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Executives

Vince Sadusky – President and CEO

Scott Blumenthal – EVP, Television

Rich Schmaeling – SVP and CFO

Analysts

Marci Ryvicker – Wells Fargo Securities

Lance Vitanza – CRT Capital

Ed Atorino – The Benchmark Company

Barry Lucas – Gabelli & Company

Harry DeMott – Knighthead Capital Management

Aaron Watts – Deutsche Bank

Avi Steiner – JPMorgan Chase & Co.

Bishop Cheen – Wells Fargo Securities

LIN TV Corporation (TVL) Q3 2010 Results Conference Call October 28, 2010 9:00 AM ET

Operator

Good morning, ladies and gentlemen and welcome to Lin TV Corporation earnings call for the third quarter ended September 30th, 2010. Today’s call is being recorded.

Before we introduce the speakers, I would like to read a brief legal statement from the company.

This conference call may include statements that constitute forward-looking statements particularly in the area described as business outlook, but also including any other statements of future business prospects or financial results including but not limited to the use of the words like believe, expect, estimate, project or other similar expression.

Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. Factors that could contribute to such differences include the risks detailed in the company’s annual report on form 10-K and other filings made with the Securities & Exchange Commission, which are available on the company’s website, www.linmedia.com in the investor relations section or at www.sec.gov, which discussions are incorporated in this release by reference.

Lin TV Corporation undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise, unless otherwise required to by ethical law.

At this time, I will turn the call over to Lin TV Corporation’s President and Chief Executive Officer, Mr. Vince Sadusky.

Vince Sadusky

Thank you, operator. Good morning and welcome to our third quarter 2010 conference call. I will begin with a brief review of results and achievements. Scott Blumenthal, our Executive Vice President of television will update you on station operations and Rich Schmaeling; our Chief Financial Officer will provide financial results and guidance.

Building on our strong performance in the first half of the year, we were pleased with third quarter results, particularly the continued growth of our digital business.

Net revenues were within guidance and increased 27% in the third quarter to $103.6 million compared to $81.4 million for the same quarter in 2009. Our growth in revenue is evidence that our business model continues to deliver. All major revenue categories which include core television, digital and political advertising performs well.

Core local and national advertising sales combined, which excludes political advertising sales, increase by 13% to $85.1 million compared to $75.6 million for the third quarter of 2009.

Eight of the 10 largest advertising categories grew compared to the third quarter of 2009 and the most significant category, automotive was up 41% from the third quarter of 2009. Political revenues were $12.5 million compared to $3 million in the third quarter last year. Political dollars came in a little slower in some of our markets that originally anticipated, but have accelerated in October.

Given the strength of our local television stations, July was another great rating book. We are either number one or number two in all big three news markets based on key demos in late news. In addition, 80% of our news markets are number one or two in key demos in early news.

Our message is consistent each quarter; local programming is not important part of our strategy. In the third quarter, we increase local programming by 500 hours compared to the same quarter in 2009 and launched two new local lifestyle shows, Mass Appeal in Springfield, Massachusetts and Studio 10 in Mobile, Alabama.

One of our most positive local lifestyle programs called Living with Amy that airs in WLUK TV in Green Bay, Wisconsin, was just named the most watched television program in its market in the morning day part, outperforming tabs syndicated in network programming such as Regis & Kelly, Martha Stewart Living and the Today’s Show with key 18 to 49 and 25 to 54 adult in women demographics.

The growth of our digital business differentiates us into today’s marketplace. In the third, digital revenues increased 54% compared to the same quarter last year. Internet advertising and other interactive revenues increased 209% compared to the same quarter last year.

These results include incremental revenue from our acquisition of RMM, which alone grew to more than 70% compared to the same quarter last year. RMM has proven to be a great addition to our existing digital products and has advanced our company’s transformation from a local broadcaster to a multimedia company with a national interactive footprint.

We continue to focus on bringing innovative products to market and building our digital assets. In the third quarter, we began rolling out On Politics, our viewers can find national political content on many websites, but On Politics provides a unique opportunity for consumers to follow and actively engage in local, regional and national politics to varying levels of interaction.

In addition, we are in the process of launching our enhanced iPad apps making it more convenient for users to access our content on the most [inaudible] electronic devices.

The results of our efforts have been terrific. Compared to our local broadcast competitors, we rank number one or number two in all of our local broadcast markets that comScore measures for unique visitors. In 93% of our markets for average time spent on site.

During the quarter, average time on site was 20 minutes per visit, in comparison to all local media, 73% of our stations rank number one or number two in unique visitors and 80% rank number one or number two for time spent on site. This is a major accomplishment and a credit to all of our employees, who have embraced our digital culture.

In addition to our competitive success, we engaged 44 million total daily unique visitors on our station’s websites during the third quarter. Our stations internally shared nearly 8,000 stories with other LIN stations and delivered 30 million video impressions. Mobile impressions, which include our iPhone, BlackBerry and Android applications, were 56 million in the third quarter of 2010, compared to 29 million in the third quarter of 2009.

Also, as you may have read in the press release issued yesterday, I was elected president of the Open Mobile Video Coalition. I’m eager to help the OMVC’s Advance Mobile Television and I’m excited about the potential it has for our industry.

Now, before I hand it over to Scott, I want to mention that while we are encouraged by the recent revenue trends, there’s still ongoing concern about the economy as we look towards 2011. We demonstrated during the recession last year that we know how to reduce expenses in a swift, but smart way. We also have the ability to sustain a lean cost structure and continue to invest in our growth priorities. I am confident, this progress will continue.

And now, I’d like to hand it over to Scott.

Scott Blumenthal

Thank you, Vince and good morning. Our television station has yet another solid performance in the third quarter of this year.

National advertising sales, which excludes political advertising, increased 22% to $29.4 million compared to the same quarter last year. National advertising sales represented 30% of our total TV advertising revenues.

Local advertising sales, which again exclude political advertising, increased 88.2% in the third quarter to $55.5 million compared to the same quarter last year. Local advertising sales represented 57% of total TV advertising revenues.

Automotive, our largest revenue category continues to show great improvement with a 41% increase compared to the same quarter last year. Drilling down even further, domestic was up 41%, foreign was up 51% and local auto [ph] advertising increased by 38% and that’s all compared to third quarter of 2009.

National advertising made up 39% of total auto revenue with local advertising making up the remaining 61% in the third quarter.

It’s important to note that automotive category is not the only category that’s rebounding. Most of our top categories showed positive gains. Financial services were up 24%, growth rate food items were up 17% and media communications were up 16% in the third quarter compared to last year.

In a post-recession, advertisers typically go back to utilizing the services of high quality proven media outlets. As we mentioned in previous calls, our strategy during the recession was to make smart decisions that will improve our efficiency without compromising the quality of our products. Our focus was on investing in our future and building relationships with our communities so that we can continue to compete effectively for the long-term.

We’ve had terrific outcomes as a result of our strategy. For example, we launched nine local lifestyle shows in eight markets since 2008 and every show has not only gained shared since their launch, but also has develop new sources of revenue in their respective markets. This is really remarkable when you think about the environment in which we were operating.

Following the success of this local programming strategy, we plan to launch our 10th lifestyle show in the fourth quarter of 2010 and another two shows in 2011. In addition, we used our local programming to build strong relationships within our communities.

For example, during the political society WLKU TV in Providence, Rhode Island hosted coffee with the candidates on their local style, lifestyle show called the Road Show. The segment was such a success that it went viral. It was shown on virtually every national cable news channel, including CNN, MSNBC and Fox News. Each of our local programs in all of our markets are providing important political content during this election year.

In fact, the quality of our work was recently recognized by the National Association of Television Arts and Sciences. Competing against major markets like Phoenix KRQE TV in Albuquerque, New Mexico took home 13 Emmys. Many of our other stations took on Emmys as well; including the seven Emmys that WISH TV in Indianapolis was awarded.

These are just the few of the results that we’ve achieved from the implementation of our strategic plan. We are confident that these ongoing initiatives will ensure LIN’s leadership position in the markets we serve as the economy continues to rebound.

And now I’d like to hand it over to Rich who will discuss our third quarter 2010 financial performance.

Rich Schmaeling

Thanks, Scott and good morning. Our 3Q ‘10 net revenues came in at $103.6 million and we’re up $22.2 million or 27% versus prior year. This increase was driven by a 13% increase in core time sales, a $9.5 million increase in political advertising and continued strong growth in digital revenues which increased 54% to $16 million.

Our total station and digital operating expenses for third quarter which includes direct operating, SG&A and program payment costs but excludes stock-based compensation increased by 14% or $8 million to $64.8 million, primarily due to increases in variable direct costs such as sales commission and bonus expense resulting from the growth in revenue and our October 2009 acquisition of RMM.

BCF for the quarter was up $14.3 million or 58% to $38.8 million compared to $24.5 million in the prior year.

Our corporate expenses, excluding stock-based compensation increased by $1.1 million for the quarter to $5.1 million, primarily driven by an accrual for RMM incentive compensation and other performance bonuses.

Adjusted EBITDA for 3Q increased by the $13.2 million or 64% to $33.7 million compared to $20.5 million in third quarter of 2009.

Our free cash flow after debt service increased by $11 million to $16.3 million. This increase was driven by the growth in EBITDA.

Our MBC joint venture stations also had a strong third quarter. The JD posted revenue growth of 22% and operating income increased by 36%.

Turning to LIN’s debt and key credit metrics, at quarter end we had unrestricted cash on hand of $8.8 million and $63 million available under our revolving credit facility.

Our total debt at September 30 was $641.3 million, down $41.6 million from year end. Our outstanding revolver credit facility balance was $13.1 million and our term loan balance was $10.4 million.

Subsequent to September 30th, we paid off all outstanding balances on our revolving credit facility.

The average cash interest rate on our debt at quarter end was about 7%.

Consolidated leverage at September 30th as defined under our senior credit facility was 5.1 times compared to 7.6 times at the end of last year. Our total leverage covenant at September 30th was 7.5 times and steps down to six times for the fourth quarter.

Our interest coverage ratio at September 30th was 2.8 times compared to our covenant of two times and our consolidated senior leverage ratio was 0.2 times compared to our covenant of three times.

Also, at quarter end we had approximately 368 million of federal NOLs.

Looking forward to the fourth quarter, we expect that fourth quarter net revenues will increase in the range of 16 to 22% compared to the fourth quarter 2009 net revenues of $101.1 million.

We expected our direct operating and SG&A expenses will increase in the range of 9% to 14% for the fourth quarter, compared to 2009 expenses of $55.4 million.

I’ll now hand it back to the operator for questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We’ll go first to Marci Ryvicker with Wells Fargo.

Marci Ryvicker – Wells Fargo Securities

Good morning. I just want to dig a little bit into your guidance. There’s deceleration from Q3 to Q4. So, it looks like it’s mostly comp driven. Just want to hear some more color on that. And it would be helpful if you can give us just color on pacings by month and how much inventory is booked for Q4.

Rich Schmaeling

Yes. It is comp driven, Marci. And we go back and look at what happens in the fourth quarter of 2009, we saw a marked step up in the run rate of our revenues in November and December. In fact, if you go back and look at kind of the average daily revenue for core in November and December, it was up 18% compared to the October year-to-date average. So, a marked step up in the run rate of revenues in November and December last year, up 18%.

So, when we look at it right now, what our guidance implies is that we expect our core revenues to be up in November and December against those much tougher comps about mid to upper single digits. So, we’re actually quite encouraged by that. We see, we kind of lapped ourselves through the end of October, yet we still see ourselves being up for core, mid to upper single digits, which is quite encouraging.

Now, when we look at the pacing right now, the pacing is quite strong. In fact, it’s pacing in excess of our guidance. But we do see – we do believe that is just as a result of revenues coming on to the books earlier in 2010 than people were booking during 2009. So, what we’re looking at right now for the full quarter, actually our pacings up above 40% versus prior year. But we don’t think that’s indicative of frankly where we’re land given just the timing of when advertisers are booking their business.

Marci Ryvicker – Wells Fargo Securities

So, is it fair to say that Q4 is decelerating month to month because of tougher comps?

Rich Schmaeling

Yes. It’s not – there is no deceleration in the run rate of revenue. In fact, we’re seeing some building momentum. It’s just tougher comps.

Marci Ryvicker – Wells Fargo Securities

Okay. And then, have you given a number for political in Q4?

Rich Schmaeling

We have not. But what our guidance implies is a political number of about 27 million gross and of course, most of that’s on the books and we’re watching the pacing each day. We’re pleasantly surprise each day with how political is coming on the books. So, we think that’s a pretty good number. We may beat it.

Marci Ryvicker – Wells Fargo Securities

Great. Thank you so much.

Operator

We’ll take our next question from Lance Vitanza with CRT Capital.

Lance Vitanza – CRT Capital

Hi, guys. Thanks for taking the call. Marci, just touched on my first big question, but maybe we could just talk about the balance sheet for a second. I mean, the leverage is now down to about 5 times. Your bonds are all trading inside of 7%. At what point do you say enough with the deleveraging, let’s focus on returning cash to shareholders through some sort of special dividend or whatnot?

Vince Sadusky

Yes. We are focus on continuing to deliver our balance sheet as rapidly as possible. So, we’re going to remain focus on doing just that for at least the near-term.

Lance Vitanza – CRT Capital

I mean with the bonds yielding where they are, the markets are certainly telling you that your leverage is comfortable relative to the cash flow here. What’s the market missing? Why do you feel the need to de-lever further?

Vince Sadusky

My goodness, what a difference a year makes. We’re hopeful that 2011, we’re going to see sustained economic recovery. That’s what we expect. But others may think differently. And we just think it’s prudent and as our Board’s believe, it’s prudent to continue to de-lever our balance sheet and really create further strategic financial flexibility.

Lance Vitanza – CRT Capital

Thanks, guys.

Operator

We’ll take our next question from Ed Atorino with Benchmark.

Ed Atorino – The Benchmark Company

Kind of sort of mention what Marci did. And just to follow-up on that, if you look at sort of post-election day bookings, is it pretty much across the board? And how far out – do you see anything yet into the first quarter?

Rich Schmaeling

We’re not looking yet, Ed, at the first quarter. We are seeing continued strength relative to local and national. But we are seeing, right now, at least on our pacing report that local for November and December is pacing up mid to upper teens.

Now, again, as I mentioned, we don’t think that’s indicative of how it will ultimately shake out for the full quarter given the timing of when insertion orders are coming on the books.

Ed Atorino – The Benchmark Company

How about pricing?

Rich Schmaeling

It’s all price set [ph], I mean …

Ed Atorino – The Benchmark Company

It’s all price, of course. Thanks, guys.

Rich Schmaeling

And of course, its category mixed, right. Because clearly auto is becoming a greater proportion of our total mix as are some other categories that typically pay a greater rate, but that translates into price.

Ed Atorino – The Benchmark Company

Good. Can you just elaborate on the categories? I know auto’s obviously a big one. Are you seeing a broadening out of the type of category gains that you’ve seen, or is it pretty much what it’s been all along?

Scott Blumenthal

I’ll actually we’re seeing a broadening up of categories. All of except those that you would expect to be going down in a recovering economy like paid and direct response. We’re seeing pretty good growth across the board in all categories coming back especially in third quarter this year.

Vince Sadusky

I say the one category we haven’t seen a nice bump up is the restaurants. So, we’re starting to see some momentum there. So, we’re pretty hopeful that becomes a pretty good catalyst in 2011 for growth, the restaurant category coming back somewhat stronger.

Ed Atorino – The Benchmark Company

And as direct response gets displaced by, let’s say, regular categories, do you get a little bit better pricing on that stuff?

Scott Blumenthal

That’s stuff being direct response?

Ed Atorino – The Benchmark Company

Yes. In other words, as if I’m selling –

Vince Sadusky

Yes.

Scott Blumenthal

Sure.

Ed Atorino – The Benchmark Company

Widgets and I’m –

Scott Blumenthal

Yes, we’ll get a little bit better pricing. But inventory demand is the pressure on the inventory is still makes so hard for that clear because it’s still less surprising. In our case, we’re probably able to handle a little bit more of that than the average company because of our duopoly situation. We have extra inventory in a lot of our markets. A load of our markets with that second station.

Ed Atorino – The Benchmark Company

One last question. Could you discuss why a difference in markets or is it pretty much across the country?

Scott Blumenthal

Well, it’s pretty much across the country. Some growth is a little bit greater than others just because how far it will fall in 2009. National and the local [ph] markets were quite depressed in 2009.

So, on a percentage basis, we’re seeing a little bit higher growth there. But there is gains consistently all across all of our markets.

Ed Atorino – The Benchmark Company

Thank you very much.

Operator

We’ll take our next question from Barry Lucas with Gabelli & Company.

Barry Lucas – Gabelli & Company

Thank you and good morning. Two items. One, Vince, I think you sort of sounded a little warning flag on the slow pace of the economic recovery and what that potentially could mean for ‘11, but Rich may have taken the opposite side of that bet. So, maybe you could just square those two and what do you really think is going to happen in ‘11.

Vince Sadusky

That we have role reversal of this company. We have an optimistic CFO, which should make everybody in this call feel very comfortable, right. Yes, look just basically we’re starting to think about 2011 as we’re going into our budget season and we’re getting through the fourth quarter. I think we were all incredibly distraught at the unprecedented 20 plus percent revenue declines that we saw last year and I think until the next political season, we probably seen the last 20 plus percent revenue increase. That’s probably in the rear view mirror now.

So, the good news is I think we’ve recovered a lot of the lost revenue over the last two years. That’s pretty exciting. But then, when we think about 2011, my comment was just merely reflective of I think what all of us have read and we’re all kind of pouring over economic data and it seems like consensus is no double dip, but unemployment remains severely high and housing starts low, and it sounds like it’s going to be kind of a long steady hopefully progress towards recovery, and that’s just simply something I wanted to make sure that we raise in the call.

We think that translates into continued growth in the core, which is terrific and we think that our additional business has incredibly high growth potential continuing into 2011 despite a tough economy. I’ve just given now; we’re in different markets than we had historically been in that we continue to growth that consumption as well and [inaudible] consumption online as well on air of course.

But we just want to make sure that – we highlight the fact that 2011is largely an unknown and our visibility remain very poor.

Rich Schmaeling

Just to highlight Vince’s point about closing the gap from where we were pre-recession, which we think of as 2007 to where we are today. The first half of 2010, we were still about mid-teens below 2007 with regard to our core time sales. When we look where we’re exiting the year, kind of November and December, it’s about – it’s low teens. So, we’re closing the gap relative to 2007, another indicator from our perspective of just gaining some traction.

Barry Lucas – Gabelli & Company

Great. Thanks for that color, Rich. Just to switch gears. I was on the Comcast call the other day and they’re fairly optimistic that they’ll get the NBC Universal deal done. So, I was hoping maybe you could touch on what that might mean for NBC affiliate group owners and, even more particularly, what that might mean for the JV and maybe dispelling some of the concerns that people have around financing at the JV level.

Vince Sadusky

Yes, I think – with regard to the merger, you’ve heard what they’ve said about timing. Our message has been pretty consistent. Once the NBC affiliate board reaches agreement on voluntary concessions that Comcast is putting forward in connection with the merger, we felt very comfortable about the combination. And I think, as I’ve said in the past, I believe Steve Burks has deep broadcast and I really do believe that Comcast admires the local news and community connection and good will that local broadcasting has.

Plus, I think that they feel as if they can influence the network ratings and hopefully have a better run here than NBC has had as of late and that will benefit the cash flow pretty significantly for their television stations and clearly benefit the affiliate group as well.

So, again, as we’ve said in the past, we’re optimistic about their ownership underneath the construct that they’ve put forward.

With regard to the NBC JV, yes, we’re anxious to have a conversation with the new owners. We don’t know that much will change given Comcast ownership, the structure as we’ve said in the past, doesn’t call for any change. There’s no ability to change anything pursuant to a change in ownership of either company. It’s pretty well locked down.

But we constantly have conversations with NBC about the operation and I think the key is whatever ultimately transpires with the joint venture, it’s a good thing that the industry experiences a pretty significant recovery and that the cash flow for the joint venture has increased pretty significantly as well.

Rich Schmaeling

And to add that the one thing that is significant for the joint venture is that subsequent to the closing of this merger, we do expect that NBC will join its peers and jump in to the retransmission consent fee gain. And that – the joint venture has, its affiliation agreement with NBC goes out for 2023. So, 100% of the retrans consent fees will benefit the joint venture and we think that could be quite significant in short order and really bodes well for the joint venture getting above water and staying there and generating significant, we hope, excess cash flow out into the future.

Barry Lucas – Gabelli & Company

Great. Thanks for that color, Rich.

Operator

We’ll take our next question from Harry DeMott with Knighthead Capital.

Harry DeMott – Knighthead Capital Management

Hey, guys. Quick questions. Could you talk just a little bit about the political? You said it was sort of a slow start to the political and some. Is that just more of a race by race, market by market thing because obviously, you have leading stations in your markets. And some guys have killed it on political, some have been a little slower, and yet it seems to have ramped up dramatically here in the last month. Could you just give us a little more flavor on that?

And then I’d love your – since you’re talking about the Open Mobile Video Coalition, I’d love, Vince, your commentary just on where you think you’re going to end up going with that, ultimately. What’s your take on something like a TV Everywhere, where obviously you don’t control all of your programming, but you do control a lot of your local programming. And sort of wondering what you’re doing, what steps you’re taking, and how you view sort of the distribution of local programming to different devices, iPads, computers, iPhones, et cetera, et cetera, et cetera. Thanks.

Scott Blumenthal

As far as political is concern, absolutely, it’s a race by race and market by market situation. Some Republican candidates have had been a lot raising funds than others, so they’re making sure that it’s being spent on the most effective manner. Typically that’s television, that’s why we’re seeing such money being committed towards the end of the campaign here.

But in all reality, they’re looking at the polls very closely. And where there is substantial leads and they think they’re going to win or they think they’re going to lose, the money is being shuffled to other races and other places that they have a better chance to win. So, it’s fluctuating greatly and in markets that we thought we’re going to be very strong because the polls have indicated that there’s not a competitive race, the money has been pulled back.

Other markets that turn out to be more competitive than we thought it was going to be, has been money put in by the parties as well as the candidates, individual fundraising efforts. So, it’s just varying across the board.

Rich Schmaeling

And I think it’s still important to know when they can look at our, the guidance we just gave. We do expect our full year political revenues to be up versus 2008. So, we’re seeing growth in category perhaps at our stations not as much as we hoped. I think you’ll see others who were in highly contested markets really blow the doors off of their kind of prior historical comps.

Vince Sadusky

Yes, really it’s market specific. Harry, on the OMVC front, I think we’re in a very good place in terms of the separate being three or four years old, having a standard adopted and having a lot of players very, very interested in being part of this, this ecosystem. I think it was really encouraging that we actually brought a product to market in D.C. over the summer time, where we had a bunch of viewers take these prototype devices and watch Mobile DTV.

And it was interesting; they actually found local news to be their favorite program. That was the most watched program during this test. So, we know the local content has a lot of value and we’ve been hard at work outside of Live TV to mobile devices as we’ve reported each quarter on being quick to be the first to market, to be able to develop applications to allow folks to kind of get bite sized content programmed in their own way, whether its weather alerts, school closings, breaking news, live video, traffic cams.

So, we think that there’s that natural extension of what we do and we believe the local content has a lot of value and that’s evidenced by just terrific numbers on Apple iPhone, app downloads of our local news widgets, et cetera. So, we feel good about that.

The OMVC is an effort to bring live television to PDAs and cell phones and other mobile devices for use of a chip and in technology standard that was approved last year. And I think that that’s got significant potential because of the engineering of it that centered around transmission through the broadcast airwaves and when you think about – I’ve got all the other products that are out there. I’ve got Sling Media, I’ve got MobiTV and whereas, they all serve a purpose.

I think kind of the live real-time TV in a linear fashion, people on the market know on their local CBS affiliate, there is Ellen’s on at 4 o’clock, local news is on at 5 o’clock. I think that they don’t have to think about what is the programming that’s offered up and search to try to find it and the signal quality is much, much better.

The over the air quality is outstanding compared to IP delivery of video, which has really struggled. It gets better every year, but it’s going to continue to struggle as – it’s very challenging on a one to one basis to deliver a whole bunch of high quality video streams.

So, we remain optimistic. I think this is something that has gotten an incredible amount of traction over the last three plus years or so and I think at CES last year, the Consumer Electronic Show; we saw some really neat devices out there. Everyone from – this company Tivit that actually won the most innovative award for mobile television to Dell laptops that had the chip installed inside the machines and I think you’ll see an even further advancement this year.

And I think something like 70 stations have lit up this transmission technology. So, as whereas it’s still in its infancy, I think going into 2011, I think you’ll see a lot more local markets activate the service and hopefully, will continue to attract more and more hardware and software manufacturers into the ecosystem.

Harry DeMott – Knighthead Capital Management

Got it. Thanks a lot.

Operator

We’ll take our next question from Aaron Watts with Deutsche Bank.

Aaron Watts – Deutsche Bank

Hey, guys.

Vince Sadusky

Good morning.

Aaron Watts – Deutsche Bank

One thing, Rich, on something you said earlier, I think in end of the year last year we were talking about a 10.5 times maintenance test for you guys stepping down to 6 where we are today, and thought that was a pretty insurmountable hurdle. So, just to your point on what a difference a year makes.

But anyway, I wanted to make sure I understood something right. On the current quarter, your revenues came in basically in the middle of your guidance range. Expenses came in a little bit above your range that you gave us. And I know you talked about variable costs, but what kind of pushed them out of the range for the quarter? And I assume that probably impacts how we think about the fourth quarter, too.

Rich Schmaeling

Yes, what really tick our expenses a little bit above where we thought we would be for the third quarter were a number of investments that we accelerated in digital and also some maintenance investments that we accelerated into the third quarter before it gotten to the chilly season of the quarter. So, some stuff outdoors that we knock down and got done. So, it’s those kinds of things that aren’t necessarily, that are more episodic versus recurring month and month out.

Aaron Watts – Deutsche Bank

Okay. And on the pricing side, encouraging to hear that pricing is firming. Is it your sense, just judging from let’s say November and December, when political kind of fades away a little bit, that that firmer pricing is holding up? Or is that just a crowding out phenomenon, just in terms of how we think about maybe 2011 pricing?

Scott Blumenthal

For November, it’s certainly holding up. The inventory portion of November, much of didn’t displace. But from an October political has driven prices and because of that we’ve been able to reestablish value on most of our products. Certainly, we’re in the position of having high quality; number one, number two news is in the marketplace which drives demand and we’ve seen pretty good look in terms of being able to hold our pricing at least through the end of the year.

Aaron Watts – Deutsche Bank

Okay. Thanks a lot.

Operator

And we’ll take our next question from Avi Steiner with JPMorgan.

Avi Steiner – JPMorgan Chase & Co.

Thanks, guys. Most of my questions have been answered, but let me throw two in here. One, it looks like there’s some opposition file to what you’re trying to do on the ACME side. And though I don’t think there’s ultimately going to be an issue, maybe if you can talk about kind of the cable view on retrans here and how some of that, particularly the noise on the Cablevision side, ultimately may affect the industry and retrans going forward. And then I have one follow-up. Thank you.

Vince Sadusky

Yes, sure. Yes, look the Time Warner filing against our ACME acquisition in Green Bay and [inaudible] we think really has no merits. The structure we’re using is one that’s got hundreds of precedent transactions. So, perhaps it delays it a bit, but we think it’s a pretty tight argument. And I think it’s ironic given Time Warner negotiates for charter and they are multiples bigger than the company the size of LIN Television, on behalf of Bright House, I’m sorry.

On the Cablevision front with Fox, we applaud Fox for aggressively going after value for their broadcasting stations. We think – the process right now is one where we hope both sides reach resolution. We think it’s bad for consumers. We’ve only come off a few times in kind of our retransmission negotiating history. We think it’s just bad business to come off.

But we certainly understand Fox’s position, we do know at times it’s very challenging with certain operators to get them to recognize value and I think the retrans mechanism that’s been in place, the structure that’s been in place for almost 20 years is one that the cable industry really had no issue with whatsoever until the last three or four years, when certain broadcasters such as ourselves had to resolve to actually utilize it and aggressively pursue retrans.

And at the end of the day, I think the only thing that really gets cable providers to the table when certain ones are not willing to acknowledge value is the loss of subscribers. We believe that our local channels are incredibly highly [inaudible] while we look at the ratings out of the roughly 200 choices that viewers have at any given market. We’re consistently the top rated choice out of all those channels, the second highest rated choice out of all those channels by a large margin over most of them.

So, we know that it’s effective. We know that it works and we’re supportive of the current retrans structure. We hope these guys recognize fair value and reach an arrangement as soon as possible.

Avi Steiner – JPMorgan Chase & Co.

That’s helpful. And then, just to switch gears on my follow-up here, with your balance sheet largely taken care of, and everybody pointed out your de-levering. And even though the 2013s remain stubbornly outstanding from my perspective, maybe if we can look ahead, how do you see M&A playing out in this industry? And would you consider yourself, at the helm of LIN, a buyer or seller of assets? Thanks.

Vince Sadusky

Look, we like the business. We were very focus on kind of the major items that could negatively impact our participation in the ecosystem a few years ago. And we think – we largely worked through a lot of those issues. We think retransmission and the ongoing negotiations and agreements with independent television station operators in their networks for retrans sharing and the networks themselves, very aggressively pursuing retransmission fees for their stations.

We think that ensures that the network affiliation business is one that’s going to be around for a long time. We continue to deliver superior audiences. It’s not simply the network programming. It’s not just the network – the syndicated programming, network programming, it’s the locales [ph] and the community town, all the things that we’ve known as broadcasters for a long time that I think are getting kind of realized all over again.

So, we like the business. I think it’s always been an issue of value when it comes to M&A and one of terrific cash flows. So, there really hasn’t been – there’s always been kind of a pretty significant historical gap between buyers and sellers just given from a cash flow perspective, it’s a nice business. From a growth perspective, it’s been challenged and I think will continue to be challenge for all but the best operators out there that have a real strategy towards leveraging this key local content and sales and technology assets.

So, I think with that, I think you’re going to see more of a realization of that fact with historical owners that have held on to these assets for a long time. Coupled with the fact that there are many new owners in the space giving all the reorganizations that have taken place and the shift in investor base. So, for us, it’s one of – yes, we like the space, we do think consolidation should take place.

We’ve always said we’re very opportunistic and realistic when it comes to valuation. For the right price, we’re a seller and participate in that way in industry consolidation. If we can sketch out real synergies that earn an accretive return for our shareholders, then we’re potentially a buyer. So, we look at everything to basically benchmark our business and have a better understanding of how we perform.

So, in terms of the predictive capabilities around M&A and this business has been pretty tough to figure out. Great activity through LBOs and cheap debt right up until a couple of years ago, no activity over the last couple of years with all the economic volatility in the business and the cap structure, the recaps that took place, I think now you’re going to get a better place in terms of being able to project out what the future might look like on the top line for these businesses.

You’re working through a lot of the cap issues. So, if you were to guess, you’d say there probably would be an increase in activity and we’ll – as I said, we’ll look at both sides of all these transactions.

Avi Steiner – JPMorgan Chase & Co.

Thank you very much.

Operator

We’ll take our next question from Bishop Cheen with Wells Fargo.

Bishop Cheen – Wells Fargo Securities

Hey, Vince, Rich and Scott. Thanks for taking the question. Let me just hit three areas that you guys have covered, but I just need a little clarification. Let me billboard them for you.

I’m just wanting your thoughts about the parity between local and national growth. It seems like this year; in this great rebound in ad media in general, national has been lead steer with local, frankly, a little anemic. And I know you talked about auto being up 41% with 60-some odd percent of that growth being local.

Secondly, political. You did about $13 million in ‘09. And I’m wondering your thoughts about maybe the genie being in or out of the bottle as you look at it off year. How big do you think 2011 could be for political?

And last, your 6.5s are callable come May. So, you look at this new issue market right now, and I’m just wondering if you think that’s – if in May the same tone of the market is there, if you think that’s positive arbitrage for you for calling your 6.5s?

Scott Blumenthal

Yes, national versus local. Good morning, Bishop. I guess I would say an issue with the term anemic. I don’t think local is anemic at all. I think that we’re starting to look in just percentages of growth; it gives a little bit of an unfair image.

With national being 30% of the business, percentage is a little bit higher. It’s a lot less actual cash flow than what we’re generating on the local side. National has far fewer active categories than local. So, I would think local is really performing pretty well for us. When you look at the variety of categories, the variety of services that overall are coming back at a responsible level, I think the parity is there clearly. National is certainly always been a little bit more fickle as we see it on the national side.

So, we’ve always seen the locals as our future. We have the direct relationships with the clients in our marketplaces and we’ve worked very hard on developing those businesses and maintaining the relationships for the future. And we’ve been pleased where we’ve been able to see to come back.

The only category as Rich indicated earlier that’s a little bit slower than what we’ve see is restaurant and that’s basically but flat, it hasn’t been down that much. But by the same token, I’m sure you’re seeing the same as we are that people are starting to go back to restaurants.

In fact, yesterday, there was an article that restaurant stocks have shown pretty good growth and we’re anticipating that that’s going to be a category of growth for us in the future that will approximate the growth we’re seeing everywhere else.

Vince Sadusky

Yes is that the percentage increase in local was 9% …

Rich Schmaeling

Per Q let me check that.

Vince Sadusky

8% for the …

Bishop Cheen – Wells Fargo Securities

Albeit 13% core. So, local was like up 9%.

Vince Sadusky

8%. So, yes, pretty good core growth and obviously, it didn’t fall nearly as hard in 2009 as national did as well with really being driven by the auto guys. So, we feel pretty good about the growth on local.

On the political side, it’s really challenge to figure it out. All we know is based on history, the off election years have increasingly received issue money and again, it’s very hard to predict what those issues would be. We got a terrific amount of issued money centered around healthcare in 2009. That probably doesn’t repeat in 2011, but I have no doubt with the nation so divided over so many issues that we will – I think that was the beginning of a trend of starting to see more issue money and political dollars in off election years.

Rich Schmaeling

I guess its Republicans take the house and seek the repeal. Obama can …

Vince Sadusky

Yes.

Rich Schmaeling

We could see a bunch of issue money in healthcare.

Vince Sadusky

It could be.

Rich Schmaeling

And then, maybe we see some early activity from the 2012 presidential election cycle and 2011 also. So, if you look at what we did in 2009, be about $13 million in gross political. We did $7 million in 2008, we come thick of those as the book ends for 2007, thank you – for what we think is likely in 2011, we’ll go from there.

What we’ve seen is that overtime the political category has consistently grown and I think that’s an important thing to think about because clearly with this recent Supreme Court ruling, there’s more money in our political system that there has been in past cycles and we sure expect to see that in ‘11 and ‘12.

Bishop Cheen – Wells Fargo Securities

And with regard to the notes?

Rich Schmaeling

With regards to the notes, we keep looking at that pretty hard. We will refinance the 6.5% notes comfortably in advance of their maturity in 2013. One could speculate that QE2 actually pushes down long rates further and maybe we see some benefit from that reduction in the yield curve in the high yield market.

So, we’re looking at our options. We keep penciling it out and we think we have plenty of options and we’ll move when we think there’s the optimal opportunity.

Bishop Cheen – Wells Fargo Securities

Okay. Fair enough. And Vince, congratulations on the Mobile Coalition.

Vince Sadusky

Thank you.

Bishop Cheen – Wells Fargo Securities

Now, like the right man for the right job at the right time.

Vince Sadusky

I’m not sure about that, but we’ll do our best. Thank you.

Bishop Cheen – Wells Fargo Securities

Okay. Thank you.

Operator

And ladies and gentlemen, we had time for one final question today. It is a follow-up question form Marci Ryvicker with Wells Fargo.

Marci Ryvicker – Wells Fargo Securities

Thank you, again. Two quick ones. First of all, when does the JV get appraised? I’m assuming it’s in the process. And then, secondly, did ACME close? And what do you expect the impact to be on your financials?

Rich Schmaeling

We will conduct an appraisal of the joint venture stations as part of the preparation of our yearend financial statements and that process will be getting underway in the next weeks. It has not yet started.

The ACME, the stations, the regulatory filings are pending with the SEC. if you had maybe heard earlier; there’s been a petition to deny filed by Time Warner that’s …

Marci Ryvicker – Wells Fargo Securities

Time Warner Cable, yes.

Rich Schmaeling

Yes, that’s likely to slow us down a little bit. So, we do anticipate that we close those transactions some time in 2011. The questions is when.

Vince Sadusky

Yes, the key though to that is we’re operating those television stations underneath our management arrangement with ACME. So, we’ve already done a lot of work around those television stations on the infrastructure side and on the sales side as well.

Marci Ryvicker – Wells Fargo Securities

So, how much do we expect in incremental revenue and expenses?

Rich Schmaeling

What we said is that there’ll be incremental EBITDA next year of 3ish million. And the revenue incrementally, that was – it’s about $8.5 million on a full year and that started to effect of July 1st this year. So, next year is about half of that incrementally.

Marci Ryvicker – Wells Fargo Securities

Great. Thank you so much.

Operator

And that does conclude our question and answer session today. At this time, I’d like to turn the call back over to Mr. Sadusky for any closing remarks.

Vince Sadusky

Okay. Well, thank you all for your continued interest in LIN Television and we’ll continue to update you next quarter. Thank you.

Scott Blumenthal

Bye.

Operator

This does conclude today’s conference. We appreciate your participation.

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