as compared to the prior year quarter, partially offset by an increase in the amortization of debt issuance costs. We expect interest expense to increase in the third quarter as a result of the amendment to our debt agreement on March 9, 2009. The decrease in income tax expense was directly attributable to operating performance.

     Radio Segment

     For the three months ended June 30, 2009, net operating revenue of the radio segment was $27,530,000 compared with $32,629,000 for the three months ended June 30, 2008, which represents a decrease of $5,099,000 or 16%. During the current quarter we had an increase in net operating revenue of approximately $384,000 that was attributable to stations we did not own and operate for the entire comparable period. We had a decrease of approximately $5,483,000 in net operating revenue generated by radio stations that we owned or operated for the comparable period in 2008 (“same station”). Same station gross national revenue and same station gross local revenue decreased approximately $1,466,000 and $4,804,000, respectively. The decrease in both gross national and gross local revenue was primarily the result of revenue downturns in most of our radio markets. There were considerable revenue declines in our Columbus, OH (25%), Manchester, NH (31%), Milwaukee, WI (20%), Norfolk, VA (30%), and Portland, ME (24%) markets. Our revenue has been directly affected by the ongoing economic conditions. There has been an overall decline in advertising revenue as a result of the slowdown in the economy and advertising spending in general. We expect this trend to continue throughout 2009.

     Station operating expense for the radio segment was $19,694,000 for the three months ended June 30, 2009, compared with $23,398,000 for the three months ended June 30, 2008, a decline of approximately $3,704,000 or 16%. Same station operating expense decreased $3,876,000 from the prior year quarter. The decrease in same station operating expense primarily resulted from cost reduction initiatives implemented in the first quarter, and reduced commission expense as a result of the decline in net operating revenue. During the current quarter we had an increase in station operating expense of approximately $172,000 attributable to stations we did not own and operate for the entire comparable period.

     Operating income in the radio segment decreased $1,395,000 or 15%, to $7,836,000 for the three months ended June 30, 2009, from $9,231,000 for the three months ended June 30, 2008. The decrease was primarily the result of lower same station net operating revenue as described in detail above.

     Television Segment

     For the three months ended June 30, 2009, net operating revenue of our television segment was $4,107,000 compared with $4,713,000 for the three months ended June 30, 2008, a decrease of $606,000 or 13%. Gross national revenue and gross local revenue decreased approximately $374,000 and $155,000, respectively. Gross political revenue decreased approximately $178,000 in the current quarter as compared to the prior year period. All of our television markets have been directly affected by the ongoing economic conditions. There has been an overall decline in advertising revenue as a result of the slowdown in the economy and advertising spending in general. We expect this trend to continue throughout 2009. The decrease in gross political revenue was directly attributable to advertising in the prior year for the 2008 presidential, congressional, senatorial and local races.

     Station operating expense in the television segment for the three months ended June 30, 2009 was $3,601,000, compared with $3,848,000 for the three months ended June 30, 2008, a decrease of approximately $247,000 or 6%. Station operating expense decreased $306,000 as a result of cost reductions and declines in net operating revenue. However, this decrease was offset by an increase in depreciation expense as a result of a change in the estimated useful life of television analog equipment.

     Operating income in the television segment for the three months ended June 30, 2009 was $506,000 compared to $1,089,000 for the three months ended June 30, 2008, a decrease of approximately $583,000 or 54%. The decrease was primarily the result of the decline in net operating revenue as discussed above. Additionally, operating income in the prior year quarter included a $224,000 gain recognized from the exchange of equipment under an arrangement the Company has with Sprint Nextel Corporation.

     Results of Operations

     The following tables summarize our results of operations for the six months ended June 30, 2009 and 2008.

     Reconciliation of segment operating income to consolidated operating income:

     Consolidated

     For the six months ended June 30, 2009, consolidated net operating revenue was $57,761,000 compared with $68,874,000 for the six months ended June 30, 2008, a decline of approximately $11,113,000 or 16%. We had a decrease of approximately $11,685,000 in net operating revenue generated by stations that we owned or operated for the comparable period in 2008 (“same station”), and an increase in net operating revenue of approximately $572,000 attributable to stations we did not own and operate for the entire comparable period. Same station gross national revenue and same station gross local revenue decreased approximately $3,239,000 and $9,367,000, respectively. Same station gross political revenue decreased approximately $849,000. The decrease in both gross national and gross local revenue was primarily the result of revenue downturns in most of our markets. There were considerable revenue declines in our Charlottesville, VA (32%), Columbus, OH (18%), Manchester, NH (34%), Milwaukee, WI (20%), Norfolk, VA (33%), Portland, ME (20%) and Joplin, MO (14%) markets. Our revenue has been directly affected by the ongoing economic conditions. There has been an overall decline in advertising revenue as a result of the slowdown in the economy and advertising spending in general. We expect this trend to continue throughout 2009. The decrease in gross political revenue was directly attributable to advertising in the prior year for the 2008 presidential, congressional, senatorial and local races.

     Station operating expense was $47,235,000 for the six months ended June 30, 2009, compared with $52,667,000 for the six months ended June 30, 2008, a decrease of approximately $5,432,000 or 10%. Approximately $5,753,000 of the decrease was attributable to stations we owned and operated for the entire comparable period. The decrease in same station operating expense primarily resulted from cost reduction initiatives implemented in the first quarter, and reduced commission expense as a result of the decline in net operating revenue. These reductions were partially offset by increased depreciation expense as a result of a change in estimated useful lives of television analog equipment. Station operating expense increased approximately $321,000 from stations that we did not own or operate for the comparable period in 2008.

     Operating income for the six months ended June 30, 2009 was $6,301,000 compared to $11,305,000 for the six months ended June 30, 2008, a decrease of approximately $5,004,000, or 44%. The decrease was the result of reduced net operating revenue and lower station operating expense, described in detail above, and a $901,000 or 18% decrease in corporate general and administrative charges. Additionally, operating income in the prior year period included a $224,000 gain from the exchange of equipment under an arrangement we have with Sprint Nextel Corporation. The decrease in corporate general and administrative charges was primarily attributable to reductions in travel and travel related expenses, including cost savings from the cancellation of the Company’s annual managers meeting, and reductions in compensation related costs.

     We generated net income of approximately $2,312,000 ($.55 per share on a fully diluted basis) during the six months ended June 30, 2009, compared with $4,370,000 ($.88 per share on a fully diluted basis) for the six months ended June 30, 2008, a decrease of approximately $2,058,000 or 47%. The decrease was primarily the result of a decline in operating income of $5,004,000, offset by decreases in interest expense and income tax expense of $1,668,000 and $1,219,000, respectively. The decrease in interest expense was attributable to a reduction in average market interest rates of approximately 2.6% as compared to the prior year, partially offset by an increase in the amortization of debt issuance costs. We expect interest expense to increase in the third quarter as a result of the amendment to our debt agreement on March 9, 2009. The decrease in income tax expense was directly attributable to operating performance.

     Radio Segment

     For the six months ended June 30, 2009, net operating revenue of the radio segment was $50,227,000 compared with $60,010,000 for the six months ended June 30, 2008, a decrease of $9,783,000 or 16%. During 2009 we had an increase in net operating revenue of approximately $572,000 attributable to stations we did not own and operate for the entire comparable period. We had a decrease of approximately $10,355,000 in net operating revenue generated by radio stations that we owned or operated for the comparable period in 2008 (“same station”). Same station gross national revenue and same station gross local revenue decreased approximately $2,659,000 and $8,768,000, respectively. Same station gross political revenue decreased approximately $484,000. The decrease in both gross national and gross local revenue was primarily the result of revenue downturns in most of our markets. There were considerable revenue declines in our Charlottesville, VA (32%), Columbus, OH (18%), Manchester, NH (34%), Milwaukee, WI (20%), Norfolk, VA (33%) and Portland, ME (20%) markets. Our revenue has been directly affected by the ongoing economic conditions. There has been an overall decline in advertising revenue as a result of the slowdown in the economy and advertising spending in general. We expect this trend to continue throughout 2009. The decrease in gross political revenue was directly attributable to advertising in the prior year for the 2008 presidential, congressional, senatorial and local races.

     Station operating expense for the radio segment was $40,011,000 for the six months ended June 30, 2009, compared with $45,311,000 for the six months ended June 30, 2008, a decrease of approximately $5,300,000 or 12%. The decrease resulted from a decrease of $5,621,000 in same station operating expense, offset by an increase of $321,000 from the operation of radio stations that we did not own or operate for the comparable period in 2008. The decrease in same station operating expense primarily resulted from cost reduction initiatives implemented in the first quarter, and reduced commission expense as a result of the decline in net operating revenue.

     Operating income in the radio segment for the six months ended June 30, 2009 was $10,216,000 compared to $14,699,000 for the six months ended June 30, 2008, a decrease of approximately $4,483,000 or 31%. The decrease was attributable to lower same station net operating revenue as discussed above.

     Television Segment

     For the six months ended June 30, 2009, net operating revenue of our television segment was $7,534,000 compared with $8,864,000 for the six months ended June 30, 2008, a decrease of $1,330,000 or 15%. Gross national revenue and gross local revenue decreased approximately $580,000 and $599,000, respectively. Gross political revenue decreased approximately $365,000 in the current year as compared to the prior year period. All of our television markets have been directly affected by the ongoing economic conditions. There has been an overall decline in advertising revenue as a result of the slowdown in the economy and advertising spending in general. We expect this trend to continue throughout 2009. The decrease in gross political revenue was directly attributable to advertising in the prior year for the 2008 presidential, congressional, senatorial and local races.

     Station operating expense in the television segment for the six months ended June 30, 2009 was $7,224,000, compared with $7,356,000 for the six months ended June 30, 2008, a decrease of approximately $132,000 or 2%. Although departmental expenses of the television segment have been reduced approximately 7% in the current year, depreciation expense has increased approximately $330,000 as a result of the acceleration in the estimated useful life of television analog equipment.

     Operating income in the television segment for the six months ended June 30, 2009 was $310,000 compared to $1,732,000 for the six months ended June 30, 2008, a decrease of approximately $1,422,000 or 82%. The decrease was primarily the result of the decline in net operating revenue as discussed above. Also contributing to the decrease in operating income was a $224,000 gain recognized in the prior year from the exchange of equipment under an arrangement the Company has with Sprint Nextel Corporation.

     Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as “believes,” “anticipates,” “estimates,” “plans”, “expects,” and similar expressions are intended to identify forward-looking statements. These statements are made as of the date of this report or as otherwise indicated, based on current expectations. We undertake no obligation to update this information. A number of important factors could cause our actual results for 2009 and beyond to differ materially from those expressed in any forward-looking statements made by or on our behalf. Forward-looking statements are not guarantees of future performance as they involve a number of risks, uncertainties and assumptions that may prove to be incorrect and that may cause our actual results and experiences to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks, uncertainties and assumptions that may affect our performance include our financial leverage and debt service requirements, dependence on key personnel, dependence on key stations, U.S. and local economic conditions, our ability to successfully integrate acquired stations, regulatory requirements, new technologies, natural disasters and terrorist attacks. We cannot be sure that we will be able to anticipate or respond timely to changes in any of these factors, which could adversely affect the operating results in one or more fiscal quarters. Results of operations in any past period should not be considered, in and of itself, indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of our stock.

     For a more complete description of the prominent risks and uncertainties inherent in our business, see “Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008.

     Debt Arrangements and Debt Service Requirements

     As of June 30, 2009, we had $133,428,000 of long-term debt (including the current portion thereof) outstanding and approximately $17,650,000 of unused borrowing capacity under our Credit Agreement.

     The Credit Agreement is a $150,000,000 reducing revolving line of credit maturing on July 29, 2012. Our indebtedness under the Credit Agreement is secured by a first priority lien on substantially all of our assets and of our subsidiaries, by a pledge of our subsidiaries’ stock and by a guarantee of our subsidiaries. The Credit Agreement may be used for general corporate purposes, including working capital and capital expenditures.

     On March 9, 2009, we amended our Credit Agreement to (i) exclude certain items from the definition of Fixed Charges effective December 31, 2008, (ii) increase the minimum Fixed Charge Coverage ratio effective December 31, 2008, (iii) increase the maximum Leverage Ratio effective December 31, 2008, (iv) reduce the Revolving Commitments to $150,000,000, (v) revise the interest rates and commitment fees and (vi) impose certain other limitations on the Company with respect to restricted payments, acquisitions and stock purchases. In addition, we agreed to pay each lender a fee. The lender fee plus amendment costs were approximately $1 million.

     On September 30, 2009, the Revolving Commitments will be permanently reduced by $1,250,000 and will continue to be permanently reduced at the end of each calendar quarter thereafter in amounts ranging from 4.375% to 12.5% of the original total Revolving Commitment of $200,000,000. In addition, the Revolving Commitments shall be further reduced by specified percentages of Excess Cash Flow (as defined in the Credit Agreement) based on leverage ratios. Any outstanding balance under the Credit Agreement will be due on the maturity date of July 29, 2012.

     The Credit Agreement contains a number of financial covenants (all of which we were in compliance with at June 30, 2009) that, among other things, requires us to maintain specified financial ratios and impose certain limitations on us with respect to additional indebtedness, acquisitions, the incurrence of additional liens, the disposition of assets, the payment of cash dividends, repurchases of our Class A Common Stock, mergers, changes in business and management, investments and transactions with affiliates. The financial covenants become more restrictive over the life of the Credit Agreement.

     Sources and Uses of Cash

     During the six months ended June 30, 2009 and 2008, we had net cash flows from operating activities of $12,001,000 and $9,839,000, respectively. We believe that cash flow from operations will be sufficient to meet quarterly debt service requirements for interest and scheduled payments of principal under the Credit Agreement. However, if such cash flow is not sufficient we may be required to sell additional equity securities, refinance our obligations or dispose of one or more of our properties in order to make such scheduled payments. There can be no assurance that we would be able to effect any such transactions on favorable terms, if at all.

     In January 2008, our board of directors authorized an increase to our Stock Buy-Back Program so that we may purchase a total of $60,000,000 of our Class A Common Stock. From the inception of the Stock Buy-Back program in 1998 through June 30, 2009, we have repurchased 1,382,085 shares of our Class A Common Stock for approximately $45,482,000. Approximately 5,700 shares were retained for payment of withholding taxes related to the vesting of restricted stock during the six months ended June 30, 2009 for $20,000.

     Our capital expenditures, exclusive of acquisitions, for the six months ended June 30, 2009 were approximately $2,574,000 ($3,525,000 in 2008). We anticipate capital expenditures in 2009 to be approximately $3,500,000 to $4,000,000, which we expect to finance through funds generated from operations or additional borrowings under the Credit Agreement.

     Summary Disclosures About Contractual Obligations and Commercial Commitments

     We have future cash obligations under various types of contracts under the terms of our Credit Agreement, operating leases, programming contracts, employment agreements, and other operating contracts. For additional information concerning our future cash obligations see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation — Summary Disclosures About Contractual Obligations and Commercial Commitments” in our Annual Report on Form 10-K for the year ended December 31, 2008.

     There have been no material changes to such contracts/commitments during the six months ended June 30, 2009. On March 9, 2009, we amended our Credit Agreement; however, there were no material changes to our cash obligations. See “Debt Arrangements and Debt Service Requirements” above for additional information regarding the amendment to the Credit Agreement.

     We anticipate that our contractual cash obligations will be financed through funds generated from operations or refinance our obligations under the Credit Agreement, or a combination thereof.

     Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates, judgments and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures and contingencies. We evaluate estimates used in preparation of our financial statements on a continual basis. There have been no significant changes to our critical accounting policies that are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2008.

     The impact of inflation on our operations has not been significant to date. There can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operations.

     Refer to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk and Risk Management Policies” in our Annual Report on Form 10-K for the year ended December 31, 2008 for a complete discussion of our market risk. There have been no material changes to the market risk information included in our 2008 Annual Report on Form 10-K.

     As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to cause the material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There were no changes in the Company’s internal controls over financial reporting during the quarter ended June 30, 2009, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

     We currently and from time to time are involved in litigation incidental to the conduct of our business. We are not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on our financial position, cash flows or results of operations.

     The Annual Meeting of Stockholders was held on May 11, 2009.

     At the Annual Meeting of Stockholders, the stockholders voted on the following matters:

     (1) The seven nominees for election as directors for the ensuing year, and until their successors are elected and qualified, received the following votes:

     (2) The proposal to ratify the selection by the Board of Directors of Ernst & Young LLP as independent auditors to audit our consolidated financial statements for the fiscal year ending December 31, 2009 was approved with 8,769,412 votes cast for, 6,348 votes cast against and 6,512 abstentions.

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