Good day ladies and gentlemen, welcome to the third quarter 2009 Fisher Communications Incorporated financial results conference call. My name is Michelle and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call Mr. Joe Lovejoy, Senior Vice President and Chief Financial Officer, please proceed.

Thank you, good afternoon everyone. Before we get started let me remind you that this call contains forward-looking statements relating to the development of the company’s operations, products and services and anticipated future operating results. These forward-looking statements include information preceded by or that includes the words believes, expects or similar expressions. These statements are based on current information and projections about future events and are necessarily subject to a number of risks and uncertainties and actual results may differ materially from expectations. Factors that could cause actual results to differ materially from those expectations are described in our annual report on Form 10-K and quarterly reports on Form 10-Q as filed periodically with the Securities and Exchange Commission. The company undertakes no obligation to update publicly any forward-looking statements due to new information, events or circumstances after the date of this conference call or to reflect the occurrence of unanticipated events. A webcast of this call is available on the investor relations portion of our website and will be archived in audio form on the website for a limited period. With that, I will turn the call over to Colleen Brown, our President and Chief Executive Officer.

Good afternoon. As usual Joe and I will deliver some prepared remarks and then we’ll open it up for questions. By now I hope all of you have had a chance to review our third quarter press release, which was issued this morning and in short our near term performance continues to be affected by the difficult economic environment and as you may recall we began to see signs of advertising weakness in the middle of last year. With the weakening economy advertising revenue began to drop in 2008 as companies started cutting advertising spending to match harsh economic realities. Over the past year this downward trend has continued, as you know we are operating in one of the deepest recession since World War II and the broadcast industry has been particularly hard hit given our reliance on advertising. Our results for the quarter continue to reflect the overall challenges facing the industry. For the quarter consolidated revenue was $34.5 million, loss from operations was $3.6 million, net loss for the quarter was $4 million or $0.46 per share broadcasting and net advertising revenue fell by 33% compared to the third quarter of 2008 and broadcasting direct operating costs were down by 26%. The sharp decline in the overall advertising revenue continues to be driven by weak consumer confidence and the ongoing reluctance of companies to expand their marketing budgets in the face of job losses, declining home value and weak consumer spending. Among our major television advertising categories for the quarter, automotive fell 31%, retail was down 26% and professional services declined 4%. Our third quarter financial results include a substantial charge related to the July 2 electrical fire at Fisher Plaza. I would like to make clear that we believe a significant portion of our incurred expenses will…

Thank you. Well, as you’ve heard from Colleen this continues to be a very difficult period for advertising support of businesses and our third-quarter financial results reflect that. To help us maintain our market leading position we are taking aggressive steps to expand our value proposition, control costs and improve our operational and financial performance. We remain confident the actions we are taking today will make Fisher a stronger broadcast company when the economy does improve. As Colleen mentioned we issued our quarterly release of financial results this morning, we plan to file our Form 10-Q tomorrow. Those documents include in-depth information regarding our financial results. So, please refer to those sources for additional information. Today I will be discussing certain non-GAAP financial measures such as broadcast cash flow and EBITDA definitions and reconciliations of both of those terms can be found in our press release. To summarize our third quarter results, consolidated revenue for the quarter was $34.5 million, a decrease of 18% from the third quarter of 2008, loss from operations for the quarter was $3.6 million compared to a loss from operations of $613,000 in the third quarter of 2008. This includes a $4 million charge related to the Fisher Plaza electrical fire in the third quarter in the third quarter 2009 figure. Net loss was $4 million or $0.46 per share for the third quarter of 2009. During the third quarter of 2008, net income was $29.8 million or $3.41 per share primarily due to the $31.8 million after tax gain on the sale of our Safeco shares. Excluding that after tax gain, net loss in the third quarter of 2008 was $2.1 million or $0.24 per share and consolidated EBITDA on the third quarter was $3.7 million compared to $3.4 million during the same period…

Thanks Joe. Before we open the call for your questions I would like to close with a final thoughts. In few weeks Fisher will celebrate its 100th year of operation, and over the past century one of the company’s hallmark has been our ability to adapt our corporate strategy and repression Fisher to take advantage of this new opportunity. Changes in our DNA, and it’s one of the things that gives me confidence in our ability to seize the opportunies being created by technological innovation and a changing advertiser behavior. We have embraced this environment and are actively reshaping the company for success in this new. This means expanding Fisher’s interactive network to better serve our audiences and capture the inherent growth opportunities in the rapidly developing social and digital media market. We know that local media is critical to the fabric of our country and that is why we intend to leverage our broadcast strings when it come to building our digital portfolio. As we move forward with our new content delivery platforms we recognize the consumers in large numbers still rely on television and radio for their news information and entertainment. We’ve come a long way since our start of the flour milling company and I am confident that our strategic focus on direction will make a positive impact on the future, and with that we will open the call for your questions. Operator.

(Operator Instructions) Your first question comes from Bishop Cheen - Wells Fargo.

First of all on the fire we are very glad that it was not worse or tragic. I know it is expensive but looking at the glass half full we are certainly glad it wasn’t worse.

Thank you for your thoughts on that Bishop, we are too.

I am sure you are, must have been a very scary event. Let me focus on a few things; one, let me just look backwards, I think you talked a little bit about the one or two covenants that remained in the notes and did you say that the basket restricts you to $10 million of either stock buybacks, dividends and/or bond buybacks.

No, the first two, the $10 million restriction is for what’s entitled the restricted payments which primarily are the stock repurchase or dividends. The notes repurchases are not part of that.

Right, and in fact there is nothing that I am aware of other than price they are sitting there, certainly well above 90 that stops you from buying back the notes as exists in that bond covenant, is that correct?

Correct.

Okay, and you didn’t buy any back in Q3

That is correct.

Okay, and they are certainly in the call but at the full premium. So, let me go to retran, not to retrans to operating cash flow. Certainly I know it is very technical math but it is quite a swing to go from 16.9 to 12.9 on the LPM basis in just one quarter and certainly from over 20.8 during the same year over year LTM period down to let’s say less than 13. How tough is it going to be to bring the operating cash flow up and should I not even worry about that because going forward now that the Safeco stock is gone, it still is the more normalized EBITDA metric.

That is correct. Now that Safeco is out of the calculation, it’s really, the interest income which these days is not much is very close. EBITDA to OCF. I mean as you know kind of answer your question the rather significant drop, I mean this is such a high fixed operating leverage business that pretty significant declines in the revenue side lead to more significant declines on the EBITDA or operating cash flow, but fortunately the same is true on the upswing as well. So, as economy improves we should see some nice improvements near the bottom lines of the P&L.

Right. And then two other things that are inherent in the television business, one is retrans and when I’m looking at that it sounds like it’s kind of a $6 million or better run rate contractual business right now, and again, I’m not aware if you have some big chunky bookings yet to achieve that’s going to fill that out near term. But on my end -- in the ballpark so to speak when I look at the $6 million incremental.

Bishop, could you explain your $6 million incremental question, I am not clear.

Well, I think you said in Q3 with kind of run rate $1.5 million net of whatever, it may have been accounted for in Q3 but it was really for first-half contracts, right?

That’s correct.

So I think Joe you said $1.5 million net, I am not sure I mean net of the $2 million that you are talking about, I’m not sure what else goes into the net, but if I take that by four quarters that’s kind of a $6 million incremental.

I understand the math it’s not quite that simple, it’s going to be higher than that, let’s put it that way, and just multiply just the annualized $4.5 million, it will be higher than that.

So I mean am I way off by a magnitude of two times or it’s just somewhat higher than that?

Let’s call it somewhat higher.

Okay. All right, that’s good. And then, political will come back, I say with conviction, I think you believed the same in 2010, and remind us again what did you do in political in 2008?

Hang on a second Bishop, I can get to that quick number

Okay. I thought it was four something.

I thought it was just above five. And I don’t want to give you bad numbers. Let me look it up real quick.

While we are looking that up Bishop, do you have anything else.

Yes, so back to retrans.

Well, the third quarter was $4.8 million. Bishop I am just looking at $4.8 million in the third quarter of last year.

4.8.

4.8 in television.

Yes, that was in five for the year for political.

Did you ask about the quarter or the year Bishop?

I’m sorry $4.8 for the quarter and for the year it had five handle on it for total political?

Well it’s going to be stronger than that. I thought you were asking for the quarter. So let me pull the year.

Okay. And then on retrans, the key question is, when normally retrans is extremely high margin revenue. But given any new agreements you may have with A,B,C or any other program supplier. Do you get to keep the lion share referring you from retrans going forward, when we talk about this better than $6 million kind of revenue?

Yes Bishop, the way to think about that in our case and it may not be the same for everybody, but in our case it was negotiated as a program right, and treated as such and is more in the category of program rights as far as retrans goes, we were done with our retrans negotiations before we began the discussion with ABC.

Okay. Looking forward again I’m just looking for what is going to keep increasing the EBITDA and the earning and certainly the revenue is nice, but?

Yes, I think one thing that you are going to see is on the next go around more involvement by the network and helping all of us get our fare value. I think it’s safe to say we were successful in communicating that the amount that we’ve been able to gain so far in re-transmission is reflective of the value we represent to the cable or the satellite folks and it’s been difficult to gain much more than what the exact fee is per sub. If the networks get involved it is our hope that we’ll get a more fair representation of what the value is being provided to these multiple video providers.

Okay. All right, that’s something…

And answer to your question for the year, political is $23 million.

Sorry, one more time.

$23 million last year.

$23 million gross in political.

Yes gross, including TV, Radio et cetera.

Last question I appreciate all of your time. At one point, I know the fire may have complicated things, at one point you were looking at monetizing Plaza as one of your strategic options. I’m thinking about that as an option for 2010?

The answer is we are not really, of how long as it relates specifically your 2010 question. I mean the real estate market as you know is all markets are soft right now. Seattle commercial office space is no exception. So what we’re focused on now is really improving the value of the asset, we’ve, again, as I mentioned in the discussion of few minutes earlier we’re doing things like consolidating space bringing up space to lease out to third parties, and doing some other initiatives that really maximizes EBITDA and therefore evaluation when the time comes where the market kind of properly value those sorts of initiatives.

Well, and Bishop I just want to add it’s something we’d look at on a pretty regular basis, but until we see the credit markets strengthen and there is a footing underneath some of the lending that just isn’t happening right now. I don’t think we’ll give it a lot of time just because it is a time consumption issue but when it does strengthen me to something that we will look at very seriously.

Your next question comes from Matt Swope - Broadpoint Capital.

Colleen could you go back to the agreement with ABC, I think you used the word immaterial as you described it. Can you say any more than that?

We really can’t. Our agreement is such that if it is not material to our financials we aren’t to disclose the amount that we have negotiated. I can’t tell you that it’s really pretty much like a program syndication negotiation that occurred and it behaved very similarly and as a result we agreed to an agreement that last through three years and then with an addition of five years, addition of two years, sorry, five years in total with retransmission in the last two years. So, there’s no real clarity of numbers in the last two years it’s just an agreement that we’ll go and work together to get retransmission fees. So the first three years it’s very much like a programming agreement.

And then you struck it that way because of the way your MSO agreements?

Correct.

Then presumably you’ll go back to negotiate together for those last two years?

Yes, we have the option of working together, and I think that’s a bonus to us. I think that’s a benefit to our company and quite honestly I think it’s good for the business if the network stand behind us and work with us rather than just stand on the sidelines.

It certainly makes sense that not only with the networks but maybe with other affiliate groups, if you could group together that you have more leverage, are there any issues around that?

Yes, there are Matt and that’s why we have to be very cognizant of how we go about this and it is very much a lawyered up situation to make sure that we don’t cross the line and do anything inappropriate. So where we can work together we do where there is not possibility, we don’t.

I see, and then Joe, just from an accounting perspective the way we will see this go through your retrans revenue will look away it has already, but there will be an expert cost somewhere in the programming cost lines?

It’s already there.

Yes, it’s there already in the third quarter, but yes you are right it will be basically treated as programming expense.

I see, okay. And then just, and Bishop was asking the question, I was having a hard time following the math, you said that you did 4.2 of retrans in the third quarter and then in the press release it said something about $2 million that applied to the earlier two quarters and then, but somehow from $4.2 minus $2, were you rounding up at 1.5, what am I missing there? Maybe this goes to Bishop’s question about how we think about annualizing the number as well.

I am trying to see the $4.2.

Let me see, I thought that was the number that I have seen in the…

Are you thinking of the $4.2 referenced in the press release which is tied to political spending?

No, I see where you are talking about, $4.2 retransmission, $2 million attributable to the first half. Let me, I am going to have to look into that a little more.

As Bishop was trying to do also, I think you are just trying to think about what an annual number can be as everything rolls in?

You know what; it says the total retransmission revenue increased $1.5 million, that wasn’t the number.

Because we had some money booked last year.

Okay, so the right math to do would be the 4.2.

The $4.2 minus the $2.

Okay, that’s good.

2.2 not 1.5, Yes, that’s right.

Okay. So, maybe if I try Bishop’s question again. If I talk to 2.2 and annualize it.

That gets you more close.

Okay. Got it, okay. That makes a little more sense. And then, Colleen you addressed the spectrum issue and referred this on a couple of the other peer calls as well. Is there any way that this could be an opportunity for you guys to monetize some of the 6 MHz in each market that you’re not using.

You mean as far as selling it back.

Yes as far as whatever way, whether the SEC ran an auction and gave you some of the proceeds or?

Matt, I think that politically that’s highly unlikely. I think that’s a pipe dream, we didn’t pay for it in the first place, I think the American public will have a real problem if we benefit from it. They consider it the public airways and that is just assuming that auctioning at off is a good idea. Remember, spectrum is finite and they are auctioning off finite public resources. So, I think that politically it would be surprising to me if it goes forward, but it doesn’t mean they won’t try and it doesn’t mean through the process that we wont inch forward with more pressure on us to utilize our spectrum, and of course while we have been developing particularly the mobile television solution I would hate to see us lose our flexibility to develop the spectrum. That is the message I carry to Washington and had the ability and the opportunity to speak with many of the secretaries of various areas of the President’s Cabinet specifically to say it’s too soon. We just transferred from analog to digital on June 12, we have only had five months. We have just got the standard in place, we gave up a third of our spectrum to make this all happen. There is a 100 MHz still yet to be maximized by the mobile folks I think it’s too soon, and we need time to develop this spectrum, and I think they heard, I think they listened. I know they listened and I think they heard, so.

Maybe I’ll ask this in a slightly different way, you think you can use the full 6 MHz in each market.

Yes I do.

Okay. That’s great. I think it was maybe partly driven by Wall Street Journal articles from last week that put to some people’s radar and a study that I guess is being presented as they try to look for extra spectrum and something that I think the service is going to be presented on February.

Yes. There was a CEA study that was quoted in that article and of course consumer electronic industries that did the study, and the only study they did was the proportion that benefits those who might get that spectrum. They didn’t do the portion that might lose the spectrum, and they didn’t do how it would affect the local communities by driving commercial stations to a lower class standard taking it away from the American public that they just convinced to spend billions on new technology by putting boxes and television sets into their home. So I think that was pretty one sided article, not that I have an opinion.

Maybe that’s a controversial topic. On the bond buyback issue as you guys think about the amount of cash you have in the balance sheet now and the amount of debt you still have outstanding how do you think about buying back more bonds in the open market?

We constantly keep our eye out and look for opportunities. I mean we understand there’s still pretty attractive premium in terms of a discount from par in the market place. It is a little difficult as you know they are not the most liquid instruments in the market. So getting our hands on them is somewhat problematic and then on the other side we do keep a mindful eye on them the cash balance to make sure that we’re in good shape.

They are also not sold in small increment. So, how they are sold is t challenge as well.

Right.

We’ll keep our eye on it though.

Your next question comes from Bishop Cheen - Wells Fargo.

Colleen it was very articulate in your analysis of spectrum. I don’t know how many more years I’ll be doing this, but however many more quarters it is I guarantee you we’ll be talking about it.

Yes, I agree with you Bishop. Not that we want to see it go but I think we will be talking.

I mean because they always come back and do this over and over again, and then you had Commissioner Cops feed the fire with a comment that he made, it’s politics at its worst.

Yes.

And it’s the government, big prince, if this little prince take this away, but I agree with you Colleen, everybody in an MTV world makes it sound like something is happening tomorrow, something happening tomorrow digital. Here is my question auto, Joe you gave it and I didn’t like that sales, auto was down what percentage in the quarter and do you have something as a percentage with the year-to-date as well?

Yes, auto for the quarter is down 31% and it is in the 60% range for the year.

Okay. I know you don’t do pacing. So this is not a pacing question, when you look at auto and you know that it is said to be finding lights again, do you see it, do you feel it. What does this Q4 feel like for you?

Yes, I think that’s a fair question and, you are right, we don’t do forward-looking, but I can tell you that October was stronger, I can tell that there is more inquiries than ever before in the last, I would say, 18 months. As you know our markets tend to be strongly foreign, automotive, and that is a little bit different than what you might hear from the Chryslers and the GMs or the domestic automotive regarding their spending pattern. There is a demand, there is a pent up demand in getting the product has been some of the issue. As strange as it sounds because of the foreign base of our automotive, it’s been very difficult to get cars in the market, because the number of cargo ships going back and forth are not bringing them in. We are down about a half, 50% of cargo ships coming into the United States which is where we get most of our cars in the foreign market. So as a result, they have got a long lead time on many of these backed up mix I would say. And that’s holding cost down and quite frankly holding down their spending. However, I’ve had several personal conversations with dealers and as you know my family has been in the dealership business for 30 years. I’ve seen indications of a great dealer of interest of coming back on the air and it’s just a matter of getting their feed under them in competence placing that schedule, but the inquiries for the avail continues, so specific numbers are good better than they were a year ago.

Do you feel that firming not just in auto, but in general in your radio and TV business, in your ad market business?

Yes, retail is interesting because it’s shaping up to look like it’s going to be a late season, but we’ve seen spending began following Halloween for the holiday seasons. So, it might be as much as a spread over two months versus really the six week period. It might be that we see a lot of after sale spending, but I’m not seeing quite the strengthening in cost of points I would like to see in the industry. Of course, as you know, part of the beauty of the last two months of the year is the strength in cost for points as we run out of inventory, but I do think that personal services or the professional services category which for us is kind of an ad hoc category, services has seemingly strengthened and that to me is a good sign that people are starting to spend in the services category again, so that’s good. Then we have had some growth, entertainment has grown for example. Financial services has grown, financial services a year ago is non-existent. So, I think that’s been positive for us. Other than that, I think a general confidence is beginning to show itself, but I wouldn’t go to the bank yet on it.

Yes, that’s what we’re hearing, I’m not sure what it is like in Seattle, but my impression is that the sell through will start to come back before the cost per point comes back when interest…

Yes, very true. But once you see the cost of point starting to strengthen, you know you are on the right track. One other thing I will say is the recent articles that have come out pretty universally that Seattle is one of the top five markets that will rebound and Portland and Seattle top ten markets that are the places to live, and that seems to some what universal regardless of the publication. We believe it’s a very young educated dynamic area of the country and we’re seeing that strength hold us up a little bit.

I’m old enough to remember the campaigns where they said come visit but please don’t move here.

Yes.

That was 30 years ago. I know your family knows a thing or two about the auto business, so Joe this is for you, I’m betting we can get you a good deal on an Opel today.

You have no further questions.

All right. Well, thank you everybody for listening and for tuning in today and again we are going to do everything we can to bring the year as strongly as possible, thank you.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.