SINCLAIR BROADCAST GROUP INC, 10-K/A, 1998-03-27

SINCLAIR BROADCAST GROUP INC
10-K/A, 1998-03-27
TELEVISION BROADCASTING STATIONS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997COMMISSION FILE NUMBER : 0-26076

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

----------------

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

2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(Address of principal executive offices)

(410) 467-5005
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act:
Class A Common Stock, par value $.01 per share Series D
Preferred Stock, par value $.01 per share

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

Indicate by check mark if disclosure of delinquent filings pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A. [X]

Based on the closing sale price of $55 15/16 per share as of March 16, 1998, the
aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $803.4 million.

As of March 13, 1998, there are 14,380,770 shares of Class A Common stock, $.01
par value; 25,166,432 shares of Class B Common Stock, $.01 par value; 976,380
shares of Series B Preferred Stock, $.01 par value, convertible into 3,550,484
shares of Class A Common Stock; and 3,450,000 shares of Series D Preferred
Stock, $.01 par value, convertible into 3,780,822 shares of Class A Common Stock
of the Registrant issued and outstanding.

In addition, 2,000,000 shares of $200 million aggregate liquidation value of 11
5/8% High Yield Trust Offered Preferred Securities of Sinclair Capital, a
subsidiary trust of Sinclair Broadcast Group, Inc., are issued and outstanding.

<PAGE>
PART I

FORWARD-LOOKING STATEMENTS

The matters discussed in this Form 10-K/A include forward-looking
statements. In addition, when used in this Form 10-K/A, the words "intends to,"
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to a number of
risks and uncertainties. Actual results in the future could differ materially
and adversely from those described in the forward-looking statements as a result
of various important factors, including the impact of changes in national and
regional economies, successful integration of acquired television and radio
stations (including achievement of synergies and cost reductions), pricing
fluctuations in local and national advertising, volatility in programming costs,
the availability of suitable acquisitions on acceptable terms and the other risk
factors set forth in the Sinclair Broadcast Group, Inc.'s ("Sinclair" or the
"Company") prospectus filed with the Securities and Exchange Commission on
December 12, 1997, pursuant to rule 424(b)(5). The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.

ITEM 1. BUSINESS

BUSINESS OF SINCLAIR

The Company is a diversified broadcasting company that currently owns or
programs pursuant to Local Marketing Agreements ("LMAs") 35 television stations
and, upon consummation of all pending acquisitions and dispositions, the Company
will own or program pursuant to LMAs 56 television stations. The Company owns or
programs pursuant to LMAs 52 radio stations and upon consummation of all pending
acquisitions and dispositions, the Company will own or program pursuant to LMAs
51 radio stations. The Company also has options to acquire two additional radio
stations. The Company believes that upon completion of all pending acquisitions
and dispositions it will be one of the top 10 radio groups in the United States,
when measured by the total number of radio stations owned or programmed pursuant
to LMAs.

The 35 television stations the Company owns or programs pursuant to LMAs
are located in 24 geographically diverse markets, with 23 of the stations in the
top 51 television designated market areas ("DMAs") in the United States. Upon
consummation of all pending acquisitions and dispositions, the Company will own
or program television stations in 37 geographically diverse markets (with 30 of
such stations in the top 51 DMAs) and will reach approximately 22.5% of the
television households in the United States. The Company currently owns or
programs 11 stations affiliated with Fox Broadcasting Company ("Fox"), 10 with
WB Television Network ("WB"), four with ABC, two with NBC, two with United
Paramount Television Network Partnership ("UPN"), and one with CBS. Five
stations operate as independents. Upon consummation of all pending acquisitions
and dispositions and the transfer of affiliations pursuant to existing
agreements, 23 of the Company's owned or programmed television stations will be
Fox affiliates, 11 will be WB affiliates, six will be UPN affiliates, five will
be ABC affiliates, three will be NBC affiliates, one will be a CBS affiliate and
seven will be operated as independents. Upon consummation of all pending
acquisitions and dispositions and transfers of affiliations pursuant to existing
agreements, the Company will own or program more stations affiliated with Fox
than any other broadcaster.

The Company's radio station group is geographically diverse with a variety
of programming formats including country, urban, news/talk/sports, rock and
adult contemporary. Of the 52 stations owned or provided programming services by
the Company, 19 broadcast on the AM band and 33 on the FM band. The Company owns
between three and eight stations in all but one of the 12 radio markets it
serves.

The Company has undergone rapid and significant growth over the course of
the last seven years. Since 1991, the Company has increased the number of
stations it owns or provides programming services to from three television
stations to 35 television stations and 52 radio stations. From 1991 to 1997, net
broadcast revenue and Adjusted EBITDA (as defined herein) increased from $39.7
million to $471.2 million, and from $15.5 million to $229.0 million,
respectively. Pro forma for pending acquisitions and dispositions described

<PAGE>

below (except the agreement the Company entered into to acquire all of the
capital stock of Montecito Broadcasting Corporation ("Montecito") for
approximately $33 million (the "Montecito Acquisition"), the agreement the
Company entered into to acquire 100% of the stock of Lakeland Group Television
Inc. ("Lakeland") for a purchase price of approximately $50 million (the
"Lakeland Acquisition"), and the execution of an LMA with respect to WSYX-TV),
net broadcast revenue and Adjusted EBITDA would have been $715.1 million and
$345.7 million, respectively.

The Company is a Maryland corporation formed in 1986. The Company's
principal offices are located at 2000 West 41st Street, Baltimore, Maryland
21211, and its telephone number is (410) 467-5005.

TELEVISION BROADCASTING

The Company owns and operates, provides programming services to, or has
agreed to acquire the following television stations:

MARKET
MARKET RANK(A) STATIONS STATUS(B) CHANNEL
- ------------------------------- --------- ---------- ------------- ---------
Minneapolis/St. Paul,
Minnesota .................... 14 KLGT Pending 23
Pittsburgh, Pennsylvania ...... 19 WPGH O&O 53
WCWB(w) LMA 22
Sacramento, California ........ 20 KOVR O&O 13
St. Louis, Missouri ........... 21 KDNL O&O 30
Baltimore, Maryland ........... 23 WBFF O&O 45
WNUV LMA 54
Indianapolis, Indiana ......... 25 WTTV LMA (e) 4
WTTK LMA (e)(g) 29
Raleigh/Durham,
North Carolina ............... 29 WLFL O&O 22
WRDC LMA 28
Cincinnati, Ohio .............. 30 WSTR O&O 64
Milwaukee, Wisconsin .......... 31 WCGV O&O 24
WVTV LMA 18
Kansas City, Missouri ......... 32 KSMO O&O 62
Nashville, Tennessee .......... 33 WZTV Pending (q) 17
WUXP Pending (r) 30
Columbus, Ohio ................ 34 WTTE O&O 28
Asheville, North Carolina
and Greenville/
Spartanburg/ Anderson,
South Carolina ............... 35 WFBC LMA 40
WLOS O&O 13
San Antonio, Texas ............ 38 KABB O&O 29
KRRT LMA 35
Norfolk, Virginia ............. 39 WTVZ O&O 33
Buffalo, New York ............. 40 WUTV Pending (q) 29
Oklahoma City, Oklahoma 44 KOCB O&O 34
KOKH Pending (r) 25
Greensboro/Winston-
Salem/High Point,
North Carolina ............... 46 WXLV Pending (q) 45
WUPN Pending (r) 48
Birmingham, Alabama ........... 51 WTTO O&O (m) 21
WABM LMA 68
Dayton, Ohio .................. 53 WKEF Pending (n) 22
WRGT Pending (r) 45

NUMBER OF
COMMERCIAL EXPIRATION
STATIONS IN STATION DATE OF
MARKET AFFILIATION THE MARKET (C) RANK(D) FCC LICENSE
- ------------------------------- ------------- ---------------- --------- -------------
<S> <C> <C> <C> <C>
Minneapolis/St. Paul,
Minnesota .................... WB 6 6 4/1/98 (f)
Pittsburgh, Pennsylvania ...... FOX 6 4 8/1/99
WB 5 8/1/99
Sacramento, California ........ CBS 7 3 12/1/98
St. Louis, Missouri ........... ABC 6 5 2/1/06
Baltimore, Maryland ........... FOX 5 4 10/1/04
WB 5 10/1/04
Indianapolis, Indiana ......... IND (h)(u) 8 5 8/1/05
IND (h) 5 8/1/05
Raleigh/Durham,
North Carolina ............... FOX 7 4 12/1/04
UPN 5 12/1/04
Cincinnati, Ohio .............. WB 5 5 10/1/05
Milwaukee, Wisconsin .......... IND 6 5 12/1/97 (f)
WB 6 12/1/05
Kansas City, Missouri ......... IND (h)(v) 8 5 2/1/06
Nashville, Tennessee .......... FOX 6 4 8/1/05
UPN 5 8/1/05
Columbus, Ohio ................ FOX 5 4 10/1/05
Asheville, North Carolina
and Greenville/
Spartanburg/ Anderson,
South Carolina ............... IND (h) 6 5 12/1/04
ABC 6 3 12/1/04
San Antonio, Texas ............ FOX 7 4 8/1/98
WB 6 8/1/98
Norfolk, Virginia ............. FOX 6 4 10/1/04
Buffalo, New York ............. FOX 5 4 6/1/99
Oklahoma City, Oklahoma WB 5 5 6/1/98 (f)
FOX 4 6/1/98 (f)
Greensboro/Winston-
Salem/High Point,
North Carolina ............... ABC 7 4 12/1/04
UPN 5 12/1/04
Birmingham, Alabama ........... WB 6 5 4/1/05
IND (h) 6 4/1/05
Dayton, Ohio .................. NBC 4 3 10/1/05
FOX 4 10/1/05
</TABLE>

<PAGE>

MARKET
MARKET RANK(A) STATIONS STATUS(B) CHANNEL
- ----------------------------- --------- ---------- -------------- ---------
Charleston/Huntington,
West Virginia .............. 57 WCHS O&O 8
WVAH Pending (r) 11
Richmond, Virginia .......... 59 WRLH Pending (q) 35
Las Vegas, Nevada ........... 61 KUPN O&O 21
KFBT Pending (s) 33
Mobile, Alabama and
Pensacola, Florida ......... 62 WEAR O&O 3
WFGX LMA 35
Flint/Saginaw/Bay City,
Michigan ................... 63 WSMH O&O 66
Lexington, Kentucky ......... 67 WDKY O&O 56
Des Moines, Iowa ............ 69 KDSM O&O 17
Syracuse, New York .......... 72 WSYT Pending (n) 68
WNYS Pending (o) 43
Rochester, New York ......... 75 WUHF Pending (q) 31
Paducah, Kentucky and Cape
Girardeau, Missouri ........ 79 KBSI Pending (n) 23
WDKA Pending (o) 49
Madison, Wisconsin .......... 84 WMSN Pending (q) 47
Burlington, Vermont and
Plattsburgh, New York ...... 91 WPTZ O&O (i) 5
WNNE O&O (i)(k) 31
WFFF LMA (j) 44
Tri-Cities, Tennessee/
Virginia ................... 93 WEMT Pending (n) 39
Tyler/Longview, Texas ....... 107 KETK Pending (n) 56
KLSB Pending (o) 19
Peoria/Bloomington,
Illinois ................... 110 WYZZ O&O 43
Charleston, South Carolina... 117 WMMP Pending (n) 36
WTAT Pending (r) 24
Utica, New York ............. 169 WFXV Pending (q) 33
WPNY Pending (q) 11
Tuscaloosa, Alabama ......... 187 WDBB LMA (m) 17

West Virginia .............. ABC 4 3 10/1/04
FOX 4 10/1/04
Richmond, Virginia .......... FOX 5 4 10/1/04
Las Vegas, Nevada ........... WB 8 5 10/1/98
IND(h) 8 10/1/98

Mobile, Alabama and
Pensacola, Florida ......... ABC 6 2 2/01/05
WB 6 2/01/05
Flint/Saginaw/Bay City,
Michigan ................... FOX 4 4 10/1/05
Lexington, Kentucky ......... FOX 5 4 8/1/05
Des Moines, Iowa ............ FOX 4 4 2/1/06
Syracuse, New York .......... FOX 5 4 6/1/99
UPN 5 6/1/99
Rochester, New York ......... FOX 4 4 6/1/99
Paducah, Kentucky and Cape
Girardeau, Missouri ........ FOX 5 4 2/1/06
UPN 5 (t)
Madison, Wisconsin .......... FOX 4 4 12/1/05
Burlington, Vermont and
Plattsburgh, New York ...... NBC 5 2 6/1/99
NBC 4 4/1/99
FOX (l) (l)
Tri-Cities, Tennessee/
Virginia ................... FOX 5 4 8/1/05
Tyler/Longview, Texas ....... NBC 3 2 8/1/98
NBC (p) 8/1/98
Peoria/Bloomington,
Illinois ................... FOX 4 4 12/1/05
Charleston, South Carolina... UPN 5 5 12/1/04
FOX 4 12/1/04
Utica, New York ............. FOX 4 3 6/1/99
UPN 4 6/1/98 (f)
Tuscaloosa, Alabama ......... WB 2 2 4/1/05
</TABLE>

- ----------
(a) Rankings are based on the relative size of a station's DMA among the 211
generally recognized DMAs in the United States as estimated by Nielsen.

(b) "O&O" refers to stations owned and operated by the Company, "LMA" refers to
stations to which the Company provides programming services pursuant to an
LMA and "Pending" refers to stations the Company has agreed to acquire.
See "-- 1997 Acquisitions."

(c) Represents the number of television stations designated by Nielsen as
"local" to the DMA, excluding public television stations and stations which
do not meet the minimum Nielsen reporting standards (weekly cumulative
audience of at least 2.5%) for the Sunday-Saturday, 6:00 a.m.
to 2:00 a.m. time period.

(d) The rank of each station in its market is based upon the November 1997
Nielsen estimates of the percentage of persons tuned to each station in the
market from 6:00 a.m. to 2:00 a.m., Sunday-Saturday.

(e) Certain assets relating to the operation of a television or radio station
other than License Assets (as defined below) ("Non-License Assets") acquired
from River City Broadcasting, L.P. ("River City") and option exercised to
acquire the television and radio station assets essential for broadcasting a
television or radio signal in compliance with regulatory guidelines,
generally consisting of the Federal Communications Commission ("FCC")
license, fixtures and equipment ("License Assets"). Will become owned and
operated upon FCC approval of transfer of License Assets and closing of
acquisition of License Assets.

(f) License renewal application pending.

(g) WTTK currently simulcasts all of the programming aired on WTTV and the
station rank applies to the combined viewership of these stations.

(h) "IND" or "Independent" refers to a station that is not affiliated with any
of ABC, CBS, NBC, Fox, WB or UPN.

<PAGE>

(i) The Company has agreed to sell this station to a third party.

(j) The Company has agreed to assign its right to program this station to the
third party to whom the Company has agreed to sell WPTZ and WNNE.

(k) WNNE currently simulcasts the programming broadcast on WPTZ.

(l) This station began broadcast operations in August 1997 pursuant to program
test authority and does not yet have a license. This station has not yet
established a rank.

(m) WDBB simulcasts the programming broadcast on WTTO.

(n) This station will be owned upon the completion of the Max Media Acquisition.

(o) The Company will provide programming services to this station upon the
completion of the Max Media Acquisition.

(p) KLSB simulcasts the programming broadcast of KETK.

(q) This station will be owned upon the completion of the Sullivan Acquisition.

(r) The Company anticipates that it will provide programming services to this
station upon the completion of the Sullivan Acquisition.

(s) The Company has entered into an agreement to provide programming to this
station effective upon termination of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act") waiting period. The Company
has also entered into an agreement to acquire this station's licensee.

(t) This station has begun broadcast operations pursuant to program test
authority and does not yet have a license.

(u) WTTV will become an affiliate of WB effective April 6, 1998.

(v) KSMO will become an affiliate of WB effective March 30, 1998.

Operating Strategy

The Company's television operating strategy includes the following key
elements:

Attracting Viewership
- ---------------------

The Company seeks to attract viewership and expand its audience share
through selective, high-quality programming.

Popular Programming. The Company believes that an important factor in
attracting viewership to its stations is their network affiliations with Fox,
WB, ABC, NBC, CBS and UPN. These affiliations enable the Company to attract
viewers by virtue of the quality first-run original programming provided by
these networks and the networks' promotion of such programming. The Company also
seeks to obtain, at attractive prices, popular syndicated programming that is
complementary to the station's network affiliation. Examples of popular
syndicated programming obtained by the Company for broadcast on its Fox, WB and
UPN affiliates and independent stations are "Mad About You," "Frasier," "The
Simpsons," "Home Improvement" and "Seinfeld." In addition to network
programming, the Company's ABC and CBS affiliates broadcast news magazine, talk
show, and game show programming such as "Hard Copy," "Entertainment Tonight,"
"Regis and Kathie Lee," "Wheel of Fortune" and "Jeopardy."

Children's Programming. The Company seeks to be a leader in children's
programming in each of its respective DMAs. The Company's nationally recognized
"Kids Club" was the forerunner and model for the Fox network-wide marketing
efforts promoting children's programming. Sinclair carries the Fox Children's
Network ("FCN") and WB and UPN children's programming, all of which include
significant amounts of animated programming throughout the week. In those
markets where the Company owns or programs ABC, NBC or CBS affiliates, the
Company broadcasts those networks' animated programming during weekends. In
addition to this animated programming, the Company broadcasts other forms of
children's programming, which may be produced by the Company or by an affiliated
network or supplied by a syndicated programmer.

Counter-Programming. The Company's programming strategy on its Fox, WB, UPN
and independent stations also includes "counter-programming," which consists of
broadcasting programs that are alternatives to the types of programs being shown
concurrently on competing stations. This strategy is designed to attract
additional audience share in demographic groups not served by concurrent
programming on competing stations. The Company believes that implementation of
this strategy enables its stations to achieve competitive rankings in households
in the 18-34, 18-49 and 25-54 demographics and to offer greater diversity of
programming in each of its DMAs.

<PAGE>

Local News. The Company believes that the production and broadcasting of
local news can be an important link to the community and an aid to the station's
efforts to expand its viewership. In addition, local news programming can
provide access to advertising sources targeted specifically to local news. The
Company carefully assesses the anticipated benefits and costs of producing local
news prior to introduction at a Company station because a significant investment
in capital equipment is required and substantial operating expenses are incurred
in introducing, developing and producing local news programming. The Company
currently provides local news programming at WBFF and WNUV in Baltimore, WLFL in
Raleigh/Durham, KDNL in St. Louis, KABB in San Antonio, KOVR in Sacramento, WPGH
in Pittsburgh and WLOS in Asheville and Greenville/Spartanburg/Anderson. The
Company also broadcasts news programs on WDKY in Lexington, which are produced
in part by the Company and in part through the purchase of production services
from an independent third party, and on WTTV in Indianapolis, which are produced
by a third party in exchange for a limited number of advertising spots. River
City provides the Company certain services with respect to the production of
news programming and on air talent on WTTE in Columbus. Pursuant to an
agreement, River City provides these services to the Company in return for a fee
equal to approximately $416,000 per year. The possible introduction of local
news at the other Company stations is reviewed periodically. The Company's
policy is to institute local news programming at a specific station only if the
expected benefits of local news programming at the station are believed to
exceed the associated costs after an appropriate start-up period.

Popular Sporting Events. The Company attempts to capture a portion of
advertising dollars designated to sports programming in selected DMAs. The
Company's WB, UPN and independent stations generally face fewer restrictions on
broadcasting live local sporting events than do their competitors that are
affiliates of the major networks and Fox since affiliates of the major networks
and Fox are subject to prohibitions against preemptions of network programming.
The Company has been able to acquire the local television broadcast rights for
certain sporting events, including NBA basketball, Major League Baseball, NFL
football, NHL hockey, ACC basketball, Big Ten football and basketball, and SEC
football. The Company seeks to expand its sports broadcasting in DMAs as
profitable opportunities arise. In addition, the Company's stations that are
affiliated with Fox, NBC, ABC and CBS broadcast certain Major League Baseball
games, NFL football games and NHL hockey games as well as the Olympics and other
popular sporting events.

Innovative Local Sales and Marketing
- ------------------------------------

The Company believes that it is able to attract new advertisers to its
stations and increase its share of existing customers' advertising budgets by
creating a sense of partnership with those advertisers. The Company develops
such relationships by training its sales forces to offer new marketing ideas and
campaigns to advertisers. These campaigns often involve the sponsorship by
advertisers of local promotional events that capitalize on the station's local
identity and programming franchises. For example, several of the Company's
stations stage local "Kids Fairs" which allow station advertisers to reinforce
their on-air advertising with their target audience. Through its strong local
sales and marketing focus, the Company seeks to capture an increasing share of
its revenue from local sources, which are generally more stable than national
advertising.

Control of Operating and Programming Costs
- ------------------------------------------

By employing a disciplined approach to managing programming acquisition and
other costs, the Company has been able to achieve operating margins that the
Company believes are among the highest in the television broadcast industry. The
Company has sought and will continue to seek to acquire quality programming for
prices at or below prices paid in the past. As an owner or provider of
programming services to a substantial number of television stations throughout
the country, the Company believes that it is able to negotiate favorable terms
for the acquisition of programming. Moreover, the Company emphasizes control of
each of its stations' programming and operating costs through program-specific
profit analysis, detailed budgeting, tight control over staffing levels and
detailed long-term planning models.

Attract and Retain High Quality Management
- ------------------------------------------

The Company believes that much of its success is due to its ability to
attract and retain highly skilled and motivated managers, both at the corporate
and local station levels. A portion of the compensation provided to regional
managers, general managers, sales managers and other station managers is based
on

<PAGE>

their achieving certain operating results. The Company also provides its
corporate and station managers with deferred compensation plans offering options
to acquire Class A Common Stock, par value $.01 per share ("Class A Common
Stock").

Community Involvement
- ---------------------

Each of the Company's stations actively participates in various community
activities and offers many community services. The Company's activities include
broadcasting programming of local interest and sponsorship of community and
charitable events. The Company also encourages its station employees to become
active members of their communities and to promote involvement in community and
charitable affairs. The Company believes that active community involvement by
its stations provides its stations with increased exposure in their respective
DMAs and ultimately increases viewership and advertising support.

Establish LMAs
- --------------

The Company believes that it can attain significant growth in operating
cash flow through the utilization of LMAs. By expanding its presence in a market
in which it owns a station, the Company can improve its competitive position
with respect to a demographic sector. In addition, by providing programming
services to an additional station in a market, the Company is able to realize
significant economies of scale in marketing, programming, overhead and capital
expenditures. After giving effect to all pending acquisitions and dispositions,
the Company will provide programming services pursuant to an LMA to an
additional station in 18 of the 37 television markets in which the Company will
own or program a station.

Programming and Affiliations

The Company continually reviews its existing programming inventory and
seeks to purchase the most profitable and cost-effective syndicated programs
available for each time period. In developing its selection of syndicated
programming, the Company balances the cost of available syndicated programs with
their potential to increase advertising revenue and the risk of their reduced
popularity during the term of the program contract. The Company seeks to
purchase only those programs with contractual periods that permit programming
flexibility and which complement a station's overall programming strategy.
Programs that can perform successfully in more than one time period are more
attractive due to the long lead time and multi-year commitments inherent in
program purchasing.

Of the 35 stations owned or provided programming services by the Company,
11 stations are Fox affiliates, 10 stations are WB affiliates, four stations are
ABC affiliates, two stations are NBC affiliates, two stations are UPN
affiliates, and one station is a CBS affiliate. The networks produce and
distribute programming in exchange for each station's commitment to air the
programming at specified times and for commercial announcement time during the
programming. In addition, networks other than Fox and UPN pay each affiliated
station a fee for each network-sponsored program broadcast by the stations.

On August 21, 1996, the Company entered into an agreement with Fox (the
"Fox Agreement") which, among other things, provides that the affiliation
agreements between Fox and eight stations owned or provided programming services
by the Company (except as noted below) would be amended to have new five-year
terms commencing on the date of the Fox Agreement. Fox has the option to extend
the affiliation agreements for additional five-year terms and must extend all of
the affiliation agreements if it extends any (except that Fox may selectively
renew affiliation agreements if any station has breached its affiliation
agreement). The Fox Agreement also provides that the Company will have the right
to purchase, for fair market value, any station Fox acquires in a market
currently served by a Company-owned Fox affiliate (other than the Norfolk,
Virginia and Raleigh/Durham, North Carolina markets) if Fox determines to
terminate the affiliation agreement with the Company's station in that market
and operate the station acquired by Fox as a Fox affiliate. The Fox Agreement
confirmed that the affiliation agreements for WTVZ-TV (Norfolk) and WLFL-TV
(Raleigh/Durham) will terminate on August 31, 1998. The Fox Agreement also
includes provisions limiting the ability of the Company to preempt Fox
programming except where it has existing programming conflicts or where the
Company preempts to serve a public purpose.

<PAGE>

On July 4, 1997, the Company entered into the WB Agreement, pursuant to
which the Company agreed that certain stations affiliated with UPN would
terminate their affiliations with UPN at the end of the current affiliation term
in January 1998, and would enter into affiliation agreements with WB effective
as of that date. With respect to the following stations, the Company did not
renew their affiliation agreements with UPN when their agreements expired on
January 15, 1998: WCWB-TV, Pittsburgh, Pennsylvania, WNUV-TV, Baltimore,
Maryland, WSTR-TV, Cincinnati, Ohio, KRRT-TV, San Antonio, Texas, KOCB-TV,
Oklahoma City, Oklahoma, KSMO-TV, Kansas City, Missouri, KUPN-TV, Las Vegas,
Nevada, WCGV-TV, Milwaukee, Wisconsin, and WABM-TV, Birmingham, Alabama.
Additionally, the Company cancelled its UPN affiliation agreement with
WTTV-TV/WTTK-TV, Indianapolis, Indiana. These stations (other than WCGV-TV, and
WABM-TV, which will either operate as independents or enter into new affiliation
agreements with WB or another network) entered into ten-year affiliation
agreements with WB which became effective on January 16, 1998 (other than
WTTV-TV/ WTTK-TV, with respect to which the affiliation agreement is expected to
begin April 6, 1998 and KSMO-TV, with respect to which the affiliation agreement
is expected to begin March 30, 1998). Pursuant to the agreement the Company
entered into with WB on July 4, 1997 (the "WB Agreement"), the WB affiliation
agreements of WVTV-TV, Milwaukee, Wisconsin, and WTTO-TV, Birmingham, Alabama
(whose programming is simulcast on WDBB-TV, Tuscaloosa, Alabama), have been
extended to January 16, 2008. In addition, WFBC-TV in the Asheville, North
Carolina and Greenville/Spartanburg/ Anderson, South Carolina market will become
affiliated with WB on November 1, 1999 when WB's current affiliation with
another station in that market expires. WTVZ-TV, Norfolk, Virginia and WLFL-TV,
Raleigh/Durham, North Carolina, will become affiliated with WB when their
affiliations with Fox expire. These Fox affiliations are scheduled to expire on
August 31, 1998.

Under the terms of the WB Agreement, WB has agreed to pay the Company $64
million in aggregate amount in monthly installments during the first eight years
commencing on January 16, 1998 in consideration for the Company's entering into
affiliation agreements with WB. In addition, WB will be obligated to pay an
additional $10 million aggregate amount in monthly installments in each of the
following two years provided that WB is in the business of supplying programming
as a television network during each of those years.

The affiliation agreements relating to stations that have been acquired by
the Company are terminable by the network upon transfer to the Company of the
License Assets of the station. The Company does not seek consents of the
affected network to the transfer of License Assets in connection with its
acquisitions. As of the date of this Form 10-K, no network has terminated an
affiliation agreement following transfer of License Assets to the Company.

RADIO BROADCASTING

The following table sets forth certain information regarding the radio
stations (i) owned and/or operated by the Company or (ii) which the Company has
an option or has agreed to acquire:

RANKING OF STATION RANK EXPIRATION
GEOGRAPHIC STATION'S PRIMARY IN PRIMARY DATE
MARKET MARKET BY PROGRAMMING DEMOGRAPHIC DEMOGRAPHIC OF FCC
SERVED/STATION (A) REVENUE (B) FORMAT TARGET (C) TARGET (D) LICENSE
- ----------------------------- ------------- --------------------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Los Angeles, California ..... 1
KBLA-AM(e) Korean N/A N/A 12/1/05
St. Louis, Missouri ......... 18
KPNT-FM Alternative Rock Adults 18-34 2 2/1/05
WVRV-FM Modern Adult Contemporary Adults 18-34 7 12/1/04
WRTH-AM Adult Standards Adults 25-54 23 2/1/05
WIL-FM Country Adults 25-54 1 2/1/05
KIHT-FM 70s Rock Adults 25-54 9 2/1/05
Portland, Oregon ............ 22
KKSN-AM (h) Adult Standards Adults 25-54 22 2/1/06
KKSN-FM (h)(u) 60s Oldies Adults 25-54 1 2/1/06
KKRH-FM (h)(u) 70s Rock Adults 25-54 9 2/1/06
Kansas City, Missouri ....... 29
KCAZ-AM (e)(t) Childrens N/A N/A 6/1/05

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
RANKING OF STATION RANK EXPIRATION
GEOGRAPHIC STATION'S PRIMARY IN PRIMARY DATE
MARKET MARKET BY PROGRAMMING DEMOGRAPHIC DEMOGRAPHIC OF FCC
SERVED/STATION (A) REVENUE (B) FORMAT TARGET (C) TARGET (D) LICENSE
- ------------------------------- ------------- -------------------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
KCFX-FM 70s Rock Adults 25-54 2 2/1/05
KQRC-FM Active Rock Adults 18-34 2 6/1/05
KCIY-FM Smooth Jazz Adults 25-54 9 2/1/05
KXTR-FM Classical Adults 25-54 13 2/1/05
Milwaukee, Wisconsin .......... 32
WEMP-AM 60s Oldies Adults 25-54 24 12/1/04
WMYX-FM Adult Contemporary Adults 25-54 6 12/1/04
WAMG-FM Rhythmic Adults 25-54 11 12/1/04
Nashville, Tennessee .......... 34
WLAC-FM (h) Adult Contemporary Women 25-54 8 8/1/04
WJZC-FM (h) Smooth Jazz Women 25-54 8 8/1/04
WLAC-AM (h) News/Talk/Sports Adults 35-64 8 8/1/04
New Orleans, Louisiana(r) ..... 38
WLMG-FM Adult Contemporary Women 25-54 3 6/1/04
KMEZ-FM (v) Urban Oldies Women 25-54 12 6/1/04
WWL-AM News/Talk/Sports Adults 35-64 2 6/1/04
WSMB-AM Talk/Sports Adults 35-64 17 6/1/04
WBYU-AM (g)(v) Adult Standards Adults 25-54 16 6/1/04
WEZB-FM (g)(i) Adult Contemporary Adults 25-54 9 6/1/04
WRNO-FM (g)(v) 70s Rock Adults 25-54 7 6/1/04
WLTS-FM (p) Adult Contemporary Women 25-54 5 6/1/04
WTKL-FM (p) Oldies Adults 25-54 5 6/1/04
Memphis, Tennessee ............ 40
WRVR-FM Soft Adult Contemporary Women 25-54 1 8/1/04
WJCE-AM Urban Oldies Women 25-54 19 8/1/04
WOGY-FM Country Adults 25-54 9 8/1/04
Norfolk, Virginia (r) ......... 41
WGH-AM Sports Talk Country Adults 25-54 18 10/1/03
WGH-FM Country Adults 25-54 3 10/1/03
WVCL-FM (j) 60s Oldies Adults 25-54 9 10/1/03
WFOG-FM (o) Soft Adult Contemporary Women 25-54 4 10/1/03
WPTE-FM (o) Adult Contemporary Adults 18-34 3 10/1/03
WWDE-FM (o) Adult Contemporary Women 25-54 4 10/1/03
WNVZ-FM (o) Contemporary Hit Radio Women 18-49 2 10/1/03
Buffalo, New York ............. 42
WMJQ-FM Adult Contemporary Women 25-54 3 6/1/98
WKSE-FM Contemporary Hit Radio Women 18-49 2 6/1/98
WBEN-AM News/Talk/Sports Adults 35-64 3 6/1/98
WWKB-AM Country Adults 35-64 18 6/1/98
WGR-AM Sports Adults 25-54 10 6/1/98
WWWS-AM Urban Oldies Adults 25-54 14 6/1/98
Greensboro/Winston
Salem/High Point,
North Carolina ............. 52
WMQX-FM (o) Oldies Adults 25-54 5 12/1/03
WQMG-FM (o) Urban Adult Contemporary Adults 25-54 4 12/1/03
WJMH-FM (o) Urban Adults 18-34 1 12/1/03
WQMG-AM (o) Gospel Adults 35-64 9 12/1/03
Rochester, New York ........... 53
WBBF-AM (h) Adult Standards Adults 25-54 13 6/1/98
WBEE-FM (h) Country Adults 25-54 1 6/1/98
WKLX-FM (h) 60s Oldies Adults 25-54 6 6/1/98
WQRV-FM (h) Classic Hits Adults 25-54 12 6/1/98
Asheville, North Carolina
Greenville/Spartanburg,
South Carolina .............. 60
</TABLE>

<PAGE>

9
<PAGE>

- ----------
(a) Actual city of license may differ from the geographic market served.

(b) Ranking of the principal radio market served by the station among all U.S.
radio markets by 1996 aggregate gross radio broadcast revenue according to
Duncan's Radio Market Guide -- 1997 Edition.

(c) Due to variations that may exist within programming formats, the primary
demographic target of stations with the same programming format may be
different.

(d) All information concerning ratings and audience listening information is
derived from the Fall 1997 Arbitron Metro Area Ratings Survey (the "Fall
1997 Arbitron"). Arbitron is the generally accepted industry source for
statistical information concerning audience ratings. Due to the nature of
listener surveys, other radio ratings services may report different
rankings; however, the Company does not believe that any radio ratings
service other than Arbitron is accorded significant weight in the radio
broadcast industry. "Station Rank in Primary Demographic Target" is the
ranking of the station among all radio stations in its market that are
ranked in its target demographic group and is based on the station's average
persons share in the primary demographic target in the applicable Metro
Survey Area. Source: Average Quarter Hour Estimates, Monday through Sunday,
6:00 a.m. to midnight, Fall 1997 Arbitron.

(e) Programming is provided to this station by a third party pursuant to an LMA.

(f) License renewal application pending.

(g) The Company has the right to acquire the assets of this station in the
Heritage Acquisition, subject to FCC approval.

(h) The Company has agreed to sell this station to a third party, which
currently programs the station pursuant to an LMA.

(i) An application for review of the grant of this station's license renewal is
pending.

(j) EEO reporting conditions for 1997, 1998 and 1999 were placed on this
station's most recent license renewal.

(k) The Company has exercised its option to acquire Keymarket of South Carolina,
Inc. ("Keymarket" or "KSC"), which owns and operates WYRD-AM, WORD-AM and
WFBC-FM, and provides sales services pursuant to a JSA or LMA and has an
option to acquire WOLI-FM and WOLT-FM. The Company has also agreed to
acquire WSPA-AM and WSPA-FM, which KSC programs pursuant to an LMA. FCC
approval of the Company's acquisition of WYRD-AM, WORD-AM, WFBC-FM, WSPA-AM,
and WSPA-FM is pending.

(l) WKRZ-FM and WKRF-FM simulcast their programming.

(m) WILK-AM, WGBI-AM, WILP-AM and WILT-AM simulcast their programming.

(n) WWSH-FM and WWFH-FM simulcast their programming.

(o) The Company has the right to acquire this radio station in conjunction with
the Max Media Acquisition.

(p) The Company provides sales and programming services to this station pursuant
to an LMA and has an option to acquire substantially all the assets of this
station.

(q) The Company provides sales and programming services to this radio station
pursuant to an LMA and has received FCC approval to acquire substantially
all the assets of this station.

(r) The Company intends to sell two FM stations and one AM station in the New
Orleans market and two FM stations in the Norfolk market in order to comply
with current FCC or DOJ guidelines.

(s) The Company provides sales and programming services to this station pursuant
to an LMA.

(t) A third party has exercised their option to purchase this station, the
closing of which is subject to FCC approval.

<PAGE>

(u) A petition to deny the transfer of the licenses of these stations was filed
with the FCC objecting to the acquisition of such licenses by the proposed
assignee.

(v) The Company has entered into an agreement to sell these radio stations to a
third party, the closing of which is subject to FCC approval.

Radio Operating Strategy

The Company's radio strategy is to operate a cluster of radio stations in
selected geographic markets throughout the country. In each geographic market,
the Company employs broadly diversified programming formats to appeal to a
variety of demographic groups within the market. The Company seeks to strengthen
the identity of each of its stations through its programming and promotional
efforts, and emphasizes that identity to a far greater degree than the identity
of any local radio personality.

The Company believes that its strategy of appealing to diverse demographic
groups in selected geographic markets allows it to reach a larger share of the
overall advertising market while realizing economies of scale and avoiding
dependence on one demographic or geographic market. The Company realizes
economies of scale by combining sales and marketing forces, back office
operations and general management in each geographic market. At the same time,
the geographic diversity of its portfolio of radio stations helps lessen the
potential impact of economic downturns in specific markets and the diversity of
target audiences served helps lessen the impact of changes in listening
preferences. In addition, the geographic and demographic diversity allows the
Company to avoid dependence on any one or any small group of advertisers.

The Company's group of radio stations includes the top billing station
group in four markets and one of the top three billing station groups in each of
its markets other than Los Angeles, Milwaukee, Portland, Rochester and
Nashville. Through ownership or LMAs, the group also includes duopolies in 12 of
its 13 markets.

Depending on the programming format of a particular station, there are a
predetermined number of advertisements broadcast each hour. The Company
determines the optimum number of advertisements available for sale during each
hour without jeopardizing listening levels (and the resulting ratings). Although
there may be shifts from time to time in the number of advertisements available
for sale during a particular time of day, the total number of advertisements
available for sale on a particular station normally does not vary significantly.
Any change in net radio broadcasting revenue, with the exception of those
instances where stations are acquired or sold, is generally the result of
pricing adjustments made to ensure that the station effectively uses advertising
time available for sale, an increase in the number of commercials sold or a
combination of these two factors.

Large, well-trained local sales forces are maintained by the Company in
each of its radio markets. The Company's principal goal is to utilize its sales
efforts to develop long-standing customer relationships through frequent direct
contacts, which the Company believes provide it with a competitive advantage.
Additionally, in some radio markets, duopolies permit the Company to offer
creative advertising packages to local, regional and national advertisers. Each
radio station owned by the Company also engages a national independent sales
representative to assist it in obtaining national advertising revenues. These
representatives obtain advertising through national advertising agencies and
receive a commission from the radio station based on its gross revenue from the
advertising obtained.

BROADCASTING ACQUISITION STRATEGY

On February 8, 1996, the Telecommunications Act of 1996 (the "1996 Act")
was signed into law. The 1996 Act represents the most sweeping overhaul of the
country's telecommunications laws since the Communications Act of 1934, as
amended (the "Communications Act"). The 1996 Act relaxes the broadcast ownership
rules and simplifies the process for renewal of broadcast station licenses.

The Company believes that the enactment of the 1996 Act has presented a
unique opportunity to build a larger and more diversified broadcasting company.
Additionally, the Company expects that the opportunity to act as one of the
consolidators of the industry will enable the Company to gain additional
influence with program suppliers, television networks, other vendors, and
alternative delivery media.

<PAGE>

The additions to the Company's management team as a result of the Company's
acquisition of certain assets from River City Broadcasting L.P. ("River City
Acquisition") have given it additional resources to take advantage of these
developments.

In implementing its acquisition strategy, the Company seeks to identify and
pursue favorable station or group acquisition opportunities primarily in the
15th to 75th largest DMAs and Metro Service Areas ("MSAs"). In assessing
potential acquisitions, the Company examines opportunities to improve revenue
share, audience share and/or cost control. Additional factors considered by the
Company in a potential acquisition include geographic location, demographic
characteristics and competitive dynamics of the market. The Company also
considers the opportunity for cross-ownership of television and radio stations
and the opportunity it may provide for cross-promotion and cross-selling.

In conjunction with its acquisitions, the Company may determine that
certain of the acquired stations may not be consistent with the Company's
strategic plan. In such an event, the Company reviews opportunities for swapping
such stations with third parties for other stations or selling such stations
outright. The Heritage Media Group, Inc. ("Heritage"), Max Media Properties, LLC
("Max Media"), and Sullivan Acquisitions may provide such opportunities.

Certain terms of the Company's acquisitions in 1998 and 1997, and other
pending acquisitions, are described below.

1998 ACQUISITIONS

Sullivan Acquisition. In February 1998, the Company entered into merger
agreements by which the Company agreed to acquire all of the issued and
outstanding capital stock of Sullivan Broadcast Holdings, Inc. ("Sullivan
Holdings") and Sullivan Broadcasting Company II, Inc. ("Sullivan II" and,
together with Sullivan Holdings, "Sullivan") for an aggregate purchase price
expected to be approximately $950 million to $1 billion, less the amount of
outstanding indebtedness of Sullivan Holdings assumed by the Company (the
"Sullivan Acquisition"). The Sullivan Acquisition will be accomplished by two
separate merger closings.

At the initial closing, the Company will acquire all of the issued and
outstanding capital stock of Sullivan Holdings, after which the Company will
indirectly own all of the operating assets (excluding the License Assets) of,
and pursuant to LMAs will provide programming services to, 13 additional
television stations (the "Sullivan Stations") in the following markets:
Nashville, Tennessee; Buffalo, New York; Oklahoma City, Oklahoma;
Greensboro/Winston-Salem/High Point, North Carolina; Dayton, Ohio;
Charleston/Huntington, West Virginia; Richmond, Virginia; Las Vegas, Nevada;
Rochester, New York; Madison, Wisconsin; and Utica, New York.

The purchase price to be paid at the initial closing will be based on a
multiple of Sullivan's projected 1998 cash flow calculated as of the time of the
initial closing. As part of the total consideration to be paid at the initial
closing, the Company, at its option, may issue to the Sullivan shareholders up
to $100 million of the Company's Class A Common Stock based on an average
closing price of the Class A Common Stock. The initial closing is subject to
termination of the applicable waiting period under the HSR Act and is expected
to occur during the second quarter of 1998.

At the second closing, the Company will acquire all of the issued and
outstanding capital stock of Sullivan II. The second closing is subject to,
among other things, FCC approval and is expected to close during the third
quarter of 1998. FCC regulations require the Company to obtain waivers from the
FCC of multiple ownership rules prior to the second closing. Although the
Company is confident that it will receive FCC consents for the merger with
Sullivan II, there can be no assurance that such consents will be obtained.
After the second closing, the Company will indirectly own the License Assets of
six of the 13 Sullivan Stations, and will continue to program the remaining
seven Sullivan Stations pursuant to seven LMAs, five with Sullivan Broadcast
Company III, Inc. ("Sullivan III"), which at the time of the second closing will
hold the License Assets for such stations, and two with the existing owners of
the License Assets of such stations.

In connection with the Sullivan Acquisition, Glencairn, Ltd. ("Glencairn")
has entered into a plan of merger with Sullivan III which, if completed, would
result in Glencairn's ownership of all the issued

<PAGE>

and outstanding capital stock of Sullivan III. After the merger, the Company
intends to enter into an LMA with Glencairn and continue to provide programming
services to the five stations the License Assets of which are acquired by
Glencairn in the merger.

Montecito Acquisition. In February 1998, the Company entered into an
agreement to acquire all of the capital stock of Montecito for approximately $33
million. Montecito owns all of the issued and outstanding stock of Channel 33,
Inc., which owns and operates KFBT-TV in Las Vegas, Nevada. Sinclair cannot
acquire Montecito unless and until FCC rules permit Sinclair to own the
broadcast license for more than one station in the Las Vegas market, or unless
Sinclair no longer owns the broadcast license for KUPN-TV in Las Vegas. The
Company will operate KFBT-TV through an LMA, upon expiration of the applicable
HSR Act waiting period. The Company expects to be able to enter into the LMA in
the second quarter of 1998.

Columbus Purchase Option. In connection with the Company's 1996 acquisition
of the radio and television broadcasting assets of River City, the Company
acquired a three-year option to purchase the assets of WSYX-TV in Columbus, Ohio
(the "Columbus Option"). The exercise price for the Columbus Option is
approximately $100 million plus an amount of indebtedness relating to the
WSYX-TV assets on the date of exercise (such indebtedness not to exceed $135
million). The exercise price is expected to be financed through borrowings under
the Company's Bank Credit Agreement. Pursuant to the Columbus Option, the
Company is required to make certain quarterly "Option Extension Fee" payments,
as defined in the Columbus Option . These fees began December 31, 1996, and
continue until the exercise price on the Columbus Option is paid. The Option
Extension Fees are calculated as 8% per annum of the option exercise price
through the first anniversary of the date of grant, 15% per annum of the option
exercise price through the second anniversary of the date of grant and 25% per
annum of the option exercise price thereafter. As of December 31, 1997, the
Company incurred Option Extension Fees and other costs relating to WSYX-TV
totaling $22.9 million. The Company currently intends to pay $100 million of the
option exercise price prior to May 31, 1998 (the date on which the Option
Extension fee of 25% per annum goes into effect) in order to extinguish the
Company's obligations to make continuing Option Extension Fee payments. Due to
the Company's ownership of another television station in the Columbus, Ohio
market, the Antitrust Division of the DOJ is currently reviewing the Company's
acquisition of and the right to operate WSYX-TV pursuant to an LMA. The Company
has entered into an agreement with the DOJ pursuant to which the Company is
required to notify the DOJ 10 business days before it begins programming WSYX-TV
pursuant to on LMA or exercises the Columbus Option or enters into a LMA with
respect to WSYX-TV, which will give the DOJ the opportunity to enjoin the
Company's action, if it chooses to do so.

The Company has agreed to sell the License Assets of WTTE-TV in Columbus,
Ohio to Glencairn and to enter into an LMA with Glencairn to provide programming
services to WTTE-TV. The FCC has approved this transaction, but the Company does
not believe that this transaction will be completed unless the Company acquires
WSYX-TV.

Other Dispositions. The Company has entered into on agreement to sell three
radio stations in the Nashville, Tennessee market for approximately $35 million.
The Company expects the closing to occur in the fourth quarter of 1998.

1997 ACQUISITIONS

Max Media Acquisition. On December 2, 1997, the Company entered into
agreements to acquire, directly or indirectly, all of the equity interests of
Max Media. As a result of this transaction, the Company will acquire, or acquire
the right to program pursuant to LMAs, nine television stations and eight radio
stations in eight markets. The television stations serve the following markets:
Dayton, Ohio; Syracuse, New York; Paducah, Kentucky and Cape Girardeau,
Missouri; Tri-Cities, Tennessee/Virginia; Tyler/Longview, Texas; and Charleston,
South Carolina. The radio stations serve the Norfolk, Virginia and
Greensboro/Winston Salem/High Point, North Carolina markets. The aggregate
purchase price is approximately $255 million payable in cash at closing (less a
deposit of $12.8 million paid at the time of signing the acquisition agreement),
a portion of which will be used to retire existing debt of Max Media at closing.
Max Media's television station WKEF-TV in Dayton, Ohio has an overlapping
service area

<PAGE>

with the Company's television stations WTTE-TV in Columbus, Ohio and WSTR-TV in
Cincinnati, Ohio as well as with Company LMA station WTTV-TV in Indianapolis,
Indiana. In addition, Max Media's television station WEMT-TV in Tri-Cities,
Tennessee/Virginia has an overlapping service area with the Company's television
station WLOS-TV in Asheville, North Carolina and Greenville/
Spartanburg/Anderson, South Carolina and Max Media's television station KBSI-TV
in Paducah, Kentucky and Cape Girardeau, Missouri has an overlapping service
area with the Company's television station KDNL-TV in St. Louis, Missouri.
Furthermore, the Company owns a television station and three radio stations in
the Norfolk, Virginia market, where four of Max Media's radio stations are
located. Consequently, the Company has requested various waivers from the FCC to
allow the Company to complete the Max Media Acquisition. There can be no
assurance that such waivers will be granted. As a result of the Max Media
Acquisition and the Heritage Acquisition, the Company intends to dispose of two
of the FM radio stations in the Norfolk, Virginia radio market that it has
agreed to acquire from Heritage and Max Media in order to be in compliance with
the FCC regulations that limit the number of radio stations that can be owned in
a market. The Company has sought FCC approval to assign the licenses of such
radio stations and an additional radio station it presently owns in the Norfolk,
Virginia market to an independent trustee. The Max Media Acquisition is subject
to approval by the FCC and termination of the applicable waiting period under
the HSR Act, and is expected to close in the second quarter of 1998. The
transaction is expected to be financed through borrowings under the Company's
Bank Credit Agreement.

Lakeland Acquisition. On November 14, 1997, the Company entered into a
definitive agreement to acquire 100% of the stock of Lakeland Group Television,
Inc. ("Lakeland"). In the Lakeland Acquisition, the Company will acquire
television station KLGT in Minneapolis/St. Paul, Minnesota. The purchase price
is approximately $50 million in cash plus the assumption of certain indebtedness
of Lakeland not to exceed $2.5 million. KLGT-TV, Channel 23, is the WB affiliate
in Minneapolis, the nation's 14th largest market. The Company intends to finance
the purchase price from borrowings under the Bank Credit Agreement. The Lakeland
Acquisition is subject to, among other things, approval by the FCC and
termination of the applicable waiting period under the HSR Act, and is expected
to close in the first or second quarter of 1998.

Heritage Acquisition. On July 16, 1997, the Company entered into the
Heritage Acquisition Agreements with certain subsidiaries of Heritage. The
aggregate purchase price of the Heritage Acquisition is approximately $630
million, less deposits paid of $65.5 million and amounts paid in January 1998
relating to the closing of certain television assets of $215 million. Pursuant
to the Heritage Acquisition Agreements, the Company obtained the right to
acquire the assets of five television stations (the interests in three of which
the Company has agreed to dispose or described herein), programming rights under
LMAs with respect to two additional television stations (one of which the
Company has agreed to dispose as described herein), and the assets of 24 radio
stations (11 of which the Company has agreed to dispose as described herein).

On January 29, 1998, the Company closed on the acquisitions of the Heritage
television stations serving the Charleston/Huntington market, Mobile and
Pensacola market and the Oklahoma City market for an aggregate purchase price of
$215 million. Simultaneously with the closing, the Company disposed of
television station KOKH-TV in Oklahoma City to Sullivan Broadcasting Company,
Inc. for an aggregate sale price of $60 million. Also simultaneously with the
closing, the Company entered into purchase option agreements pursuant to which
the Company has the option to acquire KOKH-TV from Sullivan for an aggregate
purchase price of $60 million and Sullivan has the option to acquire from the
Company television station WCHS-TV in the Charleston/Huntington, West Virginia
market for an aggregate purchase price of $30 million. In consideration for the
execution of the purchase option agreements, the Company made an option grant
payment to Sullivan of $45 million and Sullivan made an option grant payment to
the Company of $15 million. In connection with the Sullivan Acquisition, the
Company will reacquire KOKH-TV. On February 27, 1998 the Company closed on its
acquisition of all of the Heritage radio stations except the three stations in
the New Orleans market. On March 6, 1998, the Company closed on the acquisition
of the Heritage television stations serving the Burlington, Vermont and
Plattsburgh, New York market for an aggregate purchase price of $75 million.

14
<PAGE>

In January 1998, the Company entered into an agreement with Entertainment
Communications, Inc. ("Entercom") pursuant to which the Company will sell to
Entercom the Portland, Oregon and Rochester, New York radio stations which the
Company acquired from Heritage for an aggregate sales price of approximately
$126.5 million. Subject to approval by the FCC and termination of the applicable
waiting period under the HSR Act, the Company anticipates it will close on the
sale of the Portland and Rochester radio stations to Entercom during the second
quarter of 1998. Entercom is operating these stations pursuant to an LMA pending
closing of the sale.

In February 1998, the Company entered into an agreement with STC pursuant
to which STC has agreed to acquire the License and Non-License Assets of
Burlington, Vermont and Plattsburgh, New York television stations WPTZ-TV,
WNNE-TV, and the Non-License Assets of WFFF-TV for $75 million. The Company
expects to close the sale to STC during the second quarter of 1998 subject to,
among other conditions, approval by the FCC and termination of the applicable
waiting period under the HSR Act.

Acquisition of the Heritage radio stations in the New Orleans market is
conditioned on, among other things, FCC approval and the expiration of the
applicable waiting period under the HSR Act. The Company has entered into an
agreement to divest certain radio stations it owns or has the right to acquire
in the New Orleans market and expects to receive FCC approval and clearance
under the HSR Act in connection with such disposition. In addition, the Company
intends to dispose of two of the FM radio stations in the Norfolk, Virginia
radio market that it has agreed to acquire from Heritage and Max Media in order
to be in compliance with FCC regulations that limit the number of radio stations
that can be owned in a market. See "-- Max Media Acquisition." A third party has
also exercised its option to acquire from the Company radio station KCAZ in
Kansas City, Missouri.

Las Vegas Acquisition. On January 30, 1997, the Company entered into an
agreement to acquire the assets of KUPN-TV, the UPN affiliate in Las Vegas,
Nevada, for approximately $87.0 million. The Company completed this acquisition
on May 30, 1997.

ONGOING DISCUSSIONS

In furtherance of its acquisition strategy, the Company routinely reviews
and conducts investigations of potential television, radio station and related
businesses acquisitions. When the Company believes a favorable opportunity
exists, the Company seeks to enter into discussions with the owners of such
businesses regarding the possibility of an acquisition, disposition or station
swap. At any given time, the Company may be in discussions with one or more such
business owners. The Company is in serious negotiations with various parties
relating to the disposition and acquisition of television, radio and related
properties which would be disposed of and acquired for aggregate consideration
of approximately $75 million and $60 million, respectively. There can be no
assurance that any of these or other negotiations will lead to definitive
agreement or, if agreements are reached, that any transactions would be
consummated.

LOCAL MARKETING AGREEMENTS

The Company currently has LMA arrangements with television stations in nine
markets in which it owns a television station: Pittsburgh, Pennsylvania (WCWB),
Baltimore, Maryland (WNUV), Raleigh/ Durham, North Carolina (WRDC), Milwaukee,
Wisconsin (WVTV), Birmingham, Alabama (WABM), San Antonio, Texas (KRRT),
Asheville, North Carolina and Greenville/Spartanburg/Anderson, South Carolina
(WFBC), Mobile, Alabama and Pensacola, Florida (WFGX), and Burlington, Vermont
and Plattsburgh, New York (WFFF). The Company will provide programming under an
LMA to a station in a tenth market where it owns a television station (KFBT, Las
Vegas) upon expiration of the applicable HSR Act waiting period. In addition,
the Company has an LMA arrangement with a station in the Tuscaloosa, Alabama
market (WDBB), which is adjacent to Birmingham. In each of these markets other
than Pittsburgh, Tuscaloosa, Mobile and Pensacola, Las Vegas and Burlington and
Plattsburgh, the LMA arrangement is with Glencairn and the Company owns the
Non-License Assets of the stations. The Company also has LMA arrangements with
radio stations in two markets in which it owns radio stations,
Wilkes-Barre/Scranton, Pennsylvania and New Orleans, Louisiana. In addition, the
Company

<PAGE>

entered into two LMAs with respect to WTTV and WTTK in Indianapolis, Indiana. At
the Company's request, the FCC has withheld action on an application for the
Company's acquisition of WTTV and WTTK in Indianapolis (and a pending
application for the Controlling Stockholders to divest their attributable
interests in WIIB) until the FCC completes its pending rulemaking proceeding
considering the cross-interest policy. In addition, in connection with the
pending acquisitions, the Company will enter into certain LMAs. See "-- 1998
Acquisitions" and "-- 1997 Acquisitions."

The Company believes that it is able to increase its revenues and improve
its margins by providing programming services to stations in selected DMAs and
MSAs where the Company already owns a station. In certain instances, single
station operators and stations operated by smaller ownership groups do not have
the management expertise or the operating efficiencies available to the Company
as a multi-station broadcaster. The Company seeks to identify such stations in
selected markets and to provide such stations with programming services pursuant
to LMAs. In addition to providing the Company with additional revenue
opportunities, the Company believes that these LMA arrangements have assisted
certain stations whose operations may have been marginally profitable to
continue to air popular programming and contribute to diversity of programming
in their respective DMAs and MSAs.

In many cases where the Company enters into LMA arrangements in connection
with a station whose acquisition by the Company is pending FCC approval, the
Company (i) obtains an option to acquire the station assets essential for
broadcasting a television or radio signal in compliance with regulatory
guidelines, generally consisting of the FCC license, transmitter, transmission
lines, technical equipment, call letters and trademarks, and certain furniture,
fixtures and equipment (the "License Assets") and (ii) acquires the remaining
assets (the "Non-License Assets") at the time it enters into the option.
Following acquisition of the Non-License Assets, the License Assets continue to
be owned by the owner-operator and holder of the FCC license, which enters into
an LMA with the Company. After FCC approval for transfer of the License Assets
is obtained, the Company exercises its option to acquire the License Assets and
become the owner-operator of the station, and the LMA arrangement is terminated.

USE OF DIGITAL TELEVISION TECHNOLOGY

The Company believes that television broadcasting may be enhanced
significantly by the development and increased availability of digital
broadcasting service technology. This technology has the potential to permit the
Company to provide viewers multiple channels of digital television over each of
its existing standard channels, to provide certain programming in a high
definition television format and to deliver various forms of data, including
data on the Internet, to home and business computers. These additional
capabilities may provide the Company with additional sources of revenue,
although the Company may be required to incur significant additional costs in
connection therewith. The Company is currently considering plans to provide high
definition television ("HDTV"), to provide multiple channels of television
including the provision of additional broadcast programming and transmitted data
on a subscription basis, and to continue its current TV program channels on its
allocated digital television ("DTV") channels. The FCC has granted authority for
the Company to conduct experimental DTV multicasting operations in Baltimore,
Maryland. The 1996 Act allows the FCC to charge a spectrum fee to broadcasters
who use the digital spectrum to offer subscription-based services, and the FCC
has opened a rulemaking to consider the spectrum fees to be charged to
broadcasters for such use. In addition, Congress has held hearings on
broadcasters' plans for the use of their digital spectrum. The Company cannot
predict what future actions the FCC or Congress might take with respect to DTV,
nor can it predict the effect of the FCC's present DTV implementation plan or
such future actions on the Company's business. DTV technology is not currently
available to the viewing public and a successful transition from the current
analog broadcast format to a digital format may take many years. There can be no
assurance that the Company's efforts to take advantage of the new technology
will be commercially successful.

FEDERAL REGULATION OF TELEVISION AND RADIO BROADCASTING

The ownership, operation and sale of television and radio stations are
subject to the jurisdiction of the FCC, which acts under authority granted by
the Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating

<PAGE>

power of stations; issues, renews, revokes and modifies station licenses;
regulates equipment used by stations; adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules or the Communications Act.

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

License Grant and Renewal. Television and radio stations operate pursuant
to broadcasting licenses that are granted by the FCC for maximum terms of eight
years.

Television and radio station licenses are subject to renewal upon
application to the FCC. During certain periods when renewal applications are
pending, competing applicants may file for the radio or television frequency
being used by the renewal applicant. During the same periods, petitions to deny
license renewal applications may be filed by interested parties, including
members of the public. The FCC is required to hold hearings on renewal
applications if it is unable to determine that renewal of a license would serve
the public interest, convenience and necessity, or if a petition to deny raises
a "substantial and material question of fact" as to whether the grant of the
renewal application would be prima facie inconsistent with the public interest,
convenience and necessity. However, the FCC is prohibited from considering
competing applications for a renewal applicant's frequency, and is required to
grant the renewal application, if the FCC finds: (i) that the station has served
the public interest, convenience and necessity; (ii) that there have been no
serious violations by the licensee of the Communications Act or the rules and
regulations of the FCC; and (iii) that there have been no other violations by
the licensee of the Communications Act or the rules and regulations of the FCC
that, when taken together, would constitute a pattern of abuse.

All of the stations that the Company currently owns and operates or
provides programming services to pursuant to LMAs, or intends to acquire or
provide programming services pursuant to LMAs in connection with pending
acquisitions, are presently operating under regular licenses, which expire as to
each station on the dates set forth under "-- Television Broadcasting" and "--
Radio Broadcasting," above. Although renewal of license is granted in the vast
majority of cases even when petitions to deny are filed, there can be no
assurance that the licenses of such stations will be renewed.

Ownership Matters

General
- -------

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

To obtain the FCC's prior consent to assign a broadcast license or transfer
control of a broadcast licensee, an appropriate application must be filed with
the FCC. If the application involves a "substantial change" in ownership or
control, the application must be placed on public notice for a period of
approximately 30 days during which petitions to deny the application may be
filed by interested parties, including members of the public. If the application
does not involve a "substantial change" in ownership or control, it is a "pro
forma" application. The "pro forma" application is not subject to petitions to
deny or a mandatory waiting period, but is nevertheless subject to having
informal objections filed against it. If the FCC grants an assignment or
transfer application, interested parties have approximately 30 days from public
notice of the grant to seek reconsideration or review of that grant. Generally,
parties that do not file initial petitions to deny or informal objections
against the application face difficulty in seeking reconsideration or review of
the grant. The FCC normally has approximately an additional 10 days to set aside
such grant on its own motion. When passing on an assignment or transfer
application, the FCC is

<PAGE>

prohibited from considering whether the public interest might be served by an
assignment or transfer to any party other than the assignee or transferee
specified in the application.

The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding, or through subsidiaries controlling, broadcast
licenses, the interests of officers, directors and those who, directly or
indirectly, have the right to vote 5% or more of the corporation's stock (or 10%
or more of such stock in the case of insurance companies, investment companies
and bank trust departments that are passive investors) are generally
attributable, except that, in general, no minority voting stock interest will be
attributable if there is a single holder of more than 50% of the outstanding
voting power of the corporation. The FCC has pending a rulemaking proceeding
that, among other things, seeks comment on whether the FCC should modify its
attribution rules by (i) raising the attribution stock benchmark from 5% to 10%;
(ii) raising the attribution stock benchmark for passive investors from 10% to
20%; (iii) restricting the availability of the single majority shareholder
exemption; and (iv) attributing certain interests such as non-voting stock, debt
and certain holdings by limited liability corporations in certain circumstances.
More recently, the FCC has solicited comment on proposed rules that would (i)
treat an otherwise nonattributable equity or debt interest in a licensee as an
attributable interest where the interest holder is a program supplier or the
owner of a broadcast station in the same market and the equity and/or debt
holding is greater than a specified benchmark; (ii) treat a licensee of a
television station which, under an LMA, brokers more than 15% of the time on
another television station serving the same market, as having an attributable
interest in the brokered station; and (iii) in certain circumstances, treat the
licensee of a broadcast station that sells advertising time on another station
in the same market pursuant to a JSA as having an attributable interest in the
station whose advertising is being sold.

The Controlling Stockholders hold attributable interests in two entities
owning media properties, namely: Channel 63, Inc., licensee of WIIB-TV, a UHF
television station in Bloomington, Indiana, and Bay Television, Inc., licensee
of WTTA-TV, a UHF television station in St. Petersburg, Florida. All of the
issued and outstanding shares of Channel 63, Inc. are owned by the Controlling
Stockholders. All of the issued and outstanding shares of Bay Television, Inc.
are owned by the Controlling Stockholders (75%) and Robert L. Simmons (25%), a
former stockholder of the Company. The Controlling Stockholders have agreed to
divest their attributable interests in Channel 63, Inc. and the Company believes
that, after doing so, such holdings will not materially restrict its ability to
acquire or program additional broadcast stations.

Under its "cross-interest" policy, the FCC considers certain "meaningful"
relationships among competing media outlets in the same market, even if the
ownership rules do not specifically prohibit the relationship. Under this
policy, the FCC may consider significant nonattributable equity or debt
interests in a media outlet combined with an attributable interest in another
media outlet in the same market, joint ventures, and common key employees among
competitors. The cross-interest policy does not necessarily prohibit all of
these interests, but requires that the FCC consider whether, in a particular
market, the "meaningful" relationships between competitors could have a
significant adverse effect upon economic competition and program diversity.
Heretofore, the FCC has not applied its cross-interest policy to LMAs and JSAs
between broadcast stations. In its ongoing rulemaking proceeding concerning the
attribution rules, the FCC has sought comment on, among other things, (i)
whether the cross-interest policy should be applied only in smaller markets, and
(ii) whether non-equity financial relationships such as debt, when combined with
multiple business interrelationships such as LMAs and JSAs, raise concerns under
the cross-interest policy. Moreover, in its most recent proposals in its ongoing
attribution rulemaking proceeding, the FCC has proposed treating television
LMAs, television and radio JSAs, and presently nonattributable debt or equity
interests as attributable interests in certain circumstances without regard to
the cross-interest policy.

The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country (collectively,
"Aliens"). The Communications Act also authorizes the FCC, if the FCC determines
that it would be in the public interest, to prohibit the issuance of a broadcast
license to, or the holding of a broadcast license by, any corporation directly
or indirectly controlled by any other corporation of which more than 25% of the
capital stock is owned of record or voted by Aliens. The Company has been
advised that the FCC staff has interpreted this provision

<PAGE>
to require a finding that such grant or holding would be in the public interest
before a broadcast license may be granted to or held by any such corporation and
that the FCC staff has made such a finding only in limited circumstances. The
FCC has issued interpretations of existing law under which these restrictions in
modified form apply to other forms of business organizations, including
partnerships. As a result of these provisions, the licenses granted to
Subsidiaries of the Company by the FCC could be revoked if, among other
restrictions imposed by the FCC, more than 25% of the Company's stock were
directly or indirectly owned or voted by Aliens. The Company and the
Subsidiaries are domestic corporations, and the Controlling Stockholders are all
United States citizens. The Amended and Restated Articles of Incorporation of
the Company (the "Amended Certificate") contain limitations on Alien ownership
and control that are substantially similar to those contained in the
Communications Act. Pursuant to the Amended Certificate, the Company has the
right to repurchase Alien-owned shares at their fair market value to the extent
necessary, in the judgment of the Board of Directors, to comply with the Alien
ownership restrictions.

Television
- ----------

National Ownership Rule. Prior to the 1996 Act, FCC rules generally
prohibited an individual or entity from having an attributable interest in more
than 12 television stations nationwide, or in television stations reaching more
than 25% of the national television viewing audience. Pursuant to the 1996 Act,
the FCC has modified its rules to eliminate any limitation on the number of
television stations an individual or entity may own nationwide, subject to the
restriction that no individual or entity may have an attributable interest in
television stations reaching more than 35% of the national television viewing
audience. Historically, very-high frequency ("VHF") stations have shared a
larger portion of the market than ultra-high frequency ("UHF") stations.
Therefore, only half of the households in the market area of any UHF station are
included when calculating whether an entity or individual owns television
stations reaching more than 35% of the national television viewing audience. All
but six of the stations owned and operated by the Company, or to which the
Company provides programming services, are UHF. Upon completion of all pending
acquisitions and dispositions, the Company will reach approximately 14% of U.S.
television households using the FCC's method of calculation.

Duopoly Rule. On a local level, the television "duopoly" rule generally
prohibits a single individual or entity from having an attributable interest in
two or more television stations with overlapping Grade B service areas. While
the 1996 Act did not eliminate the television duopoly rule, it did direct the
FCC to initiate a rulemaking proceeding to determine whether to retain, modify,
or eliminate the rule. The FCC has pending a rulemaking proceeding in which it
has proposed, among other options, to modify the television duopoly rule to
permit the common ownership of television stations in different DMAs, so long as
the Grade A signal contours of the stations do not overlap. Pending resolution
of its rulemaking proceeding, the FCC has adopted an interim waiver policy that
permits the common ownership of television stations in different DMAs with no
overlapping Grade A signal contours, conditioned on the final outcome of the
rulemaking proceeding. The FCC has also sought comment on whether common
ownership of two television stations in a market should be permitted (i) where
one or more of the commonly owned stations is UHF, (ii) where one of the
stations is in bankruptcy or has been off the air for a substantial period of
time and (iii) where the commonly owned stations have very small audience or
advertising shares, are located in a very large market, and/or a specified
number of independently owned media voices would remain after the acquisition.

Local Marketing Agreements. A number of television stations, including
certain of the Company's stations, have entered into what have commonly been
referred to as local marketing agreements, or LMAs. While these agreements may
take varying forms, pursuant to a typical LMA, separately owned and licensed
television stations agree to enter into cooperative arrangements of varying
sorts, subject to compliance with the requirements of antitrust laws and with
the FCC's rules and policies. Under these types of arrangements, separately
owned stations could agree to function cooperatively in terms of programming,
advertising sales, etc., subject to the requirement that the licensee of each
station maintain independent control over the programming and operations of its
own station. One typical type of LMA is a programming agreement between two
separately owned television stations serving a common service area, whereby the
licensee of one station programs substantial portions of the broadcast day on
the other licensee's station, subject to ultimate editorial and other controls
being exercised by the latter licensee, and sells advertising time during such
program segments. Such arrangements are an extension

<PAGE>

of the concept of "time brokerage" agreements, under which a licensee of a
station sells blocks of time on its station to an entity or entities which
program the blocks of time and which sell their own commercial advertising
announcements during the time periods in question. The staff of the FCC's Mass
Media Bureau has held that LMAs are not contrary to the Communications Act,
provided that the licensee of the station which is being substantially
programmed by another entity maintains complete responsibility for and control
over the programming and operations of its broadcast station and assures
compliance with applicable FCC rules and policies.

At present, FCC rules permit television station LMAs, and the licensee of a
television station brokering time on another television station is not
considered to have an attributable interest in the brokered station. However, in
connection with its ongoing rulemaking proceeding regarding the television
duopoly rule, the FCC has proposed to adopt rules providing that the licensee of
a television station which brokers more than 15% of the time on another
television station serving the same market would be deemed to have an
attributable interest in the brokered station for purposes of the national and
local multiple ownership rules. In connection with this proceeding, the FCC has
solicited detailed information from parties to television LMAs as to the terms
and characteristics of such LMAs.

The 1996 Act provides that nothing therein "shall be construed to prohibit
the origination, continuation, or renewal of any television local marketing
agreement that is in compliance with the regulations of the [FCC]." The
legislative history of the 1996 Act reflects that this provision was intended to
grandfather television LMAs that were in existence upon enactment of the 1996
Act, and to allow television LMAs consistent with the FCC's rules subsequent to
enactment of the 1996 Act. In its pending rulemaking proceeding regarding the
television duopoly rule, the FCC has proposed to adopt a grandfathering policy
providing that, in the event that television LMAs become attributable interests,
LMAs that are in compliance with existing FCC rules and policies and were
entered into before November 5, 1996, would be permitted to continue in force
until the original term of the LMA expires. Under the FCC's proposal, television
LMAs that are entered into, renewed, or assigned after November 5, 1996 would
have to be terminated if LMAs are made attributable interests and the LMA in
question resulted in a violation of the television multiple ownership rules. The
Company's LMAs with television stations WPTT in Pittsburgh, Pennsylvania, WNUV
in Baltimore, Maryland, WVTV in Milwaukee, Wisconsin, WRDC in Raleigh/Durham,
North Carolina, WABM in Birmingham, Alabama, and WDBB in Tuscaloosa, Alabama,
were in existence on both the date of enactment of the 1996 Act and November 5,
1996. The Company's LMAs with television stations WTTV and WTTK in Indianapolis,
Indiana were entered into subsequent to the date of enactment of the 1996 Act
but prior to November 5, 1996. The Company's LMA with television station KRRT in
San Antonio, Texas was in existence on the date of enactment of the 1996 Act,
but was assumed by the Company subsequent to that date but prior to November 5,
1996. The licensee's rights under the Company's LMA with KRRT-TV were assumed by
Glencairn subsequent to November 5, 1996. The Company's LMAs with television
stations WFGX-TV in Mobile, Alabama and Pensacola, Florida and WFFF-TV in
Burlington, Vermont and Plattsburgh, New York were in existence on both the date
of enactment of the 1996 Act and November 5, 1996, but were assumed by the
Company subsequent to November 5, 1996. The Company's LMA with WFBC-TV in
Asheville, North Carolina and Greenville/Spartanburg/Anderson, South Carolina,
was entered into by the Company subsequent to the date of enactment of the 1996
Act but prior to November 5, 1996, and the licensee's rights under that LMA were
assumed by Glencairn subsequent to November 5, 1996. The Company's LMA with KFBT
in Las Vegas, Nevada (which will be effective upon expiration of the HSR waiting
period) was entered into subsequent to November 5, 1996. The Company cannot
predict if any or all of its LMAs will be grandfathered.

The Conference Agreement adopted as part of the Balanced Budget Act of 1997
(the "Balanced Budget Act") clarifies Congress' intent with respect to LMAs and
duopolies. The Conference Agreement states as follows: "The conferees do not
intend that the duopoly and television-newspaper cross-ownership relief provided
herein should have any bearing upon the [FCC's] current proceedings, which
concerns more immediate relief. The conferees expect that the [FCC] will proceed
with its own independent examination in these matters. Specifically, the
conferees expect that the [FCC] will provide additional relief (e.g., VHF/UHF
combinations) that it finds to be in the public interest, and will implement the
permanent grandfather requirement for local marketing agreements as provided in
the Telecommunications Act of 1996."

<PAGE>
The TV duopoly rule currently prevents the Company from acquiring the
licenses of television stations with which it has LMAs in those markets where
the Company owns a television station. As a result, if the FCC were to decide
that the provider of programming services under a television LMA should be
treated as having an attributable interest in the brokered station, and if it
did not relax its television duopoly rule, the Company could be required to
modify or terminate those of its LMAs that were not in existence on the date of
enactment of the 1996 Act or on November 5, 1996. Furthermore, if the FCC adopts
its present proposal with respect to the grandfathering of television LMAs, the
Company could be required to terminate even those LMAs that were in effect prior
to the date of enactment of the 1996 Act or prior to November 5, 1996, after the
initial term of the LMA or upon assignment of the LMA. In such an event, the
Company could be required to pay termination penalties under certain of such
LMAs. Further, if the FCC were to find, in connection with any of the Company's
LMAs, that the owners/licensees of the stations with which the Company has LMAs
failed to maintain control over their operations as required by FCC rules and
policies, the licensee of the LMA station and/or the Company could be fined or
set for hearing, the outcome of which could be a monetary forfeiture or, under
certain circumstances, loss of the applicable FCC license. The Company is unable
to predict the ultimate outcome of possible changes to these FCC rules and the
impact such changes may have on its broadcasting operations.

On June 1, 1995, the Chief of the FCC's Mass Media Bureau released a Public
Notice concerning the processing of television assignment and transfer of
control applications proposing LMAs. Due to the pendency of the ongoing
rulemaking proceeding concerning attribution of ownership, the Mass Media Bureau
has placed certain restrictions on the types of television assignment and
transfer of control applications involving LMAs that it will approve during the
pendency of the rulemaking. Specifically, the Mass Media Bureau has stated that
it will not approve arrangements where a time broker seeks to finance a station
acquisition and hold an option to purchase the station in the future. The
Company believes that none of the Company's LMAs fall within the ambit of this
Public Notice.

Radio
- -----

National Ownership Rule. Prior to the 1996 Act, the FCC's rules limited an
individual or entity from holding attributable interests in more than 20 AM and
20 FM radio stations nationwide. Pursuant to the 1996 Act, the FCC has modified
its rules to eliminate any limitation on the number of radio stations a single
individual or entity may own nationwide.

Local Ownership Rule. Prior to the 1996 Act, the FCC's rules generally
permitted an individual or entity to hold attributable interests in no more than
four radio stations in a local market (no more than two of which could be in the
same service (AM or FM)), and then only if the aggregate audience share of the
commonly owned stations did not exceed 25%. In markets with fewer than 15
commercial radio stations, an individual or entity could hold an attributable
interest in no more than three radio stations in the market (no more than two of
which could be in the same service), and then only if the number of the commonly
owned stations did not exceed 50% of the total number of commercial radio
stations in the market.

Pursuant to the 1996 Act, the limits on the number of radio stations one
entity may own locally have been increased as follows: (i) in a market with 45
or more commercial radio stations, an entity may own up to eight commercial
radio stations, not more than five of which are in the same service (AM or FM);
(ii) in a market with between 30 and 44 (inclusive) commercial radio stations,
an entity may own up to seven commercial radio stations, not more than four of
which are in the same service; (iii) in a market with between 15 and 29
(inclusive) commercial radio stations, an entity may own up to six commercial
radio stations, not more than four of which are in the same service; and (iv) in
a market with 14 or fewer commercial radio stations, an entity may own up to
five commercial radio stations, not more than three of which are in the same
service, except that an entity may not own more than 50% of the stations in such
market. These numerical limits apply regardless of the aggregate audience share
of the stations sought to be commonly owned. FCC ownership rules continue to
permit an entity to own one FM and one AM station in a local market regardless
of market size. Irrespective of FCC rules governing radio ownership, however,
the DOJ and the Federal Trade Commission have the authority to determine, and in
certain radio transactions have determined, that a particular transaction
presents antitrust concerns. Moreover, in certain recent cases the

<PAGE>
FCC has signaled a willingness to independently examine issues of market
concentration notwithstanding a transaction's compliance with the numerical
station limits. The FCC has also indicated that it may propose further revisions
to its radio multiple ownership rules.

Local Marketing Agreements. As in television, a number of radio stations
have entered into LMAs. The FCC's multiple ownership rules specifically permit
radio station LMAs to be entered into and implemented, so long as the licensee
of the station which is being programmed under the LMA maintains complete
responsibility for and control over programming and operations of its broadcast
station and assures compliance with applicable FCC rules and policies. For the
purposes of the multiple ownership rules, in general, a radio station being
programmed pursuant to an LMA by an entity is not considered an attributable
ownership interest of that entity unless that entity already owns a radio
station in the same market. However, a licensee that owns a radio station in a
market, and brokers more than 15% of the time on another station serving the
same market (i.e., a station whose principal community contour overlaps that of
the owned station), is considered to have an attributable ownership interest in
the brokered station for purposes of the FCC's multiple ownership rules. As a
result, in a market in which the Company owns a radio station, the Company would
not be permitted to enter into an LMA with another local radio station which it
could not own under the local ownership rules, unless the Company's programming
constituted 15% or less of the other local station's programming time on a
weekly basis. The FCC's rules also prohibit a broadcast licensee from
simulcasting more than 25% of its programming on another station in the same
broadcast service (i.e., AM-AM or FM-FM) through a time brokerage or LMA
arrangement where the brokered and brokering stations serve substantially the
same area.

Joint Sales Agreements. A number of radio (and television) stations have
entered into cooperative arrangements commonly known as joint sales agreements,
or JSAs. While these agreements may take varying forms, under the typical JSA, a
station licensee obtains, for a fee, the right to sell substantially all of the
commercial advertising on a separately-owned and licensed station in the same
market. The typical JSA also customarily involves the provision by the selling
licensee of certain sales, accounting, and "back office" services to the station
whose advertising is being sold. The typical JSA is distinct from an LMA in that
a JSA (unlike an LMA) normally does not involve programming.

The FCC has determined that issues of joint advertising sales should be
left to enforcement by antitrust authorities, and therefore does not generally
regulate joint sales practices between stations. Currently, stations for which a
licensee sells time under a JSA are not deemed by the FCC to be attributable
interests of that licensee. However, in connection with its ongoing rulemaking
proceeding concerning the attribution rules, the FCC is considering whether JSAs
should be considered attributable interests or within the scope of the FCC's
cross-interest policy, particularly when JSAs contain provisions for the supply
of programming services and/or other elements typically associated with LMAs. If
JSAs become attributable interests as a result of changes in the FCC rules, the
Company may be required to terminate any JSA it might have with a radio station
which the Company could not own under the FCC's multiple ownership rules.

Other Ownership Matters
- -----------------------

There remain in place after the 1996 Act a number of additional
cross-ownership rules and prohibitions pertaining to licensees of television and
radio stations. FCC rules, the Communications Act, or both generally prohibit an
individual or entity from having an attributable interest in both a television
station and a radio station, a daily newspaper, or a cable television system
that is located in or serves the same market area.

Antitrust Regulation. The DOJ and the Federal Trade Commission have
increased their scrutiny of the television and radio industry since the adoption
of the 1996 Act, and have indicated their intention to review matters related to
the concentration of ownership within markets (including LMAs and JSAs) even
when the ownership or LMA or JSA in question is permitted under the laws
administered by the FCC or by FCC rules and regulations. For instance, the DOJ
has for some time taken the position that an LMA entered into in anticipation of
a station's acquisition with the proposed buyer of the station constitutes a
change in beneficial ownership of the station which, if subject to filing under
the HSR Act, cannot be implemented until the waiting period required by that
statute has ended or been terminated.

<PAGE>

Radio/Television Cross-Ownership Rule. The FCC's radio/television
cross-ownership rule (the "one to a market" rule) generally prohibits a single
individual or entity from having an attributable interest in a television
station and a radio station serving the same market. However, in each of the 25
largest local markets in the United States, provided that there remain at least
30 separately owned television and radio stations in the particular market after
the acquisition in question, the FCC has traditionally employed a policy that
presumptively allows waivers of the one to a market rule to permit the common
ownership of one AM, one FM and one TV station in the market. The 1996 Act
directs the FCC to extend this policy to each of the top 50 markets. Moreover,
the FCC has pending a rulemaking proceeding in which it has solicited comment on
whether the one to a market rule should be eliminated altogether. The Company
has pending several requests for waivers of the one to a market rule in
connection with its applications to acquire radio stations in the Max Media
Acquisition and from Keymarket of South Carolina, Inc. and Spartan Radiocasting,
Inc., in markets where the Company owns or proposes to own a television station.

However, the FCC does not apply its presumptive waiver policy in cases
involving the common ownership of one television station, and two or more radio
stations in the same service (AM or FM), in the same market. Pending its ongoing
rulemaking proceeding to reexamine the one to a market rule, the FCC has stated
that it will consider waivers of the rule in such instances on a case-by-case
basis, considering (i) the public service benefits that will arise from the
joint operation of the facilities such as economies of scale, cost savings and
programming and service benefits; (ii) the types of facilities involved; (iii)
the number of media outlets owned by the applicant in the relevant market; (iv)
the financial difficulties of the stations involved; and (v) the nature of the
relevant market in light of the level of competition and diversity after joint
operation is implemented. Generally, any such waivers that are granted, and
which allow common ownership of a television station and more than two
same-service radio stations in the same market, are temporary and conditioned on
the outcome of the rulemaking proceeding. The Company obtained such temporary,
conditional waivers of the one to a market rule in connection with its
acquisition of the Heritage radio stations in the Kansas City and St. Louis
markets.

In its ongoing rulemaking proceeding to reexamine the one to a market rule,
the FCC has proposed the following options for modifying the rule in the event
it is not eliminated: (i) extending the presumptive waiver policy to any
television market in which a specified number of independently owned media
"voices" would remain after common ownership of a television station and one or
more radio stations is effectuated; (ii) extending the presumptive waiver policy
to entities that seek to own more than one FM and/or one AM radio station; (iii)
reducing the minimum number of independently owned voices that must remain after
a transaction is effectuated; and (iv) modifying the five-factor case-by-case
test for waivers.

Local Television/Cable Cross-Ownership Rule. While the 1996 Act eliminates
a previous statutory prohibition against the common ownership of a television
broadcast station and a cable system that serve the same local market, the 1996
Act leaves the current FCC rule in place. The legislative history of the Act
indicates that the repeal of the statutory ban should not prejudge the outcome
of any FCC review of the rule.

Broadcast Network/Cable Cross-Ownership Rule. The 1996 Act directs the FCC
to eliminate its rules which formerly prohibited the common ownership of a
broadcast network and a cable system, subject to the provision that the FCC
revise its rules as necessary to ensure carriage, channel positioning, and
non-discriminatory treatment of non-affiliated broadcast stations by cable
systems affiliated with a broadcast network. In March 1996, the FCC issued an
order implementing this legislative change.

Broadcast/Daily Newspaper Cross-Ownership Rule. The FCC's rules prohibit
the common ownership of a radio or television broadcast station and a daily
newspaper in the same market. The 1996 Act does not eliminate or modify this
prohibition. In October 1996, however, the FCC initiated a rulemaking proceeding
to determine whether it should liberalize its waiver policy with respect to
cross-ownership of a daily newspaper and one or more radio stations in the same
market.

Dual Network Rule. The 1996 Act directs the FCC to repeal its rule which
formerly prohibited an entity from operating more than one television network.
In March 1996, the FCC issued an order implementing this legislative change.
Under the modified rule, a network entity is permitted to operate

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more than one television network, provided, however, that ABC, CBS, NBC, and/or
Fox are prohibited from merging with each other or with another network
television entity such as WB or UPN.

The 1996 Act requires the FCC to review its broadcast ownership rules every
two years to "determine whether any of such rules are necessary in the public
interest as the result of competition," and to repeal or modify any rules that
are determined to be no longer in the public interest. In March 1998, the FCC
initiated a rulemaking proceeding to review certain of its broadcast ownership
rules pursuant to the statutory mandate, including: (i) the rule limiting
ownership of television stations nationally to stations reaching 35% of the
national television audience; (ii) the rule attributing only 50% of television
households in a market to the audience reach of a UHF television station for
purposes of the 35% national audience reach limit; (iii) the rule prohibiting
common ownership of a broadcast station and a daily newspaper in the same
market; (iv) the rule prohibiting common ownership of a broadcast television
station and a cable system in the same market; (v) the local radio multiple
ownership rules; and (vi) the dual network rule. Additionally, the FCC stated
that its already-pending proceedings to review the television duopoly and "one
to a market" rules satisfy the 1996 Act's biennial review requirements.

Expansion of the Company's broadcast operations on both a local and
national level will continue to be subject to the FCC's ownership rules and any
changes the FCC or Congress may adopt. Concomitantly, any further relaxation of
the FCC's ownership rules may increase the level of competition in one or more
of the markets in which the Company's stations are located, more specifically to
the extent that any of the Company's competitors may have greater resources and
thereby be in a superior position to take advantage of such changes.

Must-Carry/Retransmission Consent

Pursuant to the Cable Act of 1992, television broadcasters are required to
make triennial elections to exercise either certain "must-carry" or
"retransmission consent" rights in connection with their carriage by cable
systems in each broadcaster's local market. By electing the must-carry rights, a
broadcaster demands carriage on a specified channel on cable systems within its
Area of Dominant Influence, in general as defined by the Arbitron 1991-92
Television Market Guide. These must-carry rights are not absolute, and their
exercise is dependent on variables such as (i) the number of activated channels
on a cable system; (ii) the location and size of a cable system; and (iii) the
amount of programming on a broadcast station that duplicates the programming of
another broadcast station carried by the cable system. Therefore, under certain
circumstances, a cable system may decline to carry a given station.
Alternatively, if a broadcaster chooses to exercise retransmission consent
rights, it can prohibit cable systems from carrying its signal or grant the
appropriate cable system the authority to retransmit the broadcast signal for a
fee or other consideration. In October 1996, the Company elected must-carry or
retransmission consent with respect to each of its markets based on its
evaluation of the respective markets and the position of the Company's owned or
programmed station(s) within the market. The Company's stations continue to be
carried on all pertinent cable systems, and the Company does not believe that
its elections have resulted in the shifting of its stations to less desirable
cable channel locations. Certain of the Company's stations affiliated with Fox
are required to elect retransmission consent because Fox's retransmission
consent negotiations on behalf of the Company resulted in agreements which
extend into 1998. Therefore, the Company will need to negotiate retransmission
consent agreements for these Fox-affiliated stations to attain carriage on the
relevant cable systems for the balance of this triennial period (i.e., through
December 31, 1999). For subsequent elections beginning with the election to be
made by October 1, 1999, the must-carry market will be the station's DMA, in
general as defined by the Nielsen DMA Market and Demographic Rank Report of the
prior year.

Syndicated Exclusivity/Territorial Exclusivity

The FCC has imposed syndicated exclusivity rules and expanded existing
network nonduplication rules. The syndicated exclusivity rules allow local
broadcast television stations to demand that cable operators black out
syndicated non-network programming carried on "distant signals" (i.e., signals
of broadcast stations, including so-called "superstations," which serve areas
substantially removed from the cable system's local community). The network
non-duplication rules allow local broadcast network television affiliates to
require that cable operators black out duplicative network programming carried
on

<PAGE>
distant signals. However, in a number of markets in which the Company owns or
programs stations affiliated with a network, a station that is affiliated with
the same network in a nearby market is carried on cable systems in the Company's
market. This is not in violation of the FCC's network nonduplication rules.
However, the carriage of two network stations on the same cable system could
result in a decline of viewership adversely affecting the revenues of the
Company owned or programmed station.

Restrictions on Broadcast Advertising

Advertising of cigarettes and certain other tobacco products on broadcast
stations has been banned for many years. Various states restrict the advertising
of alcoholic beverages. Congressional committees have examined legislation
proposals which would eliminate or severely restrict the advertising of beer and
wine. Although no prediction can be made as to whether any or all of such
proposals will be enacted into law, the elimination of all beer and wine
advertising would have an adverse effect upon the revenues of the Company's
stations, as well as the revenues of other stations which carry beer and wine
advertising.

The FCC has imposed commercial time limitations in children's television
programming pursuant to legislation. In television programs designed for viewing
by children of 12 years of age and under, commercial matter is limited to 12
minutes per hour on weekdays and 10.5 minutes per hour on weekends. In granting
renewal of the license for WBFF-TV, the FCC imposed a fine of $10,000 on the
Company alleging that the station had exceeded these limitations. The Company
has appealed this fine and the appeal is pending. In granting renewal of the
license for WTTV-TV and WTTK-TV, stations that the Company programs pursuant to
an LMA, the FCC imposed a fine of $15,000 on WTTV-TV and WTTK-TV's licensee
alleging that the stations had exceeded these limitations. In granting renewal
of the license for WTTE-TV, the FCC imposed a fine of $10,000 on the Company
alleging that the station had exceeded these limitations. The Company has
appealed this fine and the appeal is pending.

The Communications Act and FCC rules also impose regulations regarding the
broadcasting of advertisements by legally qualified candidates for elective
office. Among other things, (i) stations must provide "reasonable access" for
the purchase of time by legally qualified candidates for federal office; (ii)
stations must provide "equal opportunities" for the purchase of equivalent
amounts of comparable broadcast time by opposing candidates for the same
elective office; and (iii) during the 45 days preceding a primary or primary
run-off election and during the 60 days preceding a general or special election,
legally qualified candidates for elective office may be charged no more than the
station's "lowest unit charge" for the same class of advertisement, length of
advertisement, and daypart. Recently, both the President of the United States
and the Chairman of the FCC have called for rules that would require broadcast
stations to provide free airtime to political candidates. The Company cannot
predict the effect of such a requirement on its advertising revenues.

Programming and Operation

General. The Communications Act requires broadcasters to serve the "public
interest." The FCC has relaxed or eliminated many of the more formalized
procedures it had developed in the past to promote the broadcast of certain
types of programming responsive to the needs of a station's community of
license. FCC licensees continue to be required, however, to present programming
that is responsive to their communities' issues, and to maintain certain records
demonstrating such responsiveness. Complaints from viewers concerning a
station's programming may be considered by the FCC when it evaluates renewal
applications of a licensee, although such complaints may be filed at any time
and generally may be considered by the FCC at any time. Stations also must pay
regulatory and application fees, and follow various rules promulgated under the
Communications Act that regulate, among other things, political advertising,
sponsorship identifications, the advertisement of contests and lotteries,
obscene and indecent broadcasts, and technical operations, including limits on
radio frequency radiation. In addition, licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities,
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application. Failure to observe these or
other rules and policies can result in the imposition of various sanctions,
including monetary forfeitures, the grant of a renewal for a "short" (i.e., less
than the full) license term, or, for particularly egregious violations, the
denial of a license renewal application or the revocation of a license.

<PAGE>

Children's Television Programming. Pursuant to rules adopted in 1996,
television stations are required to broadcast a minimum of three hours per week
of "core" children's educational programming, which the FCC defines as
programming that (i) has serving the educational and informational needs of
children 16 years of age and under as a significant purpose; (ii) is regularly
scheduled, weekly and at least 30 minutes in duration; and (iii) is aired
between the hours of 7:00 a.m. and 10:00 p.m. Furthermore, "core" children's
educational programs, in order to qualify as such, are required to be identified
as educational and informational programs over the air at the time they are
broadcast, and are required to be identified in the children's programming
reports required to be placed in stations' public inspection files.
Additionally, television stations are required to identify and provide
information concerning "core" children's programming to publishers of program
guides and listings.

Television Violence. The 1996 Act contains a number of provisions relating
to television violence. First, pursuant to the 1996 Act, the television industry
has developed a ratings system which the FCC has approved. Furthermore, also
pursuant to the 1996 Act the FCC has adopted rules requiring certain television
sets to include the so-called "V-chip," a computer chip that allows blocking of
rated programming. Under these rules, half of television receiver models with
picture screens 13 inches or greater will be required to have the "V-chip" by
July 1, 1999, and all such models will be required to have the "V-chip" by
January 1, 2000. In addition, the 1996 Act requires that all television license
renewal applications filed after May 1, 1995 contain summaries of written
comments and suggestions received by the station from the public regarding
violent programming.

Closed Captioning. The 1996 Act directs the FCC to adopt rules requiring
closed captioning of all broadcast television programming, except where
captioning would be "economically burdensome." The FCC has recently adopted such
rules. The rules require generally that (i) 95% of all new programming first
published or exhibited on or after January 1, 1998 must be closed captioned
within eight years, and (ii) 75% of "old" programming which first aired prior to
January 1, 1998 must be closed captioned within 10 years, subject to certain
exemptions.

Digital Television

The FCC has taken a number of steps to implement DTV broadcasting service
in the United States. In December 1996, the FCC adopted a DTV broadcast standard
and, in April 1997, adopted decisions in several pending rulemaking proceedings
that establish service rules and a plan for implementing DTV. The FCC adopted a
DTV table of allotments that provides all authorized television stations with a
second channel on which to broadcast a DTV signal. In February 1998, the FCC
made slight revisions to the DTV rules and table of allotments in acting upon a
number of appeals in the DTV proceeding. The FCC has attempted to provide DTV
coverage areas that are comparable to stations' existing service areas. The FCC
has ruled that television broadcast licensees may use their digital channels for
a wide variety of services such as high-definition television, multiple standard
definition television programming, audio, data, and other types of
communications, subject to the requirement that each broadcaster provide at
least one free video channel equal in quality to the current technical standard.

DTV channels will generally be located in the range of channels from
channel 2 through channel 51. The FCC is requiring that affiliates of ABC, CBS,
Fox and NBC in the top 10 television markets begin digital broadcasting by May
1, 1999 (many stations affiliated with these networks in the top 10 markets have
voluntarily committed to begin digital broadcasting by November 1998), and that
affiliates of these networks in markets 11 through 30 begin digital broadcasting
by November 1999. The FCC's plan calls for the DTV transition period to end in
the year 2006, at which time the FCC expects that television broadcasters will
cease non-digital broadcasting and return one of their two channels to the
government, allowing that spectrum to be recovered for other uses. Under the
Balanced Budget Act, however, the FCC is authorized to extend the December 31,
2006 deadline for reclamation of a television station's non-digital channel if,
in any given case: (i) one or more television stations affiliated with ABC, CBS,
NBC or Fox in a market is not broadcasting digitally, and the FCC determines
that such stations have "exercised due diligence" in attempting to convert to
digital broadcasting; or (ii) less than 85% of the television households in the
station's market subscribe to a multichannel video service (cable, wireless
cable or direct-to-home broadcast satellite television ("DBS")) that carries at
least one digital channel from each of the local stations in that market, and
less than 85% of the television households in the

<PAGE>
market can receive digital signals off the air using either a set-top converter
box for an analog television set or a new DTV television set. The Balanced
Budget Act also directs the FCC to auction the non-digital channels by September
30, 2002 even though they are not to be reclaimed by the government until at
least December 31, 2006. The Balanced Budget Act also permits broadcasters to
bid on the non-digital channels in cities with populations greater than 400,000,
provided the channels are used for DTV. Thus, it is possible a broadcaster could
own two channels in a market. The FCC has concluded a separate proceeding in
which it reallocated television channels 60 through 69 to other services while
protecting existing television stations on those channels from interference
during the DTV transition period. Additionally, the FCC will open a separate
proceeding to consider to what extent the cable must-carry requirements will
apply to DTV signals.

Implementation of digital television will improve the technical quality of
television signals received by viewers. Under certain circumstances, however,
conversion to digital operation may reduce a station's geographic coverage area
or result in some increased interference. The FCC's DTV allotment plan allows
present UHF stations that move to DTV channels considerably less signal power
than present VHF stations that move to UHF DTV channels. Additionally, the DTV
transmission standard adopted by the FCC may not allow certain stations to
provide a DTV signal of adequate strength to be reliably received by certain
viewers using inside television set antennas. Implementation of digital
television will also impose substantial additional costs on television stations
because of the need to replace equipment and because some stations will need to
operate at higher utility costs and there can be no assurance that the Company's
television stations will be able to increase revenue to offset such costs. The
FCC is also considering imposing new public interest requirements on television
licensees in exchange for their receipt of DTV channels. The Company is
currently considering plans to provide HDTV, to provide multiple channels of
television, including the provision of additional broadcast programming and
transmitted data on a subscription basis, and to continue its current TV program
channels on its allocated DTV channels. The 1996 Act allows the FCC to charge a
spectrum fee to broadcasters who use the digital spectrum to offer
subscription-based services. The FCC has opened a rulemaking to consider the
spectrum fees to be charged to broadcasters for such use. In addition, Congress
has held hearings on broadcasters' plans for the use of their digital spectrum.
The Company cannot predict what future actions the FCC might take with respect
to DTV, nor can it predict the effect of the FCC's present DTV implementation
plan or such future actions on the Company's business.

Proposed Changes

The Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of the Company's broadcast stations, result in the loss of
audience share and advertising revenues for the Company's broadcast stations,
and affect the ability of the Company to acquire additional broadcast stations
or finance such acquisitions. In addition to the changes and proposed changes
noted above, such matters may include, for example, the license renewal process,
spectrum use fees, political advertising rates, potential restrictions on the
advertising of certain products (beer, wine and hard liquor, for example), and
the rules and policies to be applied in enforcing the FCC's equal employment
opportunity regulations. Other matters that could affect the Company's broadcast
properties include technological innovations and developments generally
affecting competition in the mass communications industry, such as direct radio
and television broadcast satellite service, the continued establishment of
wireless cable systems and low power television stations, digital television and
radio technologies, and the advent of telephone company participation in the
provision of video programming service.

Other Considerations

The foregoing summary does not purport to be a complete discussion of all
provisions of the Communications Act or other congressional acts or of the
regulations and policies of the FCC. For further information, reference should
be made to the Communications Act, other congressional acts, and regulations and
public notices promulgated from time to time by the FCC. There are additional
regulations and policies of

<PAGE>
the FCC and other federal agencies that govern political broadcasts, public
affairs programming, equal employment opportunity, and other matters affecting
the Company's business and operations.

ENVIRONMENTAL REGULATION

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

COMPETITION

The Company's television and radio stations compete for audience share and
advertising revenue with other television and radio stations in their respective
DMAs or MSA's, as well as with other advertising media, such as newspapers,
magazines, outdoor advertising, transit advertising, yellow page directories,
direct mail and local cable and wireless cable systems. Some competitors are
part of larger organizations with substantially greater financial, technical and
other resources than the Company.

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

Broadcast television stations compete for advertising revenues primarily
with other broadcast television stations, radio stations and cable system
operators serving the same market. ABC, CBS and NBC programming generally
achieves higher household audience levels than Fox, WB and UPN programming and
syndicated programming aired by independent stations. This can be attributed to
a combination of factors, including the efforts of ABC, CBS and NBC to reach a
broader audience, generally better signal carriage available when broadcasting
over VHF channels 2 through 13 versus broadcasting over UHF channels 14 through
69 and the higher number of hours of ABC, CBS and NBC programming being
broadcast weekly. However, greater amounts of advertising time are available for
sale during Fox, UPN and WB programming and non-network syndicated programming,
and as a result the Company believes that the Company's programming typically
achieves a share of television market advertising revenues greater than its
share of a market's audience.

Television stations compete for audience share primarily on the basis of
program popularity, which has a direct effect on advertising rates. A large
amount of the Company's prime time programming is supplied by Fox and WB, and to
a lesser extent UPN, ABC, CBS and NBC. In those periods, the Company's
affiliated stations are totally dependent upon the performance of the networks'
programs in attracting viewers. Non-network time periods are programmed by the
station primarily with syndicated programs purchased for cash, cash and barter,
or barter-only, and also through self-produced news, public affairs and other
entertainment programming.

Television advertising rates are based upon factors which include the size
of the DMA in which the station operates, a program's popularity among the
viewers that an advertiser wishes to attract, the number of advertisers
competing for the available time, the demographic makeup of the DMA served by
the station, the availability of alternative advertising media in the DMA
(including radio and cable), the aggressiveness and knowledge of sales forces in
the DMA and development of projects, features and

<PAGE>
programs that tie advertiser messages to programming. The Company believes that
its sales and programming strategies allow it to compete effectively for
advertising within its DMAs.

Other factors that are material to a television station's competitive
position include signal coverage, local program acceptance, network affiliation,
audience characteristics and assigned broadcast frequency. Historically, the
Company's UHF broadcast stations have suffered a competitive disadvantage in
comparison to stations with VHF broadcast frequencies. This historic
disadvantage has gradually declined through (i) carriage on cable systems, (ii)
improvement in television receivers, (iii) improvement in television
transmitters, (iv) wider use of all channel antennae, (v) increased availability
of programming, and (vi) the development of new networks such as Fox, WB and
UPN.

The broadcasting industry is continuously faced with technical changes and
innovations, the popularity of competing entertainment and communications media,
changes in labor conditions, and governmental restrictions or actions of federal
regulatory bodies, including the FCC, any of which could possibly have a
material effect on a television station's operations and profits. There are
sources of video service other than conventional television stations, the most
common being cable television, which can increase competition for a broadcast
television station by bringing into its market distant broadcasting signals not
otherwise available to the station's audience, serving as a distribution system
for national satellite-delivered programming and other non-broadcast
programming originated on a cable system and selling advertising time to local
advertisers. Other principal sources of competition include home video
exhibition, DBS entertainment services and multichannel multipoint distribution
services ("MMDS"). Moreover, technology advances and regulatory changes
affecting programming delivery through fiber optic telephone lines and video
compression could lower entry barriers for new video channels and encourage the
development of increasingly specialized "niche" programming. The 1996 Act
permits telephone companies to provide video distribution services via radio
communication, on a common carrier basis, as "cable systems" or as "open video
systems," each pursuant to different regulatory schemes. The Company is unable
to predict the effect that technological and regulatory changes will have on the
broadcast television industry and on the future profitability and value of a
particular broadcast television station.

The FCC authorizes DBS services throughout the United States. Currently,
two FCC permitees, DirecTV and United States Satellite Broadcasting, provide
subscription DBS services via high-power communications satellites and small
dish receivers, and other companies provide direct-to-home video service using
lower powered satellites and larger receivers. Additional companies are expected
to commence direct-to-home operations in the near future. DBS and MMDS, as well
as other new technologies, will further increase competition in the delivery of
video programming.

The Company cannot predict what other video technologies might be
considered or implemented in the future, nor can it judge in advance what
impact, if any, the implementation of any of these proposals or changes might
have on its business.

The Company believes that television broadcasting may be enhanced
significantly by the development and increased availability of DTV technology.
This technology has the potential to permit the Company to provide viewers
multiple channels of digital television over each of its existing standard
channels, to provide certain programming in a high definition television format
and to deliver various forms of data, including data on the Internet, to home
and business computers. These additional capabilities may provide the Company
with additional sources of revenue. The Company is currently considering plans
to provide HDTV, to provide multiple channels of television including the
provision of additional broadcast programming and transmitted data on a
subscription basis, and to continue its current TV program channels on its
allocated DTV channels. The Company has obtained FCC authority to conduct
experimental DTV multicasting operations in Baltimore, Maryland. The 1996 Act
allows the FCC to charge a spectrum fee to broadcasters who use the digital
spectrum to offer subscription-based services. The FCC has opened a rulemaking
to consider the spectrum fees to be charged to broadcasters for such use. In
addition, Congress has held hearings on broadcasters' plans for the use of their
digital spectrum. The Company cannot predict what future actions the FCC or
Congress might take with respect to DTV, nor can it predict the effect of the
FCC's present DTV implementation plan or such future actions on the Company's
business. DTV technology is not currently available to the viewing public and a
successful transition from the current analog television format to a

<PAGE>

digital format may take many years. There can be no assurance that the Company's
efforts to take advantage of the new technology will be commercially successful.

The Company also competes for programming, which involves negotiating with
national program distributors or syndicators that sell first-run and rerun
packages of programming. The Company's stations compete for exclusive access to
those programs against in-market broadcast station competitors for syndicated
products. Cable systems generally do not compete with local stations for
programming, although various national cable networks from time to time have
acquired programs that would have otherwise been offered to local television
stations. Public broadcasting stations generally compete with commercial
broadcasters for viewers but not for advertising dollars.

Historically, the cost of programming has increased because of an increase
in the number of new independent stations and a shortage of quality programming.
However, the Company believes that over the past five years program prices
generally have stabilized.

The Company believes it competes favorably against other television
stations because of its management skill and experience, the ability of the
Company historically to generate revenue share greater than its audience share,
its network affiliations and its local program acceptance. In addition, the
Company believes that it benefits from the operation of multiple broadcast
properties, affording it certain nonquantifiable economies of scale and
competitive advantages in the purchase of programming.

Radio Competition. Radio broadcasting is a highly competitive business, and
each of the radio stations operated by the Company competes for audience share
and advertising revenue directly with other radio stations in its geographic
market, as well as with other media, including television, cable television,
newspapers, magazines, direct mail and billboard advertising. The audience
ratings and advertising revenue of each of such stations are subject to change,
and any adverse change in a particular market could have a material adverse
effect on the revenue of such radio stations located in that market. There can
be no assurance that any one of the Company's radio stations will be able to
maintain or increase its current audience ratings and radio advertising revenue
market share.

The Company attempts to improve each radio station's competitive position
with promotional campaigns designed to enhance and reinforce its identities with
the listening public. Extensive market research is conducted in order to
identify specific demographic groups and design a programming format for those
groups. The Company seeks to build a strong listener base composed of specific
demographic groups in each market, and thereby attract advertisers seeking to
reach these listeners. Aside from building its stations' identities and
targeting its programming to specific demographic groups, management believes
that the Company also obtains a competitive advantage by operating duopolies or
multiple stations in the nation's larger mid-size markets.

The radio broadcasting industry is also subject to competition from new
media technologies that are being developed or introduced, such as the delivery
of audio programming by cable television systems and by digital audio
broadcasting ("DAB"). DAB may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats to local and
national audiences. The FCC has issued licenses for two satellite DAB systems.
Historically, the radio broadcasting industry has grown in terms of total
revenues despite the introduction of new technologies for the delivery of
entertainment and information, such as television broadcasting, cable
television, audio tapes and compact disks. There can be no assurance, however,
that the development or introduction in the future of any new media technology
will not have an adverse effect on the radio broadcast industry.

EMPLOYEES

As of December 31, 1997, the Company had approximately 2,262 employees.
With the exception of certain of the employees of KOVR-TV, KDNL-TV, WBEN-AM and
WWL-AM, none of the employees is represented by labor unions under any
collective bargaining agreement. No significant labor problems have been
experienced by the Company, and the Company considers its overall labor
relations to be good.

<PAGE>

ITEM 2. PROPERTIES

Generally, each of the Company's stations has facilities consisting of
offices, studios and tower sites. Transmitter and tower sites are located to
provide maximum signal coverage of the stations' markets. The following table
generally describes the Company's principal owned and leased real property in
each of its markets of operation:

TELEVISION PROPERTIES TYPE OF FACILITY AND USE
- ------------------------------- -----------------------------------------------
Pittsburgh Market Station Site for WPGH
Space on WPGH Tower Site

Baltimore Market WBFF Studio and Company Offices
WBFF Parking Lot
Space on Main WBFF Tower for Antenna
Space on Main WBFF Tower for Transmission Disks
Space on Main WBFF Tower for Receivers

Milwaukee Market WVTV Studio Site
WVTV Transmitter Site land
WVTV Transmitter Site Building
WCGV Studio Site
WCGV Studio/Transmitter Site

Raleigh/Durham Mkt WLFL / WRDC Studio Site
WLFL Tower Site Land

Columbus Market WTTE Studio Site
WTTE Office Space
WTTE Tower Site

Norfolk Market WTVZ Studio Site
Birmingham Market WTTO Tower and Old WTTO Studio

WTTO Studio Site
WABM Studio Site

Flint/Saginaw/Bay City Market WSMH Studio & Office Site
WSMH Transmitter Site

Tuscaloosa Market WDBB Transmitter Site
Kansas City Market KSMO Studio & Office Site

KSMO Transmitter bldg.

Cincinnati Market WSTR Studio & Office Site
WSTR Transmitter Site
W66AQ Translator

Peoria Market WYZZ Studio & Office Site WYZZ
Transmitter Site -- real property only WYZZ
Transmitter Site -- tower, transmitter,
building, and equipment

Oklahoma City Market KOCB Studio & Office Site
KOCB Transmitter Site

Lexington Market WDKY Studio & Office Site
WDKY Transmitter Site
<PAGE>
APPROXIMATE
TELEVISION PROPERTIES OWNED OR LEASED(A) SIZE (SQ. FEET)
- ------------------------------- ----------------------------- ------------------
Pittsburgh Market Leased (expires 10/01/2028) 25,500
Leased (expires 02/23/2039) On site of station

Baltimore Market Leased (expires 12/31/2010) 39,000

Leased (month to month) N/A

Leased (expires 06/01/2007) N/A
Leased (expires 04/01/2011) N/A
Leased (expires 08/01/2012) N/A

Milwaukee Market Owned 37,800
Leased (expires 01/30/2030) N/A
Owned 6,200
Owned 22,296
Leased (expires 12/31/2029) N/A
Raleigh/Durham Mkt Leased (expires 07/29/2021) 26,600
Leased (expires 12/31/2018) 1,800
Columbus Market Leased (expires 12/31/2002) 14,400
Leased (expires 06/01/2003) 4,500
Leased (month to month) 1,000
Norfolk Market Leased (expires 07/31/2009) 15,000
Birmingham Market Owned 9,500

Leased (expires 1/31/2016) 9,750
Leased (expires 1/31/2016) 9,750

Flint/Saginaw/Bay City Market Owned 13,800
Leased (expires 11/13/2004) N/A

Tuscaloosa Market Leased (month to month) 678
Kansas City Market Leased (expires 02/28/2001) 11,055

Leased (expires 12/10/2010) 1,200

Cincinnati Market Owned 14,800
Owned 6,600
Owned N/A

Peoria Market Owned 6,000
Leased (expires 12/01/2001) 1,100
Owned N/A

Oklahoma City Market Owned 12,000
Owned Included above

Lexington Market Leased (expires 12/31/2010) 12,000
Owned 2,900

<PAGE>

<TABLE>
<CAPTION>
APPROXIMATE
TELEVISION PROPERTIES TYPE OF FACILITY AND USE OWNED OR LEASED(A) SIZE (SQ. FEET)
- ------------------------------- --------------------------------------- ----------------------------- ---------------------
<S> <C> <C> <C>
Indianapolis Market WTTV/WTTK Studio & Office Site (bldg) Owned 19,900

WTTV/WTTK Studio & Office Site (lot) Owned 18.5 acres
WTTV Transmitter Site/lot Owned 2,730/41.25 acres
WTTK Transmitter Site/lot Owned 800/30 acres
Bloomington microwave site (bldg.) Owned 216
Bloomington microwave site (land) Leased (expires 07/05/2077) 216

Sacramento Market KOVR Studio & Office Site Owned 42,600
KOVR Stockton Office Site Leased (expires 03/31/1999) 1,000
KOVR Transmitter Site 50% Ownership N/A
KOVR Back-up Transmitter Site 1/3 Ownership N/A
Mt. Oso Microwave Site Leased (expires 02/28/2001) N/A
Volmer Peak Microwave Site Leased (expires 06/30/2000) N/A
Downtown Sacramento Microwave Site Leased (expires 05/31/1999) N/A
Elverta Microwave Site Leased (expires 07/31/1999) N/A
San Antonio Market KABB/KRRT Studio & Office Site Owned by KABB 22,460
1200/1200/
KABB Transmitter bldg/tower/land Owned by KABB 35.562 acres
KRRT Transmitter land Leased (expires 06/30/2007) 103.854 acres

Asheville/Spartanburg WFBC/WLOS Studio & Office Site Owned by WLOS 28,000
Market WLOS Transmitter tower, bldg, land Leased (expires 12/31/2001)
WFBC Transmitter Site Owned by WFBC 45.6 acres
WFBC/WAXA studio Owned 6,000

St. Louis Market KDNL Studio & Office (Lot) Owned 53,550
KDNL Studio & Office (building) Owned 41,372 (TV)
KDNL Transmitter Site (2 buildings) Owned 1,600 & 1,330
Des Moines Market KDSM Studio & Office Site Owned 13,000
KDSM Transmitter bldg/tower Owned 2,000
KDSM Transmitter land Leased (expires 11/08/2034) 40 Acres
KDSM Translator tower/shed Leased (expires 12/31/98) 48
Las Vegas Market KUPN Studio & Office Site Leased (expires 6/26/99) 14,000
KUPN Transmitter Site/bldg. Owned .04 acres
KUPN Microwave Transmitter Site Owned N/A
KUPN Microwave Relay Site Owned N/A
Plattsburgh/Burlington Market WPTZ Station Site Owned 12,400
WPTZ Studio & Office site Leased (expires 6/30/1998) 3,919
WPTZ Transmitter site Owned N/A
WPTZ Tower and building site Leased (expires 10/31/2000) N/A
WPTZ Tower and building site Leased (expires 5/30/2000) N/A
WPTZ Tower and building site Leased (expires 10/31/2000) N/A
WNNE Studio & Office site Leased (expires 1/31/2001) 8,500
WNNE Tower site Leased (expires 5/31/2003) N/A
WNNE Transmitter building Owned 1,150
Pensacola/Mobile Market WEAR Studio & Office site Owned 22,400
WEAR Transmitter site Owned N/A
WEAR Mobile Sales Office Site Leased (expires 6/30/1998) 1.164
WFGX Studio & Transmitter site Leased (expires 4/30/2000) 5,000
Charleston Market WCHS Studio & Office site Owned 15,776
WCHS Transmitter site Owned 3,712
</TABLE>

<TABLE>
<CAPTION>
APPROXIMATE
RADIO PROPERTIES TYPE OF FACILITY AND USE OWNED OR LEASED SIZE (SQ. FEET)
- ------------------ -------------------------------- ----------------------------- ----------------
<S> <C> <C> <C>
Buffalo Market WWKB/WKSE Studio & Office Site Leased (expires 09/30/1998) 5,000
WWKB/WKSE Office Site Leased (expires 09/30/1998) 5,200
WBEN/WMJQ Studio & Office Site Leased (expires 12/31/1998) 7,750
WBEN Transmitter Site Owned 1,024
WWKB Transmitter Site Owned 2,600
WMJQ Transmitter Site Leased (expires 12/31/1998) 825
WKSE Transmitter Site Owned 6,722
WWWS Transmitter Site/bldg. Leased (expires 5/24/2001 1,000/225
</TABLE>

<PAGE>

New Orleans Market WWL/WSMB/WLMG/KMEZ Studio & Office Site Leased (expires 08/31/2002) 11,553
WWL Transmitter Site (on 64.62 acres) Owned 2,300
WSMB Transmitter Site (on 3,600 sq. ft) Owned 3,600
WLMG Transmitter Site Leased (expires 10/27/2014) N/A
KMEZ Transmitter Site Leased (expires 03/14/2001) N/A
WLAC-AM / WLAC-FM / WJZC / Road Gang /IRN

Nashville/Russellville Studio & Office Site Leased (expires 06/30/1999) 18,800
Market Gang/IRN Studio & Office Site
WLAC-AM Transmitter Site (+ 27.69 acres) Owned 5,800
WLAC-FM Transmitter Site (+18.12 acres) 1/3 Owned (3-way ownership) 2,700
WJZC Transmitter Site (land) Leased (expires 09/27/2019) 400
WJZC Transmitter Site (tower & building) Owned 1,324

Wilkes Barre/Scranton Market WILK/WGBI/WGGY/WKRZ Studio & Office Site Leased (expires 12/31/1998) 14,000
WILK Transmitter Site Leased (expires 08/31/1999) 1,000
WGBI Transmitter Site Leased (expires 02/28/2000) 1,000
WGGY Transmitter Site Leased (expires 02/28/2000) 300
WKRZ Transmitter Site Owned 4,052 (bldg)
WKRF Office Site Leased (month to month) 100
WKRF Transmitter Site Leased (month to month) 1 acre
WWSH Transmitter Site/bldg. Owned 1 acre/120
WWFH Transmitter Site and office/land Owned 2,320/1 acre
WILP Transmitter Site/bldg. Owned 1 acre/750

St. Louis Market KPNT/WVRV Studio & Office Site Owned 1,753 (radio)
KPNT Transmitter Site Owned 7450
WVRV Transmitter Site Owned 7,278
WVRV back up building Owned 240

Los Angeles Market KBLA Studio & Office Site- building Owned 6,000
KBLA Transmitter Site -- land Owned 3 acres

Milwaukee Market WEMP, WAMG and WMYX Studio and Office Site Owned 9.200
WEMP/WMYX Transmitter site Owned 3,200
WAMG Transmitter site Owned N/A

Kansas City Market KCFX, KCIY, and KXTR Studio and Office Site Leased (expires 2/28/2018) 20,914
KQRC Studio and Office Site Leased (expires 5/31/1999) 3,500
KCAZ Studio, Office and Transmitter site Owned 5,000
KCFX Transmitter site Leased (expires 6/25/2000 N/A
KXTR Transmitter site Leased (expires 3/20/2002) N/A
KCIY Transmitter site Leased (expires 7/25/2007) N/A

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
APPROXIMATE
RADIO PROPERTIES TYPE OF FACILITY AND USE OWNED OR LEASED SIZE (SQ. FEET)
- ------------------ ---------------------------------------------- ---------------------------- ----------------
<S> <C> <C> <C>
Norfolk Market WGH/(AM), WGH/(FM) and WVCL Studio and Office
Site Leased (expires 8/30.2007) 15,737
WGH-AM/FM Transmitter site Owned 1,000
WGH Nighttime Transmitter site Owned 1,800
WVCL Transmitter site Leased (expires N/A) N/A
St. Louis Market WRTH, WIL and KIHT Studio and Office Site Leased (expires 3/15/2004) 12,000
WRTH Transmitter site Owned N/A
WIL Transmitter site Leased (expires 5/31/1998) N/A
KIHT Main FM Transmitter site Leased (expries 4/28/2000) N/A
KIHT Auxilliary FM Transmitter site Leased (expires 3/15/2004 N/A
</TABLE>

- ----------
(a) Lease expiration dates assume exercise of all renewal options of the lessee.

The Company believes that all of its properties, both owned and leased, are
generally in good operating condition, subject to normal wear and tear, and are
suitable and adequate for the Company's current business operations.

ITEM 3. LEGAL PROCEEDINGS

On July 14, 1997, Sinclair publicly announced that it had reached an
agreement for certain of its owned and/or programmed television stations which
were affiliated with UPN to become affiliated with WB beginning January 16,
1998. On August 1, 1997, UPN informed Sinclair that it did not believe Sinclair
or its affiliates had provided proper notice of its intention not to extend the
UPN affiliation agreements beyond January 15, 1998, and, accordingly, that these
agreements had been automatically renewed through January 15, 2001.

In August 1997, UPN filed an action (the "California Action") in Los
Angeles Superior Court against the Company, seeking declaratory relief and
specific performance or, in the alternative, unspecified damages and alleging
that neither the Company nor its affiliates provided proper notice of their
intention not to extend the current UPN affiliations beyond January 15, 1998.
Certain subsidiaries of the Company filed an action (the "Baltimore Action") in
the Circuit Court for Baltimore City seeking declaratory relief that their
notice was effective to terminate the affiliations on January 15, 1998. On
December 9, 1997, the court in the Baltimore Action ruled that Sinclair gave
timely and proper notice to effectively terminate the affiliations as of January
15, 1998 and granted Sinclair's motion for summary judgment. Based on the
decision in the Baltimore Action, the court in the Los Angeles Superior Court
has stayed all proceedings in the California Action. Following an appeal by UPN,
the court of Special Appeals of Maryland upheld the ruling in the Baltimore
Action and UPN is seeking further appellate review by the Maryland Court of
Appeals. Although the Company believes that proper notice of intention not to
extend was provided to UPN, there can be no assurance that the Company and its
subsidiaries will prevail in these proceedings or that the outcome of these
proceedings, if adverse to the Company and its subsidiaries, will not have a
material adverse effect on the Company.

The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. Except as described above, the
Company is not a party to any lawsuit or proceeding that in the opinion of the
Company will have a material adverse effect.

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

No matters were submitted to a vote of the Company's stockholders during
the fourth quarter of 1997.

<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

Effective June 13, 1995, the common stock of the Company was listed for
trading on the Nasdaq stock market under the symbol SBGI. The following table
sets forth for the periods indicated the high and low sales prices on the Nasdaq
stock market.

1995 HIGH LOW
- ----------------------------------------------- ----------- ------------
Second Quarter (from June 13) .......... $ 29.00 $ 23.50
Third Quarter .......................... 31.00 27.375
Fourth Quarter ......................... 27.75 16.25

1996 HIGH LOW
- -------------------------------- ----------- ------------
First Quarter ........... $ 26.50 $ 16.875
Second Quarter .......... 43.50 25.50
Third Quarter ........... 46.50 36.125
Fourth Quarter .......... 43.75 23.00

1997 HIGH LOW
- -------------------------------- ------------ ------------
First Quarter ........... $ 31.00 $ 23.00
Second Quarter .......... 30.875 23.25
Third Quarter ........... 40.375 28.50
Fourth Quarter .......... 46.625 33.625

As of March 16, 1998, there were approximately 77 stockholders of record of
the common stock of the Company. This number does not include beneficial owners
holding shares through nominee names. Based on information available to it, the
Company believes it has more than 1,500 beneficial owners of its Class A Common
Stock.

The Company generally has not paid a dividend on its common stock and does
not expect to pay dividends on its common stock in the foreseeable future. The
1997 Bank Credit Agreement and certain subordinated debt of the Company
generally prohibit the Company from paying dividends on its common stock. Under
the indentures governing the Company's 10% Senior Subordinated Notes due 2003,
10% Senior Subordinated Notes due 2005, 9% Senior Subordinated Notes due 2007
and 8 3/4% Senior Subordinated Notes due 2007, the Company is not permitted to
pay dividends on its common stock unless certain specified conditions are
satisfied, including that (i) no event of default then exists under the
Indenture or certain other specified agreements relating to indebtedness of the
Company and (ii) the Company, after taking account of the dividend, is in
compliance with certain net cash flow requirements contained in the Indenture.
In addition, under certain senior unsecured debt of the Company, the payment of
dividends is not permissible during a default thereunder.

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data for the years ended December 31,
1993, 1994, 1995, 1996, and 1997 have been derived from the Company's audited
Consolidated Financial Statements. The Consolidated Financial Statements for the
years ended December 31, 1995, 1996 and 1997 are included elsewhere in this Form
10-K/A.

The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere in this Form 10-K/A.

<PAGE>

STATEMENT OF OPERATIONS DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
1993 1994 1995 1996 1997
------------ ------------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net broadcast revenue(a) ................... $ 69,532 $ 118,611 $ 187,934 $ 346,459 $ 471,228
Barter revenue ............................. 6,892 10,743 18,200 32,029 45,207
--------- ---------- ---------- ------------ ----------
Total revenue ............................ 76,424 129,354 206,134 378,488 516,435
--------- ---------- ---------- ------------ ----------
Operating costs(b) ......................... 26,665 41,338 64,326 142,576 198,262
Expenses from barter arrangements .......... 5,630 9,207 16,120 25,189 38,114
Depreciation and amortization(c) ........... 22,486 55,587 80,410 121,081 152,170
Stock-based compensation ................... -- -- -- 739 1,636
Special bonuses paid to executive
officers ................................. 10,000 3,638 -- -- --
--------- ---------- ---------- ------------ ----------
Broadcast operating income ................. 11,643 19,584 45,278 88,903 126,253
Interest expense ........................... (12,852) (25,418) (39,253) (84,314) (98,393)
Subsidiary trust minority interest
expense(d) ............................... -- -- -- -- (18,600)
Interest and other income .................. 2,131 2,447 4,163 3,478 2,228
Income (loss) before (provision) benefit
for income taxes and extraordinary
items .................................... $ 922 $ (3,387) $ 10,188 $ 8,067 $ 11,488
========= ========== ========== ============ ==========
Net income (loss) .......................... $ (7,945) $ (2,740) $ 76 $ 1,131 $ (10,566)
========= ========== ========== ============ ==========
Net income (loss) available to common
shareholders ............................. $ (7,945) $ (2,740) $ 76 $ 1,131 $ (13,329)
========= ========== ========== ============ ==========
OTHER DATA:
Broadcast cash flow(e) ..................... $ 37,498 $ 67,519 $ 111,124 $ 189,216 $ 243,406
Broadcast cash flow margin(f) .............. 53.9% 56.9% 59.1% 54.6% 51.7%
Adjusted EBITDA(g) ......................... $ 35,406 $ 64,547 $ 105,750 $ 180,272 $ 229,000
Adjusted EBITDA margin(f) .................. 50.9% 54.4% 56.3% 52.0% 48.6%
After tax cash flow(h) ..................... $ 20,850 $ 24,948 $ 54,645 $ 77,484 $ 104,884
Program contract payments .................. 8,723 14,262 19,938 30,451 51,059
Corporate overhead expense ................. 2,092 2,972 5,374 8,944 14,406
Capital expenditures ....................... 528 2,352 1,702 12,609 19,425
Cash flows from operating activities ....... 11,230 20,781 55,986 69,298 96,625
Cash flows from investing activities ....... 1,521 (249,781) (119,320) (1,012,225) (218,990)
Cash flows from financing activities ....... 3,462 213,410 173,338 832,818 259,351
PER SHARE DATA:
Basic net income (loss) per share before
extraordinary items ...................... $ -- $ (.09) $ .15 $ .03 $ (.20)
Basic net income (loss) per share after
extraordinary items ...................... $ (.27) $ (.09) $ -- $ .03 $ (.37)
Diluted net income (loss) per share
before extraordinary items ............... $ -- $ (.09) $ .15 $ .03 $ (.20)
Diluted net income (loss) per share
after extraordinary items ................ $ (.27) $ (.09) $ -- $ .03 $ (.37)
BALANCE SHEET DATA:
Cash and cash equivalents .................. $ 18,036 $ 2,446 $ 112,450 $ 2,341 $ 139,327
Total assets ............................... 242,917 399,328 605,272 1,707,297 2,034,234
Total debt(i) .............................. 224,646 346,270 418,171 1,288,103 1,080,722
HYTOPS(j) .................................. -- -- -- -- 200,000
Total stockholders' equity (deficit) ....... (11,024) (13,723) 96,374 237,253 543,288
--------- ---------- ---------- ------------ ----------

</TABLE>

36
<PAGE>

- ----------

(a) "Net broadcast revenue" is defined as broadcast revenue net of agency
commissions.

(b) Operating costs include program and production expenses and selling, general
and administrative expenses.

(c) Depreciation and amortization includes amortization of program contract
costs and net realizable value adjustments, depreciation and amortization of
property and equipment, and amortization of acquired intangible broadcasting
assets and other assets including amortization of deferred financing costs
and costs related to excess syndicated programming.

(d) Subsidiary trust minority interest expense represents the distributions on
the HYTOPS.

(e) "Broadcast cash flow" is defined as broadcast operating income plus
corporate overhead expense, special bonuses paid to executive officers,
stock-based compensation, depreciation and amortization (including film
amortization and excess syndicated programming), less cash payments for
program rights. Cash program payments represent cash payments made for
current programs payable and do not necessarily correspond to program usage.
Special bonuses paid to executive officers are considered unusual and
non-recurring. The Company has presented broadcast cash flow data, which the
Company believes are comparable to the data provided by other companies in
the industry, because such data are commonly used as a measure of
performance for broadcast companies. However, broadcast cash flow does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flows, is not a measure of
financial performance under generally accepted accounting principles and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.

(f) "Broadcast cash flow margin" is defined as broadcast cash flow divided by
net broadcast revenues. "Adjusted EBITDA margin" is defined as Adjusted
EBITDA divided by net broadcast revenues.

(g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate expenses
and is a commonly used measure of performance for broadcast companies.
Adjusted EBITDA does not purport to represent cash provided by operating
activities as reflected in the Company's consolidated statements of cash
flows, is not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.

(h) "After tax cash flow" is defined as net income (loss) available to common
shareholders plus extraordinary items (before the effect of related tax
benefits), special bonuses paid to executive officers, stock-based
compensation, depreciation and amortization (excluding film amortization),
and the deferred tax provision (or minus the deferred tax benefit). After
tax cash flow is presented here not as a measure of operating results and
does not purport to represent cash provided by operating activities. After
tax cash flow should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.

(i) "Total debt" is defined as long-term debt, net of unamortized discount, and
capital lease obligations, including current portion thereof. Total debt
does not include the HYTOPS or the Company's preferred stock.

(j) HYTOPS represents Company Obligated Mandatorily Redeemable Security of
Subsidiary Trust Holding Solely KDSM Senior Debentures representing $200,000
aggregate liquidation value.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

INTRODUCTION

The operating revenues of the Company are derived from local and national
advertisers and, to a much lesser extent, from television network compensation.
The Company's primary operating expenses involved in owning, operating or
programming the television and radio stations are syndicated program rights
fees, commissions on revenues, employee salaries, news-gathering and promotion.
Amortization and depreciation of costs associated with the acquisition of the
stations and interest carrying charges are significant factors in determining
the Company's overall profitability.

Set forth below are the principal types of broadcast revenue received by
the Company's stations for the periods indicated and the percentage contribution
of each type to the Company's total gross broadcast revenue:

BROADCAST REVENUE
(DOLLARS IN THOUSANDS)

YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1995 1996 1997
------------------------- ------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Local/regional advertising..... $ 104,299 47.5% $ 199,029 49.4% $ 287,860 52.7%
National advertising .......... 113,678 51.7 191,449 47.6 250,445 45.9
Network compensation .......... 442 0.2 3,907 1.0 5,479 1.0
Political advertising ......... 197 0.1 6,972 1.7 1,189 0.2
Production .................... 1,115 0.5 1,142 0.3 1,239 0.2
--------- ----- --------- ----- --------- -----
Broadcast revenue ............. 219,731 100.0% 402,499 100.0% 546,212 100.0%
===== ===== =====
Less: agency commissions....... (31,797) (56,040) (74,984)
--------- --------- ---------
Broadcast revenue, net ........ 187,934 346,459 471,228
Barter revenue ................ 18,200 32,029 45,207
--------- --------- ---------
Total revenue ................. $ 206,134 $ 378,488 $ 516,435
========= ========= =========
</TABLE>

The Company's primary types of programming and their approximate
percentages of 1997 net broadcast revenue were network programming (14.9%),
children's programming (5.3%) and other syndicated programming (79.8%). The
Company's four largest categories of advertising and their approximate
percentages of 1997 net broadcast revenue were automotive (20.0%), movies
(6.7%), fast food advertising (6.4%) and retail/department stores (6.2%). No
other advertising category accounted for more than 6% of the Company's net
broadcast revenue in 1997. No individual advertiser accounted for more than 5%
of any individual Company station's net broadcast revenue in 1997.

<PAGE>

The following table sets forth certain operating data of the Company for
the years ended December 31, 1995, 1996 and 1997. Capitalized terms used in this
section and not defined elsewhere in this Form 10-K/A are defined in Notes to
the Consolidated Financial Statements of the Company included elsewhere in this
Form 10-K/A.

OPERATING DATA
(DOLLARS IN THOUSANDS)

YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net broadcast revenue ..................... $ 187,934 $ 346,459 $ 471,228
Barter revenue ............................ 18,200 32,029 45,207
--------- --------- ---------
Total revenue ............................. 206,134 378,488 516,435
--------- --------- ---------
Operating costs ........................... 64,326 142,576 198,262
Expenses from barter arrangements ......... 16,120 25,189 38,114
Depreciation and amortization ............. 80,410 121,081 152,170
Stock-based compensation .................. -- 739 1,636
--------- --------- ---------
Broadcast operating income ................ $ 45,278 $ 88,903 $ 126,253
========= ========= =========
BROADCAST CASH FLOW (BCF) DATA:
Television BCF ............................ $ 111,124 $ 175,212 $ 221,631
Radio BCF ................................. -- 14,004 21,775
--------- --------- ---------
Consolidated BCF .......................... $ 111,124 $ 189,216 $ 243,406
========= ========= =========
Television BCF margin ..................... 59.1% 56.7% 54.4%
Radio BCF margin .......................... -- 37.3% 34.1%
Consolidated BCF margin ................... 59.1% 54.6% 51.7%
OTHER DATA:
Adjusted EBITDA ........................... $ 105,750 $ 180,272 $ 229,000
Adjusted EBITDA margin .................... 56.3% 52.0% 48.6%
After tax cash flow ....................... $ 54,645 $ 77,484 $ 104,884
Program contract payments ................. 19,938 30,451 51,059
Corporate expense ......................... 5,374 8,944 14,406
Capital expenditures ...................... 1,702 12,609 19,425
</TABLE>

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1996 AND 1997

Net broadcast revenue increased $124.7 million, or 36.0%, to $471.2 million
for the year ended December 31, 1997 from $346.5 million for the year ended
December 31, 1996. The increase in net broadcast revenue for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 was comprised
of $114.5 million related to television and radio station acquisitions and LMA
transactions consummated during 1996 and 1997 (the "Acquisitions") and $10.2
million that resulted from an increase in net broadcast revenue on a same
station basis. Also on a same station basis, revenue from local and national
advertisers grew 7.7% and 4.9%, respectively, for a combined growth rate of
6.1%.

Total operating costs increased $55.7 million, or 39.1%, to $198.3 million
for the year ended December 31, 1997 from $142.6 million for the year ended
December 31, 1996. The increase in operating costs for the year ended December
31, 1997 as compared to the year ended December 31, 1996 com-

<PAGE>

prised $49.0 million related to the Acquisitions, $5.4 million from an increase
in corporate overhead expenses, and $1.3 million from an increase in operating
costs on a same station basis. On a same station basis, operating costs
increased 1.8%.

Broadcast operating income increased to $126.3 million for the year ended
December 31, 1997, from $88.9 million for the year ended December 31, 1996, or
42.1%. The increase in broadcast operating income for the year ended December
31, 1997 as compared to the year ended December 31, 1996 was primarily
attributable to the Acquisitions.

Interest expense increased to $98.4 million for the year ended December 31,
1997 from $84.3 million for the year ended December 31, 1996, or 16.7%. The
increase in interest expense for the year ended December 31, 1997 primarily
related to indebtedness incurred by the Company to finance the Acquisitions.
Subsidiary trust minority interest expense of $18.6 million for the year ended
December 31, 1997 is related to the issuance of the HYTOPS which was completed
March 12, 1997. Subsidiary trust minority interest expense was partially offset
by reductions in interest expense because a portion of the proceeds of the sale
of the HYTOPS was used to reduce indebtedness under the Company's Bank Credit
Agreement.

Interest and other income decreased to $2.2 million for the year ended
December 31, 1997 from $3.5 million for the year ended December 31, 1996. This
decrease was primarily due to lower average cash balances during these periods.

For the reasons described above, net loss for the year ended December 31,
1997 was $10.6 million or $.37 per share compared to net income of $1.1 million
or $.03 per share for the year ended December 31, 1996.

Broadcast Cash Flow increased $54.2 million to $243.4 million for the year
ended December 31, 1997 from $189.2 million for the year ended December 31,
1996, or 28.6%. The increase in Broadcast Cash Flow was comprised of $45.0
million relating to the Acquisitions and $9.2 million that resulted from
Broadcast Cash Flow growth on a same station basis, which had Broadcast Cash
Flow growth of 8.2%. The Company's Broadcast Cash Flow Margin decreased to 51.7%
for the year ended December 31, 1997 from 54.6% for the year ended December 31,
1996. The decrease in Broadcast Cash Flow Margin for the year ended December 31,
1997 as compared to the year ended December 31, 1996 primarily resulted from the
lower margins related to the 1996 Acquisitions. In addition, 1996 Broadcast Cash
Flow Margin benefited from a non-recurring $4.7 million timing lag of program
contract payments relating to the River City Acquisition and certain other
acquisitions. On a same station basis, Broadcast Cash Flow Margin improved from
57.3% for the year ended December 31, 1996 to 58.9% for the year ended December
31, 1997.

Adjusted EBITDA represents broadcast cash flow less corporate expenses.
Adjusted EBITDA increased to $229.0 million for the year ended December 31, 1997
from $180.3 million for the year ended December 31, 1996, or 27.0%. The increase
in Adjusted EBITDA for the year ended December 31, 1997 as compared to the year
ended December 31, 1996 resulted from the Acquisitions and to a lesser extent,
increases in net broadcast revenues on a same station basis. The Company's
Adjusted EBITDA margin decreased to 48.6% for the year ended December 31, 1997
from 52.0% for the year ended December 31, 1996. This decrease in Adjusted
EBITDA margin resulted primarily from the circumstances affecting broadcast cash
flow margins as noted above combined with an increase in corporate expenses.
Corporate overhead expenses increased to $14.4 million for the year ended
December 31, 1997 from $8.9 million for the year ended December 31, 1996, or
61.8%. The increase in corporate expenses primarily resulted from costs
associated with managing a larger base of operations. During 1996, the Company
increased the size of its corporate staff as a result of the addition of a radio
business segment and a significant increase in the number of television stations
owned, operated or programmed. The costs associated with this increase in staff
were only incurred during a partial period of the year ended December 31, 1996.

After Tax Cash Flow increased to $104.9 million for the year ended December
31, 1997 from $77.5 million for the year ended December 31, 1996, or 35.4%. The
increase in After Tax Cash Flow for the year ended December 31, 1997 as compared
to the year ended December 31, 1996 primarily resulted

<PAGE>

from the Acquisitions, an increase in revenue on a same station basis, a Federal
income tax receivable of $10.6 million resulting from 1997 NOL carry-backs,
offset by interest expense on the debt incurred to consummate the Acquisitions
and subsidiary trust minority interest expense related to the private placement
of the HYTOPS issued during March 1997.

YEARS ENDED DECEMBER 31, 1995 AND 1996

Total revenue increased to $378.5 million, or 83.6%, for the year ended
December 31, 1996 from $206.1 million for the year ended December 31, 1995.
Excluding the effects of non-cash barter transactions, net broadcast revenue for
the year ended December 31, 1996 increased by 84.4% over the year ended December
31, 1995. The increase in broadcast revenue was primarily the result of
acquisitions and LMA transactions consummated by the Company in 1995 (the "1995
Acquisitions") and 1996. For stations owned, operated or programmed throughout
1995 and 1996, television broadcast revenue grew 2.1% for the year ended
December 31, 1996 when compared to the year ended December 31, 1995. For
stations owned, operated or programmed throughout 1994 and 1995, television
broadcast revenue grew 12.8% for the year ended December 31, 1995 when compared
to the year ended December 31, 1994. The decrease in 1996 revenue growth as
compared to 1995 revenue growth primarily resulted from the loss in 1996 of the
Fox affiliation at WTTO in the Birmingham market, the loss of the NBC
affiliation at WRDC in the Raleigh/Durham market and decreases in ratings at
WCGV and WNUV in the Milwaukee and Baltimore markets, respectively.

Operating expenses excluding depreciation, amortization of intangible
assets, stock-based compensation and excess syndicated programming costs
increased to $167.8 million, or 108.7%, for the year ended December 31, 1996
from $80.4 million for the year ended December 31, 1995. The increase in
expenses for the year ended December 31, 1996 as compared to the year ended
December 31, 1995 was largely attributable to operating costs associated with
the 1995 and 1996 Acquisitions, an increase in LMA fees resulting from LMA
transactions and an increase in corporate overhead expenses.

Broadcast operating income increased to $88.9 million for the year ended
December 31, 1996, from $45.3 million for the year ended December 31, 1995, or
96.2%. The increase in broadcast operating income for the year ended December
31, 1996 as compared to the year ended December 31, 1995 was primarily
attributable to the 1995 and 1996 Acquisitions.

Interest expense increased to $84.3 million for the year ended December 31,
1996 from $39.3 million for the year ended December 31, 1995, or 114.5%. The
increase in interest expense for the year ended December 31, 1996 was primarily
related to senior bank indebtedness incurred by the Company to finance the River
City Acquisition and other acquisitions.

Interest and other income decreased to $3.5 million for the year ended
December 31, 1996 from $4.2 million for the year ended December 31, 1995, or
16.7%. The decrease for the year ended December 31, 1996 was primarily due to
lower cash balances and related interest income resulting from cash payments
made in February 1996 when the Company made a $34.4 million payment relating to
the WSMH acquisition and April 1996 when the Company made a $60 million down
payment relating to the River City Acquisition. The decrease in interest income
was offset by an increase in other income resulting from the 1995 and 1996
Acquisitions.

For the reasons described above, net income for the year ended December 31,
1996 was $1.1 million or $0.03 per share compared to net income of $5.0 million
or $0.15 per share for the year ended December 31, 1995 before the extraordinary
loss on early extinguishment of debt.

Broadcast Cash Flow increased to $189.2 million for the year ended December
31, 1996 from $111.1 million for the year ended December 31, 1995, or 70.3%. The
increase in Broadcast Cash Flow for the year ended December 31, 1996 as compared
to the year ended December 31, 1995 primarily resulted from the 1995 and 1996
Acquisitions. For stations owned, operated or programmed throughout 1995 and
1996, Broadcast Cash Flow grew 1.3% for the year ended December 31, 1996 when
compared to the year ended December 31, 1995. For stations owned, operated or
programmed throughout 1994 and 1995, Broadcast Cash Flow grew 23.7% for the year
ended December 31, 1995 when compared to the year ended December 31, 1994. The
decrease in 1996 Broadcast Cash Flow growth as compared to 1995

<PAGE>

Broadcast Cash Flow growth primarily resulted from the loss in 1996 of the Fox
affiliation at WTTO in the Birmingham market, the loss of the NBC affiliation at
WRDC in the Raleigh/Durham market and decreases in ratings at WCGV and WNUV in
the Milwaukee and Baltimore markets, respectively. The Company's Broadcast Cash
Flow margin decreased to 54.6% for the year ended December 31, 1996 from 59.1%
for the year ended December 31, 1995. Excluding the effect of radio station
Broadcast Cash Flow, television station Broadcast Cash Flow margin decreased to
56.7% for the year ended December 31, 1996 as compared to 59.1% for the year
ended December 31, 1995. The decrease in Broadcast Cash Flow margins for the
year ended December 31, 1996 as compared to the year ended December 31, 1995
primarily resulted from the lower margins of the acquired radio broadcasting
assets and lower margins of certain of the acquired television stations. For
stations owned, operated or programmed throughout 1996 and 1995, Broadcast Cash
Flow margins were unchanged when comparing the years ended December 31, 1996 and
1995. The Company believes that margins of certain of the acquired stations will
improve as operating and programming synergies are implemented.

Adjusted EBITDA increased to $180.3 million for the year ended December 31,
1996 from $105.8 million for the year ended December 31, 1995, or 70.4%. The
increase in Adjusted EBITDA for the year ended December 31, 1996 as compared to
the year ended December 31, 1995 resulted from the 1995 and 1996 Acquisitions.
The Company's Adjusted EBITDA margin decreased to 52.0% for the year ended
December 31, 1996 from 56.3% for the year ended December 31, 1995. The decrease
in Adjusted EBITDA margins for the year ended December 31, 1996 as compared to
the year ended December 31, 1995 primarily resulted from higher operating costs
at certain of the acquired stations.

After Tax Cash Flow increased to $77.5 million for the year ended December
31, 1996 from $54.6 million for the year ended December 31, 1995, or 41.9%. The
increase in After Tax Cash Flow for the year ended December 31, 1996 as compared
to the year ended December 31, 1995 primarily resulted from the 1995 and 1996
Acquisitions offset by interest expense on the debt incurred to consummate these
acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1997, the Company had $139.3 million in cash balances
and net working capital of approximately $176.0 million. The Company's primary
sources of liquidity are cash provided by operations and availability under the
1997 Bank Credit Agreement. As of March 10, 1998, the Company's cash balances
decreased to approximately $10.1 million as a result of closing on certain of
the Heritage television stations. Also as of March 10, 1998, approximately
$239.8 million was available for borrowing under the 1997 Bank Credit Agreement.
An additional $89.6 million is available to the Company under its Revolving
Credit Commitment to the extent future acquisitions provide incremental EBITDA.
In addition, the 1997 Bank Credit Agreement provides for a Tranche C Term Loan
in the amount of up to $400 million which can be utilized upon approval by the
agent bank and upon raising sufficient commitments to fund the additional loans.

Net cash flows from operating activities increased to $96.6 million for the
year ended December 31, 1997 from $69.3 million for the year ended December 31,
1996. The Company made income tax payments of $6.5 million for the year ended
December 31, 1997 as compared to $6.8 million for the year ended December 31,
1996. The Company made interest payments on outstanding indebtedness of $98.5
million during the year ended December 31, 1997 as compared to $82.8 million for
the year ended December 31, 1996. Additional interest payments for the year
ended December 31, 1997 as compared to the year ended December 31, 1996
primarily related to additional interest costs on indebtedness incurred to
finance the 1996 Acquisitions. The Company made subsidiary trust minority
interest expense payments of $17.6 million for the year ended December 31, 1997
related to the issuance of HYTOPS completed in March 1997. Program rights
payments increased to $51.1 million for the year ended December 31, 1997 from
$30.5 million for the year ended December 31, 1996, primarily as a result of the
1996 Acquisitions.

Net cash flows used in investing activities decreased to $219.0 million for
the year ended December 31, 1997 from $1.0 billion for the year ended December
31, 1996. During the year ended December 31, 1997, the Company made cash
payments of $87.5 million to acquire the license and non-license assets of

<PAGE>

KUPN-TV in Las Vegas, Nevada, utilizing indebtedness under the 1997 Bank Credit
Agreement and existing cash balances. During the year ended December 31, 1997,
the Company incurred option extension payments and other costs of $16.0 million
relating to WSYX-TV in Columbus, Ohio. The Company made purchase option exercise
payments of $11.1 million during the year ended December 31, 1997 exercising
options to acquire certain FCC licenses related to the River City Acquisition.
The Company made payments for property and equipment of $19.4 million for the
year ended December 31, 1997. During the year ended December 31, 1997, the
Company made deposits and incurred other costs relating to the Heritage
Acquisition, the Max Media Acquisition and other acquisitions of $66.1 million,
$12.8 million and $3.4 million, respectively. The Company anticipates that
future requirements for capital expenditures will include capital expenditures
incurred during the ordinary course of business (which will include costs
associated with the implementation of digital television technology) and the
cost of additional acquisitions of television and radio stations if suitable
acquisitions can be identified on acceptable terms.

Net cash flows provided by financing activities decreased to $259.4 million
for the year ended December 31, 1997 from $832.8 million for the year ended
December 31, 1996. In March 1997, the Company completed issuance of the HYTOPS.
The Company utilized $135 million of the approximately $192.8 million net
proceeds of the issuance of the HYTOPS to repay outstanding debt and retained
the remainder for general corporate purposes, which included the acquisition of
KUPN-TV in Las Vegas, Nevada. The Company made payments totaling $4.6 million to
repurchase 186,000 shares of Class A Common Stock during the year ended December
31, 1997. In May 1997, the Company made payments of $4.7 million related to the
amendment of its 1996 Bank Credit Agreement. In the fourth quarter of 1996, the
Company negotiated the prepayment of syndicated program contract liabilities for
excess syndicated programming assets. In the first quarter of 1997, the Company
made final cash payments of $1.4 million related to these negotiations. In July
1997, the Company issued $200.0 million aggregate principal amount of 9% Senior
Subordinated Notes due 2007 and utilized $162.5 million of the approximately
$195.6 million net proceeds to repay outstanding indebtedness, retaining the
remainder to pay a portion of the $63 million cash down payment relating to the
Heritage Acquisition. In December 1997, the Company completed an issuance of
$250 million aggregate principal amount of 8 3/4% Senior Subordinated Notes due
2007. The Company received net proceeds from the issuance of $242.8 million of
which $106.2 million was used to repurchase $98.1 million aggregate principal
amount of the 10% Senior Subordinated Notes due 2003. The Company retained the
remainder of the net proceeds for general corporate purposes which included
closing the acquisition of the Heritage television stations serving the
Mobile/Pensacola and Charleston/Huntington markets in January 1998.

The Company received net proceeds from the 1997 Preferred Stock Issuance
and the 1997 Common Stock Issuance of approximately $166.9 million and $151.0
million, respectively. The Company used the majority of these funds to repay
existing borrowings under the 1997 Bank Credit Agreement. Contemporaneously with
the 1997 Preferred Stock Issuance and the 1997 Common Stock Issuance, the
Company and the lenders under the 1997 Bank Credit Agreement entered into an
amendment to the 1997 Bank Credit Agreement, the effect of which was to
recharacterize $275 million of indebtedness from the Tranche A Term Loan under
the 1997 Bank Credit Agreement to amounts owing under the revolving credit
facility under the 1997 Bank Credit Agreement. The Company used $285.7 million
of the net proceeds from the 1997 Preferred Stock Issuance and the 1997 Common
Stock Issuance to repay outstanding borrowings under the revolving credit
facility, $8.9 million to repay outstanding amounts under the Tranche A Term
Loan and the remaining net proceeds of approximately $23.3 million for general
corporate purposes.

The Company has entered into agreements to acquire additional television
stations and radio stations in the Heritage Acquisition, the Lakeland
Acquisition, the Max Media Acquisition and the Sullivan Acquisition. The Company
also has an option to acquire the assets of WSYX-TV in Columbus, Ohio. The
aggregate cash consideration needed to complete the purchase of the remaining
stations under the Heritage Acquisition and to complete the Lakeland
Acquisition, the Max Media Acquisition and the Sullivan Acquisition and to
exercise the WSYX-TV option is expected to be approximately $1.6 billion (net of
anticipated proceeds from sales of stations involved in these acquisitions).

<PAGE>

The Company anticipates that funds from operations, existing cash balances
and availability of the revolving credit facility under the 1997 Bank Credit
Agreement will be sufficient to meet its working capital, capital expenditure
commitments (other than commitments for pending acquisitions described above)
and debt service requirements for the foreseeable future. The Company intends to
finance pending acquisitions through a combination of available cash, the net
proceeds from an offering of securities, and available borrowings under the 1997
Bank Credit Agreement. The current terms of the 1997 Bank Credit Agreement do
not allow the Company to borrow an amount sufficient to finance all of the
pending acquisitions. The Company intends to begin discussions with its banks to
refinance the Bank Credit Agreement promptly upon the completion of an offering
of securities. The Company believes that such a refinancing can be accomplished
on terms reasonably satisfactory to the Company, but there can be no assurance
that the Company will be able to obtain such an amendment on satisfactory terms.
The 1997 Bank Credit Agreement and the indentures relating to the Company's 8
3/4% Senior Subordinated Notes due 2007, 9% Senior Subordinated Notes due 2007
and 10% Senior Subordinated Notes due 2005 restrict the incurrence of additional
indebtedness and the use of proceeds of an equity issuance, but these
restrictions are not expected to restrict the incurrence of indebtedness or use
of proceeds of an equity issuance to finance the pending acquisitions.

INCOME TAXES

Income tax provision increased to $16.0 million for the year ended December
31, 1997 from a provision of $6.9 million for the year ended December 31, 1996.
The Company's effective tax rate increased to 139.1% for the year ended December
31, 1997 from 86.0% for the year ended December 31, 1996. The increase in the
Company's effective tax rate for the year ended December 31, 1997 as compared to
the year ended December 31, 1996 primarily resulted from non-deductible goodwill
amortization resulting from certain 1995 and 1996 stock acquisitions, a tax
liability related to the dividends paid on the Company's Series C Preferred
Stock (see Note 9, sub-note (a) to the Company's Consolidated Financial
Statements), and state franchise taxes which are not based upon pre-tax income.
Management believes that pre-tax income and "earnings and profits" will increase
in future years which will result in a lower effective tax rate and utilization
of certain tax deductions related to dividends paid on the Company's Series C
Preferred Stock.

As of December 31, 1997, the Company has a net deferred tax liability of
$21.5 million as compared to a net deferred tax asset of $782,000 as of December
31, 1996. This change in deferred taxes primarily relates to deferred tax
liabilities associated with book and tax differences relating to the
depreciation and amortization of fixed assets and intangible assets, a deferred
tax liability generated as a result of a reduction in basis of Series C
Preferred Stock (see Note 9, sub-note (a) to the Company's Consolidated
Financial Statements), offset by deferred tax assets resulting from Federal and
state net operating tax losses (NOLs) incurred during 1997. During the year
ended December 31, 1997, the Company carried back certain Federal NOLs to be
applied against prior years' Federal taxes paid. These Federal NOL carry-backs
resulted in an income tax receivable of $10.6 million as of December 31, 1997.

The Company's income tax provision increased to $6.9 million for the year
ended December 31, 1996 from $5.2 million for the year ended December 31, 1995.
The Company's effective tax rate increased to 86% for the year ended December
31, 1996 from 51% for the year ended December 31, 1995. The increase for the
year ended December 31, 1996 as compared to the year ended December 31, 1995
primarily related to certain financial reporting and income tax differences
attributable to certain 1995 and 1996 Acquisitions (primarily non-deductible
goodwill resulting from stock acquisitions), and state franchise taxes which are
independent of pre-tax income.

The net deferred tax asset decreased to $782,000 as of December 31, 1996
from $21.0 million at December 31, 1995. The decrease in the Company's net
deferred tax asset as of December 31, 1996 as compared to December 31, 1995 is
primarily due to the Company recording deferred tax liabilities of $18.1 million
relating to the acquisition of all of the outstanding stock of Superior in May
1996, adjustments related to certain 1995 acquisitions, and resulting
differences between the book and tax basis of the underlying assets.

<PAGE>
SEASONALITY

The Company's results usually are subject to seasonal fluctuations, which
result in fourth quarter broadcast operating income typically being greater than
first, second and third quarter broadcast operating income. This seasonality is
primarily attributable to increased expenditures by advertisers in anticipation
of holiday season consumer spending and an increase in viewership during this
period.

YEAR 2000

Certain computer programs have been written using two digits rather than
four to define the applicable year, which could result in the computer
recognizing a date using "00" as the year 1900 rather than the year 2000. This,
in turn, could result in major system failures and in miscalculations, and is
generally referred to as the "Year 2000" problem. The Company and all of its
subsidiaries have implemented computer systems which run substantially all of
the Company's principal data processing and financial reporting software
applications. The applications software used in these systems are Year 2000
compliant. Presently, the Company does not believe that Year 2000 compliance
will result in any material investments, nor does the Company anticipate that
the Year 2000 problem will have material adverse effects on the business
operations or financial performance of the Company. In addition, the Company is
not aware of any Year 2000 problems of its customers, suppliers or network
affiliates that will have a material adverse effect on the business, operations
or financial performance of the Company. There can be no assurance, however,
that the Year 2000 problem will not adversely affect the Company and its
business.

ITEM 7A. QUANTITIVE AND QUALITATIVE DISCUSSION ABOUT MARKET PRICE

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statement and supplementary data of the Company required by
this item are filed as exhibits hereto, are listed under Item 14(a)(1) and (2),
and are incorporated herein by reference.

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

DISCLOSURE

None

<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is certain information relating to the Company's executive
officers, directors, certain key employees and persons expected to become
executive officers, directors or key employees.

NAME AGE TITLE
- ------------------------------- ----- -------------------------------------------------
<S> <C> <C>

David D. Smith ................ 47 President, Chief Executive Officer, Director and
Chairman of the Board
Frederick G. Smith ............ 48 Vice President and Director
J. Duncan Smith ............... 43 Vice President, Secretary and Director
Robert E. Smith ............... 34 Vice President, Treasurer and Director
David B. Amy .................. 45 Chief Financial Officer
Barry Drake ................... 46 Chief Operating Officer, SCI Radio
Robert Gluck .................. 39 Regional Director, SCI
Michael Granados .............. 43 Regional Director, SCI
Steven M. Marks ............... 41 Regional Director, SCI
Stuart Powell ................. 56 Regional Director, SCI
John T. Quigley ............... 54 Regional Director, SCI
Frank Quitoni ................. 53 Regional Director, SCI
Frank W. Bell ................. 42 Vice President, Programming, SCI Radio
M. William Butler ............. 45 Vice President/Group Program Director, SCI
Lynn A. Deppen ................ 40 Vice President, Engineering, SCI Radio
Michael Draman ................ 48 Vice President/TV Sales and Marketing, SCI
Stephen A. Eisenberg .......... 55 Vice President/Director of National Sales, SCI
Nat Ostroff ................... 57 Vice President/New Technology
Delbert R. Parks, III ......... 45 Vice President/Operations and Engineering, SCI
Robert E. Quicksilver ......... 43 Vice President/General Counsel, SCI
Thomas E. Severson ............ 34 Corporate Controller
Michael E. Sileck ............. 37 Vice President/Finance, SCI
Robin A. Smith ................ 41 Chief Financial Officer, SCI Radio
Patrick J. Talamantes ......... 33 Director of Corporate Finance, Treasurer of SCI
Lawrence E. McCanna ........... 54 Director
Basil A. Thomas ............... 82 Director
</TABLE>

In addition to the foregoing, the following persons have agreed to serve as
executive officers and/or directors of the Company as soon as permissible under
the rules of the FCC and applicable laws.

NAME AGE TITLE

- ------------------------------ ----- -----------------------------------------------
<S> <C> <C>

Barry Baker .................. 45 Executive Vice President of the Company, Chief
Executive Officer of SCI and Director
Kerby Confer ................. 56 Chief Executive Officer, SCI Radio
Roy F. Coppedge, III ......... 49 Director
</TABLE>

In connection with the River City Acquisition, the Company agreed to
increase the size of the Board of Directors from seven members to nine to
accommodate the prospective appointment of each of Barry Baker and Roy F.
Coppedge, III or such other designee as Boston Ventures Limited Partnership IV
and Boston Ventures Limited Partnership IVA (collectively "Boston Ventures") may
select. Mr. Baker and Mr. Confer currently serve as consultants to the Company.
The Company's obligation to appoint Mr. Coppedge or another designee of Boston
Ventures will end its Boston Ventures sells shares as expected in a pending
offering.

Members of the Board of Directors are elected for one-year terms and until
their successors are duly elected and qualified. Executive officers are
appointed by the Board of Directors annually to serve for one-year terms and
until their successors are duly appointed and qualified.

David D. Smith has served as President, Chief Executive Officer and
Chairman of the Board since September 1990. Prior to that, he served as General
Manager of WPTT, Pittsburgh, Pennsylvania, from 1984, and assumed the financial
and engineering responsibility for the Company, including the construction

<PAGE>

of WTTE, Columbus, Ohio, in 1984. In 1980, Mr. Smith founded Comark Television,
Inc., which applied for and was granted the permit for WPXT-TV in Portland,
Maine and which purchased WDSI-TV in Chattanooga, Tennessee. WPXT-TV was sold
one year after construction and WDSI-TV was sold two years after its
acquisition. From 1978 to 1986, Mr. Smith co-founded and served as an officer
and director of Comark Communications, Inc., a company engaged in the
manufacture of high power transmitters for UHF television stations. His
television career began with WBFF in Baltimore, where he helped in the
construction of the station and was in charge of technical maintenance until
1978. David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith
are brothers.

Frederick G. Smith has served as Vice President of the Company since 1990
and as a Director since 1986. Prior to joining the Company in 1990, Mr. Smith
was an oral and maxillofacial surgeon engaged in private practice and was
employed by Frederick G. Smith, M.S., D.D.S., P.A., a professional corporation
of which Mr. Smith was the sole officer, director and stockholder.

J. Duncan Smith has served as Vice President, Secretary and a Director of
the Company since 1988. Prior to that, he worked for Comark Communications, Inc.
installing UHF transmitters. In addition, he also worked extensively on the
construction of WPTT in Pittsburgh, WTTE in Columbus, WIIB in Bloomington and
WTTA in St. Petersburg, as well as on the renovation of the new studio, offices
and news facility for WBFF in Baltimore.

Robert E. Smith has served as Vice President, Treasurer and a Director of
the Company since 1988. Prior to that, he served as Program Director at WBFF
from 1986 to 1988. Prior to that, he assisted in the construction of WTTE and
also worked for Comark Communications, Inc. installing UHF transmitters.

David B. Amy has served as Chief Financial Officer ("CFO") since October of
1994. In addition, he serves as Secretary of Sinclair Communications, Inc., the
Company subsidiary which owns and operates the broadcasting operations. Prior to
his appointment as CFO, Mr. Amy served as the Corporate Controller of the
Company beginning in 1986 and has been the Company's Chief Accounting Officer
since that time. Mr. Amy has over thirteen years of broadcast experience, having
joined the Company as a business manager for WPTT in Pittsburgh. Mr. Amy
received an MBA degree from the University of Pittsburgh in 1981.

Barry Drake has served as Chief Operating Officer of SCI Radio since
completion of the River City Acquisition. Prior to that time, he was Chief
Operating Officer -- Keymarket Radio Division of River City since July 1995.
Prior to that time, he was President and Chief Operating Officer of Keymarket
since 1988. From 1985 through 1988, Mr. Drake performed the duties of the
President of each of the Keymarket broadcasting entities, with responsibility
for three stations located in Houston, St. Louis and Detroit.

Robert Gluck has served as Regional Director of the Company since August
1997. As Regional Director, Mr. Gluck is responsible for the Milwaukee and
Raleigh/Durham markets. Prior to joining the Company, Mr. Gluck served as
General Manager at WTIC-TV in the Hartford-New Haven market. Prior to joining
WTIC-TV in 1988, Mr. Gluck served as National Sales Manager and Local Sales
Manager of WLVI-TV in Boston. Before joining WLVI-TV, Mr. Gluck served in
various sales and management capacities with New York national sales
representative firms.

Michael Granados has served as a Regional Director of the Company since
July 1996. As a Regional Director, Mr. Granados is responsible for the San
Antonio, Des Moines, Peoria and Las Vegas markets. Prior to July 1996, Mr.
Granados has served in various positions with the Company and, before the River
City Acquisition, with River City. He served as the General Sales Manager of
KABB from 1989 to 1993, the Station Manager and Director of Sales of WTTV from
1993 to 1994 and the General Manager of WTTV prior to his appointment as
Regional Director in 1996.

Steven M. Marks has served as Regional Director for the Company since
October 1994. As Regional Director, Mr. Marks is responsible for the Baltimore,
Norfolk, Flint and Birmingham markets. Prior to his appointment as Regional
Director, Mr. Marks served as General Manager for WBFF since July 1991. From
1986 until joining WBFF in 1991, Mr. Marks served as General Sales Manager at
WTTE. Prior to that time, he was national sales manager for WFLX-TV in West Palm
Beach, Florida.

Stuart Powell has served as a Regional Director since December 15, 1997.
As a Regional Director, Mr. Powell is responsible for the Pittsburgh, Kansas
City and Lexington markets. Prior to joining the Company, Mr. Powell served as
Vice President and General Manager at WXIX-TV in the Cincinnati

<PAGE>

market. Prior to joining WXIX-TV in 1992, Mr. Powell served as General Manager
of WFLD in Chicago. Before joining WFLD, Mr. Powell served in various sales and
management capacities with Scripps Howard in Phoenix and Kansas City.

John T. Quigley has served as a Regional Director of the Company since June
1996. As Regional Director, Mr. Quigley is responsible for the Columbus,
Cincinnati, and Oklahoma City markets. Prior to that time, Mr. Quigley served as
general manager of WTTE since July 1985. Prior to joining WTTE, Mr. Quigley
served in broadcast management positions at WCPO-TV in Cincinnati, Ohio and
WPTV-TV in West Palm Beach, Florida.

Frank Quitoni has served as a Regional Director since completion of the
River City Acquisition. As Regional Director, Mr. Quitoni is responsible for the
St. Louis, Sacramento, Indianapolis and Asheville/ Greenville/Spartanburg
markets. Prior to joining the Company, he was Vice President of Operations for
River City since 1995. Mr. Quitoni had served as the Director of Operations and
Engineering for River City since 1994. Prior thereto Mr. Quitoni served as a
consultant to CBS beginning in 1989. Mr. Quitoni was the Director of Olympic
Operations for CBS Sports for the 1992 Winter Olympic Games and consulted with
CBS for the 1994 Winter Olympic Games. Mr. Quitoni was awarded the Technical
Achievement Emmy for the 1992 and 1994 CBS Olympic broadcasts.

Frank W. Bell has served as Vice President/Radio Programming of SCI Radio
since the Company's acquisition of the assets of River City in 1996. Prior to
that time, he served in the same capacity in the Keymarket Radio Division of
River City Broadcasting since 1995, and for Keymarket Communications since 1987.
From 1981 through 1987, Mr. Bell owned and operated several radio stations in
Pennsylvania and Kansas. Before that, he served two years as a Regional Manager
for the National Association of Broadcasters.

M. William Butler has served as Vice President/Group Program Director, SCI
since 1997. From 1995 to 1997, Mr. Butler served as Director of Programming at
KCAL, the Walt Disney Company station in Los Angeles, California. From 1991 to
1995, he was Director of Marketing and Programming at WTXF in Philadelphia,
Pennsylvania and prior to that he held the same position at WLVI in Boston,
Massachusetts. Mr. Butler attended the Graduate Business School of the
University of Cincinnati from 1975 to 1976.

Lynn A. Deppen has served as Director of Engineering/Radio Division of SCI
Radio since the Company's acquisition of the assets of River City in 1996. Prior
to that time, he served in the same position for the Keymarket Radio Division of
River City Broadcasting since 1995, and for Keymarket Communications since 1985.
Mr. Deppen has owned and operated his own technical consulting firm as well as
radio stations in Pennsylvania, New York and Ohio.

Michael Draman has served as Vice President/TV Sales and Marketing, SCI
since 1997. From 1995 until joining the Company, Mr. Draman served as Vice
President of Revenue Development for New World Television. From 1983 to 1995, he
was Director of Sales and Marketing for WSVN in Miami, Florida. Mr. Draman
attended The American University and The Harvard Business School and served with
the U.S. Marine Corps in Vietnam.

Stephen A. Eisenberg has served as Director of National Sales, SCI since
November 1996. Prior to joining the Company, he worked since 1975 in various
capacities at Petry Television, including most recently as Vice
President/Director of Sales with total national sales responsibility for KTTV in
Los Angeles, California, KCPQ-TV in Seattle, Washington, WTNH-TV in New Haven,
Connecticut, WKYC-TV in Cleveland, Ohio, WBIR-TV in Knoxville, Tennessee,
WKEF-TV in Dayton, Ohio and WTMJ-TV in Milwaukee, Wisconsin. Mr. Eisenberg
received an MS degree in Journalism from Northwestern's Medill School and a BA
degree from Brooklyn College.

Nat Ostroff has served as Vice President for New Technology since joining
the Company in January of 1996. From 1984 until joining the Company, he was the
President and CEO of Comark Communication Inc., a leading manufacturer of UHF
transmission equipment. While at Comark, Mr. Ostroff was nominated and awarded a
Prime Time Emmy Award for outstanding engineering achievement for the
development of new UHF transmitter technologies in 1993. In 1968, Mr. Ostroff
founded Acrodyne

<PAGE>

Industries Inc., a manufacturer of TV transmitters and a public company and
served as its first President and CEO. Mr. Ostroff holds a BSEE degree from
Drexel University and an MEEE degree from New York University. He is a member of
several industry organizations, including, AFCCE, IEEE and SBE.

Delbert R. Parks III has served as Vice President of Operations and
Engineering since the completion of the River City Acquisition. Prior to that
time, he was Director of Operations and Engineering for WBFF and Sinclair since
1985, and has been with the Company for 25 years. He is responsible for
planning, organizing and implementing operational and engineering policies and
strategies as they relate to television and computer systems. Currently, he is
consolidating facilities for Sinclair's television stations and has just
completed a digital facility for Sinclair's news and technical operation in
Pittsburgh. Mr. Parks was also a Lieutenant Colonel in the Maryland Army
National Guard and commanded the 1st Battalion, 175th Infantry (Light).

Robert E. Quicksilver has served as Vice President/General Counsel, SCI
since completion of the River City Acquisition. Prior to that time he served as
General Counsel of River City since September 1994. From 1988 to 1994, Mr.
Quicksilver was a partner of the law firm of Rosenblum, Goldenhersh, Silverstein
and Zafft, P.C. in St. Louis. Mr. Quicksilver holds a B.A. from Dartmouth
College and a J.D. from the University of Michigan.

Thomas E. Severson has served as Corporate Controller since January 1997.
Prior to that time, Mr. Severson served as Assistant Controller of the Company
since 1995. Prior to joining the Company, Mr. Severson held positions in the
audit departments of KPMG Peat Marwick LLP and Deloitte & Touche LLP from 1991
to 1995. Mr. Severson is a graduate of the University of Baltimore and is a
Certified Public Accountant.

Michael E. Sileck has served as Vice President/Finance of SCI since
completion of the River City Acquisition. Prior to that time he served as the
Director of Finance for River City since 1993. Mr. Sileck joined River City in
July 1990 as Director of Finance and Business Affairs for KDNL-TV. Mr. Sileck is
an active member of the Broadcast Cable Financial Management Association
("BCFM") and was a Director of BCFM from 1993 to 1996. Mr. Sileck, a Certified
Public Accountant, received a B.S. degree in Accounting from Wayne State
University and an M.B.A. in Finance from Oklahoma City University.

Robin A. Smith has served as Chief Financial Officer, SCI Radio since June
1996. From 1993 until joining the Company, Ms. Smith served as Vice President
and Chief Financial Officer of the Park Lane Group of Menlo Park, California,
which owned and operated small market radio stations. From 1982 to 1993, she
served as Vice President and Treasurer of Edens Broadcasting, Inc. in Phoenix,
Arizona, which owns and operates radio stations in major markets. Ms. Smith is a
graduate of the Arizona State University and is a Certified Public Accountant.

Patrick J. Talamantes has served as Director of Corporate Finance and
Treasurer of SCI since completion of the River City Acquisition. Prior to that
time, he served as Treasurer for River City since April 1995. From 1991 to 1995,
he was a Vice President with Chemical Bank, where he completed financings for
clients in the cable, broadcasting, publishing and entertainment industries. Mr.
Talamantes holds a B.A. degree from Stanford University and an M.B.A. from the
Wharton School at the University of Pennsylvania.

Lawrence E. McCanna has served as a Director of the Company since July
1995. Mr. McCanna has been a partner of the accounting firm of Gross, Mendelsohn
& Associates, P.A., since 1972 and has served as its managing partner since
1982. Mr. McCanna has served on various committees of the Maryland Association
of Certified Public Accountants and was chairman of the Management of the
Accounting Practice Committee. He is also a former member of the Management of
an Accounting Practice Committee of the American Institute of Certified Public
Accountants. Mr. McCanna is a member of the board of directors of Maryland
Special Olympics.

Basil A. Thomas has served as a Director of the Company since November
1993. He is of counsel to the Baltimore law firm of Thomas & Libowitz, P.A. and
has been in the private practice of law since 1983. From 1961 to 1968, Judge
Thomas served as an Associate Judge on the Municipal Court of Baltimore City
and, from 1968 to 1983, he served as an Associate Judge of the Supreme Bench of
Baltimore City. Judge Thomas is a trustee of the University of Baltimore and a
member of the American Bar Association and the Maryland

<PAGE>

State Bar Association. Judge Thomas attended the College of William & Mary and
received his L.L.B. from the University of Baltimore. Judge Thomas is the
father of Steven A. Thomas, a senior attorney and founder of Thomas & Libowitz,
counsel to the Company.

Barry Baker has been the Chief Executive Officer of River City since 1989,
and is the President of the corporate general partner of River City and Better
Communications, Inc. ("BCI"). The principal business of both River City and BCI
is television and radio broadcasting. In connection with the River City
Acquisition, the Company agreed to appoint Mr. Baker Executive Vice President of
the Company and to elect him as a Director at such time as he is eligible to
hold those positions under applicable FCC regulations. He currently serves as a
consultant to the Company.

Kerby Confer served as a member of the Board of Representatives and Chief
Executive Officer -- Keymarket Radio Division of River City since July 1995.
Prior thereto, Mr. Confer served as Chairman of the Board and Chief Executive
Officer of Keymarket since its founding in December 1981. Prior to engaging in
the acquisition of various radio stations in 1975, Mr. Confer held a number of
jobs in the broadcast business, including serving as Managing Partner of a radio
station in Annapolis, Maryland from 1969 to 1975. From 1966 to 1969, he hosted a
pop music television show on WBAL-TV (Baltimore) and WDCA-TV (Washington, D.C.).
Prior thereto, Mr. Confer served as program director or producer/director for
radio and television stations owned by Susquehanna Broadcasting and Plough
Broadcasting Company, Inc. Mr. Confer currently provides services to the Company
and is expected to become Chief Executive Officer of SCI Radio at such time as
he is eligible to hold this position under applicable FCC regulations.

Roy F. Coppedge, III is a general partner of the general partner of each of
the Boston Ventures partnerships, limited partnerships primarily involved in the
business of investments. Mr. Coppedge is a director of Continental Cablevision,
Inc., and American Media, Inc. and a member of the Board of Representatives of
Falcon Holding Group, L.P. In connection with the River City Acquisition, the
Company agreed to elect Mr. Coppedge as a Director at such time as he is
eligible to hold that position under applicable FCC regulations.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain information regarding the annual and
long-term compensation by the Company for services rendered in all capacities
during the year ended December 31, 1997 by the Chief Executive Officer and the
four other executive officers of the Company as to whom the total annual salary
and bonus exceeded $100,000 in 1997:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND ------------------------------- SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (A) OPTIONS GRANTED (#) COMPENSATION (B)
- ------------------------------------------ ------ ------------- ----------- ----------------------- -----------------
<S> <C> <C> <C> <C> <C>

David D. Smith
President and Chief Executive Officer ... 1997 $1,354,490 $ 98,224 -- $ 6,306
1996 767,308 317,913 -- 6,748
1995 450,000 343,213 -- 4,592
Frederick G. Smith
Vice President .......................... 1997 273,000 -- -- 5,912
1996 260,000 233,054 -- 6,704
1995 260,000 258,354 -- 20,361
J. Duncan Smith
Secretary ............................... 1997 283,500 -- -- 15,569
1996 270,000 243,485 -- 18,494
1995 270,000 268,354 -- 21,467
Robert E. Smith
Secretary ............................... 1997 259,615 -- -- 5,539
1996 250,000 233,054 -- 6,300
1995 250,000 258,354 -- 4,592
David B. Amy
Chief Financial Officer ................. 1997 189,000 50,000 25,000 10,140
1996 173,582 31,000 -- 7,766
1995 132,310 20,000 7,500 7,868
</TABLE>

- ----------

50
<PAGE>
(a) The bonuses reported in this column represent amounts awarded and paid
during the fiscal years noted but relate to the fiscal year immediately
prior to the year noted.

(b) All other compensation consists of income deemed received for personal use
of Company-leased automobiles, the Company's 401 (k) contribution, life
insurance and long-term disability coverage.

In addition to the foregoing, Mr. Barry Baker and Mr. Kerby Confer have
agreed to serve as executive officers and/or directors of the Company as soon as
permissible under the rules of the FCC and applicable laws and have received
consulting fees during the year ended December 31, 1997 of $1,179,856 and
$328,568 respectively.

STOCK OPTIONS

No grants of stock options were made during 1997 to the Named Executive
Officers other than the options with respect to 25,000 shares of Class A Common
Stock which were granted to David Amy. The following table shows the number of
stock options exercised during 1997 and the 1997 year-end value of the stock
options held by the Named Executive Officers:

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS "IN-THE-MONEY" OPTIONS
AT DECEMBER 31, 1997 AT DECEMBER 31, 1997(A)
SHARES ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------------- --------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
David D. Smith ............. -- $-- -- -- $ -- $ --
Frederick G. Smith ......... -- -- -- -- -- --
J. Duncan Smith ............ -- -- -- -- -- --
Robert E. Smith ............ -- -- -- -- -- --
David B. Amy ............... -- -- 11,500 21,000 226,363 212,613
</TABLE>

- ----------
(a) An "In-the-Money" option is an option for which the option price of the
underlying stock is less than the market price at December 31, 1997, and all
of the value shown reflects stock price appreciation since the granting of
the option.

DIRECTOR COMPENSATION

Directors of the Company who also are employees of the Company serve
without additional compensation. Independent directors receive $15,000 annually.
These independent directors also receive $1,000 for each meeting of the Board of
Directors attended and $500 for each committee meeting attended. In addition,
the independent directors are reimbursed for any expenses incurred in connection
with their attendance at such meetings.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with David D. Smith,
President and Chief Executive Officer of the Company. David Smith's employment
agreement has an initial term of three years and is renewable for additional
one-year terms, unless either party gives notice of termination not less than 60
days prior to the expiration of the then current term. As of January 1, 1998,
Mr. Smith receives a base salary of approximately $1,386,750, subject to annual
increases of 7 1/2% on January 1 of each year. Mr. Smith is also entitled to
participate in the Company's Executive Bonus Plan based upon the performance of
the Company during the year. The employment agreement provides that the Company
may terminate Mr. Smith's employment prior to expiration of the agreement's term
as a result of (i) a breach by Mr. Smith of any material covenant, promise or
agreement contained in the employment agreement; (ii) a dissolution or winding
up of the Company; (iii) the disability of Mr. Smith for more than 210 days in
any twelve month period (as determined under the employment agreement); or (iv)
for cause, which includes conviction of certain crimes, breach of a fiduciary
duty to the Company or the stockholders, or repeated failure to exercise or
undertake his duties as an officer of the Company (each, a "Termination Event").

<PAGE>

In June 1995, the Company entered into an employment agreement with
Frederick G. Smith, Vice President of the Company. Frederick Smith's employment
agreement has an initial term of three years and is renewable for additional
one-year terms, unless either party gives notice of termination not less than 60
days prior to the expiration of the then current term. Under the agreement, Mr.
Smith receives a base salary of $260,000 and is also entitled to participate in
the Company's Executive Bonus Plan based upon the performance of the Company and
Mr. Smith during the year. The employment agreement provides that the Company
may terminate Mr. Smith's employment prior to expiration of the agreement's term
as a result of a Termination Event.

In June 1995, the Company entered into an employment agreement with J.
Duncan Smith, Vice President and Secretary of the Company. J. Duncan Smith's
employment agreement has an initial term of three years and is renewable for
additional one-year terms, unless either party gives notice of termination not
less than 60 days prior to the expiration of the then current term. Under the
agreement, Mr. Smith receives a base salary of $270,000 and is also entitled to
participate in the Company's Executive Bonus Plan based upon the performance of
the Company and Mr. Smith during the year. The employment agreement provides
that the Company may terminate Mr. Smith's employment prior to expiration of the
agreement's term as a result of a Termination Event.

In June 1995, the Company entered into an employment agreement with Robert
E. Smith, Vice President and Treasurer of the Company. Robert E. Smith's
employment agreement has an initial term of three years and is renewable for
additional one-year terms, unless either party gives notice of termination not
less than 60 days prior to the expiration of the then current term. Under the
agreement, Mr. Smith receives a base salary of $250,000 and is also entitled to
participate in the Company's Executive Bonus Plan based upon the performance of
the Company and Mr. Smith during the year. The employment agreement provides
that the Company may terminate Mr. Smith's employment prior to expiration of the
agreement's term as a result of a Termination Event.

In connection with the River City Acquisition, the Company entered into an
employment agreement (the "Baker Employment Agreement") with Barry Baker
pursuant to which Mr. Baker will become President and Chief Executive Officer of
SCI and Executive Vice President of the Company at such time as Mr. Baker is
able to hold those positions consistent with applicable FCC regulations. Until
such time as Mr. Baker is able to become an officer of the Company, he serves as
a consultant to the Company pursuant to a consulting agreement and receives
compensation that he would be entitled to as an officer under the Baker
Employment Agreement. While Mr. Baker acts as consultant to the Company he will
not direct employees of Sinclair in the operation of its television stations and
will not perform services relating to any shareholder, bank financing or
regulatory compliance matters with respect to the Company. In addition, Mr.
Baker will remain the Chief Executive Officer of River City and will devote a
substantial amount of his business time and energies to those services. As of
January 1, 1998, Mr. Baker receives a base salary of approximately $1,155,625
per year, subject to annual increases of 7 1/2% on January 1 each year. Mr.
Baker is also entitled to receive a bonus equal to 2% of the amount by which the
Broadcast Cash Flow (as defined in the Baker Employment Agreement) of SCI for a
year exceeds the Broadcast Cash Flow for the immediately preceding year. Mr.
Baker has received options to acquire 1,382,435 shares of the Class A Common
Stock (or 3.33% of the common equity of Sinclair determined on a fully diluted
basis as of the date of the River City Acquisition). The option became
exercisable with respect to 50% of the shares upon closing of the River City
Acquisition, and became exercisable with respect to an additional 25% of the
shares on the first anniversary of the closing of the River City Acquisition,
and will become exercisable with respect to the remaining 25% on the second
anniversary of the closing of the River City Acquisition. The exercise price of
the option is approximately $30.11 per share. The term of the Baker Employment
Agreement extends until May 31, 2001, and is automatically extended to the third
anniversary of any Change of Control (as defined in the Baker Employment
Agreement). If the Baker Employment Agreement is terminated as a result of a
Series B Trigger Event (as defined below), then Mr. Baker shall be entitled to a
termination payment equal to the amount that would have been paid in base salary
for the remainder of the term of the agreement plus bonuses that would be paid
for such period based on the average bonus paid to Mr. Baker for the previous
three years, and all options shall vest immediately upon such termination. In
addition, upon such a termination, Mr. Baker shall have the option to purchase
from the Company for the fair market value thereof either (i) all broadcast
operations of Sinclair in the St. Louis, Missouri DMA or (at the option of Mr.
Baker) the

<PAGE>

Asheville, North Carolina/Greenville/Spartanburg, South Carolina DMA or (ii) all
of the Company's radio broadcast operations. Mr. Baker shall also have the right
following such a termination to receive quarterly payments (which may be paid
either in cash or, at the Company's option, in additional shares of Class A
Common Stock) equal to 5.00% of the fair market value (on the date of each
payment) of all stock options and common stock issued pursuant to the exercise
of such stock options or pursuant to payments of this obligation in shares of
Class A Common Stock and held by him at the time of such payment (except that
the first such payment shall be 3.75% of such value). The fair market value of
unexercised options for such purpose shall be equal to the market price of
underlying shares less the exercise price of the options. Following termination
of Mr. Baker's employment agreement, the Company shall have the option to
purchase the options and shares from Mr. Baker at their market value. A "Series
B Trigger Event" means the termination of Barry Baker's employment with the
Company prior to the expiration of the initial five-year term of the Baker
Employment Agreement (i) by the Company for any reason other than "for cause"
(as defined in the Baker Employment Agreement) or (ii) by Barry Baker under
certain circumstances, including (a) on 60 days' prior written notice given at
any time within 180 days following a Change of Control; (b) if Mr. Baker is not
elected (and continued) as a director of Sinclair or SCI, as President and Chief
Executive Officer of SCI or as Executive Vice President of Sinclair, or Mr.
Baker shall be removed from any such board or office; (c) upon a material breach
by Sinclair or SCI of the Baker Employment Agreement which is not cured; (d) if
there shall be a material diminution in Mr. Baker's authority or responsibility,
or certain of his economic benefits are materially reduced, or Mr. Baker shall
be required to work outside Baltimore; or (e) the effective date of his
employment as contemplated by clause (b) shall not have occurred by August 31,
1997. Mr. Baker cannot be appointed to such positions with the Company or SCI
until the Company or SCI takes certain actions with respect to WTTV and WTTK in
Indianapolis and WTTE or WSYX in Columbus. The Company has not taken these
actions as of the date of this Form 10-K and, accordingly, Mr. Baker is able to
terminate the Baker Employment Agreement at any time.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Other than as follows, no Named Executive Officer is a director of a
corporation that has a director or executive officer who is also a director of
the Company. Each of David D. Smith, Frederick G. Smith, J. Duncan Smith and
Robert E. Smith (the "Controlling Stockholders") (all of whom are directors of
the Company and Named Executive Officers) is a director and/or executive officer
of each of various other corporations controlled by the Controlling
Stockholders.

During 1997, none of the Named Executive Officers participated in any
deliberations of the Company's Board of Directors or the Compensation Committee
relating to compensation of the Named Executive Officers.

The members of the Compensation Committee are Messrs. Thomas and McCanna.
Mr. Thomas is of counsel to the law firm of Thomas & Libowitz, and is the father
of Steven A. Thomas, a senior attorney and founder of Thomas & Libowitz, P.A.
During 1997, the Company paid Thomas & Libowitz, P.A., approximately $919,058 in
fees and expenses for legal services.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth as of the date hereof the number and
percentage of outstanding shares of the Company's Common Stock beneficially
owned by (i) all persons known by the Company to beneficially own more than 5%
of the Company's Common Stock, (ii) each director and each Named Executive
Officer who is a stockholder, and (iii) all director and executive officers as a
group. Unless noted otherwise, the business address of each of the following is
2000 West 41st Street, Baltimore, MD 21211:

53
<PAGE>

<TABLE>
<CAPTION>
SHARES OF CLASS B SHARES OF SERIES B SHARES OF CLASS A
COMMON STOCK PREFERRED STOCK COMMON STOCK PRERCENT OF
BENEFICIALLY OWNED BENEFICIALLY OWNED BENEFICIALLY OWNED TOTAL
---------------------- -------------------- ---------------------- VOTING
NAME NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT POWER (A)
- ----------------------------------------- ------------ --------- ---------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David D. Smith(b) ....................... 6,924,999 27.5% 6,935,057 32.6% 25.7%
Frederick G. Smith (b)(c) ............... 5,922,795 23.5% 5,926,853 29.2% 22.0%
J. Duncan Smith (b)(d) .................. 6,569,994 26.2% 6,570,020 31.4% 24.4%
Robert E. Smith (b)(e) .................. 5,748,644 22.8% 5,748,702 28.6% 21.3%
David B. Amy (f) ........................ 102,258 * *
Basil A. Thomas ......................... 2,000 * *
Lawrence E. McCanna ..................... 300 * *
Barry Baker (g)(h) ...................... 72,016 7.4% 1,644,311 10.3% *
Putnam Investments, Inc. ................ 4,393,534 30.6% 1.6%
One Post Office Square
Boston, Massachusetts 02109
T. Rowe Price Associates, Inc. (i) ...... 933,500 6.5% *
100 East Pratt Street
Baltimore, Maryland 21202
Lynn & Mayer Inc. ....................... 819,000 5.7% *
520 Madison Avenue
New York, New York 10022
The Equitable Companies Incorporated..... 1,162,725 8.1% *
787 Seventh Avenue
New York, New York 10019
Better Communications, Inc. (h) ......... 134,858 13.8% 490,393 3.3% *
1215 Cole Street
St. Louis, Missouri 63106
BancBoston Investments (h) .............. 150,335 13.8% 546,673 3.7%
150 Royal Street
Canton, Massachusetts 02021
Pyramid Ventures, Inc. .................. 152,995 15.7% 556,345 3.7% *
1215 Cole Street
St. Louis, Missouri 63106
Boston Ventures Limited
Partnership IV (h) ..................... 253,800 26.0% 922,909 6.0% *
21 Custom House Street
10th Floor
Boston, Massachusetts 02110
Boston Ventures Limited
Partnership IVA (h) .................... 142,745 14.6% 519,073 3.5% *
21 Custom House Street
10th Floor
Boston, Massachusetts 02110
All directors and executive
officers as a group (7 persons) ........ 25,166,432 100.0% -- -- 25,285,190 63.8% 93.4%
</TABLE>
- ----------
* Less than 1%
(a) Holders of Class A Common Stock are entitled to one vote per share and
holders of Class B Common Stock are entitled to ten votes per share except
for votes relating to "going private" and certain other transactions. The
Class A Common Stock, the Class B Common Stock and the Series B Preferred
Stock vote altogether as a single class except as otherwise may be required
by Maryland law on all matters presented for a vote, with each share of
Series B Preferred Stock entitled to approximately 3.64 votes on all such
matters. Holders of Class B Common Stock may at any time convert their
shares into the same number of shares of Class A Common Stock and holders of
Series B Preferred Stock may at any time convert each share of Series B
Preferred Stock into approximately 3.64 shares of Class A Common Stock.

(b) Shares of Class A Common Stock beneficially owned includes shares of Class B
Common Stock beneficially owned, each of which is convertible into one share
of Class A Common Stock.

(c) Includes 430,145 shares held in irrevocable trusts established by Frederick
G. Smith for the benefit of his children and as to which Mr. Smith has the
power to acquire by substitution of trust property. Absent such
substitution, Mr. Smith would have no power to vote or dispose of the
shares.

(d) Includes 456,695 shares held in irrevocable trusts established by J. Duncan
Smith for the benefit of his children and as to which Mr. Smith has the
power to acquire by substitution of trust property. Absent such
substitution, Mr. Smith would have no power to vote or dispose of the
shares.

(e) Includes 782,855 shares held in irrevocable trusts established by Robert E.
Smith for the benefit of his children and as to which Mr. Smith has the
power to acquire by substitution of trust property. Absent such
substitution, Mr. Smith would have no power to vote or dispose of the
shares.

(f) Includes 100,000 shares of Class A Common Stock that may be acquired upon
exercise of options granted in 1995, 1996 and 1998 pursuant to the Incentive
Stock Option Plan and Long Term Incentive Plan.

<PAGE>
(g) Consists of 1,382,435 shares of Class A Common Stock that may be acquired
upon exercise of options granted in 1996 pursuant to the Long Term Incentive
Plan.

(h) Shares of Class A Common Stock beneficially owned includes 3.64 shares for
each share of Series B Preferred Stock beneficially owned as each share of
Series B Preferred Stock is immediately convertible into approximately 3.64
shares of Class A Common Stock.

(i) These securities are owned by various individual and institutional investors
to which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment advisor with power to direct investments and/or sole voting power
to vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, beneficial owner of such securities.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since December 31, 1996, the Company has engaged in the following
transactions with persons who are, or are members of the immediate family of,
directors, persons expected to become a director, officers or beneficial owners
of 5% or more of the issued and outstanding Common Stock, or with entities in
which such persons or certain of their relatives have interests.

WPTT NOTE

In connection with the sale of WPTT in Pittsburgh by the Company to WPTT,
Inc., WPTT, Inc., issued to the Company a 15-year senior secured term note of
$6.0 million (the "WPTT Note"). The Company subsequently sold the WPTT Note to
the late Julian S. Smith and Carolyn C. Smith, the parents of the Controlling
Stockholders and both former stockholders of the Company, in exchange for the
payment of $50,000 and the issuance of a $6.6 million note, which bears interest
at 7.21% per annum and requires payments of interest only through September
2001. Monthly principal payments of $109,317 plus interest are payable with
respect to this note commencing in November 2001 and ending in September 2006,
at which time the remaining principal balance plus accrued interest, if any, is
due. During the year ended December 31, 1997, the Company received $439,000 in
interest payments on this note. At December 31, 1997, the balance on this note
was $6.6 million.

WIIB NOTE

In September 1990, the Company sold all the stock of Channel 63, Inc., the
owner of WIIB in Bloomington, Indiana, to the Controlling Stockholders for $1.5
million. The purchase price was delivered in the form of a note issued to the
Company which was refinanced in June 1992 (the "WIIB Note"). The WIIB Note bears
interest at 6.88% per annum, is payable in monthly principal and interest
payments of $16,000 until September 30, 2000, at which time a final payment of
approximately $431,000 is due. Principal and interest paid in 1997 on the WIIB
Note was $211,000. As of December 31, 1997, $842,000 in principal amount of the
WIIB Note remained outstanding.

BAY CREDIT FACILITY

In connection with the capitalization of Bay Television, Inc., the Company
agreed on May 17, 1990 to loan the Controlling Stockholders up to $3.0 million
(the "Bay Credit Facility"). Each of the loans to the Controlling Stockholders
pursuant to the Bay Credit Facility is evidenced by an amended and restated
secured note totaling $2.6 million due December 31, 1999 accruing interest at a
fixed rate equal to 6.88%. Principal and interest are payable over six years
commencing on March 31, 1994, and are required to be repaid quarterly and
$530,000 was paid in 1997. $660,000 is payable in 1998 and $718,000 is payable
in 1999. As of December 31, 1997, approximately $1.3 million in principal amount
was outstanding under this note.

AFFILIATED LEASES

From 1987 to 1992, the Company entered into five lease transactions with
CCI, a corporation wholly owned by the Controlling Stockholders, to lease
certain facilities from CCI. Four of these leases are 10-year leases for rental
space on broadcast towers, two of which are capital leases having renewable
terms of 10 years. The other lease is a month-to-month lease for a portion of
studio and office space at

<PAGE>

which certain satellite dishes are located. Aggregate annual rental payments
related to these leases were $641,000 in 1997. The aggregate annual rental
payments related to these leases are scheduled to be $679,000 in 1998 and
$700,000 in 1999.

In January 1991, CTI entered into a 10-year capital lease with KIG, a
corporation wholly owned by the Controlling Stockholders, pursuant to which CTI
leases both an administrative facility and studios for station WBFF and the
Company's present corporate offices. Additionally, in June 1991, CTI entered
into a one-year renewable lease with KIG pursuant to which CTI leases parking
facilities at the administrative facility. Payments under these leases with KIG
were $481,000 in 1997. The aggregate annual rental payments related to the
administrative facility are scheduled to be $519,000 in 1998 and $540,000 in
1999. During 1997, the Company chartered airplanes owned by certain companies
controlled by the Controlling Stockholders and incurred expenses of
approximately $736,000 related to these charters.

TRANSACTIONS WITH GERSTELL

Gerstell LP, an entity wholly owned by the Controlling Stockholders, was
formed in April 1993 to acquire certain personal and real property interests of
the Company in Pennsylvania. In a transaction that was completed in September
1993, Gerstell LP acquired the WPGH office/studio, transmitter and tower site
for an aggregate purchase price of $2.2 million. The purchase price was financed
in part by a $2.1 million note from Gerstell LP bearing interest at 6.18% with
principal payments beginning on November 1, 1994 and a final maturity date of
October 1, 2013. Principal and interest paid in 1997 on the note was $183,000.
At December 31, 1997, $1.9 million in principal amount of the note remained
outstanding. Following the acquisition, Gerstell LP leased the office/studio,
transmitter and tower site to WPGH, Inc. (a subsidiary of the Company) for
$14,875 per month and $25,000 per month, respectively. The leases have terms of
seven years, with four seven-year renewal periods. Aggregate annual rental
payment related to these leases was $561,000 in 1997. The Company believes that
the leases with Gerstell LP are on terms and conditions customary in similar
leases with independent third parties.

STOCK REDEMPTIONS

On September 30, 1990, the Company issued certain notes (the "Founders'
Notes") maturing on May 31, 2005, payable to the late Julian S. Smith and
Carolyn C. Smith, former majority owners of the Company and the parents of the
Controlling Stockholders. The Founders' Notes, which were issued in
consideration for stock redemptions equal to 72.65% of the then outstanding
stock of the Company, have principal amounts of $7.5 million and $6.7 million,
respectively. The Founders' Notes include stated interest rates of 8.75%, which
were payable annually from October 1990 until October 1992, then payable monthly
commencing April 1993 to December 1996, and then semiannually thereafter until
maturity. The effective interest rate approximates 9.4%. The Founders' Notes are
secured by security interests in substantially all of the assets of the Company
and its Subsidiaries, and are personally guaranteed by the Controlling
Stockholders.

Principal and interest payments on the Founders' Note issued to the estate
of Julian S. Smith are payable, in various amounts, each April and October,
beginning October 1991 until October 2004, with a balloon payment due at
maturity in the amount of $5.0 million. Additionally, monthly interest payments
commenced on April 1993 and continued until December 1996. Principal and
interest paid in 1997 on this Founders' Note was $653,000 and at December 31,
1997, $5.8 million in principal amount of this Founders' Note remained
outstanding.

Principal payments on the Founders' Note issued to Carolyn C. Smith are
payable, in various amounts, each April and October, beginning October 1991
until October 2002. Principal and interest paid in 1997 on this Founders' Note
was $1.1 million. At December 31, 1997, $3.7 million in principal amount of this
Founders' Note remained outstanding.

RELATIONSHIP WITH GLENCAIRN

Glencairn is a corporation owned by (i) Edwin L. Edwards, Sr. (3%), (ii)
Carolyn C. Smith, the mother of the Controlling Stockholders (7%), and (iii)
certain trusts established by Carolyn C. Smith for the benefit of her
grandchildren (the "Glencairn Trusts") (90%). The 90% equity interest in
Glencairn

<PAGE>
owned by the Glencairn Trusts is held through the ownership of non-voting common
stock. The 7% equity interest in Glencairn owned by Carolyn C. Smith is held
through the ownership of common stock that is generally non-voting, except with
respect to certain specified extraordinary corporate matters as to which this 7%
equity interest has the controlling vote. Edwin L. Edwards, Sr. owns a 3% equity
interest in Glencairn through ownership of all of the issued and outstanding
voting stock of Glencairn and is Chairman of the Board, President and Chief
Executive Officer of Glencairn.

There have been, and the Company expects that in the future there will be,
transactions between the Company and Glencairn. Glencairn is the owner-operator
and FCC licensee of WNUV in Baltimore, WVTV in Milwaukee, WRDC in
Raleigh/Durham, WABM in Birmingham, KRRT in San Antonio and WFBC in
Asheville/Greenville/Spartanburg. The Company has entered into LMAs with
Glencairn pursuant to which the Company provides programming to Glencairn for
broadcast on WNUV, WVTV, WRDC, WABM, KRRT and WFBC during the hours of 6:00 a.m.
to 2:00 a.m. each day and has the right to sell advertising during this period,
all in exchange for the payment by the Company to Glencairn of a monthly fee
totaling $789,000.

In June 1995, the Company acquired options from certain stockholders of
Glencairn (the "Glencairn Options") which grant to the Company the right to
acquire, subject to applicable FCC rules and regulations, stock comprising up to
a 97% equity interest in Glencairn. Of the stock subject to the Glencairn
Options, a 90% equity interest is non-voting and the remaining 7% equity
interest is non-voting, except with respect to certain extraordinary matters as
to which this 7% equity interest has the controlling vote. Each Glencairn Option
was purchased by the Company for $1,000 ($5,000 in the aggregate) and is
exercisable only upon the Company's payment of an option exercise price
generally equal to the optionor's proportionate share of the aggregate
acquisition cost of all stations owned by Glencairn on the date of exercise
(plus interest at a rate of 10% from the respective acquisition date). The
Company estimates that the aggregate option exercise price for the Glencairn
Options, if currently exercised, would be approximately $14.8 million.

In addition, the Company has agreed to sell to Glencairn for $2,000,000 the
License Assets of WTTE in Columbus, Ohio, which the Company currently owns. In
addition, the Company has an option to acquire from River City the assets of
WSYX, which is in the same market as WTTE. See "Business--Broadcasting
Acquisition Strategy." Upon the Company's assignment of the License Assets of
WTTE to Glencairn (which the Company does not expect to occur unless the Company
acquires WSYX), the Company intends to enter into an LMA with Glencairn relating
to WTTE pursuant to which the Company will supply programming to Glencairn,
obtain the right to sell advertising during the periods covered by the supplied
programming and make payments to Glencairn in amounts to be negotiated.

In connection with the Sullivan Acquisition, Glencairn has entered into a
plan of merger with Sullivan III which, if completed, would result in
Glencairn's ownership of all the issued and outstanding capital stock of
Sullivan III. After the merger, the Company intends to enter into an LMA with
Glencairn and continue to provide programming services to the five stations the
License Assets of which are acquired by Glencairn in the merger.

RIVER CITY TRANSACTIONS

Roy F. Coppedge, who will become a director of the Company upon
satisfaction of certain conditions, and Barry Baker, who will become a director
and executive officer of the Company as soon as permissible under the rules of
the FCC and applicable laws, each have a direct or indirect equity interest in
River City Partners, L.P. Therefore, Messrs. Coppedge and Baker have an interest
in the River City Acquisition, which is described above in
"Business--Broadcasting Acquisition Strategy." During 1997, the Company made LMA
payments of $896,000 to River City. In September 1996, the Company entered into
a five-year agreement with River City pursuant to which River City will provide
to the Company certain production services. Pursuant to this agreement, River
City will provide certain services to the Company in return for an annual fee of
$416,000, subject to certain adjustments on each anniversary date.

KEYMARKET OF SOUTH CAROLINA

Kerby Confer, who is expected to become an executive officer of the Company
as soon as permissible under the rules of the FCC and applicable laws, is the
owner of 100% of the common stock of

<PAGE>

Keymarket of South Carolina, Inc. ("KSC"). The Company has exercised its option
to acquire all of the assets of KSC for forgiveness of debt in an aggregate
principal amount of approximately $7.4 million, plus payment of approximately
$1.0 million, less certain adjustments. The Company also purchased two
properties from Mr. Confer for an aggregate purchase price of approximately
$1.75 million.

BEAVER DAM LIMITED LIABILITY COMPANY

In May 1996, the Company, along with the Controlling Stockholders, formed
Beaver Dam Limited Liability Company ("BDLLC"), of which the Company owns a 45%
interest. BDLLC was formed for the purpose of constructing and owning a building
which may be the site for the Company's corporate headquarters. The Company made
capital contributions to BDLLC in 1996 of approximately $380,000. During 1997,
the Partnership made a liquidating distribution to the Company of approximately
$380,000 and the Company no longer owns an interest in BDLP.

HERITAGE AUTOMOTIVE GROUP

In January 1997, David D. Smith, the Company's President and Chief
Executive Officer and one of the Controlling Shareholders, made a substantial
investment in, and became a member of the board of directors of, Summa Holdings,
Ltd. which, through wholly owned subsidiaries, owns the Heritage Automotive
Group ("Heritage") and Allstate Leasing ("Allstate"). Mr. Smith is not an
officer, nor does he actively participate in the management, of Summa Holdings,
Ltd., Heritage, or Allstate. Heritage owns and operates new and used car
dealerships in the Baltimore metropolitan area. Allstate owns and operates an
automobile and equipment leasing business with offices in the Baltimore,
Richmond, Houston, and Atlanta metropolitan areas. The Company sells Heritage
and Allstate advertising time on WBFF and WNUV, the television stations operated
by the Company serving the Baltimore DMA. The Company believes that the terms of
the transactions between the Company and Heritage and the Company and Allstate
are and will be comparable to those prevailing in similar transactions with or
involving unaffiliated parties. Payments from Heritage and Allstate to Sinclair
for the year 1997 were approximately $263,200.

58
<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K AND FORM 8-K/A

(a) (1) Index to Financial Statements

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

Index to Financial Statements

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Index to Financial Statements ................................................ F-1
Report of Independent Public Accountants ..................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997 ................. F-3
Consolidated Statements of Operations for the Years Ended December 31, 1995,
1996 and 1997 ............................................................... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended Decem-
ber 31, 1995, 1996 and 1997 ................................................. F-5, F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995,
1996 and 1997 ............................................................... F-7, F-8
Notes to Consolidated Financial Statements ................................... F-9

</TABLE>

(a) (2) Index to Financial Statements Schedules

The financial statements schedules required by this item are submitted on
pages S-1 through S-3 of this Report.

PAGE
-----
Index to Schedules .................................................... S-1
Report of Arthur Andersen LLP Independent Public Accountants .......... S-2
Schedule II -- Valuation and Qualifying Accounts ...................... S-3

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

(a) (3) Index to Exhibits

See Index to Exhibits

(b) Reports on Form 8-K

There were no reports on Form 8-K filed by the Registrant during the fourth
quarter of the fiscal year ended December 31, 1997, except for the Registrant's
Current Reports on Form 8-K and 8-K/A, filed October 8, 1997, November 26, 1997,
December 5, 1997, December 12, 1997 and December 16, 1997.

The exhibits required by this Item are listed under Item 14 (a) (3).

(d) Financial Statements Schedules

The financial statement schedules required by this Item are listed under
Item 14 (a) (2).

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

Report of Independent Public Accountants .............................................. F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997 .......................... F-3
Consolidated Statements of Operations for the Years Ended December 31, 1995, 1996 and
1997 ................................................................................ F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1995,
1996 and 1997 ....................................................................... F-5, F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1996 and
1997 ................................................................................ F-7, F-8
Notes to Consolidated Financial Statements ............................................ F-9

</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
Sinclair Broadcast Group, Inc.:

We have audited the accompanying consolidated balance sheets of Sinclair
Broadcast Group, Inc. (a Maryland corporation) and Subsidiaries as of December
31, 1996 and 1997, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1995, 1996
and 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sinclair Broadcast Group,
Inc. and Subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for the years ended December 31, 1995, 1996 and
1997, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Baltimore, Maryland,
February 9, 1998, except for Note 24,
as to which the date is February 23, 1998

F-2

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

AS OF DECEMBER 31,
------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, and cash equivalents .................................................. $ 2,341 $ 139,327
Accounts receivable, net of allowance for doubtful accounts
of $2,472 and $2,920, respectively ......................................... 112,313 123,018
Current portion of program contract costs ................................... 44,526 46,876
Prepaid expenses and other current assets ................................... 3,704 4,673
Deferred barter costs ....................................................... 3,641 3,727
Refundable income taxes ..................................................... -- 10,581
Deferred tax assets ......................................................... 1,245 2,550
---------- ----------
Total current assets ....................................................... 167,770 330,752
PROGRAM CONTRACT COSTS, less current portion ................................. 43,037 40,609
LOANS TO OFFICERS AND AFFILIATES ............................................. 11,426 11,088
PROPERTY AND EQUIPMENT, net .................................................. 154,333 161,714
NON-COMPETE AND CONSULTING AGREEMENTS, net of
accumulated amortization of $54,236 and $64,229, respectively ............... 10,193 200
OTHER ASSETS ................................................................. 64,235 167,895
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net of
accumulated amortization of $85,155 and $138,061, respectively .............. 1,256,303 1,321,976
---------- ----------
Total Assets ............................................................... $1,707,297 $2,034,234
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................................ $ 11,886 $ 5,207
Income taxes payable ........................................................ 730 --
Accrued liabilities ......................................................... 35,074 40,532
Current portion of long-term liabilities- ...................................
Notes payable and commercial bank financing ................................ 62,144 35,215
Notes and capital leases payable to affiliates ............................. 1,774 3,073
Program contracts payable .................................................. 58,461 66,404
Deferred barter revenues ................................................... 3,576 4,273
---------- ----------
Total current liabilities .................................................. 173,645 154,704
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing ................................. 1,212,000 1,022,934
Notes and capital leases payable to affiliates .............................. 12,185 19,500
Program contracts payable ................................................... 56,194 62,408
Deferred tax liability ...................................................... 463 24,092
Other long-term liabilities ................................................. 2,739 3,611
---------- ----------
Total liabilities .......................................................... 1,457,226 1,287,249
---------- ----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES ............................... 3,880 3,697
---------- ----------
COMMITMENTS AND CONTINGENCIES
EQUITY PUT OPTIONS ........................................................... 8,938 --
---------- ----------
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ...................... -- 200,000
---------- ----------
STOCKHOLDERS' EQUITY:
Series B Preferred stock, $.01 par value, 10,000,000 shares authorized and
1,150,000 and 1,071,381 issued and outstanding ............................. 11 10
Series D Preferred stock, $.01 par value, 3,450,000 shares authorized and
-0- and 3,450,000 shares issued and outstanding, respectively .............. -- 35
Class A Common stock, $.01 par value, 100,000,000 shares authorized
and 6,911,880 and 13,733,430 shares issued and outstanding,
respectively ............................................................... 70 137
Class B Common stock, $.01 par value, 35,000,000 shares authorized and
27,850,581 and 25,436,432 shares issued and outstanding .................... 279 255
Additional paid-in capital .................................................. 256,954 552,949
Additional paid-in capital -- equity put options ............................ -- 23,117
Additional paid-in capital -- deferred compensation ......................... (1,129) (954)
Accumulated deficit ......................................................... (18,932) (32,261)
---------- ----------
Total stockholders' equity ................................................. 237,253 543,288
---------- ----------
Total Liabilities and Stockholders' Equity ................................. $1,707,297 $2,034,234
========== ==========

</TABLE>

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

F-3

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1995 1996 1997
----------- ----------- -------------
<S> <C> <C> <C>
REVENUE:
Station broadcast revenue, net of agency commissions of
$31,797, $56,040 and $74,984, respectively .......................... $ 187,934 $ 346,459 $ 471,228
Revenue realized from station barter arrangements ..................... 18,200 32,029 45,207
--------- --------- ---------
Total revenue ....................................................... 206,134 378,488 516,435
--------- --------- ---------
OPERATING EXPENSES:
Program and production ................................................ 28,152 66,652 92,178
Selling, general and administrative ................................... 36,174 75,924 106,084
Expenses realized from station barter arrangements .................... 16,120 25,189 38,114
Amortization of program contract costs and net
realizable value adjustments ........................................ 29,021 47,797 66,290
Stock-based compensation .............................................. -- 739 1,636
Depreciation and amortization of property and equipment ............... 5,400 11,711 18,040
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets .............. 45,989 58,530 67,840
Amortization of excess syndicated programming ......................... -- 3,043 --
--------- --------- ---------
Total operating expenses ............................................ 160,856 289,585 390,182
--------- --------- ---------
Broadcast operating income .......................................... 45,278 88,903 126,253
--------- --------- ---------

OTHER INCOME (EXPENSE):
Interest and amortization of debt discount expense .................... (39,253) (84,314) (98,393)
Subsidiary trust minority interest expense.. .......................... -- -- (18,600)
Interest income ....................................................... 3,942 3,136 2,174
Other income. ......................................................... 221 342 54
--------- --------- ---------
Income before provision for income taxes and extraordinary item ..... 10,188 8,067 11,488

PROVISION FOR INCOME TAXES. ............................................ 5,200 6,936 15,984
--------- --------- ---------
Net income (loss) before extraordinary item ........................... 4,988 1,131 (4,496)

EXTRAORDINARY ITEM:
Loss on early extinguishment of debt, net of related income
tax benefit of $3,357 and $4,045, respectively. ..................... (4,912) -- (6,070)
--------- --------- ---------
NET INCOME (LOSS) ...................................................... $ 76 $ 1,131 $ (10,566)
========= ========= =========
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS .......................................................... $ 76 $ 1,131 $ (13,329)
========= ========= =========
BASIC EARNINGS PER SHARE:
Income (loss) per share before extraordinary item ..................... $ .15 $ .03 $ (.20)
========= ========= =========
Net income (loss) per share ........................................... $ - $ .03 $ (.37)
========= ========= =========
Average shares outstanding ............................................ 32,198 34,748 35,951
========= ========= =========
DILUTED EARNINGS PER SHARE:
Income (loss) per share before extraordinary item ..................... $ .15 $ .03 $ (.20)
========= ========= =========
Net income (loss) per share ........................................... $ - $ .03 $ (.37)
========= ========= =========
Average shares outstanding ............................................ 32,205 37,381 40,078
========= ========= =========
</TABLE>

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

F-4

<PAGE>

PAGE 1 OF 2
-----------

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)

SERIES A SERIES B CLASS A CLASS B
PREFERRED PREFERRED COMMON COMMON
STOCK STOCK STOCK STOCK
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 ..................... $ -- $-- $-- $ 290
Issuance of common shares, net of
related expenses of $9,288 ................... -- -- 58 --
Non-cash distribution prior to KCI merger ..... -- -- -- --
Realization of deferred gain .................. -- -- -- --
Net income .................................... -- -- -- --
------ --- --- -----
BALANCE, December 31, 1995 ..................... -- -- 58 290
Class B Common Stock converted into
Class A Common Stock ......................... -- -- 11 (11)
Issuance of Series A Preferred Stock .......... 12 -- -- --
Series A Preferred Stock converted
into Series B Preferred Stock ................ (12) 12 -- --
Series B Preferred Stock converted into
Class A Common Stock ......................... -- (1) 1 --
Repurchase of 30,000 shares of
Class A Common Stock ......................... -- -- -- --
Stock option grants ........................... -- -- -- --
Income tax provision for deferred
compensation ................................. -- -- -- --
Equity put options ............................ -- -- -- --
Amortization of deferred
compensation. ................................ -- -- -- --
Net income. ................................... -- -- -- --
------ ----- --- -----
BALANCE, December 31, 1996 ..................... $ -- $11 $70 $ 279
====== ===== === =====

<CAPTION>
ADDITIONAL
ADDITIONAL PAID-IN CAPITAL - TOTAL
PAID-IN DEFERRED ACCUMULATED STOCKHOLDERS'
CAPITAL COMPENSATION DEFICIT EQUITY
------------ ------------------- ------------- --------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 ..................... $ 4,774 $ -- $ (18,787) $ (13,723)
Issuance of common shares, net of
related expenses of $9,288 ................... 111,403 -- -- 111,461
Non-cash distribution prior to KCI merger ..... (109) -- (1,352) (1,461)
Realization of deferred gain .................. 21 -- -- 21
Net income .................................... -- -- 76 76
-------- -------- --------- ---------
BALANCE, December 31, 1995 ..................... 116,089 -- (20,063) 96,374
Class B Common Stock converted into
Class A Common Stock ......................... -- -- -- --
Issuance of Series A Preferred Stock .......... 125,067 -- -- 125,079
Series A Preferred Stock converted
into Series B Preferred Stock ................ -- -- -- --
Series B Preferred Stock converted into
Class A Common Stock ......................... -- -- -- --
Repurchase of 30,000 shares of
Class A Common Stock ......................... (748) -- -- (748)
Stock option grants ........................... 25,784 (1,868) -- 23,916
Income tax provision for deferred
compensation ................................. (300) -- -- (300)
Equity put options ............................ (8,938) -- -- (8,938)
Amortization of deferred
compensation. ................................ -- 739 -- 739
Net income. ................................... -- -- 1,131 1,131
-------- -------- --------- ---------
BALANCE, December 31, 1996 ..................... $256,954 $ (1,129) $ (18,932) $ 237,253
======== ======== ========= =========
</TABLE>

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

F-5

<PAGE>

PAGE 2 OF 2
-----------

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)

SERIES B SERIES D CLASS A CLASS B
PREFERRED PREFERRED COMMON COMMON
STOCK STOCK STOCK STOCK
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996 ......................... $11 $-- $70 $ 279
Repurchase of 186,000 shares of
Class A Common Stock ............................. -- -- (2) --
Class B Common Stock converted into Class A Common
Stock ............................................ -- -- 24 (24)
Series B Preferred Stock converted
into Class A Common Stock ........................ (1) -- 2 --
Issuance of Class A Common Stock,
net of related issuance costs of $7,572........... -- -- 43 --
Issuance of Series D Preferred Stock,
net of related issuance costs of $5,601........... -- 35 -- --
Dividends payable on Series D
Preferred Stock .................................. -- -- -- --
Income tax provision for deferred
compensation ..................................... -- -- -- --
Equity put options ................................ -- -- -- --
Equity put options premium ........................ -- -- -- --
Stock option grants ............................... -- -- -- --
Stock option grants exercised ..................... -- -- -- --
Amortization of deferred compensation ............. -- -- -- --
Net loss .......................................... -- -- -- --
----- --- ----- -----
BALANCE, December 31, 1997 ......................... $10 $35 $137 $ 255
===== === ===== =====

ADDITIONAL ADDITIONAL
PAID-IN PAID-IN
ADDITIONAL CAPITAL - CAPITAL - TOTAL
PAID-IN EQUITY PUT DEFERRED ACCUMULATED STOCKHOLDERS'
CAPITAL OPTIONS COMPENSATION DEFICIT EQUITY
-------------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 ......................... $256,954 $ -- $ (1,129) $ (18,932) $ 237,253
Repurchase of 186,000 shares of
Class A Common Stock ............................. (4,597) -- -- -- (4,599)
Class B Common Stock converted into Class A Common
Stock ............................................ -- -- -- -- --
Series B Preferred Stock converted
into Class A Common Stock ........................ (1) -- -- -- --
Issuance of Class A Common Stock,
net of related issuance costs of $7,572........... 150,978 -- -- -- 151,021
Issuance of Series D Preferred Stock,
net of related issuance costs of $5,601........... 166,864 -- -- -- 166,899
Dividends payable on Series D
Preferred Stock .................................. -- -- -- (2,763) (2,763)
Income tax provision for deferred
compensation ..................................... (240) -- -- -- (240)
Equity put options ................................ (14,179) 23,117 -- -- 8,938
Equity put options premium ........................ (3,365) -- -- -- (3,365)
Stock option grants ............................... 430 -- (430) -- --
Stock option grants exercised ..................... 105 -- -- -- 105
Amortization of deferred compensation ............. -- -- 605 -- 605
Net loss .......................................... -- -- -- (10,566) (10,566)
---------- ------- -------- --------- ---------
BALANCE, December 31, 1997 ......................... $552,949 $23,117 $ (954) $ (32,261) $ 543,288
========== ======= ======== ========= =========
</TABLE>

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

F-6

<PAGE>

PAGE 1 OF 2
-----------

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)

1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................. $ 76 $ 1,131 $ (10,566)
Adjustments to reconcile net income (loss) to net cash flows
from operating activities--
Extraordinary loss .............................................. 8,269 -- 10,115
Amortization of excess syndicated programming ................... -- 3,043 --
Amortization of debt discount ................................... -- -- 4
(Gain) loss on sales of assets .................................. (221) -- 226
Depreciation and amortization of property and equipment ......... 5,400 11,711 18,040
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ......... 45,989 58,530 67,840
Amortization of program contract costs and net realizable
value adjustments .............................................. 29,021 47,797 66,290
Stock-based compensation ........................................ -- 739 1,636
Deferred tax provision (benefit) ................................ (5,089) 2,330 20,582
Realization of deferred gain .................................... (42) -- --
Net effect of change in deferred barter revenues
and deferred barter costs ...................................... 230 (908) 591
Decrease in minority interest ................................... (38) (121) (183)
Changes in assets and liabilities, net of effects of
acquisitions and dispositions ...................................
Increase in accounts receivable, net ............................ (12,245) (41,310) (9,468)
Increase in prepaid expenses and other current assets ........... (273) (217) (591)
Increase in refundable income taxes ............................. -- -- (10,581)
Increase (decrease) in accounts payable and
accrued liabilities ............................................ 7,274 19,941 (4,360)
Decrease in income taxes payable ................................ (2,427) (3,214) (970)
Increase (decrease) in other long-term liabilities .............. -- 297 (921)
Payments on program contracts payable ............................. (19,938) (30,451) (51,059)
--------- --------- ---------
Net cash flows from operating activities ....................... $ 55,986 $ 69,298 $ 96,625
========= ========= =========
</TABLE>

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

F-7

<PAGE>

PAGE 2 OF 2
-----------

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
------------- --------------- ------------
<S> <C> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES ................................. $ 55,986 $ 69,298 $ 96,625
---------- ------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ................................... (1,702) (12,609) (19,425)
Payments for acquisition of television and radio station assets ......... (101,000) (74,593) (90,598)
Payments related to the acquisition of the non-license assets
of River City Broadcasting ............................................ -- (818,083) (2,992)
Payments for acquisition of certain other non-license assets ............ (14,283) (29,532) --
Payments for the purchase of outstanding stock of
Superior Communications, Inc. ......................................... -- (63,504) --
Payments to exercise options to acquire certain FCC licenses ............ -- (6,894) (11,079)
Proceeds from assignment of FCC purchase option. ........................ 4,200 -- 2,000
Purchase option extension payments ...................................... -- (6,960) (15,966)
Payments for consulting and non-compete agreements ...................... (1,000) (50) --
Payments to acquire and exercise purchase options ....................... (10,000) -- --
Distributions from (investments in) joint ventures ...................... 240 (380) 380
Proceeds from disposal of property and equipment ........................ 3,330 -- 470
Payment for WPTT subordinated convertible debenture ..................... (1,000) -- --
Loans to officers and affiliates ........................................ (205) (854) (1,199)
Repayments of loans to officers and affiliates .......................... 2,177 1,562 1,694
Deposits and other costs relating to future acquisitions ................ (77) (328) (82,275)
---------- ------------ ----------
Net cash flows used in investing activities.. ........................ (119,320) (1,012,225) (218,990)
---------- ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing ............... 138,000 982,500 126,500
Repayments of notes payable, commercial bank financing
and capital leases .................................................... (362,928) (110,657) (693,519)
Repayments of notes and capital leases to affiliates .................... (3,171) (1,867) (2,313)
Payments of costs related to financing .................................. (3,200) (20,009) (4,707)
Payments for interest rate derivative agreements.. ...................... -- (851) (474)
Prepayments of excess syndicated program contract liabilities ........... -- (15,116) (1,373)
Repurchases of the Company's Class A Common Stock ....................... -- (748) (4,599)
Payments relating to redemption of 1993 Notes ........................... -- -- (98,101)
Payment of premium and other costs related to
redemption of 1993 Notes .............................................. -- -- (8,407)
Payments for costs related to subsequent year securities offering ....... -- (434) --
Dividends paid on Series D Preferred Stock .............................. -- -- (2,357)
Proceeds from exercise of stock options ................................. -- -- 105
Payment of equity put option premium .................................... -- -- (507)
Net proceeds from issuances of Senior Subordinated Notes. ............... 293,176 -- 438,427
Net proceeds from issuance of Class A Common Stock ...................... 111,461 -- 151,021
Net proceeds from issuance of Series D Preferred Stock .................. -- -- 166,899
Net proceeds from subsidiary trust securities offering .................. -- -- 192,756
---------- ------------ ----------
Net cash flows from financing activities ............................. 173,338 832,818 259,351
---------- ------------ ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ............................................................. 110,004 (110,109) 136,986
CASH AND CASH EQUIVALENTS, beginning of period. .......................... 2,446 112,450 2,341
---------- ------------ ----------
CASH AND CASH EQUIVALENTS, end of period ................................. $ 112,450 $ 2,341 $ 139,327
========== ============ ==========
</TABLE>

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

F-8

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other
consolidated subsidiaries, which are collectively referred to hereafter as "the
Company, Companies or SBG." The Company owns and operates television and radio
stations throughout the United States. Additionally, included in the
accompanying consolidated financial statements are the results of operations of
certain television stations pursuant to local marketing agreements (LMAs) and
radio stations pursuant to joint sales agreements (JSAs).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
all its wholly-owned and majority-owned subsidiaries. Minority interest
represents a minority owner's proportionate share of the equity in two of the
Company's subsidiaries. In addition, the Company uses the equity method of
accounting for 20% to 50% ownership investments. All significant intercompany
transactions and account balances have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses in the
financial statements and in the disclosures of contingent assets and
liabilities. While actual results could differ from those estimates, management
believes that actual results will not be materially different from amounts
provided in the accompanying consolidated financial statements.

Cash Equivalents

Cash equivalents are stated at cost plus accrued interest, which approximates
fair value. Cash equivalents are highly liquid investment grade debt instruments
with an original maturity of three months or less and consist of time deposits
with a number of consumer banks with high credit ratings.

Programming

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

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

F-9

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Barter Arrangements

Certain program contracts provide for the exchange of advertising air time in
lieu of cash payments for the rights to such programming. These contracts are
recorded as the programs are aired at the estimated fair value of the
advertising air time given in exchange for the program rights. Network
programming is excluded from these calculations.

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

Other Assets

Other assets as of December 31, 1996 and 1997 consist of the following (in
thousands):

<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Unamortized debt acquisition costs ................................ $26,453 $ 43,011
Investments in limited partnerships ............................... 3,039 2,850
Notes receivable .................................................. 10,773 11,102
Purchase options and related extension fees ....................... 22,902 27,826
Deposits and other costs relating to future acquisitions .......... 328 82,275
Other ............................................................. 740 831
------- --------
$64,235 $167,895
======= ========

</TABLE>

Non-Compete and Consulting Agreements

The Company has entered into non-compete and consulting agreements with various
parties. These agreements range from two to three years. Amounts paid under
these agreements are amortized over the life of the agreement.

Acquired Intangible Broadcasting Assets

Acquired intangible broadcasting assets are being amortized over periods of 1 to
40 years. These amounts result from the acquisition of certain television and
radio station license and non-license assets (see Note 12). The Company monitors
the individual financial performance of each of the stations and continually
evaluates the realizability of intangible and tangible assets and the existence
of any impairment to its recoverability based on the projected undiscounted cash
flows of the respective stations.

F-10

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Intangible assets, at cost, as of December 31, 1996 and 1997, consist of the
following (in thousands):

<TABLE>
<CAPTION>
AMORTIZATION
PERIOD 1996 1997
--------------- ------------- -------------
<S> <C> <C> <C>
Goodwill ............................... 40 years $ 676,219 $ 755,858
Intangibles related to LMAs ............ 15 years 120,787 128,080
Decaying advertiser base ............... 1 -- 15 years 93,896 95,657
FCC licenses ........................... 25 years 370,533 400,073
Network affiliations ................... 1 -- 25 years 55,966 55,966
Other .................................. 1 -- 40 years 24,057 24,403
---------- ----------
1,341,458 1,460,037
Less- Accumulated amortization ......... (85,155) (138,061)
---------- ----------
$1,256,303 $1,321,976
========== ==========

</TABLE>
Accrued Liabilities

Accrued liabilities consist of the following as of December 31, 1996 and 1997
(in thousands):

1996 1997
---------- ----------
Compensation .......... $10,850 $10,608
Interest .............. 11,915 18,359
Other ................. 12,309 11,565
------- -------
$35,074 $40,532
======= =======

Supplemental Information - Statement of Cash Flows

During 1995, 1996 and 1997 the Company incurred the following transactions (in
thousands):

<TABLE>
<CAPTION>
1995 1996 1997
--------- ---------- ----------
<S> <C> <C> <C>
- - Purchase accounting adjustments related to deferred
taxes .................................................. $ 3,400 $ 18,051 $ --
======= ======== =======
- - Capital lease obligations incurred .................... $ -- $ -- $10,927
======= ======== =======
- - Issuance of Series A Preferred Stock (see Note 12)..... $ -- $125,079 $ --
======= ======== =======
- - Income taxes paid ..................................... $ 7,941 $ 6,837 $ 6,502
======= ======== =======
- - Subsidiary trust minority interest payments ........... $ -- $ -- $17,631
======= ======== =======
- - Interest paid ......................................... $24,770 $ 82,814 $98,521
======= ======== =======
</TABLE>

Local Marketing Agreements

The Company generally enters into LMAs, JSAs and similar arrangements with
stations located in markets in which the Company already owns and operates a
station, and in connection with acquisitions, pending regulatory approval of
transfer of License Assets. Under the terms of these agreements, the Company
makes specified periodic payments to the owner-operator in exchange for the
grant to the Company of the right to program and sell advertising on a specified
portion of the station's inventory of

F-11

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

broadcast time. Nevertheless, as the holder of the Federal Communications
Commission (FCC) license, the owner-operator retains full control and
responsibility for the operation of the station, including control over all
programming broadcast on the station.

Included in the accompanying consolidated statements of operations for the years
ended December 31, 1995, 1996 and 1997, are net revenues of $49.5 million,
$153.0 million (including $103.3 million relating to River City), and $135.0
million (including $71.9 million relating to River City) respectively, that
relate to LMAs, JSAs and time brokerage agreements ("TBAs").

In connection with the River City Acquisition, the Company entered into an LMA
in the form of TBAs with River City and the owner of KRRT with respect to each
of the nine television and 21 radio stations with respect to which the Company
acquired Non-License Assets. During 1997, the Company exercised its options and
now owns the License Assets of (or has entered into an LMA with respect to) all
of these stations other than WTTV-TV and WTTK-TV in Indianapolis, Indiana.

Reclassifications

Certain reclassifications have been made to the prior years' financial
statements to conform with the current year presentation.

2. PROPERTY AND EQUIPMENT:

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

<TABLE>

<S> <C>

Buildings and improvements .................................... 10 -- 35 years
Station equipment ............................................. 5 -- 10 years
Office furniture and equipment ................................ 5 -- 10 years
Leasehold improvements ........................................ 10 -- 31 years
Automotive equipment .......................................... 3 -- 5 years
Property and equipment and autos under capital leases ......... Shorter of 10 years
or the lease term
</TABLE>

Property and equipment consisted of the following as of December 31, 1996 and
1997 (in thousands):

1996 1997
------------ ------------
Land and improvements .......................... $ 9,795 $ 10,225
Buildings and improvements ..................... 39,008 41,436
Station equipment .............................. 112,994 130,586
Office furniture and equipment ................. 10,140 14,037
Leasehold improvements ......................... 3,377 8,457
Automotive equipment ........................... 3,280 4,090
Construction in progress ....................... 6,923 --
--------- ---------
185,517 208,831
Less- Accumulated depreciation and amortization (31,184) (47,117)
--------- ---------
$ 154,333 $ 161,714
========= =========

3. INTEREST RATE DERIVATIVE AGREEMENTS:

The Company entered into interest rate derivative agreements to reduce the
impact of changing interest rates on its floating rate debt, primarily relating
to the 1997 Bank Credit Agreement (see Note 4 ). The 1997 Bank Credit Agreement,
as amended and restated, requires the Company to enter into Interest

F-12

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Rate Protection Agreements at rates not to exceed 9.5% per annum as to a
notional principal amount at least equal to 60% of the Tranche A term loans
scheduled to be outstanding from time to time and at rates not to exceed 9.75%
per annum as to a notional principal amount of 60% of the aggregate amount of
Tranche B scheduled to be outstanding from time to time.

As of December 31, 1997, the Company had several interest rate swap agreements
relating to the Company's indebtedness which expire from June 10, 1998 to July
15, 2007. The swap agreements set rates in the range of 5.64% to 9.0%. The
notional amounts related to these agreements were $1.0 billion at December 31,
1997, and decrease to $200 million through the expiration dates. The Company has
no intentions of terminating these instruments prior to their expiration dates
unless it were to prepay a portion of its bank debt.

The floating interest rates are based upon the three month London Interbank
Offered Rate (LIBOR) rate, and the measurement and settlement is performed
quarterly. Settlements of these agreements are recorded as adjustments to
interest expense in the relevant periods. Premiums paid under these agreements
were approximately $1.1 million in 1994, $851,000 in 1996 and $474,000 in 1997
and are amortized over the life of the agreements as a component of interest
expense. The counter parties to these agreements are major national financial
institutions. The Company estimates the aggregate cost to retire these
instruments at December 31, 1997 to be $726,000.

4. NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

FIRST AMENDED AND RESTATED BANK CREDIT AGREEMENT
------------------------------------------------

In connection with the 1994 Acquisitions, the Company amended and restated its
Bank Credit Agreement (the "1994 Bank Credit Agreement"). The 1994 Bank Credit
Agreement consisted of three classes: Facility A Revolving Credit and Term Loan,
Facility B Credit Loan and Facility C Term Loan. In August 1995, the Company
utilized the net proceeds from the 1995 Notes discussed below to repay amounts
outstanding under the 1994 Bank Credit Agreement.

The weighted average interest rates during 1995, while amounts were outstanding
and as of August 28, 1995 (when outstanding indebtedness relating to Bank Credit
Agreement were repaid) and December 31, 1995 were 8.44% and 7.63%, respectively.
Interest expense relating to the Bank Credit Agreement was $15.6 million for the
year ended December 31, 1995. Simultaneously with the acquisition of the
non-license assets of River City, the 1994 Bank Credit Agreement was amended and
restated with new terms as outlined below.

SECOND AMENDED AND RESTATED BANK CREDIT AGREEMENT
-------------------------------------------------

In order to finance the acquisition of the non-license assets of River City and
potential future acquisitions, the Company amended and restated its Bank Credit
Agreement on May 31, 1996 (the "1996 Bank Credit Agreement"). The 1996 Bank
Credit Agreement consisted of three classes: Tranche A Term Loan, Tranche B Term
Loan and a Revolving Credit Commitment.

The Tranche A Term Loan was a term loan in a principal amount not to exceed $550
million and was scheduled to be paid in quarterly installments beginning
December 31, 1996 through December 31, 2002. The Tranche B Term Loan was a term
loan in a principal amount not to exceed $200 million and was scheduled to be
paid in quarterly installments beginning December 31, 1996 through November
2003. The Revolving Credit Commitment was a revolving credit facility in a
principal amount not to exceed $250 million and was scheduled to have reduced
availability quarterly beginning March 31, 1999 through November 30, 2003. The
Company incurred amendment acquisition costs of approximately $20 million
associated with this indebtedness which are being amortized over the life of the
debt.

F-13

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

The applicable interest rate for the Tranche A Term Loan and the Revolving
Credit Commitment was either LIBOR plus 1.25% to 2.5% or the base rate plus zero
to 1.25%. The applicable interest rate for the Tranche A Term Loan and the
Revolving Credit Commitment was adjusted based on the ratio of total debt to
four quarters trailing earnings before interest, taxes, depreciation and
amortization. The applicable interest rate for Tranche B was either LIBOR plus
2.75% or the base rate plus 1.75%. The weighted average interest rates for
outstanding indebtedness relating to the 1996 Bank Credit Agreement during 1996
and as of December 31, 1996, were 8.08% and 8.12%, respectively. Interest
expense relating to the 1996 Bank Credit Agreement was $40.4 million for the
year ended December 31, 1996. The Company amended and restated the 1996 Bank
Credit Agreement as discussed below.

THIRD AMENDED AND RESTATED BANK CREDIT AGREEMENT
------------------------------------------------

In order to expand its capacity and obtain more favorable terms with its
syndicate of banks, the Company amended and restated its Bank Credit Agreement
in May 1997 (the "1997 Bank Credit Agreement"). In connection with the amendment
and restatement, the Company incurred amendment acquisition costs of
approximately $4.7 million, which are being amortized over the life of the debt.

Contemporaneously with the Preferred Stock Offering and the Common Stock
Offering (see Notes 15 and 16) consummated in September 1997, the Company
amended its 1997 Bank Credit Agreement. The 1997 Bank Credit Agreement, as
amended, consists of two classes: Tranche A Term Loan and a Revolving Credit
Commitment. The Tranche A Term Loan is a term loan in a principal amount not to
exceed $325 million and is scheduled to be paid in quarterly installments
through December 31, 2004. The Revolving Credit Commitment is a revolving credit
facility in a principal amount not to exceed $675 million and is scheduled to
have reduced availability quarterly through December 31, 2004. As of December
31, 1997, outstanding indebtedness under the Tranche A Term Loan and the
Revolving Credit Commitment were $307.1 million and $-0- respectively.

The applicable interest rate for the Tranche A Term Loan and the Revolving
Credit Commitment is either LIBOR plus 0.5% to 1.875% or the base rate plus zero
to 0.625%. The applicable interest rate for the Tranche A Term Loan and the
Revolving Credit Commitment is adjusted based on the ratio of total debt to four
quarters' trailing earnings before interest, taxes, depreciation and
amortization. The weighted average interest rates for outstanding indebtedness
relating to the 1997 Bank Credit Agreement during 1997 and as of December 31,
1997 were 7.43% and 8.5%, respectively. The interest expense relating to the
1997 Bank Credit Agreement was $46.7 million for the year ended December 31,
1997.

The Company is required to maintain certain debt covenants in connection with
the 1997 Bank Credit Agreement. As of December 31, 1997, the Company is in
compliance with all debt covenants.

8 3/4% SENIOR SUBORDINATED NOTES DUE 2007:
------------------------------------------

In December 1997, the Company completed an issuance of $250 million aggregate
principal amount of 8 3/4% Senior Subordinated Notes due 2007 (the "8 3/4%
Notes") pursuant to the Shelf Registration statement (see Note 14) and generated
net proceeds to the Company of $242.8 million. Of the net proceeds from the
issuance, $106.2 million was utilized to tender the Company's 1993 Notes with
the remainder retained for general corporate purposes which may include payments
relating to future acquisitions.

Interest on the 8 3/4% Notes is payable semiannually on June 15 and December 15
of each year, commencing June 15, 1998. Interest expense for the year ended
December 31, 1997 was $0.9 million. The 8 3/4% Notes are issued under an
Indenture among SBG, its subsidiaries (the guarantors) and the trustee. Costs
associated with the offering totaled $5.8 million, including an underwriting
discount of $5.0 million. These costs were capitalized and are being amortized
over the life of the debt.

Based upon the quoted market price, the fair value of the 8 3/4% Notes as of
December 31, 1997 is $250.6 million.

F-14

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

9% SENIOR SUBORDINATED NOTES DUE 2007:
--------------------------------------

In July 1997, the Company completed an issuance of $200 million aggregate
principal amount of 9% Senior Subordinated Notes due 2007 (the "9% Notes"). The
9% Notes were sold to "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act) and a limited number of institutional "accredited
investors" and the offering was exempt from registration under the Securities
Act, pursuant to Section 4(2) of the Securities Act and Rule 144A thereunder.
The Company utilized $162.5 million of the approximately $195.6 million net
proceeds of the private issuance to repay outstanding revolving credit
indebtedness under the 1997 Bank Credit Agreement and utilized the remainder to
pay a portion of the $63 million cash down payment relating to the Heritage
Acquisition (see Note 12).

Pursuant to a Registration Rights Agreement entered into in connection with the
private placement of the 9% Notes, the Company offered to holders of the 9%
Notes the right to exchange the 9% Notes with new 9% Notes (the "Notes Exchange
Offer") having the same terms as the existing notes, except that the exchange of
the new Notes for the existing Notes will be registered under the Securities
Act. On October 8, 1997 the Company filed a registration statement on Form S-4
with the Securities and Exchange Commission (the "Commission") for the purpose
of registering the new 9% Notes to be offered in exchange for the aforementioned
existing 9% Notes. The Company's Notes Exchange Offer became effective on
October 10, 1997 and was closed on November 7, 1997, at which time all of the
existing 9% Notes were exchanged for new 9% Notes.

Interest on the 9% Notes is payable semiannually on January 15 and July 15 of
each year, commencing January 15, 1998. Interest expense for the year ended
December 31, 1997 was $9.0 million. The 9% Notes are issued under an Indenture
among SBG, its subsidiaries (the guarantors) and the trustee. Costs associated
with the offering totaled $4.8 million, including an underwriting discount of
$4.0 million. These costs were capitalized and are being amortized over the life
of the debt.

Based upon the quoted market price, the fair value of the 9% Notes as of
December 31, 1997 is $206.4 million.

10% SENIOR SUBORDINATED NOTES DUE 2005
--------------------------------------

In August 1995, the Company completed an issuance of $300 million aggregate
principal amount of 10% Senior Subordinated Notes (the "1995 Notes"), due 2005,
generating net proceeds to the Company of $293.2 million. The net proceeds of
this offering were utilized to repay outstanding indebtedness under the then
existing Bank Credit Agreement of $201.8 million with the remainder being
retained and eventually utilized to make payments related to certain
acquisitions consummated during 1996. In conjunction with the repayment of
outstanding indebtedness under the Bank Credit Agreement, the Company recorded
an extraordinary loss of $4.9 million, net of a tax benefit of $3.4 million.

Interest on the Notes is payable semiannually on March 30 and September 30 of
each year, commencing March 30, 1996. Interest expense for the years ended
December 31, 1996 and 1997, was $30.0 million and $30.0 million, respectively.
The notes are issued under an indenture among SBG, its subsidiaries (the
guarantors) and the trustee. Costs associated with the offering totaled $6.8
million, including an underwriting discount of $6.0 million and are being
amortized over the life of the debt.

Based upon the quoted market price, the fair value of the Notes as of December
31, 1997 is $322.2 million.

10% SENIOR SUBORDINATED NOTES DUE 2003 AND 1997 TENDER OFFER
------------------------------------------------------------

In December 1993, the Company completed an issuance of $200 million aggregate
principal amount of 10% Senior Subordinated Notes (the "1993 Notes"), due 2003.
Subsequently, the Company determined that a redemption of $100.0 million was
required. This redemption and a refund of $1.0 million of fees from the
underwriters took place in the first quarter of 1994.

F-15

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

In December 1997, the Company completed a tender offer of $98.1 million
aggregate principal amount of the 1993 Notes (the "Tender Offer"). Total
consideration per $1,000 principal amount note tendered was $1,082.08 resulting
in total consideration paid to consummate the Tender Offer of $106.2 million. In
conjunction with the Tender Offer, the Company recorded an extraordinary loss of
$6.1 million, net of a tax benefit of $4.0 million.

Interest on the Notes not tendered is payable semiannually on June 15 and
December 15 of each year. Interest expense for the years ended December 31,
1995, 1996 and 1997, was $10.0 million, $10.0 million and $9.6 million,
respectively. The Notes are issued under an Indenture among SBG, its
subsidiaries (the guarantors) and the trustee.

SUMMARY
- -------

Notes payable and commercial bank financing consisted of the following as of
December 31, 1996 and 1997 (in thousands):

<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Bank Credit Agreement, Tranche A Term Loan .......................... $ 520,000 $ 307,125
Bank Credit Agreement, Tranche B Term Loan .......................... 198,500 --
Bank Credit Agreement, Revolving Credit Commitment .................. 155,000 --
8 3/4% Senior Subordinated Notes, due 2007 ......................... -- 250,000
9% Senior Subordinated Notes, due 2007 .............................. -- 200,000
10% Senior Subordinated Notes, due 2003 ............................. 100,000 1,899
10% Senior Subordinated Notes, due 2005 ............................. 300,000 300,000
Installment note for certain real estate interest at 8.0% ........... -- 101
Unsecured installment notes to former minority stockholders of
CRI and WBFF, interest at 18% ...................................... 644 --
---------- ----------
1,274,144 1,059,125
Less: Discount on 8 3/4% Senior Subordinated Notes, due 2007 ........ -- (976)
Less: Current portion ............................................... (62,144) (35,215)
---------- ----------
$1,212,000 $1,022,934
========== ==========

</TABLE>

F-16

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

The Revolving Credit Commitment is a revolving credit facility in a principal
amount not to exceed $675 million and is scheduled to have reduced availability
quarterly beginning March 31, 1999 through December 31, 2004. Indebtedness under
Tranche A of the 1997 Bank Credit Agreement and notes payable as of December 31,
1997, mature as follows (in thousands):

<TABLE>
<S> <C>
1998 ................................................................ $ 35,215
1999 ................................................................ 37,924
2000 ................................................................ 48,758
2001 ................................................................ 48,759
2002 ................................................................ 48,759
2003 and thereafter ................................................. 839,710
----------
1,059,125
Less: Discount on 8 3/4% Senior Subordinated Notes, due 2007 ........ (976)
----------
$1,058,149
==========

</TABLE>

Substantially all of the Company's assets have been pledged as security for
notes payable and commercial bank financing. See Note 23 for Guarantor and
Non-Guarantor Subsidiaries under the Company's Indentures.

5. NOTES AND CAPITAL LEASES PAYABLE TO AFFILIATES:

Notes and capital leases payable to affiliates consisted of the following as of
December 31, 1996 and 1997 (in thousands):

1996 1997
---------- -----------
<S> <C> <C>
Subordinated installment notes payable to former majority owners,
interest at 8.75%, principal payments in varying amounts due annually
beginning October 1991, with a balloon payment
due at maturity in May 2005 ........................................... $ 10,448 $ 9,574
Capital lease for building, interest at 17.5% .......................... 1,372 1,198
Capital leases for broadcasting tower facilities, interest rates aver-
aging 10% ............................................................. 249 3,720
Capitalization of time brokerage agreements, interest at 6.73% ......... -- 6,611
Capital leases for building and tower, interest at 8.25% ............... 1,890 1,470
-------- --------
13,959 22,573
Less: Current portion .................................................. (1,774) (3,073)
-------- --------
$ 12,185 $ 19,500
======== ========
</TABLE>

F-17
<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Notes and capital leases payable to affiliates, as of December 31, 1997, mature
as follows (in thousands):

<TABLE>

<S> <C>
1998 ............................................................. $ 4,694
1999 ............................................................. 4,696
2000 ............................................................. 4,615
2001 ............................................................. 4,044
2002 ............................................................. 2,854
2003 and thereafter .............................................. 7,503
--------
Total minimum payments due ....................................... 28,406
Less: Amount representing interest ............................... (5,833)
--------
Present value of future notes and capital lease payments ......... $ 22,573
========
</TABLE>
6. PROGRAM CONTRACTS PAYABLE:

Future payments required under program contracts payable as of December 31,
1997, are as follows (in thousands):

1998 ................................................... $ 66,404
1999 ................................................... 40,026
2000 ................................................... 20,375
2001 ................................................... 1,770
2002 ................................................... 208
2003 and thereafter .................................... 29
---------
128,812
Less: Current portion .................................. (66,404)
---------
Long-term portion of program contracts payable ......... $ 62,408
=========

Included in the current portion amounts are payments due in arrears of $14.3
million. In addition, the Companies have entered into noncancelable commitments
for future program rights aggregating $56.9 million as of December 31, 1997.

The Company has estimated the fair value of its program contract payables and
noncancelable commitments at approximately $102.7 million and $43.1 million,
respectively, as of December 31, 1996, and $118.9 million and $46.7 million,
respectively, at December 31, 1997, based on future cash flows discounted at the
Company's current borrowing rate.

7. PREPAYMENT OF SYNDICATED PROGRAM CONTRACT LIABILITIES:

In connection with the 1996 acquisitions (see Note 12), the Company assumed
certain syndicated program contracts payable for which the underlying value of
the associated syndicated program assets was determined, by management, to be of
little or no value. The Company negotiated the prepayment of syndicated program
contracts payable for certain of the 1996 acquisitions, as well as certain other
of the Company's subsidiaries. During the years ended December 31, 1996 and
1997, the Company made cash payments totaling $15.1 million and $1.4 million,
respectively, relating to these negotiations. For subsidiaries owned prior to
1996, the Company recognized related amortization of excess syndicated
programming of $3.0 million for the year ended December 31, 1996.

F-18

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

8. RELATED PARTY TRANSACTIONS:

In connection with the start-up of an affiliate in 1990, certain SBG Class B
Stockholders issued a note allowing them to borrow up to $3.0 million from the
Company. This note was amended and restated June 1, 1994, to a term loan bearing
interest of 6.88% with quarterly principal payments beginning March 31, 1996
through December 31, 1999. As of December 31, 1996 and 1997, the balance
outstanding was approximately $1.8 and $1.3 million, respectively.

During the year ended December 31, 1993, the Company loaned Gerstell Development
Limited Partnership (a partnership owned by Class B Stockholders) $2.1 million.
The note bears interest at 6.18%, with principal payments beginning on November
1, 1994, and a final maturity date of October 1, 2013. As of December 31, 1996
and 1997, the balance outstanding was approximately $1.9 million.

Concurrently with the initial public offering (see Note 13), the Company
acquired options from certain stockholders of Glencairn that will grant the
Company the right to acquire, subject to applicable FCC rules and regulations,
up to 97% of the capital stock of Glencairn. The Glencairn options were
purchased by the Company for nominal consideration and will be exercisable only
upon payment of an aggregate price equal to Glencairn's cost for the underlying
stations, plus a 10% annual return. Glencairn is the owner-operator and FCC
licensee of WNUV in Baltimore, WVTV in Milwaukee, WRDC in Raleigh/Durham, WABM
in Birmingham, KRRT in Kerrville and WFBC in Asheville/Greenville/Spartanburg.
The Company has entered into five-year LMA agreements (with five-year renewal
options) with Glencairn pursuant to which the Company provides programming to
Glencairn for airing on WNUV, WVTV, WRDC, WABM, KRRT and WFBC during the hours
of 6:00 a.m. to 2:00 a.m. each day and has the right to sell advertising during
this period. During the years ended December 31, 1995, 1996 and 1997, the
Company made payments of $5.6 million, $7.3 million and $8.4 million
respectively, to Glencairn under these LMA agreements.

During the years ended December 31, 1995, 1996 and 1997, the Company from time
to time entered into charter arrangements to lease airplanes owned by certain
Class B Stockholders. During the years ended December 31, 1995, 1996 and 1997,
the Company incurred expenses of approximately $489,000, $336,000 and $736,000
related to these arrangements, respectively.

In May 1996, the Company acquired certain assets from River City, obtained
options to acquire other assets from River City and entered into an LMA to
provide programming services to certain television and radio stations, of which
River City is the owner of the License Assets. Certain individuals who have
direct or indirect beneficial owners of equity interests in River City are
affiliates of the Company. During the years ended December 31, 1996 and 1997,
the Company incurred LMA expenses relating to River City of $1.4 million and
$896,000, respectively.

In September 1996, the Company entered into a five-year agreement with River
City pursuant to which River City will provide to the Company certain production
services. Pursuant to this agreement, River City will provide certain services
to the Company in return for an annual fee of $416,000, subject to certain
adjustments on each anniversary date. During the years ended December 31, 1996
and 1997, the Company incurred expenses relating to this agreement of $166,000
and $397,000, respectively.

An individual who is an affiliate of the Company is the owner of 100% of the
common stock of Keymarket of South Carolina, Inc. ("KSC"). The Company has
exercised its option to acquire all of the assets of KSC for consideration of
forgiveness of KSC debt in an aggregate principal amount of approximately $7.4
million, plus a payment of approximately $1.0 million, less certain adjustments.
The Company will close this transaction upon FCC approval which is anticipated
to occur during 1998. The Company also purchased two properties from this
affiliate for an aggregate purchase price of approximately $1.75 million as
required by certain leases assigned to the Company in connection with the River
City acquisition.

During May 1996, the Company, along with the Class B Stockholders, formed Beaver
Dam Limited Partnership (BDLP), of which the Company owned a 45% interest. BDLP
was formed for the purpose of

F-19

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

constructing and owning a building which may be the site for the Company's
corporate headquarters. The Company made capital contributions of approximately
$380,000. During 1997, the Partnership made a liquidating distribution to the
Company of approximately $380,000 and the Company no longer owns an interest in
BDLP.

Certain assets used by the Company's operating subsidiaries are leased from
Cunningham, KIG and Gerstell (entities owned by the Class B Stockholders). Lease
payments made to these entities were $1.3 million, $1.3 million, and $1.4
million for the years ended December 31, 1995, 1996 and 1997, respectively.

9. INCOME TAXES:

The Company files a consolidated federal income tax return and separate company
state tax returns. The provision (benefit) for income taxes consists of the
following as of December 31, 1995, 1996 and 1997 (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
----------- --------- -------------
<S> <C> <C> <C>
Provision for income taxes before extraordinary item .......... $ 5,200 $6,936 $ 15,984
Income tax effect of extraordinary item ....................... (3,357) -- (4,045)
-------- ------ ---------
$ 1,843 $6,936 $ 11,939
======== ====== =========
Current:
Federal ...................................................... $ 5,374 $ 127 $ (10,581)
State ........................................................ 1,558 4,479 1,938
-------- ------ ---------
6,932 4,606 (8,643)
-------- ------ ---------
Deferred:
Federal ...................................................... (4,119) 2,065 18,177
State ........................................................ (970) 265 2,405
-------- ------ ---------
(5,089) 2,330 20,582
-------- ------ ---------
$ 1,843 $6,936 $ 11,939
======== ====== =========
</TABLE>

The following is a reconciliation of federal income taxes at the applicable
statutory rate to the recorded provision (benefit):

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Statutory federal income taxes ............................................ 34.0% 34.0% 34.0%
Adjustments-
State income and franchise taxes, net of federal effect .................. 2.8 16.7 6.3
Goodwill amortization .................................................... 16.4 24.3 17.0
Non-deductible expense items.. ........................................... 3.7 6.1 8.5
Tax liability related to dividends on Parent Preferred Stock (a) ......... -- -- 70.3
Other .................................................................... (5.9) 4.9 3.0
---- ---- -----
Provision for income taxes ................................................ 51.0% 86.0% 139.1%
==== ==== =====
</TABLE>
- ----------

(a) In March 1997, the Company issued the HYTOPS securities (see Note 17). In
connection with this transaction, Sinclair Broadcast Group, Inc. (the
"Parent") issued $206.2 million of Series C Preferred Stock (the "Parent
Preferred Stock") to KDSM, Inc., a wholly owned subsidiary. Parent Preferred
Stock dividends paid to KDSM, Inc. are considered taxable income for Federal
tax purposes and not considered income for book purposes. Also for Federal
tax purposes, KDSM, Inc. is allowed a tax deduction for dividends received
on the Parent Preferred Stock in an amount equal to Parent Preferred Stock
dividends received in each taxable year limited to the extent that the
Parent's consolidated group has "earnings and profits". To the extent that
dividends received by KDSM, Inc. are in excess of the Parent's consolidated
group earnings and profits, the Parent will reduce its tax basis in the
Parent Preferred Stock which gives rise to a deferred tax liability (to be
recognized upon redemption) and KDSM, Inc.'s dividend income is treated as a
permanent difference between taxable income and book income. During the year
ended December 31, 1997, the Parent did not generate earnings and profits
which resulted in a reduction in basis of the Parent's Series C Preferred
Stock of $20.8 million which generated a related deferred tax liability of
$8.4 million.

F-20

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Temporary differences between the financial reporting carrying amounts and the
tax basis of assets and liabilities give rise to deferred taxes. The Company had
a net deferred tax asset and deferred tax liability of $782,000 and $21.5
million as of December 31, 1996 and 1997, respectively. The realization of
deferred tax assets is contingent upon the Company's ability to generate
sufficient future taxable income to realize the future tax benefits associated
with the net deferred tax asset. Management believes that deferred assets will
be realized through future operating results.

The Company has total available Federal NOL's of approximately $57.3 million as
of December 31, 1997, which expire during various years from 2004 to 2012. These
NOL's are recorded within refundable income taxes and deferred taxes in the
accompanying Consolidated Balance Sheet as of December 31, 1997. Certain of
these NOL's are limited to use within a specific entity, and certain NOL's are
subject to annual limitations under Internal Revenue Code Section 382 and
similar state provisions.

Total deferred tax assets and deferred tax liabilities as of December 31, 1996
and 1997, including the effects of businesses acquired, and the sources of the
difference between financial accounting and tax bases of the Company's assets
and liabilities which give rise to the deferred tax assets and deferred tax
liabilities and the tax effects of each are as follows (in thousands):

<TABLE>
<CAPTION>
1996 1997
---------- ---------
<S> <C> <C>
Deferred Tax Assets:
Accruals and reserves ................................................. $ 2,195 $ 3,015
Loss on disposal of fixed assets ...................................... -- 148
Net operating losses .................................................. 4,829 10,435
Program contracts ..................................................... 2,734 3,410
Other ................................................................. 713 903
------- -------
$10,471 $17,911
======= =======
Deferred Tax Liabilities:

FCC license ........................................................... $ 2,613 $ 5,346
Parent Preferred Stock deferred tax liability [see (a) above] ......... -- 8,388
Hedging instruments. .................................................. 188 15
Fixed assets and intangibles .......................................... 4,430 23,572
Capital lease accounting .............................................. 1,304 1,647
Affiliation agreement.. ............................................... 691 --
Investment in partnerships. ........................................... 209 420
Other ................................................................. 254 65
------- -------
$ 9,689 $39,453
======= =======

</TABLE>
During 1996, the Company made a $1.1 million deferred tax adjustment to decrease
its deferred tax asset and increase goodwill under the purchase accounting
guidelines of APB 16 and in accordance with SFAS 109 related to the opening
deferred tax asset balances of certain 1995 acquisitions.

10. EMPLOYEE BENEFIT PLAN:

The Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and trust (the
"SBG Plan") covers eligible employees of the Company. Contributions made to the
SBG Plan include an employee elected salary reduction amount, company matching
contributions and a discretionary amount determined each year by the Board of
Directors. The Company's 401(k) expense for the years ended December 31, 1995,
1996 and 1997, was $271,000, $657,000 and $1.0 million, respectively. There were
no discretionary contributions during these periods. During December 1997, the
Company registered 400,000 shares of its Class "A" Common Stock with the
Securities and Exchange Commission (the "Commission") to be issued as a matching
contribution for the 1997 plan year and subsequent plan years.

F-21

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

11. CONTINGENCIES AND OTHER COMMITMENTS:

LITIGATION
----------

Lawsuits and claims are filed against the Company from time to time in the
ordinary course of business. These actions are in various preliminary stages,
and no judgments or decisions have been rendered by hearing boards or courts.
Management, after reviewing developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the Company's financial position or results of operations.

OPERATING LEASES
----------------

The Company has entered into operating leases for certain property and equipment
under terms ranging from three to ten years. The rent expense under these
leases, as well as certain leases under month-to-month arrangements, for the
years ended December 31, 1995, 1996 and 1997, aggregated approximately $1.1
million, $3.1 million and $3.9 million, respectively.

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

1998 ........................ $ 3,427
1999 ........................ 2,226
2000 ........................ 1,583
2001 ........................ 1,382
2002 ........................ 1,172
2003 and thereafter ......... 4,988
-------
$14,778
=======

12. ACQUISITIONS:

1995 ACQUISITIONS AND DISPOSITIONS
----------------------------------

In January and May 1995, the Company acquired the non-license and license
assets, respectively, of WTVZ in Norfolk, Virginia for a purchase price of $49.0
million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets, acquired intangible broadcasting assets and other intangible assets for
$1.4 million, $12.6 million and $35.0 million, respectively, based upon an
independent appraisal. Intangible assets are being amortized over 1 to 40 years.

In January 1995, the Company acquired the license and non-license assets of the
Paramount Station Group of Raleigh/Durham, Inc. which owned and operated WLFL in
Raleigh/Durham, North Carolina for $55.5 million, plus the assumption of $3.7
million in liabilities. The acquisition was accounted for under the purchase
method of accounting whereby the purchase price was allocated to property and
programming assets, acquired intangible broadcasting assets and other intangible
assets for $8.6 million, $15.9 million and $34.7 million, respectively, based
upon an independent appraisal. Intangible assets are being amortized over
periods of 1 to 40 years.

On March 31, 1995, the Company exercised its option to acquire 100% of the
voting stock of FSFA for the exercise price of $100. FSFA was merged into WLFL,
Inc. and became a wholly-owned subsidiary of the Company. Simultaneously, the
Company sold the license assets of FSFA to Glencairn for $2.0 million, and
entered into a five-year LMA (with a five-year renewal option) with Glencairn
(see Note 8).

F-22

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

On May 5, 1995, Keyser Communications, Inc. (KCI), an affiliated entity
wholly-owned by the stockholders of the Company, was merged into the Company for
common stock. Certain assets and liabilities of KCI (other than programming
items, an LMA agreement and consulting agreements), were distributed to the KCI
shareholders immediately prior to the merger. The merger of KCI is being treated
as a reorganization and has been accounted for as a pooling of interests
transaction. Accordingly, the consolidated financial statements for all periods
presented have been restated to include the accounts of KCI.

In July 1995, the Company acquired the non-license assets of WABM in Birmingham,
Alabama for a purchase price of $2.5 million. The acquisition was accounted for
under the purchase method of accounting whereby $1.1 million of the purchase
price was allocated to property and program assets, based upon an independent
appraisal. The excess of the purchase price over the acquired assets of
approximately $1.4 million was allocated to other intangible assets and is being
amortized over 15 years. Simultaneously with the purchase, the Company entered
into a five-year LMA agreement (with a five-year renewal option) with Glencairn.

In November 1995, the Company acquired the non-license assets of WDBB in
Tuscaloosa, Alabama for a purchase price of $400,000. In addition, the Company
made "Option Grant Payments" of $11.3 million to certain parties for options to
purchase the issued and outstanding stock of WDBB, Inc., which holds the license
assets of WDBB. The option agreement further provides for the payment of option
grant installments of $2.6 million over five years and a final option exercise
price of $100,000. The acquisition was accounted for under the purchase method
of accounting whereby $11.1 million was allocated to the property and program
assets based upon an independent appraisal. The total of Option Grant Payments
paid and grant installments accrued of $14.0 million was allocated to other
intangible assets and is being amortized over 15 years.

1996 ACQUISITIONS
- -----------------

RIVER CITY ACQUISITION

In April 1996, the Company entered into an agreement to purchase certain
non-license assets of River City. In May 1996, the Company closed the
transaction for a purchase price of $967.1 million, providing as consideration
1,150,000 shares of Series A Convertible Preferred Stock with a fair market
value of $125.1 million, 1,382,435 stock options with a fair market value of
$23.9 million and cash payments totaling $818.1 million. The Company utilized
indebtedness under its Bank Credit Agreement to finance the transaction. The
acquisition was accounted for under the purchase method of accounting whereby
the purchase price was allocated to property and programming assets, acquired
intangible broadcasting assets and other intangible assets for $82.8 million,
$375.6 million and $508.7 million, respectively, based upon an independent
appraisal. Intangible assets are being amortized over 1 to 40 years.

Simultaneously, the Company entered into option agreements to purchase certain
license assets for an aggregate option exercise price of $20 million. In
September 1996, after receiving FCC approval for license transfer, the Company
made a cash payment of $6.9 million to acquire certain radio station FCC
licenses. During 1997, the Company exercised its options to acquire certain
other FCC licenses and now owns all of the License Assets (or has entered into
an LMA with respect to) all of the television and radio stations with respect to
which it acquired non-license assets from River City, other than WTTV-TV and
WTTK-TV in Indianapolis, Indiana.

Also, simultaneously with the acquisition, the Company entered into an option
agreement to purchase the license and non-license assets of WSYX-TV in Columbus,
Ohio. The option purchase price for this television station is $100 million plus
the amount of River City indebtedness secured by the WSYX assets on the exercise
date (not to exceed the amount at the date of closing of $135 million). Pursuant
to

F-23

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

the WSYX option agreement, the Company is required to make certain "Option
Extension Fees", as defined. These fees are required to begin quarterly
beginning with December 31, 1996, through the earlier of the "Option Grant Date"
or the expiration date of June 30, 1999. The Option Extension Fees are
calculated as 8% per annum of the option purchase price through the first
anniversary of the Option Grant Date, 15% per annum of the option purchase price
through the second anniversary of the Option Grant Date and 25% per annum of the
option purchase price through the expiration of the WSYX option agreement. As of
December 31, 1997, the Company incurred Option Extension Fees and other costs
relating to WSYX-TV totaling $22.9 million.

In conjunction with the River City acquisition, the Company entered into an
agreement to purchase the non-license assets of KRRT, Inc., a television station
in San Antonio, Texas, for a purchase price of $29.5 million. The acquisition
was accounted for under the purchase method of accounting whereby the purchase
price was allocated to property and programming assets, acquired intangible
broadcasting assets and other intangible assets for $3.8 million, $0.4 million
and $25.3 million, respectively, based upon an independent appraisal. Intangible
assets are being amortized over 1 to 15 years.

In connection with the River City acquisition, the Company consummated the
following transactions concurrent with or subsequent to the closing:

1. In June 1996, the Board of Directors of the Company adopted, upon approval
of the stockholders by proxy, an amendment to the Company's amended and
restated charter. This amendment increased the number of Class A Common
Stock shares authorized to be issued by the Company from 35,000,000 shares
to 100,000,000 shares. The amendment also increased the number of shares of
Preferred Stock authorized from 5,000,000 shares to 10,000,000 shares.

2. Series A Preferred Stock -- As partial consideration for the acquisition of
the non-license assets of River City, the Company issued 1,150,000 shares of
Series A Preferred Stock. In June 1996, the Board of Directors of the
Company adopted, upon approval of the stockholders by proxy, an amendment to
the Company's amended and restated charter at which time Series A Preferred
Stock was exchanged for and converted into Series B Preferred Stock. The
Company recorded the issuance of Series A Preferred Stock based on the fair
market value at the date the River City acquisition was announced at the
exchange rate of 3.64 shares of Class A Common Stock for each share of
Series A Preferred Stock.

3. Series B Preferred Stock -- Shares of Series B Preferred Stock are
convertible at any time into shares of Class A Common Stock, with each share
of Series B Preferred Stock convertible into approximately 3.64 shares of
Series A Common Stock. The Company may redeem shares of Series B Preferred
Stock only after the occurrence of certain events. If the Company seeks to
redeem shares of Series B Preferred Stock and the stockholder elects to
retain the shares, the shares will automatically be converted into common
stock on the proposed redemption date. All shares of Series B Preferred
Stock remaining outstanding as of May 31, 2001, will automatically convert
into Class A Common Stock. Series B Preferred Stock is entitled to 3.64
votes on all matters with respect to which Class A Common Stock has a vote.

F-24

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

4. Stock Options and Awards:

Long-Term Incentive Plan-

In June 1996, the Board of Directors adopted, upon approval of the
stockholders by proxy, the 1996 Long-Term Incentive Plan of the Company (the
"LTIP"). The purpose of the LTIP is to reward key individuals for making
major contributions to the success of the Company and its subsidiaries and to
attract and retain the services of qualified and capable employees. A total
of 2,073,673 shares of Class A Common Stock is reserved and available for
awards under the plan. In connection with the River City acquisition, 244,500
options were granted to certain employees and 1,382,454 were granted to Barry
Baker (see Executive Employment Agreement below) under this plan with an
exercise price of $30.11 per share.

The Company recorded deferred compensation of $1.9 million as additional
paid-in capital at the stock option grant date. During the years ended
December 31, 1996 and 1997, compensation expense of $739,000 and $605,000 was
recorded relating to the options issued under the LTIP, respectively. The
remaining deferred compensation of approximately $954,000 will be recognized
as expense on a straight-line basis over the vesting period.

Incentive Stock Option Plan-

In June 1996, the Board of Directors adopted, upon approval of the
stockholders by proxy, certain amendment to the Company's Incentive Stock
Option Plan. The purpose of the amendments was (i) to increase the number of
shares of Class A Common Stock approved for issuance under the plan from
400,000 to 500,000, (ii) to delegate to Barry Baker the authority to grant
certain options, (iii) to lengthen the period after the date of grant before
options become exercisable, from two years to three (iv) and to provide
immediate termination and three-year ratable vesting of options in certain
circumstances. In connection with the River City acquisition, the Company
granted 287,000 options to key management employees at an exercise price of
$37.75, the fair market value at the date of grant.

5. Executive Employment Agreement

In connection with the acquisition of River City, the Company entered into a
five-year employment agreement (the "Baker Employment Agreement") with Barry
Baker, pursuant to which Mr. Baker will become President and Chief Executive
Officer of SCI and Executive Vice President of the Company, at such time as
Mr. Baker is able to hold those positions consistent with applicable FCC
regulations. Until such time as Mr. Baker is able to become an officer of the
Company, he serves as a consultant to the Company pursuant to a consulting
agreement and received compensation that he would be entitled to as an
officer under the Baker Employment Agreement. If the Baker Employment
Agreement is terminated by the Company other than for cause (as defined) or
by Mr. Baker for good cause (constituting certain occurrences specified in
the agreement), Mr. Baker shall be entitled to certain termination payments
entitling him to his salary and bonuses which would have been paid under the
agreement; to purchase certain television or radio assets acquired by the
Company from River City at fair market value, and all stock options held by
Mr. Baker shall vest immediately.

OTHER 1996 ACQUISITIONS

In May 1995, the Company entered into option agreements to acquire all of the
license and non-license assets of WSMH-TV in Flint, Michigan (WSMH). In July
1995, the Company paid the $1.0 million option exercise price to exercise its
option and in February 1996, the Company consummated the acquisition for a
purchase price of $35.4 million. The acquisition was accounted for under the
purchase

F-25

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

method of accounting whereby the purchase price was allocated to property and
programming assets, acquired intangible broadcasting assets and other intangible
assets for $1.9 million, $6.0 million and $27.5 million, respectively, based
upon an independent appraisal.

In March 1996, the Company entered into an agreement to acquire the outstanding
stock of Superior Communications, Inc. (Superior) which owns the license and
non-license assets of the television stations KOCB in Oklahoma City, Oklahoma
and WDKY in Lexington, Kentucky. In May 1996, the Company consummated the
acquisition for a purchase price of $63.5 million. The acquisition was accounted
for under the purchase method of accounting whereby the purchase price was
allocated to property and programming assets, acquired intangible broadcasting
assets and other intangible assets for $7.3 million, $20.4 million and $35.8
million, respectively, based upon an independent appraisal.

In January 1996, the Company entered into an agreement to acquire license and
non-license assets of the television station WYZZ in Peoria, Illinois. In July
1996, the Company consummated the acquisition for a purchase price of $21.1
million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets, acquired intangible broadcasting assets and other intangible assets for
$2.2 million, $4.3 million and $14.6 million, respectively, based upon an
independent appraisal.

In July 1996, the Company entered into an agreement to acquire license and
non-license assets of the television station KSMO in Kansas City, Missouri
through the exercise of its options described in Note 13 for a total purchase
price of $10.0 million. The acquisition was accounted for under the purchase
method of accounting whereby the purchase price was allocated to property and
programming assets and acquired intangible broadcasting assets for $4.6 million
and $5.4 million, respectively, based upon an independent appraisal.

In August 1996, the Company acquired the license and non-license assets of the
television station WSTR in Cincinnati, Ohio for a total purchase price of $8.7
million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets and acquired intangible broadcasting assets for $6.2 million and $2.5
million, respectively, based upon an independent appraisal.

1997 ACQUISITIONS AND AGREEMENTS TO ACQUIRE CERTAIN ASSETS:
- -----------------------------------------------------------

1997 ACQUISITIONS

In January 1997, the Company entered into a purchase agreement to acquire the
license and non-license assets of KUPN-TV, the UPN affiliate in Las Vegas,
Nevada, for a purchase price of $87.5 million. Under the terms of this
agreement, the Company made cash deposit payments of $9.0 million and in May
1997, the Company closed on the acquisition making cash payments of $78.5
million for the remaining balance of the purchase price and other related
closing costs. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets, acquired intangible broadcasting assets and other intangible assets for
$1.6 million, $17.9 million and $68.0 million, respectively, based upon an
independent appraisal. The Company financed the transaction by utilizing
proceeds from the HYTOPS offering (see Note 17) combined with indebtedness under
the 1997 Bank Credit Agreement.

In 1997, the Company exercised options to acquire the license and non-license
assets of the following radio stations: WGR-AM and WWWS-AM (Buffalo, New York)
and WWFH-FM, WILP-AM, WWSH-FM and WKRF-FM (Wilkes-Barre/Scranton, Pennsylvania).
During the year ended December 31, 1997, the Company made payments totaling
approximately $3.1 million to acquire the license and non-license assets of
these radio stations.

F-26

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

EXERCISE OF OPTIONS TO ACQUIRE RIVER CITY LICENSE ASSETS

Since March 31, 1997, the FCC has granted approval for transfer of FCC licenses
with respect to the following television stations: KDNL-TV (St. Louis,
Missouri), KOVR-TV (Sacramento, California), WLOS-TV (Asheville, North
Carolina), KABB-TV (San Antonio, Texas) and KDSM-TV (Des Moines, Iowa). The
Company exercised options to acquire the License Assets (the television and
radio assets essential for broadcasting a television or radio signal in
compliance with regulatory guidelines) of each of these stations from River City
Broadcasting, L.P. ("River City") for aggregate option exercise payments of $9.3
million. In July 1997, the Company made an option exercise payment of $0.5
million to River City related to the license assets of WFBC-TV (Greenville,
South Carolina) and simultaneously assigned its option to acquire the License
Assets of WFBC-TV to Glencairn, Ltd. ("Glencairn") for an option assignment fee
of $2.0 million. The Company entered into a local marketing agreement ("LMA")
with Glencairn whereby the Company, in exchange for an hourly fee, obtained the
right to program and sell advertising on substantially all of the station's
inventory of broadcast time. The Company also received FCC approval for the
transfer of the FCC licenses of KPNT-FM and WVRV-FM in St. Louis, Missouri, and
exercised its option to acquire the License Assets of these radio stations for
an option exercise price of $1.2 million. As a result of these license approvals
and option exercises, the Company now owns the License Assets of (or has entered
into an LMA with Glencairn with respect to) all of the television and radio
stations with respect to which it acquired Non-License Assets (assets involved
in the operation of radio and television stations other than License Assets)
from River City, other than WTTV-TV and WTTK-TV in Indianapolis, Indiana.

AGREEMENT TO ACQUIRE HERITAGE

On July 16, 1997, the Company entered into agreements (the "Heritage Acquisition
Agreements") with The News Corporation Limited, Heritage Media Group, Inc. and
certain subsidiaries of Heritage Media Corporation (collectively, "Heritage"),
pursuant to which the Company agreed to acquire certain television and radio
station assets. Under the Heritage Acquisition Agreements, the Company will
acquire the assets of, or the right to program pursuant to LMAs, six television
stations in three markets and the assets of 24 radio stations in seven markets
(the "Heritage Acquisition"). The aggregate purchase price for the assets is
$630 million payable in cash at closing, less deposits paid of $65.5 million.
During the first quarter of 1998, the Company completed the acquisition of the
Heritage television and radio stations except for the radio stations in the New
Orleans, Louisiana market (see Note 24).

AGREEMENT TO ACQUIRE LAKELAND GROUP

In November 1997, the Company entered into an agreement to acquire 100% of the
stock of Lakeland Group Television Inc. for a purchase price of $50 million (the
"Lakeland Acquisition") and made a cash deposit of $1.5 million. Upon the
closing of the Lakeland Acquisition, the Company will acquire television station
KLGT in Minneapolis, Minnesota. The Lakeland Acquisition is expected to close in
the second quarter of 1998.

AGREEMENT TO ACQUIRE MAX MEDIA

On December 2, 1997, the Company entered into agreements to acquire, directly or
indirectly, all of the equity interests of Max Media Properties, L.L.C. ("Max
Media"). As a result of this transaction, the Company will acquire, or acquire
the right to program pursuant to LMAs, nine television stations and eight radio
stations in eight markets (the "Max Media Acquisition"). The aggregate purchase
price is $255 million payable in cash at closing (less a deposit of $12.8
million paid at the time of signing the acquisition agreement), a portion of
which will be used to retire existing debt of Max Media at closing. Max Media's
television station WKEF-TV in Dayton, Ohio has an overlapping service area with
the

F-27

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Company's television stations WTTE-TV in Columbus, Ohio, WSTR-TV in Cincinnati,
Ohio, and with Company LMA station WTTV-TV in Indianapolis, Indiana. In
addition, Max Media's television station WEMT-TV in Tri-Cities,
Tennessee/Virginia has an overlapping service area with the Company's television
station WLOS-TV in Asheville, North Carolina and Max Media's television station
KBSI-TV in Paducah, Kentucky/Cape Girardeau, Missouri has an overlapping service
area with the Company's television station KDNL-TV in St. Louis, Missouri.
Furthermore, the Company owns a television station (and proposes to acquire
radio stations from Heritage) in the Norfolk-Virginia Beach-Newport News,
Virginia market, where four of Max Media's radio stations are located.
Consequently, the Company has requested waivers from the FCC to allow the
Company to complete the Max Media Acquisition. There can be no assurance that
such waivers will be granted. As a result of the Max Media Acquisition and the
Heritage Acquisition, the Company intends to dispose of two of the FM radio
stations in the Norfolk-Virginia Beach-Newport News, Virginia radio market that
it has agreed to acquire from Heritage and Max Media in order to be in
compliance with the FCC regulations that limit the number of radio stations that
can be owned in a market. The Max Media Acquisition is subject to FCC and
Department of Justice (DOJ) approval and certain other conditions, and is
anticipated to be completed in the second quarter of 1998. The transaction is
expected to be financed through borrowings under the Company's Bank Credit
Agreement.

13. INITIAL PUBLIC OFFERING:

In June 1995, the Company consummated an initial public offering of 5,750,000
shares of Class A Common Stock at an initial public offering price of $21.00 per
share realizing net proceeds of approximately $111.5 million. The net proceeds
to the Company from this offering were used to reduce long-term indebtedness.

The Company consummated the following transactions concurrent with or prior to
the offering:

1. The Company purchased the options to acquire the partnership interests and
liabilities of KSMO in Kansas City, Missouri and WSTR in Cincinnati, Ohio
("Option Stations") from the stockholders for an aggregate purchase price
was $9.0 million. The stockholders also assigned to the Company their rights
and obligations under an option agreement among the stockholders and a
commercial bank which held secured debt of KSMO and WSTR.

2. The stockholders assigned the subordinated convertible debenture relating to
the sale of WPTT to the Company in exchange for $1.0 million, a portion of
which was used to retire the outstanding balance of a note due from the
controlling stockholders.

3. The Company acquired options from certain stockholders of Glencairn that
will grant the Company the right to acquire, subject to applicable FCC rules
and regulations, up to 97% of the capital stock of Glencairn.

4. The Board of Directors of the Company adopted Amended and Restated Articles
of Incorporation to authorize up to 35,000,000 shares of Class A Common
Stock, par value $.01 per share, 35,000,000 shares of Class B Common Stock,
par value $.01 per share and 5,000,000 shares of Preferred Stock, par value
$.01 per share; completed a reclassification and conversion of its
outstanding common stock into shares of Class B Common Stock; and effected
an approximately 49.1 for 1 stock split of the Company's common stock
(resulting in 29,000,000 shares of Class B Common Stock outstanding). The
reclassification, conversion and stock split have been retroactively
reflected in the accompanying consolidated balance sheets and statements of
stockholders' equity. In June 1996, the Company amended its charter,
increasing the number of shares of Class A Common Stock authorized to be
issued from 35,000,000 to 100,000,000 (see Note 12).

F-28

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

5. The Board of Directors of the Company adopted an Incentive Stock Option Plan
for Designated Participants (the Designated Participants Stock Option Plan)
pursuant to which options for shares of Class A Common Stock will be granted
to certain designated employees of the Company upon adoption.

6. On March 27, 1995, the Board of Directors of the Company adopted an
Incentive Stock Option Plan (the Stock Option Plan) pursuant to which
options for shares of Class A Common Stock may be granted to certain
designated classes of employees of the Company. The Stock Option Plan
provides that the maximum number of shares of Class A Common Stock reserved
for issuance under the Stock Option Plan is 500,000, as amended, and that
options to purchase Class A Common Stock may be granted under the plan until
the tenth anniversary of its adoption.

14. SHELF REGISTRATION STATEMENTS:

In September 1996, the Company filed and in November 1996 obtained effectiveness
of a registration statement on Form S-3 with the Commission with respect to the
sale by certain selling stockholders of 5,564,253 shares of Class A Common
Stock. These shares represent 4,181,818 shares of Class A Common Stock issuable
upon conversion of Series B Preferred Stock and 1,382,435 shares of Class A
Common Stock issuable upon exercise of options held by Barry Baker.

In October 1996, the Company filed a registration statement on Form S-3 with the
Commission for the purpose of offering additional shares of its Class A Common
Stock to the public. In August 1997, the Company amended this registration
statement to reflect the registration of $1 billion of securities to be offered
to the public, covering Class A Common Stock, Preferred Stock and debt
securities (the "Shelf Registration"). In September 1997, the Company completed
offerings of its Class A Common Stock and Series D Preferred Stock pursuant to
the Shelf Registration. In December 1997, the Company issued the 8 3/4% Notes
pursuant to the Shelf Registration.

15. SECONDARY PUBLIC OFFERING OF CLASS A COMMON STOCK:

In September 1997, the Company and certain stockholders of the Company completed
a public offering of 4,345,000 and 1,750,000 shares, respectively of Class A
Common Stock (the "Common Stock Offering"). The shares were sold pursuant to the
Shelf Registration for an offering price of $36.50 per share and generated
proceeds to the Company of $151.0 million, net of underwriters' discount and
other offering costs of $7.6 million. The Company utilized a significant portion
of the Common Stock Offering proceeds to repay indebtedness under the 1997 Bank
Credit Agreement (see Note 4).

16. PUBLIC OFFERING OF SERIES D PREFERRED STOCK:

Concurrent with the Common Stock Offering, the Company completed a public
offering of 3,450,000 shares of Series D Convertible Exchangeable Preferred
Stock (the "Preferred Stock Offering"). The shares were sold pursuant to the
Shelf Registration at an offering price of $50 per share and generated proceeds
to the Company of $166.9 million, net of underwriters' discount and other
offering costs of $5.0 million.

The Convertible Exchangeable Preferred Stock has a liquidation preference of $50
per share and a stated annual dividend of $3.00 per share payable quarterly out
of legally available funds and are convertible into shares of Class A Common
Stock at the option of the holders thereof at a conversion price of $45.625 per
share, subject to adjustment. The shares of Convertible Exchangeable Preferred
Stock are exchangeable at the option of the Company, for 6% Convertible
Subordinated Debentures of the Company, due 2012, and are redeemable at the
option of the Company on or after September 20, 2000 at specified prices plus
accrued dividends.

F-29

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

The Company received total net proceeds of $317.9 million from the Preferred
Stock Offering and the Common Stock Offering. The Company utilized $285.7
million of the net proceeds from the Common Stock Offering and the Preferred
Stock Offering to repay outstanding borrowings under the revolving credit
facility, $8.9 million to repay outstanding amounts under the Tranche A term
loan of the 1997 Bank Credit Agreement and retained the remaining net proceeds
of approximately $23.3 million for general corporate purposes.

17. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY
TRUST:

In March 1997, the Company completed a private placement of $200 million
aggregate liquidation value of 11 5/8% High Yield Trust Offered Preferred
Securities (the "HYTOPS") of Sinclair Capital, a subsidiary trust of the
Company. The HYTOPS were issued March 12, 1997, mature March 15, 2009, and
provide for quarterly distributions to be paid in arrears beginning June 15,
1997. The HYTOPS were sold to "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act of 1933, as amended) and a limited number of
institutional "accredited investors" and the offering was exempt from
registration under the Securities Act of 1933, as amended ("the Securities
Act"), pursuant to Section 4(2) of the Securities Act and Rule 144A thereunder.
The Company utilized $135 million of the approximately $192.8 million net
proceeds of the private placement to repay outstanding debt and retained the
remainder for general corporate purposes, which included the acquisition of
KUPN-TV in Las Vegas, Nevada.

Pursuant to a Registration Rights Agreement entered into in connection with the
private placement of the HYTOPS, the Company offered holders of the HYTOPS the
right to exchange the HYTOPS for new HYTOPS having the same terms as the
existing securities, except that the exchange of the new HYTOPS for the existing
HYTOPS has been registered under the Securities Act. On May 2, 1997, the Company
filed a registration statement on Form S-4 with the Commission for the purpose
of registering the new HYTOPS to be offered in exchange for the aforementioned
existing HYTOPS issued by the Company in March 1997 (the "Exchange Offer"). The
Company's Exchange Offer was closed and became effective August 11, 1997, at
which time all of the existing HYTOPS were exchanged for new HYTOPS.

Amounts payable to the holders of HYTOPS are recorded as "Subsidiary trust
minority interest expense" in the accompanying financial statements and were
$18.6 million for the year ended December 31, 1997.

18. STOCK-BASED COMPENSATION PLANS:

As permitted under SFAS 123, "Accounting for Stock-Based Compensation," the
Company measures compensation expense for its stock-based employee compensation
plans using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and provides pro
forma disclosures of net income and earnings per share as if the fair
value-based method prescribed by SFAS 123 had been applied in measuring
compensation expense.

F-30

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

A summary of changes in outstanding stock options follows:

<TABLE>
<CAPTION>
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
EXERCISE EXERCISE
OPTIONS PRICE EXERCISABLE PRICE
------------ ----------- ------------- ----------
<S> <C> <C> <C> <C>
Outstanding at end of 1994 ......... -- $ -- -- $ --
1995 Activity:
Granted ........................... 68,000 21.00 -- --
------ ------ ------- ------
Outstanding at end of 1995 ......... 68,000 21.00 -- --
1996 Activity:
Granted ........................... 1,904,785 31.50 -- --
Exercised ......................... -- -- -- --
Forfeited ......................... 3,750 21.00 -- --
--------- ------ ------- ------
Outstanding at end of 1996 ......... 1,969,035 31.16 736,218 30.11
--------- ------ ------- ------
1997 Activity:
Granted ........................... 274,450 33.74 -- --
Exercised ......................... 5,000 21.00 -- --
Forfeited ......................... 126,200 35.69 -- --
--------- ------ ------- ------
Outstanding at end of 1997 ......... 2,112,285 $ 34.19 1,214,076 $ 29.82
========= ======= ========= =======
</TABLE>

Additional information regarding stock options outstanding at December 31, 1997,
follows:

WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
REMAINING REMAINING WEIGHTED-
VESTING CONTRACTUAL AVERAGE
EXERCISE PERIOD LIFE EXERCISE
OUTSTANDING PRICE (IN YEARS) (IN YEARS) EXERCISABLE PRICE
- ------------- ---------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
54,250 $ 21.00 0.13 7.44 38,250 $ 21.00
1,708,935 30.11 0.67 8.49 1,175,826 30.11
326,100 37.75 1.76 8.76 -- --
23,000 41.875 2.97 9.97 -- --
---------- --------- ---- ---- --------- --------
2,112,285 $ 34.19 0.85 8.52 1,214,076 $ 29.82
========== ========= ==== ==== ========= ========

</TABLE>

F-31

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Had compensation cost for the Company's 1995, 1996, and 1997 grants for
stock-based compensation plans been determined consistent with SFAS 123, the
Company's net income, net income applicable to common share before extraordinary
items, and net income per common share for these years would approximate the pro
forma amounts below (in thousands except per share data):

<TABLE>
<CAPTION>
1995 1996 1997
------------------------- ------------------------- --------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA AS REPORTED PRO FORMA
------------- ----------- ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) before extraor-
dinary item ........................ $ 4,988 $4,799 $ 1,131 $ (1,639) $ (4,496) $ (5,871)
------- ------ ------- -------- --------- ---------
Net income (loss) ................... $ 76 $ (113) $ 1,131 $ (1,639) $ (10,566) $ (11,941)
------- ------ ------- -------- --------- ---------
Net income (loss) available to
common shareholders ................ $ 76 $ (113) $ 1,131 $ (1,639) $ (13,329) $ (14,704)
------- ------ ------- -------- --------- ---------
Basic net income per share before
extraordinary items ................ $ .15 $ .15 $ .03 $ (.05) $ (.20) $ (.24)
------- ------ ------- -------- --------- ---------
Basic net income per share after
extraordinary items ................ $ -- $ -- $ .03 $ (.05) $ (.37) $ (.41)
------- ------ ------- -------- --------- ---------
Diluted net income per share be-
fore extraordinary items ........... $ .15 $ .15 $ .03 $ (.05) $ (.20) $ (.24)
------- ------ ------- -------- --------- ---------
Diluted net income per share af-
ter extraordinary items ............ $ -- $ -- $ .03 $ (.05) $ (.37) $ (.41)
------- ------ ------- -------- --------- ---------
</TABLE>

The Company has computed for pro forma disclosure purposes the value of all
options granted during 1995, 1996, and 1997 using the Black-Scholes option
pricing model as prescribed by SFAS No. 123 and the following weighted average
assumptions:

YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
---------- ---------- -------------
Risk-free interest rate 5.78% 6.66% 5.66 - 6.35%
Expected lives 5 years 5 years 5 years
Expected volatility 35% 35% 35%

Adjustments are made for options forfeited prior to vesting.

19. EQUITY PUT AND CALL OPTIONS:

During December 1996, the Company entered into physically settled in cash put
and call option contracts related to the Company's common stock. These option
contracts were entered into for the purpose of hedging the dilution of the
Company's common stock upon the exercise of stock options granted. The Company
entered into 250,000 call options for common stock and 320,600 put options for
common stock, with a strike price of $37.75 and $27.88 per common share,
respectively. To the extent that the Company entered into put option contracts,
the additional paid-in capital amounts were adjusted accordingly and reflected
as Equity Put Options in the accompanying balance sheet as of December 31, 1996.
In March 1997, the Company amended its put option contracts from physically
settled in cash to physically or net physically settled in shares, at the
election of the Company, and reclassified amounts reflected as Equity Put
Options to "Additional paid-in capital -- equity put options" as reflected in
the accompanying balance sheet as of December 31, 1997.

In April 1997, the Company entered into put and call option contracts related to
its common stock for the purpose of hedging the dilution of the common stock
upon the exercise of stock options granted. The Company entered into 550,000
European style (that is, exercisable on the expiration date only) put

F-32

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

options for common stock with a strike price of $25.78 per share which provide
for settlement in cash or in shares, at the election of the Company. The Company
entered into 550,000 American style (that is, exercisable any time on or before
the expiration date) call options for common stock with a strike price of $25.78
per share which provide for settlement in cash or in shares, at the election of
the Company. The option premium amount of $3.4 million for these contracts,
which was recorded as a reduction of additional paid-in capital, is payable in
quarterly installments at 8.1% interest per annum through the maturity date,
July 13, 2000.

20. EARNINGS PER SHARE:

The Company adopted SFAS 128 "Earnings per Share" which requires the restatement
of prior periods and disclosure of basic and diluted earnings per share and
related computations.

<TABLE>
<CAPTION>
THE YEARS ENDED
----------------------------------------
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
Weighted-average number of common shares ............................... 32,198 34,748 35,951
Dilutive effect of outstanding stock options ........................... 7 170 119
Dilutive effect of conversion of preferred shares ...................... -- 2,463 4,008
------ ------ ------
Weighted-average number of common
equivalent shares outstanding .......................................... 32,205 37,381 40,078
====== ====== ======
Net income (loss) before extraordinary item ............................ $ 4,988 $ 1,131 $ (4,496)
======== ======== =========
Net income (loss) ...................................................... $ 76 $ 1,131 $ (10,566)
Preferred stock dividends payable ...................................... -- -- (2,763)
-------- -------- ---------
Net income (loss) available to common shareholders ..................... $ 76 $ 1,131 $ (13,329)
======== ======== =========
Basic net income (loss) per share before extraordinary items ........... $ .15 $ .03 $ (.20)
======== ======== =========
Basic net income (loss) per share after extraordinary items ............ $ -- $ .03 $ (.37)
======== ======== =========
Diluted net income (loss) per share before extraordinary items ......... $ .15 $ .03 $ (.20)
======== ======== =========
Diluted net income (loss) per share after extraordinary items .......... $ -- $ .03 $ (.37)
======== ======== =========
</TABLE>

21. FINANCIAL INFORMATION BY SEGMENT:

In June 1997, the Financial Accounting Standards Board (FASB) released Statement
of Financial Accounting Standards (SFAS) 131 "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 establishes standards for
reporting information about operating segments in annual financial statements
and requires selected information about operating segments in interim financial
statements. SFAS 131 supercedes SFAS 14, "Financial Reporting for Segments of a
Business Enterprise" and is effective for financial statements for periods
beginning after December 15, 1997.

As of December 31, 1997, the Company consisted of two principal business
segments - television broadcasting and radio broadcasting. Prior to the
acquisition of River City Broadcasting, L.P. in May 1996, the Company did not
own, operate or program radio stations. As of December 31, 1997 the Company owns
or provides programming services pursuant to LMAs to 29 television stations
located in 21 geographically diverse markets in the continental United States.
The Company owns 30 radio stations in seven geographically diverse markets.
Substantially all revenues represent income from unaffiliated companies.

F-33

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

TELEVISION
YEARS ENDED DECEMBER 31,

-----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Total revenue ................................................... $ 338,467 $ 449,878
Station operating expenses. ..................................... 142,231 192,049
Depreciation, program amortization and stock-based compensation.. 56,420 80,799
Amortization of intangibles and other assets. ................... 55,063 57,897
Amortization of excess syndicated programming.. ................. 3,043 --
---------- ----------
Station broadcast operating income .............................. $ 81,710 $ 119,133
========== ==========
Total assets. ................................................... $1,400,521 $1,736,149
========== ==========
Capital expenditures. ........................................... $ 12,335 $ 16,613
========== ==========
</TABLE>

RADIO
YEARS ENDED DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Total revenue ................................................... $ 40,021 $ 66,557
Station operating expenses. ..................................... 25,534 44,327
Depreciation, program amortization and stock-based compensation.. 3,827 5,167
Amortization of intangibles and other assets. ................... 3,467 9,943
Amortization of excess syndicated programming.. ................. -- --
-------- --------
Station broadcast operating income.. ............................ $ 7,193 $ 7,120
======== ========
Total assets. ................................................... $306,776 $298,085
======== ========
Capital expenditures. ........................................... $ 274 $ 2,812
======== ========
</TABLE>

F-34

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

22. UNAUDITED PRO FORMA SUMMARY RESULTS OF OPERATIONS:

The unaudited pro forma summary consolidated results of operations for the years
ended December 31, 1996 and 1997, assuming the 1996 and 1997 acquisitions had
been consummated on January 1, 1996, are as follows (in thousands, except per
share data):

<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
1996 1997
------------- ------------
<S> <C> <C>
Revenue, net ........................................................... $ 489,270 $ 520,359
========== =========
Net loss before extraordinary item ..................................... $ (12,750) $ (3,643)
========== =========
Net Loss ............................................................... $ (12,750) $ (9,713)
========== =========
Net loss available to common shareholders .............................. $ (12,750) $ (12,476)
========== =========
Basic and diluted earnings per share before extraordinary item ......... $ (0.37) $ (0.18)
========== =========
Basic and diluted earnings per share ................................... $ (0.37) $ (0.35)
========== =========
</TABLE>

23. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES:

Prior to the HYTOPS issuance in March 1997, the 1993 Notes and the 10% Notes
were guaranteed by all of the Company's subsidiaries other than Cresap
Enterprises, Inc. (the Company believes that Cresap Enterprises, Inc. is
inconsequential to its operations). In conjunction with the HYTOPS issuance,
KDSM, Inc., KDSM Licensee, Inc. and Sinclair Capital (the "Non-Guarantor
Subsidiaries") are no longer guarantors of indebtedness under the 1993 Notes or
the 10% Notes. Furthermore, the Non-Guarantor Subsidiaries are not guarantors
under the Company's 1997 Bank Credit Agreement or the indentures relating to the
9% Notes or the 8 3/4% Notes issued in July 1997 and December 1997,
respectively. The following supplemental financial information sets forth on a
condensed basis the balance sheet and statement of operations as of and for the
year ended December 31, 1997 for Sinclair Broadcast Group, Inc. (without its
subsidiaries, the "Parent"), the Non-Guarantor Subsidiaries, and the
subsidiaries (the "Guarantor Subsidiaries") that continue to guarantee
indebtedness under the 1997 Bank Credit Agreement, the 1993 Notes, the 10%
Notes, the 9% Notes and the 8 3/4% Notes. Certain reclassifications have been
made to provide for uniform disclosure of all periods presented. The Company
believes that these reclassifications are not material.

F-35

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Balance Sheet information as of December 31, 1997:

GUARANTOR NON-GUARANTOR ELIMINATION
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------- -------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents ..................... $ 137,683 $ 1,633 $ 11 $ -- $ 139,327
Accounts receivable, net ...................... 6,127 125,322 2,150 -- 133,599
Other current assets .......................... 1,826 53,794 2,206 -- 57,826
---------- ---------- -------- ------------ ----------
Total current assets .......................... 145,636 180,749 4,367 -- 330,752
Other long-term assets and acquired in-
tangible broadcasting assets, net ............ 1,390,698 1,259,250 254,173 (1,200,639) 1,703,482
---------- ---------- -------- ------------ ----------
Total assets .................................. $1,536,334 $1,439,999 $258,540 $ (1,200,639) $2,034,234
========== ========== ======== ============ ==========
Accounts payable and accrued expenses.......... $ 27,507 $ 17,806 $ 426 $ -- $ 45,739
Notes payable and commercial bank fi-
nancing ...................................... 35,207 8 -- -- 35,215
Other current liabilities ..................... 1,595 1,021,272 2,790 (951,907) 73,750
---------- ---------- -------- ------------ ----------
Total current liabilities ..................... 64,309 1,039,086 3,216 (951,907) 154,704
Notes payable and commercial bank fi-
nancing ...................................... 1,022,841 93 -- -- 1,022,934
Other long-term liabilities ................... 9,916 98,120 1,575 -- 109,611
---------- ---------- -------- ------------ ----------
Total liabilities ............................. 1,097,066 1,137,299 4,791 (951,907) 1,287,249
Minority interest in consolidated subsid-
iaries ....................................... -- 3,697 -- -- 3,697
Company Obligated Mandatorily Re-
deemable Security of Subsidiary Trust
Holding Solely KDSM Senior Deben-
tures ........................................ -- -- 200,000 -- 200,000
Stockholders' equity .......................... 439,268 299,003 53,749 (248,732) 543,288
---------- ---------- -------- ------------ ----------
Total liabilities and stockholders' equity . $1,536,334 $1,439,999 $258,540 $ (1,200,639) $2,034,234
========== ========== ======== ============ ==========
</TABLE>

F-36

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

Statement of operations information for the year ended December 31, 1997:

<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR ELIMINATION
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ -------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Total revenue ................................. $ -- $ 507,897 $ 8,538 $ -- $ 516,435
--------- --------- --------- --------- ----------
Program and production including barter
expenses ..................................... -- 128,810 1,482 -- 130,292
Selling, general and administrative ........... 7,501 96,124 2,459 -- 106,084
Amortization of program contract costs
and net realizable value adjustments ......... -- 64,711 1,579 -- 66,290
Amortization of acquired intangible
broadcasting assets, non-compete and
consulting agreements and other assets 4,916 61,336 1,588 -- 67,840
Other depreciation and amortization ........... 713 18,586 377 -- 19,676
--------- --------- --------- --------- ----------
Broadcast operating income .................... (13,130) 138,330 1,053 -- 126,253
Interest and amortization of debt dis-
count expense ................................ (97,625) (98,392) (18,600) 97,624 (116,993)
Interest and other income (expense) ........... 96,297 (17,271) 20,826 (97,624) 2,228
--------- --------- --------- --------- ----------
Income (loss) before provision (benefit)
for income taxes and extraordinary
item ......................................... (14,458) 22,667 3,279 -- 11,488
Provision (benefit) for income taxes .......... 14,740 (140) 1,384 -- 15,984
--------- --------- --------- --------- ----------
Net income before extraordinary item .......... (29,198) 22,807 1,895 -- (4,496)
Extraordinary item net of income tax
benefit ...................................... (5,239) (831) -- -- (6,070)
--------- --------- --------- --------- ----------
Net income (loss) ............................. $ (34,437) $ 21,976 $ 1,895 $ -- $ (10,566)
========= ========= ========= ========= ==========
</TABLE>

24. SUBSEQUENT EVENTS:

Heritage Acquisition. As of the date hereof and pursuant to the Heritage
Acquisition, (dispositions described below) the Company has acquired or is
providing programming services to three television stations in two separate
markets and 13 radio stations in four separate markets. The Company has made
cash payments totaling $544 million in connection with the closing of these
stations during the first quarter of 1998. The Company also has the right to
acquire three radio stations in the New Orleans, Louisiana market. Acquisition
of the Heritage radio stations in the New Orleans market is subject to approval
by the FCC and termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). The Company has reached an agreement to divest certain radio stations it
owns or has the right to acquire in the New Orleans market and expects to
receive FCC approval and clearance under the HSR Act in connection with such
disposition.

The Company has entered into agreements to sell to STC Broadcasting of Vermont,
Inc. ("STC") two television stations and the Non-License Assets and rights to
program a third television station, all of which were acquired in the Heritage
Acquisition. The three television stations are in the Burlington, Vermont and
Plattsburgh, New York market and will be sold for aggregate consideration of
approximately $72 million. The Company expects to close the sale to STC during
the second quarter of 1998 subject to, among other conditions, approval by the
FCC and termination of the applicable waiting period under the HSR Act.

F-37

<PAGE>

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 - (CONTINUED)

The Company has also agreed to sell to Entertainment Communications, Inc.
("Entercom") seven radio stations it acquired in the Heritage Acquisition. The
seven stations are located in the Portland, Oregon and Rochester, New York
markets and will be sold for aggregate consideration of approximately $126.5
million. Subject to approval by the FCC and termination of the applicable
waiting period under the HSR Act, the Company anticipates it will close on the
sale of the Portland and Rochester radio stations to Entercom during the second
quarter of 1998. Entercom is operating these stations pursuant to an LMA pending
closing of the sale.

Montecito Acquisition. In February 1998, the Company entered into an agreement
to acquire all of the capital stock of Montecito Broadcasting Corporation
("Montecito") for approximately $33 million (the "Montecito Acquisition").
Montecito owns all of the issued and outstanding stock of Channel 33, Inc. which
owns and operates KFBT-TV in Las Vegas, Nevada. Currently, the Company is a
Guarantor of Montecito Indebtedness of approximately $33 million. The Company
cannot acquire Montecito unless and until FCC rules permit Sinclair to own the
broadcast license for more than one station in the Las Vegas market, or unless
Sinclair no longer owns the broadcast license for KUPN-TV in Las Vegas. The
Company will operate KFBT-TV through an LMA upon expiration of the applicable
HSR Act waiting period. The Company expects to be able to enter into the LMA in
the second quarter of 1998.

Sullivan Acquisition. In February 1998, the Company entered into an agreement to
acquire all of the capital stock of Sullivan Broadcast Holdings, Inc. ("Sullivan
Holdings") and Sullivan Broadcasting Company II, Inc. ("Sullivan II" and,
together with Sullivan Holdings, "Sullivan") for a purchase price expected to be
approximately $950 million to $1 billion, less the amount of certain outstanding
indebtedness of Sullivan Holdings assumed by the Company (the "Sullivan
Acquisition"). Upon the closing of all aspects of the Sullivan Acquisition, the
Company will own or provide programming services to 13 additional television
stations in 11 separate markets. The final purchase price will be based on a
multiple of Sullivan's projected 1998 cash flow calculated at the initial
closing of the Sullivan Acquisition. As part of the total consideration, the
Company, at its option, may issue to the sellers up to $100 million of Class A
Common Stock based on an average closing price of the Class A Common Stock.
Among other conditions, the Sullivan Acquisition is subject to approval by the
FCC and termination of the applicable waiting period under the HSR Act. An
initial closing, at which the Company will acquire control of operating assets
(excluding the License Assets) of, and acquire the right to program, the 13
television stations, is expected to occur in the second quarter of 1998. A
second closing, at which the Company will acquire control of the License Assets
of six of the stations, is expected to occur in the third quarter of 1998.

F-38

<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
INDEX TO SCHEDULES

Schedule II -- Valuation and Qualifying Accounts ......... S - 3

All schedules except those listed above are omitted as not applicable or not
required or the required information is included in the consolidated financial
statements or in the notes thereto.

S-1

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
Sinclair Broadcast Group, Inc.:

We have audited in accordance with generally accepted auditing standards,
the consolidated balance sheets, statements of operations, changes in
stockholders' equity and cash flows balance sheets, statements of operations,
changes in stockholders' equity and cash flows of Sinclair Broadcast Group, Inc.
and Subsidiaries included in this Form 10-K registration statement and have
issued our report thereon dated February 9, 1998, except for Note 24, as to
which the date is February 23, 1998. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedules listed in the accompanying index is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

Baltimore, Maryland,
February 9, 1998

S-2

<PAGE>

SCHEDULE II

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)

BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT ENDED
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIODS
- ------------------------------------- ------------ ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
1995
Allowance for doubtful accounts ..... $ 855 $ 978 $-- $ 767 $1,066

1996
Allowance for doubtful accounts ..... 1,066 1,563 575 (1) 732 2,472

1997
Allowance for doubtful accounts ..... 2,472 2,655 -- 2,207 2,920
</TABLE>

- ----------
(1) Amount represents allowance for doubtful account balances purchased in
connection with the acquisition of certain television stations during 1996.

S-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Section 14 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K/A
to be signed on its behalf by the undersigned, thereto duly authorized on March
27, 1998.

SINCLAIR BROADCAST GROUP, INC.

By: /s/ David B. Amy
------------------------------------
David B. Amy
Chief Financial Officer
Principal Accounting Officer

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

SIGNATURE TITLE DATE
- --------------------------- ------------------------------ ---------------

/s/ David D. Smith
- ------------------------- Chairman of the Board, March 27, 1998
David D. Smith Chief Executive Officer
(Principal executive officer)

/s/ David B. Amy
- ------------------------- Chief Financial Officer March 27, 1998
David B. Amy (Principal Financial and
Accounting Officer

* Director March 27, 1998
- -------------------------
Frederick G. Smith

* Director March 27, 1998
- -------------------------
J. Duncan Smith

* Director March 27, 1998
- -------------------------
Robert E. Smith

Director
- -------------------------
Basil A. Thomas

Director
- -------------------------
Lawrence E. McCanna

*By: /s/ David B. Amy
--------------------
David B. Amy
Attorney-in-Fact
II-1

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------

3.1 Amended and Restated Certificate of Incorporation (1)

3.2 By-laws (2)

4.1 Indenture, dated as of December 9, 1993, among Sinclair Broadcast Group,
Inc., its wholly-owned subsidiaries and First Union National Banks of
North Carolina, as trustee. (2)

4.2 Indenture, dated as of August 28, 1995, among Sinclair Broadcast Group,
Inc., its wholly-owned subsidiaries and the United States Trust Company
of New York as trustee. (2)

4.3 Form of Senior Subordinated Indenture among Sinclair Broadcast Group,
Inc. and First Union National Bank, as trustee. (9)

4.4 Form of First Supplemental Indenture among Sinclair Broadcast Group,
Inc. the Guarantors named therein and First Union National Bank, as
trustee, including Form of Note. (9)

10.1 Asset Purchase Agreement, dated as of April 10, 1996, by and between
River City Broad- casting, L.P. as seller and Sinclair Broadcast Group,
Inc. as buyer. (3)

10.2 Option Agreement, dated as of April 10, 1996, by and among River City
Broadcasting, L.P., as sellers and Sinclair Broadcast Group, Inc. (3)

10.3 Modification Agreement, dated as of April 10, 1996, by and between River
City Broadcast Group, L.P. as seller, and Sinclair Broadcast Group, Inc.
as buyer, with reference to Asset Purchase Agreement. (3)

10.4 Stock Option Agreement dated April 10, 1996 by and between Sinclair
Broadcast Group, Inc. and Barry Baker. (10)

10.5 Employment Agreement, dated as of April 10, 1996, with Barry Baker. (1)

10.6 Indemnification Agreement, dated as of April 10, 1996, with Barry Baker.
(1)

10.7 Time Brokerage Agreement, dated as of May 31, 1996, by and among
Sinclair Communications, Inc., River City Broadcasting, L.P. and River
City License Partnership and Sinclair Broadcast Group, Inc. (1)

10.8 Registration Rights Agreement, dated as of May 31, 1996, by and between
Sinclair Broadcast Group, Inc. and River City Broadcasting, L.P. (1)

10.9 Time Brokerage Agreement, dated as of August 3, 1995, by and between
River City Broad- casting, L.P. and KRRT, Inc. and Assignment and
Assumption Agreement dated as of May 31, 1996 by and among KRRT, Inc.,
River City Broadcasting, L.P. and KABB, Inc. (as Assignee of Sinclair
Broadcast Group, Inc.). (1)

10.10 Loan Agreement, dated as of July 7, 1995, by and between Keymarket of
South Carolina, Inc. and River City Broadcasting, L.P. and First
Amendment to Loan Agreement dated as of May 24, 1996. (1)

10.11 Option Agreement, dated as of July 7, 1995, by and among Keymarket of
South Carolina, Kerby E. Confer and River City Broadcasting, L.P. (1)

10.12 Letter Agreement, dated August 20, 1996, between Sinclair Broadcast
Group, Inc., River City Broadcasting, L.P. and Fox Broadcasting Company.
(4)

10.13 Asset Purchase Agreement, dated January 31, 1997, by and between Channel
21, L.P. and KUPN, Inc. (10)

10.14 Promissory Note, dated as of May 17, 1990, in the principal amount of
$3,000,000 among David D. Smith, Frederick G. Smith, J. Duncan Smith and
Robert E. Smith (as makers) and Sinclair Broadcast Group, Inc., Channel
63, Inc., Commercial Radio Institute, Inc., WTTE, Channel 28, Inc. and
Chesapeake Television, Inc. (as holders). (5)

10.15 Term Note, dated as of September 30, 1990, in the principal amount of
$7,515,000 between Sinclair Broadcast Group, Inc. (as borrower) and
Julian S. Smith (as lender). (6)

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ------------ -------------------------------------------------------------------

10.16 Replacement Term Note dated as of September 30, 1990 in the principal
amount of $6,700,000 between Sinclair Broadcast Group, Inc. (as
borrower) and Carolyn C. Smith (as lender) (2)

10.17 Note dated as of September 30, 1990 in the principal amount of
$1,500,000 between Frederick G. Smith, David D. Smith, J. Duncan Smith
and Robert E. Smith (as borrowers and Sinclair Broadcast Group, Inc. (as
lender) (5)

10.18 Amended and Restated Note dated as of June 30, 1992 in the principal
amount of $1,458,489 between Frederick G. Smith, David D. Smith, J.
Duncan Smith and Robert E. Smith (as borrowers) and Sinclair Broadcast
Group, Inc. (as lender) (5)

10.19 Term Note dated August 1, 1992 in the principal amount of $900,000
between Frederick G. Smith, David D. Smith, J. Duncan Smith and Robert
E. Smith (as borrowers) and Commer- cial Radio Institute, Inc. (as
lender) (5)

10.20 Management Agreement dated as of January 6, 1992 between Keyser
Communications, Inc. and WPGH, Inc. (5)

10.21 Promissory Note dated as of December 28, 1986 in the principal amount of
$6,421,483.53 between Sinclair Broadcast Group, Inc. (as maker) and
Frederick H. Himes, B. Stanley Resnick and Edward A. Johnston (as
representatives for the holders) (5)

10.22 Term Note dated as of March 1, 1993 in the principal amount of
$6,559,000 between Julian S. Smith and Carolyn C. Smith (as
makers-borrowers) and Commercial Radio Institute, Inc. (as
holder-lender) (5)

10.23 Restatement of Stock Redemption Agreement by and among Sinclair
Broadcast Group, Inc. and Chesapeake Television, Inc., et al. dated June
19, 1990 (5)

10.24 Corporate Guaranty Agreement dated as of September 30, 1990 by
Chesapeake Television, Inc., Commercial Radio, Inc., Channel 63, Inc.
and WTTE, Channel 28, Inc. (as guarantors) to Julian S. Smith and
Carolyn C. Smith (as lenders) (5)

10.25 Security Agreement dated as of September 30, 1990 among Sinclair
Broadcast Group, Inc., Chesapeake Television, Inc., Commercial Radio
Institute, Inc., WTTE, Channel 28, Inc. and Channel 63, Inc. (as
borrowers and subsidiaries of the borrower) and Julian S. Smith and
Carolyn C. Smith (as lenders) (5)

10.26 Term Note dated as of September 22, 1993, in the principal amount of
$1,900,000 between Gerstell Development Limited Partnership (as
maker-borrower) and Sinclair Broadcast Group, Inc. (as holder-lender)
(5)

10.27 Third Amended and Restated Credit Agreement, dated as of May 20, 1997,
by and among Sinclair Broadcast Group, Inc., Certain Subsidiary
Guarantors, Certain Lenders and the Chase Manhattan Bank as Agent. (11)

10.28 Incentive Stock Option Plan for Designated Participants. (2)

10.29 Incentive Stock Option Plan of Sinclair Broadcast Group, Inc. (2)

10.30 First Amendment to Incentive Stock Option Plan of Sinclair Broadcast
Group, Inc., adopted April 10, 1996. (10)

10.31 Second Amendment to Incentive Stock Option Plan of Sinclair Broadcast
Group, Inc., adopted May 31, 1996. (10)

10.32 1996 Long Term Incentive Plan of Sinclair Broadcast Group, Inc. (10)

10.33 Employment Agreement by and between Sinclair Broadcast Group, Inc. and
Robert E. Smith, dated as of June 12, 1995. (10)

10.34 Employment Agreement by and between Sinclair Broadcast Group, Inc. and
J. Duncan Smith, dated as of June 12, 1995*. (10)

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ------------ -------------------------------------------------------------------

10.35 Employment Agreement by and between Sinclair Broadcast Group, Inc. and
Frederick G. Smith, dated as of June 12, 1995. (10)

10.36 Employment Agreement by and between Sinclair Broadcast Group, Inc. and
David D. Smith, dated as of June 12, 1995. (10)

10.37 Common Stock Option dated as of August 26, 1994 by and between
Communications Corporation of America (as optionee) and Sinclair
Broadcast Group, Inc. (as optionor) (2)

10.38 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by and
between Sinclair Broadcast Group, Inc. and William Richard Schmidt, as
trustee (2)

10.39 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by and
between Sinclair Broadcast Group, Inc. and C. Victoria Woodward, as
trustee (2)

10.40 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by and
between Sinclair Broadcast Group, Inc. and Dyson Ehrhardt, as trustee
(2)

10.41 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by and
between Sinclair Broadcast Group, Inc. and Mark Knobloch, as trustee (2)

10.42 Agreement and Plan of Merger of Keyser Communications, Inc. into
Sinclair Broadcast Group, Inc. dated May 4, 1995 and Articles of Merger
dated May 4, 1995 (2)

10.43 Amended and Restated Asset Purchase Agreement by and between River City
Broadcasting, L.P. and Sinclair Broadcast Group, Inc. dated as of April
10, 1996 and amended and restated as of May 31, 1996 (7)

10.44 Group I Option Agreement by and among River City Broadcasting, L.P. and
Sinclair Broad- cast Group, Inc. dated as of May 31, 1996 (7)

10.45 Columbus Option Agreement by and among River City Broadcasting, L.P. and
River City License Partnership and Sinclair Broadcast Group, Inc. dated
as of May 31, 1996 (7)

10.46 Option Agreement dated as of May 24, 1994 between Kansas City TV 62
Limited Partnership and the Individuals Named Herein, on Behalf of an
Entity To Be Formed (1)

10.47 Option Agreement dated as of May 24, 1994 between Cincinnati 64 Limited
Partnership and the Individuals Named Herein, on Behalf of an Entity To
Be Formed (1)

10.48 Stock Purchase Agreement dated as of March 1, 1996 by and between
Sinclair Broadcast Group, Inc. and The Stockholders of Superior
Communications Group, Inc. (1)

10.49 Asset Purchase Agreement dated as of January 16, 1996 by and between
Bloomington Comco, Inc. And WYZZ, Inc. (1)

10.50 Asset Purchase Agreement dated as of June 10, 1996 by and between WTTE,
Channel 28, Inc. and WTTE, Channel 28 Licensee, Inc. and Glencairn, Ltd.
(1)

10.51 Asset Purchase Agreement dated April 10, 1996 by and between KRRT, Inc.
and SBGI, Inc. (8)

10.52 Agreement for the purchase of assets dated as of January 16, 1996 and
escrow agreement dated as of January 16, 1996 between Bloomington Comco,
Inc. and Sinclair Broadcast Group (6)

10.53 Stock Purchase Agreement dated as of March 1, 1996 by and among Sinclair
Broadcast Group, Inc. and PNC Capital Corp., Primus Capital Fund II,
Ltd., Albert M. Holtz, Perry A. Sook, Richard J. Roberts, George F.
Boggs, Albert M. Holtz, as Trustee for the Irrevocable Deed of Trust for
Tara Ellen Holtz, dated December 6, 1994, and Albert M. Holtz as trustee
for the Irrevocable Deed of Trust for Meghan Ellen Holtz, dated December
6, 1994 (6)

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- ------------ -------------------------------------------------------------------

10.54 Primary Television Affiliation Agreement dated as of March 24, 1997 by
and between Amer- ican Broadcasting Companies, Inc., River City
Broadcasting, L.P. and Chesapeake Television, Inc. (Confidential
treatment has been requested. The copy filed omits the information
subject to a confidentiality request.) (13)

10.55 Primary Television Affiliation Agreement dated as of March 24, 1997 by
and between Amer- ican Broadcasting Companies, Inc., River City
Broadcasting, L.P. and WPGH, Inc. (Confidential treatment has been
requested. The copy filed omits the information subject to a
confidentiality request.) (13)

10.56 Assets Purchase Agreement by and among Entertainment Communications,
Inc., Tuscaloosa Broadcasting, Inc., Sinclair Radio of Portland
Licensee, Inc. and Sinclair Radio of Rochester Licensee, Inc., dated as
of January 26, 1998. (13)

10.57 Time Brokerage Agreement by and among Entertainment Communications,
Inc., Tuscaloosa Broadcasting, Inc., Sinclair Radio of Portland
Licensee, Inc. and Sinclair Radio or Rochester Licensee, Inc., dated as
of January 26, 1998. (13)

10.58 Stock Purchase Agreement by and among the sole stockholders of Montecito
Broadcasting Corporation, Montecito Broadcasting Corporation and
Sinclair Communications, Inc., dated as of February 3, 1998. (13)

10.59 Stock Purchase Agreement by and among Sinclair Communications, Inc., the
stockholders of Max Investors, Inc., Max Investors, Inc. and Max Media
Properties LLC., dated as of Decem- ber 2, 1997 (13)

10.60 Asset Purchase Agreement by and among Sinclair Communications, Inc., Max
Management LLC and Max Media Properties LLC., dated as of December 2,
1997. (13)

10.61 Asset Purchase Agreement by and among Sinclair Communications, Inc., Max
Television Company, Max Media Properties LLC and Max Media Properties II
LLC., dated as of De- cember 2, 1997. (13)

10.62 Asset Purchase Agreement by and among Sinclair Communications, Inc., Max
Television Company, Max Media Properties LLC and Max Media Properties II
LLC., dated as of Jan- uary 21, 1998. (13)

10.63 Asset Purchase Agreement by and among Tuscoloosa Broadcasting, Inc.,
WPTZ Licensee, Inc., WNNE Licensee, Inc., and STC Broadcasting of
Vermont, Inc., dated as of February 3, 1998. (13)

10.64 Stock Purchase Agreement by and among Sinclair Communications, Inc. and
the stockholders of Lakeland Group Television, Inc., dated as of
November 14, 1997. (13)

10.65 Stock Purchase Agreement by and among Sinclair Communications, Inc., the
stockholders of Max Radio, Inc., Max Radio Inc. and Max Media Properties
LLC, dated as of December 2, 1997. (13)

10.66 Agreement and Plan of Merger among Sullivan Broadcasting Company II,
Inc., Sinclair Broadcast Group, Inc., and ABRY Partners, Inc. Effective
as of February 23, 1998. (13)

10.67 Agreement and Plan of Merger among Sullivan Broadcast Holdings, Inc.,
Sinclair Broadcast Group, Inc., and ABRY Partners, Inc. Effective as of
February 23, 1998. (13)

10.68 Amendment No. 1 dated as of September 2, 1997 to the Third Amended and
Restated Credit Agreement dated as of May 20, 1997 by and among Sinclair
Broadcast Group, Inc., certain Subsidiary Guarantors, certain Lenders
and The Chase Manhattan Bank as Agent. (12)

<PAGE>

EXHIBIT
NUMBER DESCRIPTION
- -------- -----------------------------------------------------------------------

12 Computation of Ratio of Earnings to Fixed Charges

23 Consent of Independent Public Accountants

27 Financial Data Schedule (13)

- ----------------
(1) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1996

(2) Incorporated by reference from the Company's Registration Statement on
Form S-1, No. 33-90682

(3) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended March 31, 1996

(4) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended September 30, 1996.

(5) Incorporated by reference from the Company's Registration Statement on
Form S-1, No. 33-69482

(6) Incorporated by reference from the Company's Report on Form 10-K for the
annual period ended December 31, 1995.

(7) Incorporated by reference from the Company's Amended Current Report on Form
8-K/A, filed May 9, 1996.

(8) Incorporated by reference from the Company's Current Report on Form 8-K,
filed May 17, 1996.

(9) Incorporated by reference from the Company's Current Report on Form 8-K,
dated as of December 16, 1997.

(10) Incorporated by reference from the Company's Report on Form 10-K for the
annual period ended December 31, 1996.

(11) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1997.

(12) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended September 30, 1997.

(13) Incorporated by reference from the Company's Report on Form 10-k for the
annual period ended December 31, 1997.

EXHIBIT 12

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995, 1996, AND 1997
(DOLLARS IN THOUSANDS)

1993 1994 1995 1996 1997
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Income (loss) before provision (benefit)
for income taxes and extraordinary

items ....................................... $ 922 $ (3,387) $ 10,188 $ 8,067 11,488
Fixed charges(a) ............................. 12,852 25,418 39,253 84,314 98,393
-------- -------- -------- -------- ------
Earnings available for fixed charges ......... 13,774 22,031 49,441 92,381 109,881
Fixed charges ................................ 12,852 25,418 39,253 84,314 98,393
-------- -------- -------- -------- -------
Ratio of earnings to fixed charges ........... 1.1 x -- 1.3 x 1.1 x 1.1 x
</TABLE>

- ----------
(a) Fixed charges consist of interest expense, which includes interest on all
debt and amortization of debt discount, and deferred financing costs.

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference into Prospectus Supplement File Nos. 333-12255, 333-12257, 333-31569,
333-31571 and 333-43047 of our report dated February 9, 1998, except for Note
24, as to which the date is February 23, 1998, of Sinclair Broadcast Group, Inc.
It should be noted that we have not audited any financial statements of the
Company subsequent to December 31, 1997, or performed any audit procedures
subsequent to the date of our report.

Baltimore, Maryland Arthur Andersen LLP

March 27, 1998