Outdoor Channel Holdings Reports Double-Digit Revenue Gains for the 2008 Second Quarter

Total revenues from continuing operations amounted to $13.0 million for the 2008 second quarter, compared with $11.4 million in the corresponding period a year ago. For the first half of 2008, total revenues from continuing operations equaled $24.7 million, compared with $22.5 million in the 2007 six-month period.

Advertising revenue for the 2008 second quarter rose 28.0 percent to $8.5 million from $6.6 million in the prior-year period. For the first six months of 2008, advertising sales rose 24.1 percent to $16.1 million from $13.0 million in the first half of 2007.

Subscriber fees totaled $4.6 million for the second quarter of 2008 and $8.6 million year-to-date. This reflects reductions of 4.6 percent and 9.6 percent, respectively, from $4.8 million and $9.5 million in the 2007 second quarter and six months. The company attributed the reductions in subscriber fees to the successful completion of carriage negotiations with the National Cable Television Cooperative (NCTC), Charter Communications and Comcast Corporation during the preceding three quarters.

"The positive momentum we witnessed in recent quarters has continued throughout the second quarter, and moving forward we remain hopeful that we can continue those trends," said Roger L. Werner, president and chief executive officer. "In particular, we are pleased with the continued growth of our advertising revenues, despite a challenging economic environment. We believe the continued improvement in our ad sales is a clear testament to the advertising community's growing acknowledgement of Outdoor Channel's leadership in its genre."

Outdoor Channel achieved another quarter of ratings increases over prior-year periods. For the 2008 second quarter, each night of the network's primetime themed blocks, between 7 p.m. to midnight, delivered strong double-digit increases in household delivery. Leading the week was Outdoor Channel's Thursday night hunting block, posting a 169 percent increase in household delivery. The Channel's Friday night fishing, Wednesday night shooting and Monday night off-road motorsports blocks also achieved very strong double-digit gains in household delivery of 75 percent, 58 percent and 57 percent, respectively.

Werner said household delivery ratings were generally higher throughout the entire day, citing a 36 percent increase Saturday and Sunday, between 6 a.m. to 7 p.m. and an 82 percent gain Monday through Friday, during the fringe hours between 4 p.m. to 7 p.m.

Outdoor Channel Holdings posted net income of $271,000, or $0.01 per diluted share, for the 2008 second quarter, compared with a net loss of $1.1 million, or $0.04 per share, in the prior-year period. For the 2008 six-month period, the company narrowed its net loss to $510,000, or $0.02 per share, from a net loss of $1.8 million, or $0.07 per share, for the first half of 2007.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense, amounted to $1.6 million for the 2008 second quarter, compared with $2.4 million in the prior-year period. For the year-to-date period, EBITDA, adjusted for the effects of discontinued operations and share-based compensation expense, equaled $1.6 million, compared with $4.9 million for the first six months of 2007.

Investor Conference Call

Outdoor Channel Holdings' management will host an investor conference call today, July 31, 2008, at 2 p.m. PDT (5 p.m. EDT) to review the company's financials and operations for its 2008 second quarter ended June 30, 2008. Investment professionals are invited to participate in the live call by dialing 800-901-5217 (domestic) or 617-786-2964 (international) and using participant passcode 61535980. The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the company's Web site, www.outdoorchannel.com. For those who are not able to listen to the live broadcast, the call will be archived for one year at both web sites. A telephonic playback of the conference call also will be available through 5 p.m. PDT (8 p.m. EDT), August 7, 2008, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 12208469.

About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's leader in outdoor TV. The national network offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle. Outdoor Channel can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic new broadband website. For more information about the company or Outdoor Channel, please visit www.outdoorchannel.com.

Nielsen Media Research Universe Estimates for Outdoor Channel

Nielsen Media Research is the leading provider of television audience measurement and advertising information services worldwide. Nielsen estimated that Outdoor Channel had approximately 30.1 million cable and satellite subscribers for August 2008. Please note that this estimate regarding Outdoor Channel's subscriber base is made by Nielsen Media Research and is theirs alone and does not represent opinions, forecasts or predictions of Outdoor Channel Holdings, Inc. or its management. Outdoor Channel Holdings, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information.

Use of Non-GAAP Financial Information

This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. The company believes that earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense, provides greater comparability regarding its ongoing operating performance. This information is not intended to be considered in isolation or as a substitute for net income (loss) calculated in accordance with U.S. GAAP. A reconciliation of the company's U.S. GAAP information to EBITDA, adjusted for the effects of discontinued operations and share-based compensation expense is provided in the attached table.

Safe Harbor Statement

Statements in this news release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements, without limitation, about our expectations, beliefs, intentions, strategies regarding the future long-term value of the company resulting from the company's current actions or strategic initiatives and the future anticipated value of Outdoor Channel to our audience, distributors and advertisers. The company's actual results could differ materially from those discussed in any forward-looking statements. The company intends that such forward-looking statements be subject to the safe-harbor provisions contained in those sections. Such statements involve significant risks and uncertainties and are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) service providers discontinuing or refraining from carrying Outdoor Channel; (2) a decline in the number of viewers from having Outdoor Channel placed in unpopular cable or satellite packages, or increases in subscription fees, established by the service providers; (3) the company's ability to grow the subscriber base of Outdoor Channel; (4) a change in Nielsen's methodology of estimating the number of subscribers to Outdoor Channel, or an inaccuracy in Nielsen's such estimated number; (5) a decrease in operating results from offering reduced subscriber fee rates, launch support fees and other incentives to grow the subscriber base; and other factors which are discussed in the company's filings with the Securities and Exchange Commission. For these forward-looking statements, the company claims the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited, in thousands, except per share data) Three Months Six Months Ended Ended June 30, June 30, -------------- --------------- 2008 2007 2008 2007 ------ ------- ------- ------- Revenues: Advertising $8,491 $ 6,634 $16,122 $12,991 Subscriber fees 4,556 4,775 8,605 9,524 ------ ------- ------- ------- Total revenues 13,047 11,409 24,727 22,515 ------ ------- ------- ------- Cost of services: Programming 1,773 1,633 3,696 3,104 Satellite transmission fees 549 636 1,175 1,232 Production and operations 1,162 904 3,023 2,274 Other direct costs 95 17 192 55 ------ ------- ------- ------- Total cost of services 3,579 3,190 8,086 6,665 ------ ------- ------- ------- Other expenses: Advertising 1,488 1,816 2,026 2,530 Selling, general and administrative 7,133 6,801 14,750 15,001 Depreciation and amortization 617 658 1,232 1,307 ------ ------- ------- ------- Total other expenses 9,238 9,275 18,008 18,838 ------ ------- ------- ------- Income (loss) from operations 230 (1,056) (1,367) (2,988) Interest and other income, net 408 812 946 1,515 ------ ------- ------- ------- Income (loss) from continuing operations before income taxes 638 (244) (421) (1,473) Income tax provision 367 819 89 353 ------ ------- ------- ------- Income (loss) from continuing operations 271 (1,063) (510) (1,826) Income (loss) from discontinued operations, net of tax -- (7) -- 29 ------ ------- ------- ------- Net income (loss) $ 271 $(1,070)$ (510)$(1,797) ====== ======= ======= ======= Basic earnings (loss) per common share data: From continuing operations $ 0.01 $ (0.04)$ (0.02)$ (0.07) ====== ======= ======= ======= From discontinued operations $ -- $ -- $ -- $ -- ====== ======= ======= ======= Basic earnings per common share $ 0.01 $ (0.04)$ (0.02)$ (0.07) ====== ======= ======= ======= Diluted earnings (loss) per common share data: From continuing operations $ 0.01 $ (0.04)$ (0.02)$ (0.07) ====== ======= ======= ======= From discontinued operations $ -- $ -- $ -- $ -- ====== ======= ======= ======= Diluted earnings per common share $ 0.01 $ (0.04)$ (0.02)$ (0.07) ===== ====== ====== ====== Weighted average number of common shares outstanding: Basic 25,965 25,857 26,049 25,728 ====== ======= ======= ======= Diluted 26,059 25,857 26,049 25,728 ====== ======= ======= =======

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited, in thousands) June 30, December 31, 2008 2007 ----------- ------------ Assets (unaudited) Current assets: Cash and cash equivalents $ 60,507 $ 25,260 Investment in available-for-sale securities 6,856 46,155 Accounts receivable, net of allowance for doubtful accounts 8,210 8,299 Other current assets 5,625 5,626 ----------- ------------ Total current assets 81,198 85,340 ----------- ------------ Property, plant and equipment, net 10,910 11,632 Goodwill and amortizable intangible assets, net 43,296 43,473 Investment in auction-rate securities 2,683 -- Deferred tax assets, net 9,239 9,326 Deposits and other assets 1,688 1,930 ----------- ------------ Totals $149,014 $151,701 =========== ============ Liabilities and Stockholders' Equity Current liabilities $ 5,993 $ 4,833 Long-term liabilities 273 291 ----------- ------------ Total liabilities 6,266 5,124 ----------- ------------ Total stockholders' equity 142,748 146,577 ----------- ------------ Totals $149,014 $151,701 =========== ============

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited, in thousands) Three Months Six Months Ended Ended June 30, June 30, ---------------- ---------------- 2008 2007 2008 2007 ------- ------- ------- ------- Operating activities: Net income (loss) $ 271 $(1,070) $ (510) $(1,797) Adjustments to reconcile net loss to net cash provided by operating activities: Income (loss) from discontinued operations -- 7 -- (29) Depreciation and amortization 617 658 1,232 1,307 Amortization of subscriber acquisition fees 120 128 242 244 Gain on sale of equipment -- -- (5) -- Loss on sale of available-for- sale securities -- -- 44 -- Other-than-temporary impairment on auction-rate securities 76 -- 336 -- Provision for doubtful accounts 187 13 464 68 Share-based employee and service provider compensation 800 2,751 1,712 6,531 Deferred tax provision, net 366 806 87 360 Tax benefits from exercise of stock options in excess of recognized expense -- (7) -- (7) Changes in operating assets and liabilities: Accounts receivable (321) (1,115) (375) (1,148) Income tax refund receivable -- -- (5) 2,077 Prepaid programming costs (148) 253 198 500 Other current assets 741 (355) (192) (315) Deposits and other assets 62 (129) -- (314) Accounts payable and accrued expenses 669 (132) 1,602 398 Deferred revenue 79 (5) 10 (84) Customer deposits (12) -- (14) (41) Accrued severance payments (38) (113) (225) (173) Deferred obligations (112) (8) (97) (17) ------- ------- ------- ------- Net cash provided by operating activities 3,357 1,682 4,504 7,560 ------- ------- ------- ------- Investing activities: Purchases of property, plant and equipment (170) (492) (478) (709) Proceeds from sale of equipment -- -- 15 -- Proceeds from sale of discontinued operations -- 3,589 -- 3,589 Purchases of available-for-sale and auction-rate securities -- (42,824) (27,176) (59,550) Proceeds from sale of available-for-sale and auction-rate securities 22,949 26,610 63,472 53,890 ------- ------- ------- ------- Net cash provided by (used in) investing activities 22,779 (13,117) 35,833 (2,780) ------- ------- ------- ------- Financing activities: Proceeds from exercise of stock options 11 152 11 598 Purchase and retirement of stock (4,811) -- (4,811) -- Purchase of treasury stock (226) (105) (290) (272) Tax benefits from exercise of stock options in excess of recognized expense -- 7 -- 7 ------- ------- ------- ------- Net cash provided by (used in) financing activities (5,026) 54 (5,090) 333 ------- ------- ------- ------- Cash flows from discontinued operations: Net cash used in operating activities of discontinued operations -- (334) -- (581) Net cash used in investing activities of discontinued operations -- (69) -- (69) ------- ------- ------- ------- Net cash used in discontinued operations -- (403) -- (650) ------- ------- ------- ------- Net increase (decrease) in cash and cash equivalents 21,110 (11,784) 35,247 4,463 Cash and cash equivalents, beginning of period 39,397 30,473 25,260 14,226 ------- ------- ------- ------- Cash and cash equivalents, end of period $60,507 $18,689 $60,507 $18,689 ======= ======= ======= ======= Supplemental disclosure of cash flow information: Income taxes paid $ 1 $ 7 $ 6 $ 8 ======= ======= ======= ======= Supplemental disclosures of non- cash investing and financing activities: Effect of net increase (decrease) in fair value of available-for-sale securities, net of deferred taxes $ -- $ (33) $ 59 $ (34) ======= ======= ======= ======= Property, plant and equipment costs incurred but not paid $ 36 $ 30 $ 36 $ 30 ======= ======= ======= ======= Retirement of treasury stock $ 354 $ 105 $ 290 $ 272 ======= ======= ======= =======

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-U.S. GAAP MEASURES TO U.S. GAAP (unaudited, in thousands) The following table sets forth the reconciliation of net income (loss) to earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of discontinued operations and share-based compensation expense: Three Months Ended Six Months Ended June 30, June 30, ------------------ ----------------- 2008 2007 2008 2007 ---------- ------- -------- -------- Net income (loss) 271 (1,070) (510) (1,797) Add/Subtract: Interest and other income, net 408 812 946 1,515 Income tax provision 367 819 89 353 Depreciation and amortization 617 658 1,232 1,307 ---------- ------- -------- -------- EBITDA 847 (405) (135) (1,652) Adjusted for: Income (loss) from discontinued operations, net of tax -- (7) -- 29 ---------- ------- -------- -------- EBITDA as adjusted for discontinued operations, net of tax 847 (398) (135) (1,681) Adjusted for: Share-based compensation expense 800 2,751 1,712 6,531 EBITDA as adjusted for discontinued operations, net of tax and share based compensation expense 1,647 2,353 1,577 4,850 ---------- ------- -------- -------- Summary of Cost of Services Share based compensation expense $ 76 $ 88 $ 175 $ 79 Cost of Services $3,503 $3,102 $ 7,911 $ 6,586 ---------- ------- -------- -------- Total Cost of Services $3,579 $3,190 $ 8,086 $ 6,665 Summary of Selling, general and administrative Share based compensation expense $ 724 $2,663 $ 1,537 $ 6,452 Selling, general and administrative $6,409 $4,138 $13,213 $ 8,549 ---------- ------- -------- -------- Total Selling, general and administrative $7,133 $6,801 $14,750 $15,001

SOURCE: Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc. Thomas Hornish Chief Operating Officer 951-699-6991, ext. 104 thornish@outdoorchannel.com or PondelWilkinson Inc. Angie Yang 310-279-5967 ayang@pondel.com