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Local Conditions, NBC Bring Down Hearst Revenue

Hearst-Argyle Television announced third quarter net income of $9.7 million and earnings of 10 cents per share, a drop from net income of $16.5 million and earnings per share of 18 cents in Q3 2006. Earnings would have been higher (13 cents a share) but for $3.6 million of expenses related to its corporate parent Hearst Corp’s. recently expired tender offer for the 27 percent of HTV it does not already own.

Revenue from retransmission consent agreements increased from $17.9 million in all 2006 to a projected $21 million-plus in 2007, out of a total anticipated revenue of about $750 million.

“With a majority of our retransmission agreements coming up for renewal at the end of 2008 and during 2009, we anticipate future retransmission revenue growth,” the company said.

In the third quarter, HTC announced a long-term retransmission consent agreement with Cox Communications.

HTV said revenue was impacted by local economic issues, particularly the downturn in the housing market in California, Florida and certain areas in the Northeast.

“This is further aggravated by the lagging NBC primetime performance,” the company said. Ten of its 26 stations are NBC affiliates, making HTV the network’s second-largest affiliate owner.

“Our local stations continue to deliver strong local audience ratings, and consistently over-index our networks’ ratings in primetime,” said Chairman and CEO David Barrett. “We’re also making great strides with our digital media initiatives, launching and refining digital products, and tapping into the growing digital revenue ad stream.”

Online, the number of unique visitors to the HTV Web sites grew a whopping 134 percent over the same quarter last year, with annual revenues expected to increase by about a third to more than $21 million. Its online ventures include High School Playbook, which combines television and the Internet to deliver local high school sports on-air and on-line. High School Playbook currently operates in seven markets with more markets expected to launch in the future.

Sixteen Hearst-Argyle stations have launched weather multicast channels and four HTV stations—KCRA (Sacramento), WCVB (Boston), KMBC (Kansas City) and WESH (Orlando)—now produce local news in HD.

HTV expects to invest $60 million in property, plant and equipment in 2007, including costs for the transition to HD news production, enhancement of IT infrastructure and support of digital initiatives.