Lynch Interactive Corporation Reports First Quarter Operating Results.

RYE, N.Y. -- Lynch Interactive Corporation (Pink Sheets: LICT) reported that 2006's first quarter revenues rose to $25.1 million from $21.6 million in the first quarter of 2005, a 16.1% increase. On August 29, 2005, the Company completed the acquisition of California-Oregon Telecommunications Company and its subsidiaries ("Cal-Ore"). Cal-Ore is a diversified communications company offering services in the Butte Valley and Tulelake areas of northern California, as well as some areas of southern Klamath County, Oregon. Accordingly, the operating results of Cal-Ore have been included in the Company's first quarter of 2006 financial results but not for the previous year. Cal-Ore operations contributed $1.9 million, or approximately 53% of this increase. The receipt of $1 million as a fee for providing services to a third party in an auction for spectrum in 1997 contributed another 29% of the increase. The fee was contingent and became payable in January 2006 based on the sale of such licenses. The acquisition of CATV subscribers in Utah, higher interstate access revenues, favorable NECA adjustments, USF support payments, and additional DSL lines from the Company's on-going operations made up most of the remaining increase. Offsetting the above, a decline in access lines was recorded during the quarter, as well as lower intrastate revenues.

First quarter of 2006 Adjusted Operating Profit (operating profit before depreciation and amortization) before corporate expense was $12.7 million compared to $10.5 million in the first quarter of 2005. The Cal-Ore contribution to the quarter of $1.0 million and the $1.0 million service provider fee made up most of the increase. Corporate expenses were approximately $2.1 million in the first quarters of both 2006 and 2005 including False Claims Act litigation costs of approximately $1.2 million in both periods. Reflecting these corporate costs, operating profit for the first quarter of 2006 was $4.9 million or $1.6 million higher than the $3.3 million reported in the first quarter of 2005. Operating profit plus depreciation and amortization expense equals Adjusted Operating Profit. See Attachment A for an explanation of why Adjusted Operating Profit is useful information to our investors.

Earnings were $109.73 per share for the three months ended March 31, 2006, as compared to $25.24 per share for the three months ended March 31, 2005.

We invested $2.2 million in capital expenditures during the three months ended March 31, 2006, compared to $1.9 million in 2005. The Company is currently anticipating 2006 capital expenditures of approximately $13.0 million.

As discussed in more detail in Note H, Litigation, to the Company's first quarter report, the Company is a named defendant in a Federal False Claims Act litigation case. While Interactive believes it has meritorious defenses and has contested the case vigorously, it and the other defendants are involved in serious settlement negotiations in order to avoid the further costs and uncertainties associated with a trial and possible subsequent appeals. It is anticipated that any such settlement, while eliminating significant litigation costs, would have a substantial adverse effect on the Corporation, its consolidated financial statements and impair its growth potential. While management believes that it could restructure existing debt, raise additional debt, issue equity and/or sell assets to satisfy such a potential settlement, there is no assurance that such a plan could be accomplished. Any incremental interest expense may in whole or in part be offset by savings in current legal costs being incurred in defense of the litigation.

Management - Effective May 1, 2006, the Board of Directors selected Robert Dolan, its Chief Financial Officer, to serve as Interim President and Chief Executive Officer while the Company evaluates its corporate structure. John Barnicle, who was formerly the Company's Chief Executive Officer, left to pursue other interests.

Simplifying our Structure - We are working to simplify our balkanized structure. On January 9, 2006, we acquired the remaining two-thirds interest in KMG Holdings, Inc., which eliminates the minority interest associated with Western New Mexico Telephone Company. We are planning to acquire another minority interest in 2006. In addition, we are considering the distribution of certain non-RLEC assets to our shareholders.

Telephone Operations - The following table summarizes certain information regarding Interactive's multimedia operation. In addition, Interactive has PCS licenses covering areas with an aggregate population of approximately 380,800.

March 31, 2006      March 31, 2005
                          ------------------  ------------------
Access Lines                    52,644              51,180
DSL Lines                        7,311               4,653
Cable Subscribers                6,001               5,989
Internet Subscribers            20,099              19,487
CLEC Customers                   6,770               5,911
Long Distance Resale            17,378              14,112

Spectrum Auctions - over the past ten years, we have been involved in 19 spectrum auctions conducted by the FCC. Our involvement has been as a venture capital investor, a service provider, and purchaser of licenses. Many of our efforts have not been successful.

We believe that, despite the litigation and the write-off's, our efforts to date have been fundamental and necessary to provide wireless mobility solutions to our RLEC customers in 10 states and we have filed to participate in Auction 66 - Advanced Wireless Services - which is expected to begin in August 2006.

Rural Telephone Bank Holdings - President Bush's Budget for Fiscal Year 2006 established the process and terms to implement the dissolution of the Rural Telephone Bank ("RTB"). Under RTB's By-Laws, on dissolution, the holders of its Class B and Class C stock will be paid the par value of their stock. As of March 31, 2006, the total par value of RTB Class B and Class C stock at the Company's subsidiaries was $13.7 million. The subsidiaries received these funds in April and May 2006.

Stock Repurchase Program - during the quarter ended March 31, 2006, Interactive acquired 356 shares of its own stock at an average price of $2,171 per share. Subsequent to March 31, 2006, it has repurchased an additional 125 shares at an average price of $1,840. To date, the Company has now acquired 1,293 shares pursuant to the stock repurchase program plus 1,610 shares acquired in the reverse stock split at a total cost of $8.4 million or $2,884 per share. This is 10.3% of the company's originally issued shares. The Company has been authorized by its Board of Directors to acquire an additional 1,707 shares.

Balance Sheet - We point out that the majority of our cash is not readily available to the parent company. As a result, we are sensitive to liquidity issues as we are incurring significant costs for litigation as well as ongoing corporate expenses for auditing and other matters. The 2005 delisting process, while beneficial to the Company and its shareholders, put an additional burden on our liquidity. On June 15, 2005 our parent company entered into a $10 million bank line with Webster Bank of which $3.8 million was available at March 31, 2006. We are continuing to restructure a significant portion of our debt. Our total debt at March 31, 2006 was $186.9 million. Of this total debt, approximately $27 million becomes due and needs to be refinanced in the next twelve months. Total debt was $190.1 million at December 31, 2005. At March 31, 2006, $78.8 million of debt was at variable interest rates, averaging 8.0% and $108.1 million was at fixed interest rates, averaging 7.0%. At March 31, 2006, we had cash and cash equivalents of $35.1 million as compared to $32.0 million at December 31, 2005.

This release contains certain forward-looking information 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 without limitation, spectrum applications, future financing, and performance and financial targets for 2006. It should be recognized that such information is based upon certain assumptions, projections and forecasts, including without limitation business conditions and financial markets, and regulatory actions and initiatives. Actual results will vary from these assumptions, projections and forecasts, and such variances may well be material. There can be no assurance that any possible transactions will be accomplished or be successful or that financial targets will be met, and such information is subject to uncertainties, risks and inaccuracies, which could be material.

Interactive is a holding company with subsidiaries in multimedia and actively seeks acquisitions, principally in existing business areas.

Interactive is listed on the Pink Sheets(R) under the symbol LICT. Interactive's World Wide Web address is: http://www.lynchinteractivecorp.com.

Shareholder
Contact:            Robert E. Dolan
                    Interim Chief Executive Officer
                    914/921-8821

Release:  06-09


                             Attachment A

Use of Adjusted Operating Profit

Adjusted Operating Profit is presented because it is a widely
accepted financial indicator of transaction values and the ability to
incur and service debt. Interactive utilizes Adjusted Operating Profit
as one of its metrics for valuing potential acquisitions. Adjusted
Operating Profit equals Operating Profit plus depreciation and
amortization. It excludes all amounts included in "Other income
(expense)", the provision for income taxes and minority interest.
Adjusted Operating Profit for the three months ended March 31, 2006
and 2005 is not a substitute for operating profit ($4.9 million and
$3.3 million, respectively) or net income ($2.8 million and $0.7
million, respectively) determined in accordance with generally
accepted accounting principles.



Lynch Interactive Corporation                            Attachment B
Statements of Operations  and Selected Balance
 Sheet Data
Unaudited
(In Thousands, Except Per Share Data)

STATEMENTS OF OPERATIONS

                                          Three Months Ended Percent
                                              March 31,      Increase
                                         -------------------
                                           2006      2005   (Decrease)
                                         -----------------------------

Revenues                                   $25,088  $21,618     16.1%

Cost and Expenses:
Cost of service and sales                    8,468    7,651
Selling, general and administration          3,902    3,423
Corporate office expense                     2,068    2,091
Depreciation and amortization                5,732    5,195
                                         -------------------
  Operating profit, in accordance with
   generally accepted accounting
   principles                                4,918    3,258     51.0%

Other Income(Expense)
Investment income                              899      793
Interest expense                            (3,532)  (2,823)
Equity in earnings of affiliated companies     892      711
Gain on sale of marketable securities        1,826        -
                                         -------------------
                                                85   (1,319)
                                         -------------------
Income (Loss) Before Income Taxes
 Minority
    Interests                                5,003    1,939
(Provision) Benefit For Income Taxes        (1,818)    (767)
Minority Interests                            (372)    (477)
                                         -------------------
    Net Income (Loss)                       $2,813     $695
                                         ===================

Weighted Average Shares Used In Earnings
 Per Share Computations                     25,637   27,537

Basic and Diluted Earnings Per Share       $109.73   $25.24


Adjusted Operating Profit - see
 Attachment A
Operating Subsidiaries                     $12,718  $10,544     20.6%
Corporate Office Expense                    (2,068)  (2,091)
                                         -------------------
    Total Adjusted Operating Profit         10,650    8,453     26.0%
Depreciation and amortization               (5,732)  (5,195)
                                         -------------------
  Operating profit, in accordance with
   generally accepted accounting
   principles                               $4,918   $3,258
                                         ===================

Capital Expenditures                        $2,192   $1,915


SELECTED BALANCE SHEET DATA
                                          Mar. 31, Mar. 31, Dec. 31,
                                           2006      2005     2005
                                         ----------------------------
Cash and Cash Equivalents                  $35,081  $29,698  $32,001

Notes Payable                               10,122    5,980   12,633
Long-Term Debt (including current
 portion)                                  176,794  168,248  177,449
                                         ----------------------------
  Total Debt                               186,916  174,228  190,082

Minority Interests                           2,931   11,313   11,766
Shareholders' Equity                        34,901   34,995   33,972

Shares Outstanding at Date                  25,471   27,523   25,827