Dear Fellow Shareholders,

It is good to put 2009 behind us and move forward into a new year. Experts are calling 2009 the worst economic environment since World War II. As the economy faltered in 2009 and the automotive industry stalled, we stepped up to deal with the challenges. While the economic environment certainly impacted our business and industry during the year in many ways, there were many positive developments for our company during 2009. Throughout the year, we remained keenly focused on taking action to develop our business and strengthen Fisher as the historical economic challenges subside.

During 2009 Fisher’s stations enjoyed ratings success and our television stations gained positive retransmission momentum. For the ever-important news broadcasts, all Fisher television stations but one achieved either the #1 or #2 market ranking during the year. In radio, KOMO Newsradio thrived as it solidified its all news station format without the Seattle Mariners baseball programming, and STAR 101.5 moved into the top position in the marketplace. Fisher reached cash carriage agreements with its key multiple video distributors, which should amount to significant retransmission fees over the next 3 years. Fisher television stations were not carried by DISH Network during the first half of 2009 as we continued to work to achieve appropriate value for our content and for our shareholders. Our stations returned to DISH when we reached an agreement in June.

In June we also successfully completed the FCC mandated technology shift from an analog signal to digital. In August, Fisher renewed its ABC affiliations for KOMO 4 and KATU with no disruption and on acceptable terms. In addition, we strengthened the key syndicated programming in our markets and renegotiated many of our key syndication contracts, resulting in significant expected cost savings over the next few years. 

The July equipment room electrical fire at Fisher Plaza was a fine example of crisis management by the Fisher team. I am proud of the team’s collected, resilient and thoughtful approach throughout the recovery and remediation phases. And in the process, Fisher stations delivered some memorable TV and radio broadcasts. Fisher Plaza continues as one of the premier technical facilities in the region. 

During 2009, we launched our hyperlocal Internet initiative, which resulted in the rollout of our local neighborhood Internet sites. This initiative has shown very promising early results. In fact, in less than 1 year, we exceeded 2 milestones: we have attracted over 1,000 paying neighborhood advertisers and have launched over 100 sites. Our hyperlocal initiative is in line with our strategic plan and is a key part of our broadcast-to-broadband efforts to leverage our strong brands with important and interesting neighborhood information. This initiative helps to create vibrant local communities while enabling local businesses to efficiently reach their customers. Although it is still a very small part of our business, the revenue generated from our hyperlocal initiative is an entirely new revenue source for Fisher.   

Because 2010 is a political year with a number of key races in play across the states we serve, political spending in 2010 is expected to be stronger than 2009. In addition, the U.S. Supreme Court’s recent decision to invalidate limits on corporate and labor union political advertising is expected to have a positive effect on political spending in the coming years. 

Among our other initiatives, our multicast channels and mobile digital television efforts both showed promise during 2009. While still remaining a relatively small part of our business, our additional TV channels broadcast on our digital signals, called multicast channels, began to grow in 2009. Mobile digital television has been launched in 35 markets across the country and is expected to be in 150 markets by the end of 2010. As device testing stations, Fisher’s Seattle TV stations have been working closely with various device manufacturers on behalf of the broadcasting industry since last fall, and test results for handheld and portable devices have been promising. As part of its recently announced National Broadband Plan, the FCC has proposed a voluntary return of unused TV spectrum by broadcasters in exchange for unspecified compensation. We will continue to monitor the plan as it develops and takes shape, and we will work to provide all of the services our viewers have come to expect from our stations. 

Despite the extremely difficult year, I’m proud of the work accomplished by the Fisher team this year. As we move forward into 2010 and continue to execute on our strategic plan, the technological complexity and rapid pace of change is likely to continue. The digital revolution has changed our business in exciting new ways, and we intend to seek new ways to leverage these changes for growth. We have an opportunity to be at the forefront of the redefinition of our business and industry, and we understand Fisher must participate in more areas of the continually evolving media ecosystem. This means developing multiplatform and multiple revenue source strategies, which in turn requires new skill sets, workflow, partnerships and business models.

We expect that the economy will be slow to recover from the wide-ranging effects of the recession, and therefore we intend to continue our aggressive efforts to control expenses. As we maintain our keen focus on cost savings and operational execution, we believe we have the right strategy to deliver the strongest long-term returns for our shareholders and to position Fisher as an even stronger company as the economy recovers. 

In 2010, Fisher celebrates its 100th anniversary. From our origins as a flour milling company through our transition into the premier regional media company we are today, Fisher has a history of preserving our heritage, while adapting to the ever-changing world in which we operate. Thank you for your continued support. 

Sincerely,

Colleen Brown
President and Chief Executive Officer