Hearst Television Inc.

You've undoubtedly heard the ancient Chinese saying, "May you live in interesting times." Today, with media companies and the television industry facing transformational change, these are the most "interesting times" most of us could ever have imagined.

All at once, Hearst Television is operating some of America's most successful local television stations, launching new digital media businesses, and repositioning our company for success and growth in a new media world. The challenge of being responsive to how viewers consume media, and how advertisers pursue consumers across an expanding number of media platforms, makes it imperative that media companies in general, and Hearst Television in particular, be more innovative, more adept, and more daring if we are to replicate the success and growth we've enjoyed over the years. The legacy of Hearst Television, dating back to media pioneers William Randolph Hearst and Joseph Pulitzer, is long and rich, distinguished by a commitment to compelling content, a tradition of excellent broadcast journalism, and a deep sense of responsibility to the communities we serve. And now, we confront the newest challenge of staying in step with our viewers as they experience media on demand via numerous new technology platforms and devices. It is our belief that our content and consumer-centric business model, which has yielded great success over the years, is still relevant, and still sustainable, for years to come.

Over time, some companies manage to find ways to bridge transformational change, while others do not. Common denominators for success are inevitably the best and brightest people, a commitment to innovation and quality, a sensibility to continually refresh and reinvigorate, and strong financial stewardship. These are the values of Hearst Television. Our stations set the highest standards of excellence in local journalism, in sales performance, and in service to our communities. Local market leadership, coupled with an entrepreneurial spirit of innovation, is enabling us to launch promising new initiatives for the digital era that will resonate with viewers and advertisers.

During 2005, we achieved a number of important strategic objectives which will help drive growth in 2006 and beyond. Most notably, our stations continue to capture strong ratings, especially so in local news time periods and in prime time, where we consistently over-index our networks' national ratings. In a very crowded media world, with literally hundreds of video alternatives, the sustained popularity of our local stations' brands and programs is impressive. In virtually every one of our markets, the Hearst Television stations are in the top tier of ratings popularity and brand awareness, typically aggregating the largest audience segments among all media outlets.

Hearst stations are perennially among the most honored in the industry for excellence in broadcast journalism. Included on the honors list for 2005 are WTAE-TV, Pittsburgh, the recipient of a National Edward R. Murrow Award and five National Headliner Awards; and WBAL Radio, Baltimore, which also received a National Murrow Award and four National Headliner Awards, along with the NAB's prestigious Service to Children Radio Award for its nationally recognized "Radio Kids Campaign," now in its 35th year of serving Baltimore's children in need.

We are quite encouraged by the progress we are making with our digital media initiatives. The strength and popularity of our local news and weather content; our strong local station brands, which transfer well to other platforms; and the high value of our localized marketing and promotion efforts are contributing to successful launches of these new businesses. Our ability to deliver content to audiences on demand - when, where, and how they choose to receive it - is an exciting and promising opportunity for us.

As we consider all of the challenges and opportunities that confront our company on an everyday basis, there is nothing more important than attracting, empowering, and developing talented people who will execute our business objectives, meet strategic challenges, and drive company-wide success. Over the years we've been blessed to have many of the industry's best and brightest within the ranks of Hearst Television. Our leaders at the station level, and on our corporate management team, have achieved top-tier performance and top-tier reputations within our industry. Today's leaders are mentoring our next generation of management talent to take on the challenges that lie ahead. It is gratifying to see the spirit, commitment and the "digital intellect" of the next generation rising within our ranks. They will assuredly keep us in the forefront of the media industry.

I can think of no better illustration of the quality of our people and their shared commitment to the success of Hearst Television than what we witnessed last fall in the wake of Hurricane Katrina. If ever there was a shining moment for our mission as local broadcasters to serve our community, and a spirit of generosity in support of colleagues in need, it was evident at the time of Hurricane Katrina.

The men and women of WDSU-TV, our New Orleans NBC affiliate, and so many others from our stations across the company, responded courageously and selflessly to cover a story of devastation, survival and recovery and rebirth unprecedented in our nation's history.

As a first informer, and then as the chronicler of so many Katrina stories, WDSU-TV met its responsibilities as a television station, and as a citizen of its community, with valor and distinction. The on-site help, and ongoing encouragement and support - both emotional and financial - that was extended to our WDSU-TV colleagues by so many individuals throughout our company, and at the Hearst Corporation, was truly heartwarming.

We do important work as local broadcasters, and we have significant business opportunities that flow from that work. All of what we accomplish, yesterday, today and tomorrow, is the result of the hard work of our people at every one of our stations. Their character and commitment to their profession is inspiring, making me certain that we have the "right stuff" to succeed for years to come.

We can all be very proud of the company we are building, and we have every reason to be confident that the "interesting times" ahead will be the best of times for our company.