Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Special Note about Forward-Looking Statements

This report contains certain forward-looking statements with respect to our financial condition, results of operations and business, including statements under this caption "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations". All of these forward-looking statements are based on estimates and assumptions made by our management, which, although we believe them to be reasonable, are inherently uncertain. Therefore, you should not place undue reliance upon such estimates and statements. We cannot assure you that any of such estimates or statements will be realized and actual results may differ materially from those contemplated by such forward-looking statements. Factors that may cause such differences include those discussed under the caption "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2007. Many of these factors are beyond our control. Forward-looking statements contained herein speak only as of the date hereof. We undertake no obligation to update these forward-looking statements, to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Executive Summary

We own and operate and/or program 29 television stations in 17 mid-sized markets in the United States. Our operating revenues are derived primarily from the sale of advertising time to local, national and political advertisers and to a lesser extent from digital revenues, network compensation, barter and other revenues.

We recorded net income of $10.0 million and net loss of $204.5 million for the three and nine months ended September 30, 2008, respectively; and we recorded net income of $1.7 million and $26.0 million for the three and nine months ended September 30, 2007, respectively. The following are some of the key developments in our operations for the three months ended September 30, 2008:

† Net revenues increased 5% for the third quarter of 2008 compared to the same quarter last year, primarily due to increased political and digital revenues, offset by reduced national and local advertising revenues.

† Our gross local advertising revenues decreased by 3% for the third quarter of 2008 compared to the same quarter last year. The decrease is due to the television advertising marketplace decline in our local markets resulting from general economic pressures. Local advertising revenues represented 60% and 63% of total advertising revenues for the third quarter of 2008 and 2007, respectively.

† Our gross national advertising revenues decreased 15% for the third quarter of 2008 compared to the same quarter last year. The decrease is due to the national television advertising marketplace decline in our markets resulting from general economic pressures. National advertising revenues represented 29% and 35% of total advertising revenues for the third quarter of 2008 and 2007, respectively.

† Advertising categories for which local and national advertising sales decreased for the third quarter of 2008, compared to the same quarter last year, were automotive, restaurants, media/telecommunications, services, financial services and entertainment. Advertising categories for which revenues increased for the third quarter of 2008 included political, medical and education. The automotive category, which represented 25% of our local and national advertising sales for the third quarter of 2008, decreased 20% compared to the same quarter last year.

† Our gross political advertising revenues were $11.4 million for the three months ended September 30, 2008 compared to $1.3 million for the three months ended September 30, 2007. Political elections generally occur in even years resulting in significant changes in political advertising revenues between odd years (2005 and 2007) and even years (2006 and 2008). Political advertising revenues represented 11% and 1% of total advertising revenues for the three months ended September 30, 2008 and 2007, respectively.

† Our digital revenues, which include revenues generated by our retransmission consent agreements and Internet web sites, increased 88% compared to the same period in the prior year. During the third quarter of 2008, total page views for our web sites were 134.5 million, compared to 99.3 million in the third quarter of 2007, representing a 35% increase. Unique visitors for our web sites were 16.0 million in the third quarter of 2008, compared to 11.6 million in the third quarter of 2007, representing a 38% increase.

††††††††† We repaid $7.5 million of the term loans and $15.0 million of the revolving loans under our credit facility during the third quarter of 2008. As a result, our cash balances at September 30, 2008 were $16.3 million and our total debt outstanding at September 30, 2008 was $760.8 million, or $72.0 million less than our total debt at December 31, 2007.

Subsequent Event

On October 28, 2008, LIN Television Corporation signed a new retransmission consent agreement with Time Warner Cable, which grants to Time Warner and its affiliated entities ("Time Warner") the right to carry the analog and high definition signals of certain of our television stations on the Time Warner cable systems. When our previous retransmission consent agreement with Time Warner expired on October 2, 2008, Time Warner removed from their cable systems our television signals covered by that agreement. Time Warner resumed carrying our television channels on October 29, 2008 that are covered under this agreement. Time Warner represents approximately 2.7 million or 19% of our total duplicated television households.

Critical Accounting Policies and Estimates and Recently Issued Accounting Pronouncements

Certain of our accounting policies, as well as estimates that we make, are critical to the presentation of our financial condition and results of operations since they are particularly sensitive to our judgment. Some of these policies and estimates relate to matters that are inherently uncertain. The estimates and judgments we make affect the reported amounts of assets, liabilities, revenues and expenses, and related

disclosures of contingent liabilities. On an on-going basis, we evaluate our estimates, including those related to intangible assets and goodwill, equity investments, bad debts, program rights, income taxes, stock-based compensation, employee medical insurance claims, pensions, useful lives of property, equipment, and indefinite-lived intangible assets, contingencies, barter transactions, acquired asset valuations and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and it is possible that such differences could have a material impact on our consolidated financial statements. For a more detailed explanation of the judgments made in these areas and a discussion of our accounting policies, refer to "Critical Accounting Policies, Estimates and Recently Issued Accounting Pronouncements" included in Item 7, and Note 1 - "Summary of Significant Accounting Policies" included in Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2007.

Fair Value Estimates

We record certain financial assets and liabilities at fair value on a recurring basis consistent with SFAS 157. The following table summarizes the financial assets and liabilities measured at fair value in the accompanying condensed consolidated balance sheet, using the three-level fair value hierarchy established by SFAS 157 (in thousands):

                                                                September 30, 2008
                                                             Significant          Signficant
                                      Quoted prices in        observable         unobservable
                                       active markets           inputs              inputs
                                         (Level 1)            (Level 2)           (Level 3)           Total

Assets:
Deferred compensation related
investments                          $            4,630    $              -    $              -    $     4,630

Liabilities:
Interest rate swaps                                   -               3,219                   -          3,219
Deferred compensation related
liabilities                                       4,630                   -                   -          4,630

The fair value of interest rate swaps is determined based on the present value of future cash flows using observable inputs, including interest rates associated with a similar financial instrument using a series of three-month LIBOR-based loans through November 4, 2011. With respect to the deferred compensation plan, the fair value of deferred compensation is determined based on the fair value of the investments selected by employees.

Accounting Pronouncements

In September 2008, the FASB issued FASB Staff Position ("FSP") FSP SFAS 133-1 and FIN 45-4 "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of SFAS 133 and FIN 45; and Clarification of the Effective Date of SFAS 161" ("FSP SFAS 133-1 and FIN 45-4"), which is effective for reporting periods, both annual and interim, ending after November 15, 2008. FSP SFAS 133-1 and FIN 45-4 applies to credit derivatives within the scope of SFAS 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), hybrid instruments that have embedded credit derivatives, and guarantees within the scope of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others-an interpretation of FASB

Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34". This FSP requires additional financial statement disclosures relative to the current status of the payment/performance risk of the credit derivative or guarantee to enable users of financial statements to assess their potential effect on the financial position, financial performance and cash flows. FSP SFAS 133-1 and FIN 45-4 impacts only our disclosure requirements and therefore will not have a material impact on our financial position, financial performance or cash flows. We plan to adopt FSP SFAS 133-1 and FIN 45-4 and include the additional disclosures with our Annual Report on Form 10-K for year ending December 31, 2008.

In June 2008, the FASB issued FSP SFAS 142-3 "Determination of the Useful Life of Intangible Assets" ("FSP SFAS 142-3"), which is effective for financial statements issued for fiscal years beginning after December 31, 2008, and interim periods within those fiscal years. Early adoption is prohibited. FSP SFAS 142-3 provides guidance for determining the useful life of a recognized intangible asset and will be applied prospectively to intangible assets acquired after the effective date. We plan to adopt FSP SFAS 142-3 effective January 1, 2009, and its effects on future periods will depend on the nature and significance of any acquisitions subject to SFAS 141R "Business Combinations" ("SFAS 141R").

In March 2008, the FASB issued SFAS 161 "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"), which is effective for fiscal years and interim periods beginning after November 15, 2008, with earlier adoption encouraged. This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity's derivative instruments and hedging activities and their effects on the entity's financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. SFAS 161 impacts only our disclosure requirements and therefore will not have a material impact on our financial position, financial performance or cash flows. We plan to adopt SFAS 161 effective January 1, 2009.

In December 2007, the FASB issued SFAS 141R, which is effective prospectively for all business combinations with acquisition dates on or after the beginning of the first fiscal year beginning after December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141R replaces SFAS 141 "Business Combinations" ("SFAS 141"), but it retains the underlying concepts of SFAS 141 in that all business combinations are required to be accounted for at fair value under the acquisition method of accounting. However, SFAS 141R changed the method of applying the acquisition method in a number of significant ways. Acquisition costs will generally be expensed as incurred; non-controlling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value at the acquisition date as an indefinite-lived intangible asset; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. We plan to adopt SFAS 141R effective January 1, 2009, and its effects on future periods will depend on the nature and significance of any acquisitions subject to SFAS 141R.

In December 2007, the FASB issued SFAS 160 "Non-controlling Interests in Consolidated Financial Statements" ("SFAS 160"), which amends Accounting Research Bulletin ("ARB") 51, "Consolidated Financial Statements" ("ARB 51"). SFAS 160 is effective for quarterly and annual reporting periods that begin after December 15, 2008. SFAS 160 establishes accounting and reporting standards with respect to non-controlling interests (also called minority interests) in an effort to improve the relevance, comparability and transparency of financial information that a company provides with respect to its non-controlling interests. The significant requirements under SFAS 160 are the reporting of the non-controlling interests separately in the equity section of the balance sheet and the reporting of the net income or loss of the controlling and non-controlling interests separately on the face of the statement of operations. We plan to adopt SFAS 160 effective January 1, 2009, and we do not expect it to have a material impact on our consolidated financial statements.

In September 2006, the FASB issued SFAS 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. For all of our financial assets and liabilities that are recognized and disclosed at fair value on a recurring basis, we adopted the provisions of SFAS 157 effective January 1, 2008. The adoption of SFAS 157, relating to financial assets and liabilities that are recognized and disclosed at fair value on a recurring basis, did not have a material impact on our consolidated financial statements. For all assets and liabilities that are non-financial that are recognized or disclosed at fair value in the financial statements on a non-recurring basis, we plan to adopt the provisions of SFAS 157 effective January 1, 2009. This partial deferral was a result of FSP SFAS 157-2 "Effective Date of FASB Statement No. 157" ("FSP SFAS 157-2") issued on February 12, 2008, which delayed the adoption of SFAS 157 for non-financial assets and liabilities that are recognized or disclosed at fair value on a non-recurring basis. We are currently evaluating the impact of SFAS 157 on our financial statements relative to non-financial assets and liabilities. In October 2008, the FASB issued FSP SFAS 157-3 "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active" ("FSP SFAS 157-3"), which is effective upon issuance for all financial statements that have not been issued. FSP SFAS 157-3 clarifies the application of SFAS 157, in a market that is not active. We have adopted FSP SFAS 157-3 effective with this filing. FSP SFAS 157-3 does not have a material impact on our financial position, financial performance or cash flows.

Results of Operations

Our condensed consolidated financial statements reflect the operations, assets and liabilities of our Puerto Rico operations and of Banks Broadcasting as discontinued for all periods presented. Set forth below are key components that contributed to our operating results (in thousands):

                         Three months ended September 30,          Nine months ended September 30,
                         2008           2007        % change        2008           2007       % change

Revenues:
Local advertising
sales                 $    60,629    $    62,650      -3%       $     191,704    $ 199,332      -4%
National
advertisng sales           29,646         35,012      -15%             94,542      105,020      -10%
Political
advertising sales          11,357          1,305      770%             22,678        2,876      689%
Digital revenues            8,114          4,317      88%              19,737       10,133      95%
Network
compensation                  913            919      -1%               2,838        2,756       3%
Barter revenues             1,088          2,030      -46%              3,754        6,162      -39%
Other revenues              1,152            999      15%               2,986        2,806       6%
Agency commissions        (14,095 )      (13,492 )     4%             (42,668 )    (41,788 )     2%
Net revenues               98,804         93,740       5%             295,571      287,297       3%
                                                       %
Operating costs
and expenses:                                          %
Direct operating           28,977         29,016       0%              88,666       86,353       3%
Selling, general
and administrative         28,321         26,928       5%              85,157       84,188       1%
Amortization of
program rights              5,856          6,382      -8%              17,620       18,523      -5%
Corporate                   3,683          5,844      -37%             14,922       16,374      -9%
Depreciation                7,308          6,876       6%              22,125       23,088      -4%
Amortization of
intangible assets              44            523      -92%                228        1,669      -86%
Impairment of
goodwill and
broadcast licenses              -              -       0%             296,972            -
Restructuring
benefit                         -           (165 )   -100%                  -          (74 )   -100%
Loss (gain) from
asset sales                    74            679      -89%               (296 )      1,382     -121%
Total operating
costs and expenses         74,263         76,083      -2%             525,394      231,503      127%

Operating income      $    24,541    $    17,657      39%       $    (229,823 )  $  55,794     -512%

Period Comparison

Revenues

Net revenues consist primarily of national, local and political advertising sales, net of sales adjustments and agency commissions. Additional amounts are generated from Internet revenues and retransmission consent fees (collectively, "digital revenues"), barter revenues, network compensation, production revenues and tower rental income.

Net revenues increased $5.1 million, or 5%, for the three months ended September 30, 2008, compared with the three months ended September 30, 2007. The increase was primarily due to: (a) an increase in political advertising sales of $10.1 million; and (b) an increase in digital revenue of $3.8 million. These increases were partially offset by (a) a decrease in local advertising sales of $2.0 million; (b) a decrease in national advertising sales of $5.4 million; and
(c) the collective decrease in barter and all other revenue categories of $1.4 million.

Net revenues increased $8.3 million, or 3%, for the nine months ended September 30, 2008, compared with the nine months ended September 30, 2007. The increase was primarily due to: (a) an increase in political advertising sales of $19.8 million; and (b) an increase in digital revenue of $9.6 million. These increases were partially offset by (a) a decrease in local advertising sales of $7.6 million; (b) a decrease in national advertising sales of $10.5 million; and
(c) the collective decrease in barter and all other revenue categories of $3.0 million.

The increase in political advertising sales during the three and nine months ended September 30, 2008, compared to the same period last year, is a result of the upcoming Presidential, Congressional, state and local elections. We expect higher political advertising sales in the fourth quarter of 2008 compared to the average of the first three quarters of 2008.

The increase in digital revenues for the three and nine months ended September 30, 2008 over the comparable periods last year is primarily due to several new retransmission consent agreements reached with cable, satellite and telecommunication operators during 2007 and 2008, and an increase in Internet revenues. We expect higher digital revenues in the fourth quarter of 2008 compared to the average of the first three quarters of 2008.

The decrease in local advertising sales is due to general economic pressure now impacting a number of local economies, primarily in the housing, automobile and retail segments. The decrease in national time sales is due to the same general economic factors, which has impacted most national advertising categories, particularly automotive spending. We expect this trend to continue for local and national advertising in the fourth quarter of 2008 and into 2009.

Operating Costs and Expenses

Operating costs and expenses decreased $1.8 million or 2% to $74.3 million for the three months ended September 30, 2008 compared to $76.1 million for the same period in 2007. This variance was primarily due to: (a) fair value or mark-to-market adjustment of $1.2 million in executive deferred compensation investment accounts; (b) reduction of $0.8 million in stock-based compensation expense; (c) lower barter expenses of $0.8 million; (d) lower amortization expense related to intangible assets of $0.5 million; and (e) a decrease from losses from the sale or disposal of assets of $0.6 million. These decreases were partially offset by (a) higher legal and professional fees of $1.3 million;
(b) higher depreciation expense of $0.4 million; (c) a benefit of $0.2 million in restructuring charges in the third quarter of 2007 compared to no benefit in the third quarter of 2008; and (d) other cost increases of $0.2 million.

Operating costs and expenses increased $293.9 million to $525.4 million for the nine months ended September 30, 2008 compared to $231.5 million for the same period in 2007. This increase was primarily due to: (a) an impairment charge of $297.0 million relating to our broadcast licenses and goodwill (described below); (b) higher legal and professional fees of $2.7 million; (c) higher contract costs of $1.3 million; and (d) other cost increases of $1.1 million. These increases were partially offset by (a) lower benefit costs of $2.2 million; (b) lower barter costs of $1.9 million; (c) lower amortization of intangible assets of $1.4 million; (d) lower (gain) loss of sales of assets of $1.7 million; and (e) lower depreciation costs of $1.0 million.

Impairment of broadcast licenses and goodwill

We recorded an impairment charge of $297.0 million during the second quarter of 2008 that included an impairment to the carrying values of our broadcast licenses of $185.7 million, related to 19 of our television stations; and an impairment to the carrying values of our goodwill of $111.3 million, related to 8 of our television

stations. As required by SFAS 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), we tested our unamortized intangible assets for impairment at June 30, 2008, between the required annual tests, because we believed events had occurred and circumstances changed that would more likely than not reduce the fair value of our broadcast licenses and goodwill below their carrying amounts. These events included: (a) the continued decline of the price of our Class A common stock; (b) the decline in the current selling prices of television stations; (c) the lower growth in advertising revenues; and (d) the decline in the operating profit margins of some of our stations.

We used the income approach to test our broadcast licenses for impairments as of June 30, 2008 and we used the same assumptions as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007, except for the following adjustments: (a) the discount rate was adjusted from 8% to 9%; (b) market growth rates were adjusted from a range of 1.0% - 2.7% to a range of 0.1% to 2.1%; and
(c) operating profit margins were adjusted from a range of 8.5% to 40.9% to a range of 8.5% to 39.8%. The increase in the discount rate reflected the volatility of stock prices of public companies within the media sector. The changes in the market growth rates and operating profit margins reflected the current general economic pressures impacting both the national and a number of local economies, and specifically, national and local advertising revenues in the markets where our stations operate.

We used the income approach to test goodwill for impairments as of June 30, 2008 and we used the same assumptions as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007, except for the following adjustments: (a) the discount rate was adjusted from 10% to 11.5%; (b) market growth rates were adjusted from a range of 1.0% to 2.7% to a range of 0.1% to 2.1%; and (c) operating profit margins were adjusted from a range of 29.2% to 57.6% to a range of 22.4% to 62.1%. These assumptions are based on: (a) the actual historical performance of our stations; (b) management's estimates of future performance of our stations; and (c) the same market growth assumptions used in the calculation of the fair value of our broadcast licenses. The increase in the discount rate reflected the volatility of our Class A common stock. The changes in the market growth rates and operating profit margins reflected the current general economic pressures impacting both the national and a number of local economies, and . . .