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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC
20549

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FORM 10-Q

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|- | ----------------------------------------------------------------------------------------
|  |                                                                                         
|  | for the quarterly period ended June 30, 2003                                            
|  |                                                                                         
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |                                                                                         
|  | for the transition period from  ________ to ________ .                                  

Commission File Number: 333-62916

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NEXSTAR FINANCE, L.L.C. NEXSTAR FINANCE, INC.
(Exact name of registrant as specified in its charter)

|                                                             |  | 23-3063155                                          
|------------------------------------------------------------ |  | ----------------------------------------------------
|Delaware                                                     |  | 23-3063152                                          
|(State of Organization or Incorporation)                     |  | (IRS Employer Identification No.)                   
|                                                             |  |                                                     
|909 Lake Carolyn Parkway, Suite 1450Irving, Texas 75039      |  | (972) 373-8800                                      
|(Address of Principal Executive Offices, including Zip Code) |  | (Registrants Telephone Number, Including Area Code)

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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that it was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

|Yes x | No o
|----- | ----

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

|Yes o | No x
|----- | ----

As of June 30, 2003, Nexstar Finance, L.L.C. had one member, Nexstar Finance Holdings, L.L.C., and Nexstar Finance, Inc. had 1,000 shares of common stock outstanding,
all of which were owned by Nexstar Finance, L.L.C.

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TABLE OF CONTENTS

|           |                                                                                                                                                  | Page
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|           |                                                                                                                                                  |     
|PART I     | FINANCIAL INFORMATION                                                                                                                            |     
|           |                                                                                                                                                  |     
|ITEM 1.    | Financial Statements (Unaudited)                                                                                                                 | 1   
|           |                                                                                                                                                  |     
|           | Consolidated Balance Sheets  December 31, 2002 and June 30, 2003                                                                                | 1   
|           |                                                                                                                                                  |     
|           | Consolidated Statements of Operations and Other Comprehensive Loss for the three months and the six months ended June 30, 2002 and 2003          | 2   
|           |                                                                                                                                                  |     
|           | Consolidated Statements of Changes in Members Interest for the year ended December 31, 2002 and for the six months ended June 30, 2002 and 2003 | 3   
|           |                                                                                                                                                  |     
|           | Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2003                                                            | 4   
|           |                                                                                                                                                  |     
|           | Notes to Consolidated Financial Statements                                                                                                       | 5   
|           |                                                                                                                                                  |     
|ITEM 2.    | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                            | 20  
|           |                                                                                                                                                  |     
|ITEM 3.    | Quantitative and Qualitative Disclosures about Market Risk                                                                                       | 28  
|           |                                                                                                                                                  |     
|ITEM 4.    | Controls and Procedures                                                                                                                          | 28  
|           |                                                                                                                                                  |     
|PART II    | OTHER INFORMATION                                                                                                                                |     
|           |                                                                                                                                                  |     
|ITEM 1.    | Legal Proceedings                                                                                                                                | 29  
|           |                                                                                                                                                  |     
|ITEM 2.    | Changes in Securities and Use of Proceeds                                                                                                        | 29  
|           |                                                                                                                                                  |     
|ITEM 3.    | Defaults Upon Senior Securities                                                                                                                  | 29  
|           |                                                                                                                                                  |     
|ITEM 4.    | Submission of Matters to a Vote of Security Holders                                                                                              | 29  
|           |                                                                                                                                                  |     
|ITEM 5.    | Other Information                                                                                                                                | 29  
|           |                                                                                                                                                  |     
|ITEM 6.    | Exhibits and Reports on Form 8-K                                                                                                                 | 29  
|           |                                                                                                                                                  |     
|SIGNATURES | 30                                                                                                                                              

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

NEXSTAR FINANCE, L.L.C.

CONSOLIDATED BALANCE SHEETS

|                                                                                             |  | December 31, 2002      |             | June 30, 2003 |  
|-------------------------------------------------------------------------------------------- |  | ---------------------- | ----------- | ------------- | -
|                                                                                             |  |                        |             |               |  
|                                                                                             |  |                        | (Unaudited) |               |  
|                                                                                             |  | (dollars in thousands) |            
|ASSETS                                                                                       |  |                        |             |               |  
|Current assets:                                                                              |  |                        |             |               |  
|Cash and cash equivalents                                                                    |  | $                      | 19,879      |               | $
|Accounts receivable, net of allowance for doubtful accounts of $660 and $1,008, respectively |  |                        | 26,065      |               |  
|Current portion of broadcast rights                                                          |  |                        | 10,357      |               |  
|Prepaid expenses and other current assets                                                    |  |                        | 1,005       |               |  
|Deferred tax assets                                                                          |  |                        | 43          |               |  
|Taxes receivable                                                                             |  |                        |            |               |  
|                                                                                             |  |                        |             |               |  
|Total current assets                                                                         |  |                        | 57,349      |               |  
|Property and equipment, net                                                                  |  |                        | 54,612      |               |  
|Broadcast rights                                                                             |  |                        | 3,392       |               |  
|Due from parent entities                                                                     |  |                        | 3,722       |               |  
|Other noncurrent assets                                                                      |  |                        | 2,585       |               |  
|Goodwill, net                                                                                |  |                        | 60,708      |               |  
|Intangible assets, net                                                                       |  |                        | 219,920     |               |  
|                                                                                             |  |                        |             |               |  
|Total assets                                                                                 |  | $                      | 402,288     |               | $
|                                                                                             |  |                        |             |               |  
|LIABILITIES AND MEMBERS INTEREST                                                            |  |                        |             |               |  
|Current liabilities:                                                                         |  |                        |             |               |  
|Current portion of debt                                                                      |  | $                      | 2,567       |               | $
|Current portion of broadcast rights payable                                                  |  |                        | 10,581      |               |  
|Accounts payable                                                                             |  |                        | 2,624       |               |  
|Accrued expenses                                                                             |  |                        | 7,000       |               |  
|Taxes payable                                                                                |  |                        | 57          |               |  
|Interest payable                                                                             |  |                        | 4,964       |               |  
|Deferred revenue                                                                             |  |                        | 438         |               |  
|                                                                                             |  |                        |             |               |  
|Total current liabilities                                                                    |  |                        | 28,231      |               |  
|Debt                                                                                         |  |                        | 292,943     |               |  
|Broadcast rights payable                                                                     |  |                        | 3,732       |               |  
|Deferred tax liabilities                                                                     |  |                        | 5,891       |               |  
|Deferred revenue                                                                             |  |                        | 2,171       |               |  
|Other liabilities                                                                            |  |                        | 5,641       |               |  
|                                                                                             |  |                        |             |               |  
|Total liabilities                                                                            |  |                        | 338,609     |               |  
|                                                                                             |  |                        |             |               |  
|Commitments and contingencies (Note 9)                                                       |  |                        |             |               |  
|Minority interest in consolidated entity                                                     |  |                        |            |               |  
|                                                                                             |  |                        |             |               |  
|Members interest:                                                                           |  |                        |             |               |  
|Contributed capital                                                                          |  |                        | 170,067     |               |  
|Accumulated deficit                                                                          |  |                        | (106,388    | )             |  
|                                                                                             |  |                        |             |               |  
|Total members interest                                                                      |  |                        | 63,679      |               |  
|                                                                                             |  |                        |             |               |  
|Total liabilities and members interest                                                      |  | $                      | 402,288     |               | $
|                                                                                             |  |                        |             |               |  
|                                                                                             |  |                        |             |               |  

The accompanying notes are an integral part of these consolidated financial statements.

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NEXSTAR FINANCE, L.L.C.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

|                                                                                                                  |  | Three Months Ended June 30, |        | Six Months Ended June 30, |  
|----------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | -
|                                                                                                                  |  |                             |        |                           |  
|                                                                                                                  |  | 2002                        |        | 2003                      |  
|                                                                                                                  |  |                             |        |                           |  
|                                                                                                                  |  | (Unaudited)                 |        | (Unaudited)               |  
|                                                                                                                  |  | (dollars in thousands)      |        | (dollars in thousands)    |  
|Revenue (excluding trade and barter)                                                                              |  | $                           | 33,623 |                           | $
|Less: commissions                                                                                                 |  |                             | (4,633 | )                         |  
|                                                                                                                  |  |                             |        |                           |  
|Net broadcast revenue (excluding trade and barter)                                                                |  |                             | 28,990 |                           |  
|Trade and barter revenue                                                                                          |  |                             | 2,531  |                           |  
|                                                                                                                  |  |                             |        |                           |  
|Total net revenue                                                                                                 |  |                             | 31,521 |                           |  
|                                                                                                                  |  |                             |        |                           |  
|Operating expenses:                                                                                               |  |                             |        |                           |  
|Direct operating expenses (exclusive of depreciation and amortization shown separately below)                     |  |                             | 8,819  |                           |  
|Selling, general, and administrative expenses (exclusive of depreciation and amortization shown separately below) |  |                             | 8,467  |                           |  
|Amortization of broadcast rights                                                                                  |  |                             | 3,320  |                           |  
|Amortization of intangible assets                                                                                 |  |                             | 3,218  |                           |  
|Depreciation                                                                                                      |  |                             | 3,252  |                           |  
|                                                                                                                  |  |                             |        |                           |  
|Total operating expenses                                                                                          |  |                             | 27,076 |                           |  
|                                                                                                                  |  |                             |        |                           |  
|Income from operations                                                                                            |  |                             | 4,445  |                           |  
|Interest expense, including amortization of debt financing costs                                                  |  |                             | (8,715 | )                         |  
|Interest income                                                                                                   |  |                             | 25     |                           |  
|Other income (expenses), net                                                                                      |  |                             | (1,263 | )                         |  
|                                                                                                                  |  |                             |        |                           |  
|Loss before income taxes and cumulative effect of change in accounting principle                                  |  |                             | (5,508 | )                         |  
|Income tax benefit (expense)                                                                                      |  |                             | 1,260  |                           |  
|                                                                                                                  |  |                             |        |                           |  
|Loss before cumulative effect of change in accounting principle and minority interest in consolidated entity      |  |                             | (4,248 | )                         |  
|Cumulative effect of change in accounting principle, net of tax (Note 2)                                          |  |                             |       |                           |  
|Minority interest in consolidated entity                                                                          |  |                             |       |                           |  
|                                                                                                                  |  |                             |        |                           |  
|Net loss                                                                                                          |  | $                           | (4,248 | )                         | $
|                                                                                                                  |  |                             |        |                           |  
|Other comprehensive loss:                                                                                         |  |                             |        |                           |  
|Change in market value of derivative instrument                                                                   |  | $                           | 955    |                           | $
|                                                                                                                  |  |                             |        |                           |  
|Net loss and other comprehensive loss                                                                             |  | $                           | (3,293 | )                         | $
|                                                                                                                  |  |                             |        |                           |  

The accompanying notes are an integral part of these consolidated financial
statements.

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NEXSTAR FINANCE, L.L.C.

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS INTEREST

|                                                |  | Contributed Capital    |         | Accumulated Deficit |   | Other Comprehensive Loss |   | Total Members Interest |       
|----------------------------------------------- |  | ---------------------- | ------- | ------------------- | - | ------------------------ | - | ----------------------- | ------
|                                                |  |                        |         |                     |   |                          |   |                         |       
|                                                |  | (dollars in thousands) |        
|Balance at January 1, 2002 (Unaudited)          |  | $                      | 171,479 |                     | $ | (63,487                  | ) | $                       | (3,731
|Contributions                                   |  |                        | 3       |                     |   |                         |   |                         |      
|Distributions                                   |  |                        | (1,416  | )                   |   |                         |   |                         |      
|Net loss                                        |  |                        |        |                     |   | (38,192                  | ) |                         |      
|Change in market value of derivative instrument |  |                        |        |                     |   |                         |   |                         | 1,920 
|                                                |  |                        |         |                     |   |                          |   |                         |       
|Balance at June 30, 2002 (Unaudited)            |  |                        | 170,066 |                     |   | (101,679                 | ) |                         | (1,811
|Contributions                                   |  |                        | 3       |                     |   |                         |   |                         |      
|Distributions                                   |  |                        | (2      | )                   |   |                         |   |                         |      
|Net loss                                        |  |                        |        |                     |   | (4,709                   | ) |                         |      
|Change in market value of derivative instrument |  |                        |        |                     |   |                         |   |                         | 1,811 
|                                                |  |                        |         |                     |   |                          |   |                         |       
|Balance at December 31, 2002 (Unaudited)        |  |                        | 170,067 |                     |   | (106,388                 | ) |                         |      
|Contributions                                   |  |                        | 71,371  |                     |   |                         |   |                         |      
|Distributions                                   |  |                        | (1,520  | )                   |   |                         |   |                         |      
|Net loss                                        |  |                        |        |                     |   | (14,040                  | ) |                         |      
|                                                |  |                        |         |                     |   |                          |   |                         |       
|Balance at June 30, 2003 (Unaudited)            |  | $                      | 239,918 |                     | $ | (120,428                 | ) | $                       |      
|                                                |  |                        |         |                     |   |                          |   |                         |       

The accompanying notes are an integral part of these consolidated financial
statements.

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NEXSTAR FINANCE, L.L.C.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                |  | Six Months Ended June 30, |        
|------------------------------------------------------------------------------- |  | ------------------------- | -------
|                                                                                |  |                           |        
|                                                                                |  | 2002                      |        
|                                                                                |  |                           |        
|                                                                                |  | (Unaudited)               |        
|                                                                                |  | (dollars in thousands)    |        
|Cash flows from operating activities:                                           |  |                           |        
|Net loss                                                                        |  | $                         | (38,192
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                           |        
|Deferred income taxes                                                           |  |                           | (416   
|Depreciation of property and equipment                                          |  |                           | 6,403  
|Amortization of intangible assets                                               |  |                           | 6,474  
|Amortization of debt financing costs                                            |  |                           | 1,330  
|Amortization of broadcast rights, excluding barter                              |  |                           | 3,787  
|Payments for broadcast rights                                                   |  |                           | (3,936 
|Loss (gain) on asset disposal, net                                              |  |                           | (14    
|Cumulative effect of change in accounting principle, net of tax                 |  |                           | 27,419 
|Amortization of debt discount                                                   |  |                           | 319    
|Effect of accounting for derivative instruments                                 |  |                           | 1,704  
|Minority interest in consolidated entity                                        |  |                           |       
|Changes in assets and liabilities:                                              |  |                           |        
|Increase in accounts receivable and due from parent entities                    |  |                           | (1,162 
|Increase in prepaid expenses and other current assets                           |  |                           | (223   
|Increase in taxes receivable                                                    |  |                           | (785   
|Decrease in other noncurrent assets                                             |  |                           | 587    
|Increase in accounts payable and accrued expenses                               |  |                           | 721    
|Decrease in taxes payable                                                       |  |                           |       
|Increase (decrease) in interest payable                                         |  |                           | (1,023 
|Increase in deferred revenue                                                    |  |                           | 1,033  
|                                                                                |  |                           |        
|Net cash provided by operating activities                                       |  |                           | 4,026  
|                                                                                |  |                           |        
|Cash flows from investing activities:                                           |  |                           |        
|Additions to property and equipment, net                                        |  |                           | (3,936 
|Proceeds from sale of assets                                                    |  |                           |       
|Acquisition of broadcast properties and related transaction costs               |  |                           | (35    
|Down payment on acquisition of stations                                         |  |                           |       
|                                                                                |  |                           |        
|Net cash used for investing activities                                          |  |                           | (3,971 
|                                                                                |  |                           |        
|Cash flows from financing activities:                                           |  |                           |        
|Proceeds from debt issuance                                                     |  |                           |       
|Repayment of loans                                                              |  |                           | (2,671 
|Proceeds from revolver draws                                                    |  |                           | 2,500  
|Payments for debt finance costs                                                 |  |                           | (162   
|Capital contributions                                                           |  |                           | 3      
|Distributions                                                                   |  |                           | (1,416 
|                                                                                |  |                           |        
|Net cash provided by (used for) financing activities                            |  |                           | (1,746 
|                                                                                |  |                           |        
|Net increase (decrease) in cash and cash equivalents                            |  |                           | (1,691 
|Cash and cash equivalents at beginning of period                                |  |                           | 5,802  
|                                                                                |  |                           |        
|Cash and cash equivalents at end of period                                      |  | $                         | 4,111  
|                                                                                |  |                           |        

The accompanying notes are an integral part of these consolidated financial
statements.

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NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Organization and Business
Operations

Nexstar Finance, L.L.C. (Nexstar) owns, operates and programs, through its subsidiaries, six NBC-affiliated
television stations, three ABC-affiliated television stations, four CBS-affiliated television stations and one UPN-affiliated television station in the United States of America. Nexstar has an outsourcing agreement to provide services for a Fox
affiliate owned by a subsidiary of Sinclair Broadcast Group, Inc. Through various local service agreements, Nexstar (i) programs one Fox-affiliated television station, one NBC-affiliated station and one ABC-affiliated station each under a Time
Brokerage Agreement (TBA), (ii) has Shared Services Agreements (SSA) with two NBC-affiliated television stations, a CBS-affiliated television station and an ABC-affiliated television station and (iii) has SSAs and Joint Sales
Agreements (JSA) with two Fox-affiliated television stations and a low-power UPN-affiliated television station. The television stations described above are located in New York, Pennsylvania, Illinois, Indiana, Missouri, Texas, Louisiana,
Arkansas and Alabama.

Television broadcasting is subject to the jurisdiction of the Federal Communications Commission (FCC)
under the Communications Act of 1934, as amended (the Communications Act). The Communications Act prohibits the operation of television broadcasting stations, except under a license issued by the FCC, and empowers the FCC, among other
things, to issue, revoke, and modify broadcasting licenses, determine the location of television stations, regulate the equipment used by television stations, adopt regulations to carry out the provisions of the Communications Act and impose
penalties for the violation of such regulations.

Nexstar is highly leveraged, which makes it vulnerable to changes in general economic
conditions. Nexstars ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond the control of Nexstar. Nexstar believes that, taken
together, its current cash balances, internally generated cash flow and availability under its credit facilities should result in Nexstar having adequate cash resources to meet its future requirements for working capital, capital expenditures and
debt service for at least the next twelve months.

2.     Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Nexstar and
its wholly-owned subsidiaries and independently-owned Mission Broadcasting, Inc. (Mission) (collectively, the Company). Mission owns and operates the following television stations: WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC and
KACB. In addition, Mission provides most of the programming for WBAK, pursuant to a TBA. Nexstar does not own Mission or Missions television stations; however, under U.S. generally accepted accounting principles (U.S. GAAP),
Nexstar is deemed to have a controlling financial interest in them due to Nexstars guarantee of Missions debt and the service and purchase option agreements described below. Additionally, Nexstar has evaluated the impact of accounting
for Mission under Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation on Accounting Research Bulletin No. 51 (FIN No. 46) and has
determined that Nexstar will be required to continue consolidating Missions financial statements under U.S. GAAP. In order for both Nexstar and Mission to continue to comply with FCC regulations, Mission must maintain complete responsibility
for and control over programming, finances, personnel and operations of its stations. Nexstar has entered into various service agreements with all of Missions stations. Nexstar has a TBA with WFXP, which allows Nexstar to program most of the
stations broadcast time, sell the stations advertising time and retain the advertising revenue generated by WFXP in exchange for monthly payments to Mission. Nexstar has an SSA with KJTL and KJBO-LP, which allows the sharing of services
including news production, technical maintenance and security, in exchange for Nexstars right to receive certain payments from Mission as described in the SSA. These payments have had the effect of Nexstar receiving substantially all of the
available cash, after payment of debt service costs, generated by KJTL and KJBO-LP. Nexstar anticipates that the payments required by the SSA with KJTL and KJBO-LP will continue to have the effect of Nexstar receiving substantially all of the
available cash, after payment of debt service costs, generated by KJTL and KJBO-LP. Pursuant to a JSA, Nexstar has also acquired the right to sell and receive the revenue from the advertising time on KJTL and KJBO-LP in return for monthly payments
to Mission. Nexstar has an SSA with each of WYOU, KODE, KRBC, KACB and WBAK and has a JSA with WBAK, which have terms substantially similar to the terms of the SSA and JSA, as applicable, with KJTL and KJBO-LP, except that the payment terms for the
WYOU, KRBC and KACB SSAs provide for payment of a flat monthly fee. Nexstars ability to receive cash from Mission is governed by the agreements described above.

In addition to providing certain services to Missions television stations, Nexstar is also the guarantor of Missions debt (See Note 7). Mission is a
guarantor of the senior credit facilities entered into and the senior subordinated notes issued by Nexstar (See Note 7). The shareholder of Mission has granted Nexstar a purchase option to acquire the assets and liabilities of each Mission station
for consideration equal to the greater of (1) seven times the stations broadcast cash flow as defined in the option agreement less the amount of its indebtedness as defined in the option agreement or (2) the amount of its indebtedness. These
option agreements are freely exercisable or assignable by Nexstar without consent or approval by the shareholder of Mission.

As a result
of the service arrangements, the debt guarantees and the option agreements with Mission, Nexstar is deemed to have a controlling financial interest in Mission under U.S. GAAP while complying with the FCCs rules regarding ownership limits in
television markets. As a result of Nexstars controlling financial interest in Mission under U.S. GAAP, Nexstar consolidates the financial position, results of operations and cash flows of Mission with Nexstar as if it were a wholly-owned
entity of Nexstar in order to provide a more meaningful presentation of Nexstars performance. Because Mission has a net asset deficit and because there is no binding obligation on the shareholder of Mission to make capital contributions to
cover the deficit, Nexstar recognizes 100% of Missions losses. As discussed above, Nexstar has considered the method of accounting under FIN No. 46 and has determined that it will be required to continue consolidating Missions financial
statements.

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

2.     Summary of Significant Accounting Policies(Continued)

The financial statements as of June 30, 2003 and for the three months and six months ended June 30, 2002 and 2003 are unaudited. However, in the opinion of
management, such statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with U.S. GAAP and pursuant to the rules and
regulations of the Securities and Exchange Commission. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for
interim periods are not necessarily indicative of results for the full year. The financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Companys Annual Report on Form
10-K for the year ended December 31, 2002. The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete
financial statements.

All intercompany account balances and transactions have been eliminated in consolidation. Certain prior year
amounts have been reclassified to conform to the current year presentation. Unless otherwise noted, all dollars are in thousands.

Trade Transactions

The Company trades certain advertising time for various goods and services. These transactions are recorded at the estimated fair value of the goods or services
received. Revenue from trade transactions is recognized when advertisements are broadcast and services or merchandise received are charged to expense or capitalized when received or used.  The Company recorded $0.7 million and $1.1 million of
trade revenue for the three months ended June 30, 2003 and 2002, respectively, and $1.8 million of trade revenue for both the six months ended June 30, 2003 and 2002, respectively.

Broadcast
Rights and Broadcast Rights Payable, Cash and Barter

Broadcast rights, primarily in the form of syndicated programs and feature
movie packages, are initially recorded at the amount paid or payable to program suppliers for the limited right to broadcast the suppliers programming and are recorded when the following criteria are met: 1) the cost of each program is known
or reasonably determinable, 2) the license period must have begun, 3) the program material has been accepted in accordance with the license agreement, and 4) the programming is available for use. Broadcast rights are stated at the lower of
unamortized cost or net realizable value. Amortization is computed using the straight-line method based on the license period or usage, whichever yields the greater expense. The current portion of broadcast rights represents those rights available
for broadcast which will be amortized in the succeeding year.

The Company barters advertising time for certain program material. These
transactions, except those involving exchange of advertising time for network programming, are recorded at managements estimate of the value of the advertising time exchanged, which approximates the fair value of the program material received.
The value of advertising time exchanged is estimated by applying average historical advertising rates for specific time periods. The Company recorded $1.8 million and $1.5 million of barter revenue for the three months ended June 30, 2003 and 2002,
respectively, and $3.8 million and $3.1 million of barter revenue for the six months ended June 30, 2003 and 2002, respectively. The Company recorded $2.3 million and $2.5 million of trade and barter expense for the three months ended June 30, 2003
and 2002, respectively, and $5.6 million and $4.8 million of trade and barter expense for the six months ended June 30, 2003 and 2002, respectively.

Intangible Assets

Intangible assets include FCC licenses, network affiliation agreements, and goodwill.  On January 1, 2002, the Company
adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 142 requires companies to cease amortizing certain intangible assets including goodwill and FCC
licenses.  The amortization of existing goodwill and FCC licenses resulting from acquisitions completed prior to July 1, 2001 ceased on December 31, 2001. Any goodwill and FCC licenses resulting from acquisitions completed after June 30, 2001
were not and will not be amortized. SFAS No. 142 established a new method of testing goodwill and FCC licenses for impairment on an annual basis or on an interim basis if an event occurs or circumstances change which would reduce the fair value of a
reporting unit below its carrying value.

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

2.     Summary of Significant Accounting Policies(Continued)

As required by SFAS No. 142, the Company completed a transitional impairment test for goodwill and FCC licenses as of January 1, 2002. As a result of this test, an
impairment of $27.4 million, net of taxes, was recorded in the first quarter of 2002 as a cumulative effect of change in accounting principle. As of June 30, 2003, the Company did not identify any events that triggered any impairment
assessment.

An impairment assessment of goodwill and FCC licenses could be triggered by a significant reduction in
operating results or cash flows at one or more of the Companys television stations, or a forecast of such reductions, a significant adverse change in the advertising marketplaces in which the Companys television stations operate, or by
adverse changes to FCC ownership rules, among others.

Long Lived-Assets

The Company periodically evaluates the net realizable value of long-lived assets, including tangible and intangible assets, relying on a number of factors
including operating results, business plans, economic projections and anticipated future cash flows. An impairment in the carrying value of an asset is recognized when the expected future operating cash flow derived from the asset is less than its
carrying value.

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

3.     Acquisitions

KODE

On December 31, 2001, Mission entered into a TBA with GOCOM Broadcasting of Joplin, L.L.C. (GOCOM) and simultaneously entered into a
purchase agreement to acquire substantially all of the assets of KODE for $14.0 million. Pursuant to the terms of the purchase agreement, Mission made a down payment of $6.0 million against the purchase price on December 31, 2001 and paid the
remaining $8.0 million upon the consummation of the acquisition on September 30, 2002, exclusive of transaction costs. KODE is the ABC-affiliated television station in Joplin, Missouri. The acquisition has been accounted for under the purchase
method and, accordingly, the purchase price was allocated to assets and liabilities acquired based on their estimated fair value on the acquisition date. The TBA was terminated upon the closing of the acquisition, and non-recurring TBA fees in the
amount of $0.1 million and $0.2 million, respectively, are included in the consolidated financial statements of the Company for the three months and six months ended June 30, 2002.

On April 1, 2002, Mission entered into an SSA with KSNF, a Nexstar-owned station in the Joplin, Missouri market. As a result of the SSA with KSNF, Mission was able to
reduce overhead costs associated with operations at KODE. Based on the expectation of the cost reductions through the SSA, Mission purchased KODE for an amount which resulted in the recognition of $0.4 million of goodwill, exclusive of transaction
costs.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of
acquisition. The Company obtained third-party valuations of certain acquired intangible assets.

|                                      |  | At September 30, 2002 |     
|------------------------------------- |  | --------------------- | ----
|                                      |  |                       |     
|                                      |  | (in millions)         |     
|Broadcast rights                      |  | $                     | 0.9 
|Property, plant and equipment         |  |                       | 2.7 
|Intangible assets                     |  |                       | 10.9
|Goodwill, including transaction costs |  |                       | 0.7 
|                                      |  |                       |     
|Total assets acquired                 |  |                       | 15.2
|Less: broadcast rights payable        |  |                       | 0.9 
|                                      |  |                       |     
|Net assets acquired                   |  | $                     | 14.3
|                                      |  |                       |     

Of the $10.9 million of acquired intangible
assets, $4.3 million was assigned to FCC licenses that are not subject to amortization and $5.5 million was assigned to network affiliation agreements (useful life of 15 years). The remaining $1.1 million of acquired intangible assets have a useful
life of approximately 1 year. Goodwill of $0.7 million is expected to be deductible for tax purposes.

KRBC and KACB

On December 13, 2002, Mission entered into a local marketing agreement with LIN Television Corporation and two of its subsidiaries, which owned KRBC, the NBC
affiliate in Abilene-Sweetwater, Texas, and KACB, the NBC affiliate in San Angelo, Texas, pending the sale of the stations to Mission pursuant to a purchase agreement between the parties. Operations under the local marketing agreement commenced on
January 1, 2003 and terminated upon the purchase of the stations. On June 13, 2003, Mission purchased substantially all of the assets of the stations for $10.0 million. Pursuant to the terms of the purchase agreement, Mission made a down payment of
$1.5 million against the purchase price in December 2002, which has been included in noncurrent assets as of December 31, 2002, and paid the remaining $8.5 million upon the consummation of the acquisition on June 13, 2003, exclusive of transaction
costs. The acquisition has been accounted for under the purchase method and, accordingly, the purchase price was allocated to assets and liabilities acquired based on their estimated fair value on the acquisition date.

On June 13, 2003, Mission entered into an SSA with KTAB, a Nexstar-owned station in the Abilene-Sweetwater, Texas market, whereby KTAB provides news production,
technical maintenance and security for KRBC and KACB. As a result of the SSA with KTAB, Mission should be able to reduce overhead costs associated with operations at KRBC and KACB.

8



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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

3.     Acquisitions(Continued)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The Company obtained third-party
valuations of certain acquired intangible assets.

|                                      |  | At June 13, 2003 |     
|------------------------------------- |  | ---------------- | ----
|                                      |  |                  |     
|                                      |  | (in millions)    |     
|Accounts receivable                   |  | $                | 0.8 
|Broadcast rights                      |  |                  | 0.3 
|Property, plant and equipment         |  |                  | 5.4 
|Intangible assets                     |  |                  | 4.0 
|Goodwill, including transaction costs |  |                  | 0.3 
|                                      |  |                  |     
|Total assets acquired                 |  |                  | 10.8
|Less: accounts payable                |  |                  | 0.1 
|Less: broadcast rights payable        |  |                  | 0.3 
|                                      |  |                  |     
|Net assets acquired                   |  | $                | 10.4
|                                      |  |                  |     

Of the $4.0 million of acquired intangible
assets, $2.1 million was assigned to FCC licenses that are not subject to amortization and $1.7 million was assigned to network affiliation agreements (useful life of 15 years). The remaining $0.2 million of acquired intangible assets have a useful
life of approximately 1 year. Goodwill of $0.3 million is expected to be deductible for tax purposes.

The selected unaudited pro forma
consolidated information for the three months and six months ended June 30, 2002 and 2003 determined as if the acquisitions, described above, had occurred on January 1, of each year is as follows:

|                                                    |  | Three Months Ended June 30, 2002 |        | Three Months Ended June 30, 2003 |  
|--------------------------------------------------- |  | -------------------------------- | ------ | -------------------------------- | -
|                                                    |  |                                  |        |                                  |  
|                                                    |  | As Reported                      |        | Pro Forma                        |  
|                                                    |  |                                  |        |                                  |  
|                                                    |  | (Unaudited)                      |        | (Unaudited)                      |  
|Net broadcast revenue  (excluding trade and barter) |  | $                                | 28,990 |                                  | $
|Total net revenue                                   |  |                                  | 31,521 |                                  |  
|Income from operations                              |  |                                  | 4,445  |                                  |  
|Net loss                                            |  | $                                | (4,248 | )                                | $

|                                                    |  | Six Months Ended June 30, 2002 |         | Six Months Ended June 30, 2003 |  
|--------------------------------------------------- |  | ------------------------------ | ------- | ------------------------------ | -
|                                                    |  |                                |         |                                |  
|                                                    |  | As Reported                    |         | Pro Forma                      |  
|                                                    |  |                                |         |                                |  
|                                                    |  | (Unaudited)                    |         | (Unaudited)                    |  
|Net broadcast revenue  (excluding trade and barter) |  | $                              | 54,930  |                                | $
|Total net revenue                                   |  |                                | 59,844  |                                |  
|Income from operations                              |  |                                | 5,742   |                                |  
|Net loss                                            |  | $                              | (38,192 | )                              | $

The selected unaudited pro forma information is
presented for illustrative purposes only and is not necessarily indicative of results of operations in future periods or results that would have been achieved had the Company and the acquired stations been combined during the specified periods.

9



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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

4.     Time Brokerage, Shared Services, Joint Sales and Outsourcing Agreements

WYZZ

Effective December 1, 2001, Nexstar entered into an outsourcing agreement with a subsidiary of
Sinclair Broadcast Group, Inc. (Sinclair) to provide certain engineering, production, sales and administrative services for WYZZ, the Fox affiliate in Peoria, Illinois. Pursuant to this agreement, the parties share the combined broadcast
cash flow, as defined in the agreement, generated by WYZZ and Nexstar-owned WMBD. The agreement was non-cancelable until May 31, 2003 and expires in December 2008. Nexstar has evaluated its arrangement with Sinclair under FIN No. 46 and has
determined that it is not the primary beneficiary of WYZZ. Additionally, Nexstar has received a notice from Sinclair stating that WYZZ is terminating the outsourcing agreement effective as of the close of business on December 31, 2003.

KRBC and KACB

On December 13, 2002, Mission entered into a local marketing agreement
with LIN Television Corporation and two of its subsidiaries, which owned KRBC, the NBC affiliate in Abilene-Sweetwater, Texas, and KACB, the NBC affiliate in San Angelo, Texas. Operations under the local marketing agreement commenced on January 1,
2003 and terminated upon the purchase of the stations. On June 13, 2003, Mission purchased KRBC and KACB (Note 3) and entered into a shared services agreement with Nexstar whereby Nexstars station, KTAB, provides news production, technical
maintenance and security for KRBC and KACB. The local marketing agreement was terminated on June 13, 2003.

KARK and WDHN

On December 30, 2002, Nexstar entered into a purchase agreement and time brokerage agreements with two subsidiaries of Morris Multimedia, Inc., which owned KARK, the
NBC affiliate in Little Rock, Arkansas, and WDHN, the ABC affiliate in Dothan, Alabama.  Operations under the time brokerage agreements commenced on February 1, 2003.  On August 1, 2003, Nexstar purchased all of the stock of the stations
for $90.0 million.  Pursuant to terms of the purchase agreement, Nexstar made a down payment of $40.0 million against the purchase price on January 31, 2003, which has been included in noncurrent assets as of June 30, 2003, and paid the
remaining $50.0 million upon the consummation of the acquisition, exclusive of transaction costs. The time brokerage agreements were terminated on August 1, 2003. The Company will be required to consolidate the financial position and results of
operations of these stations. As of December 31, 2002, KARK and WDHN had combined total assets of approximately $32.2 million.

WBAK

On May 8, 2003, Mission entered into a time brokerage agreement with Bahakel Communications and certain of its subsidiaries relating to WBAK and simultaneously
entered into a purchase agreement to acquire substantially all of the assets of WBAK, the Fox affiliate in Terre Haute, Indiana, for $3.0 million. Operations under the time brokerage agreement commenced on May 9, 2003 and will terminate upon
purchase of the station. Pursuant to the terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price, which was funded from Missions senior credit facilities. The $1.5 million down payment has been
included in noncurrent assets as of June 30, 2003. Additionally, Mission entered into a shared services agreement with Nexstar, effective May 9, 2003, whereby Nexstar-owned WTWO provides certain services to WBAK, including production, technical
maintenance and security, among other services in return for monthly payments from Mission. Mission also entered into a joint sales agreement, effective May 9, 2003, whereby Nexstar-owned WTWO purchases all of the advertising time on WBAK and
retains the advertising revenue in return for payments to Mission of $0.1 million per month, subject to adjustment to assure that each payment equals Missions actual operating costs plus $10.0 thousand per month. Mission has evaluated its
arrangement with Bahakel Communication under FIN No. 46 and has determined it is the primary beneficiary of WBAK. Mission has therefore consolidated the financial position and results of operations of WBAK. Bahakels ownership is currently
reflected as minority interest in these consolidated financial statements.

Under these agreements (excluding the WYZZ outsourcing agreement),
the Company is responsible for the operating expenses of the respective stations and therefore may have unlimited exposure to any potential operating losses. The Company will continue to operate the stations under the time brokerage, shared
services, joint sales and outsourcing agreements until the termination of such agreements. Termination of these agreements typically occurs on consummation of the acquisitions of the stations. Additionally, Nexstar or Mission, as applicable,
indemnifies the owners from and against all liability and claims arising out of or resulting from its activities, acts or omissions in connection with the agreements. The maximum potential amount of future payments Nexstar or Mission could be
required to make for such indemnification is undeterminable at this time.

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

5.     Related Party Transactions

GuarantyChief Executive Officer

Pursuant to a continuing guaranty agreement dated June 16, 2001 with Nexstars primary lender, Nexstar guarantees a $3.0
million non-revolving line of credit to its president and chief executive officer to enable him, among other uses, to purchase equity interests of Nexstar Broadcasting Group, L.L.C., Nexstars ultimate parent. The line of credit is
full-recourse to the officer. However, if the officer does not repay some or all of the loan then Nexstar may be required to pay up to the maximum potential amount of $3.0 million. The full amount has been drawn against the line of credit and is due
on December 31, 2004.

6.     Intangible Assets and Goodwill

|                                                    |  | Estimated useful life (years) |              | December 31, 2002 |             | June 30, 2003 |            
|--------------------------------------------------- |  | ----------------------------- | ------------ | ----------------- | ----------- | ------------- | -----------
|                                                    |  |                               |              |                   |             |               |            
|                                                    |  |                               |              |                   | (Unaudited) |               | (Unaudited)
|Network affiliation agreements                      |  |                               | 15           |                   | $           | 177,509       |            
|FCC licenses                                        |  |                               | indefinite   |                   |             | 81,468        |            
|Debt financing costs                                |  |                               | term of debt |                   |             | 16,583        |            
|Other intangible assets                             |  |                               | 1-15         |                   |             | 12,122        |            
|                                                    |  |                               |              |                   |             |               |            
|                                                    |  |                               |              |                   |             | 287,682       |            
|Less: accumulated amortization                      |  |                               |              |                   |             | (67,762       | )          
|                                                    |  |                               |              |                   |             |               |            
|Intangible assets, net of accumulated amortization. |  |                               |              |                   |             | 219,920       |            
|Goodwill                                            |  |                               | indefinite   |                   |             | 60,708        |            
|                                                    |  |                               |              |                   |             |               |            
|Intangible assets and goodwill, net                 |  |                               |              |                   | $           | 280,628       |            
|                                                    |  |                               |              |                   |             |               |            

Total amortization expense from
definite-lived intangibles (excluding debt financing costs) for the year ended December 31, 2002 and six months ended June 30, 2003 was $13.4 million and $7.1 million, respectively. The estimated useful life of network affiliations contemplates
renewals of the underlying agreements based on the Companys historical ability to renew such agreements without significant cost or modifications to the conditions from which the value of the affiliation was derived. These renewals can result
in estimated useful lives of individual affiliations ranging from 12 to 20 years. Management has determined that 15 years is a reasonable estimate within the range of such estimated useful lives. The carrying value of indefinite-lived intangibles,
excluding goodwill, at December 31, 2002 and June 30, 2003 was $68.6 million and $72.4 million, respectively. The use of an indefinite life for FCC licenses contemplates the Companys historical ability to renew their licenses, that such
renewals generally may be obtained indefinitely and at little cost, and that the technology used in broadcasting is not expected to be replaced in the foreseeable future. Therefore, cash flows derived from the FCC licenses are expected to continue
indefinitely.

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

7.     Debt

Long-term debt consists of the following:

|                                                        |  | December 31, 2002 |         | June 30, 2003 |  
|------------------------------------------------------- |  | ----------------- | ------- | ------------- | -
|                                                        |  |                   |         |               |  
|                                                        |  | (Unaudited)       |         | (Unaudited)   |  
|Term loans                                              |  | $                 | 81,513  |               | $
|Revolving credit facility                               |  |                   | 55,143  |               |  
|12% Senior subordinated notes due 2008, net of discount |  |                   | 154,762 |               |  
|SFAS No. 133 hedge accounting adjustment                |  |                   | 4,092   |               |  
|                                                        |  |                   |         |               |  
|                                                        |  |                   | 295,510 |               |  
|Less:  current portion                                  |  |                   | (2,567  | )             |  
|                                                        |  |                   |         |               |  
|                                                        |  | $                 | 292,943 |               | $
|                                                        |  |                   |         |               |  

The Nexstar Senior Secured Credit Facilities

On January 12, 2001, Nexstar entered into senior secured credit facilities (the Nexstar credit facilities) with a group of commercial
banks. The terms of the credit agreement provided for a revolving credit facility (the Nexstar revolver) in the amount of $122.0 million and a term loan facility (the Nexstar term loan) in the amount of $110.0 million. The
revolving credit facility was subsequently reduced to $72.0 million after the issuance of the Senior Subordinated Notes discussed below. The credit facilities were subsequently amended on June 14, 2001 to allow for a $50.0 million Term A facility, a
$75.0 million Term B facility and a $57.0 million revolving facility. On November 14, 2001, the credit facilities were further amended to adjust certain financial covenants effective for the period ended September 30, 2001 and future periods because
Nexstar was not in compliance with the consolidated total leverage ratio as of September 30, 2001, due in large part to the negative impact on advertising revenue resulting from the events of September 11, 2001 and Nexstar anticipated non-compliance
in future periods. The amendment also reduced the revolving facility to $42.0 million. On June 5, 2002, the Nexstar credit facilities were amended again to allow Nexstar to undertake the reorganization and other transactions related to the proposed
initial public offering by Nexstar Broadcasting Group, Inc., a member of Nexstar Broadcasting Group, L.L.C., including the redemption of the preferred membership interests of Nexstar Broadcasting Group, L.L.C., Nexstars ultimate parent. Prior
to the refinancing described below, the Nexstar revolver and Term A facility would have matured on January 12, 2007 and the Term B facility would have matured on July 12, 2007. Any excess amount outstanding at the time of a mandatory reduction would
have been payable at that time. The borrowings under the Nexstar credit facilities are guaranteed, jointly and severally, by Nexstar and Mission, and by each existing and subsequently acquired or organized subsidiary of Nexstar.

On February 13, 2003, Nexstar obtained new senior secured credit facilities (the New Nexstar Facilities).  The New Nexstar Facilities
consist of a $130.0 million term loan and a $50.0 million revolver.  Nexstar used the proceeds from the term loan to refinance its existing senior secured credit facilities, pay related debt financing costs and provide additional working
capital. Financial covenants under the New Nexstar Facilities include a total leverage ratio of 7.25 times the last twelve months operating cash flow (as defined in the credit agreement) through March 30, 2004 and a senior leverage ratio of 4.25
times the last twelve months operating cash through June 29, 2004.  Covenants also include, among others, an interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of 1.10 to 1.00 through September 29,
2004.  The term loans amortize at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010.  The outstanding principal amount on the revolving loans mature on December 31, 2009. As of June 30, 2003, Nexstar had drawn
$130.0 million on its term loan and had no borrowings outstanding under its revolver.  Interest rates associated with the New Nexstar Facilities are based, at the option of Nexstar, on the prevailing prime rate plus an applicable margin or
LIBOR plus an applicable margin, as defined in the credit agreement (4.29% at June 30, 2003). Interest is fixed for a period ranging from one month to 12 months, depending on availability of the interest basis selected, except if Nexstar selects a
prime-based loan, in which case the interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of interest rate selected. In addition, Nexstar is required to pay quarterly
commitment fees on the unused portion of the Nexstar revolver loan commitment based on the Companys leverage ratio for that particular quarter. The Nexstar term loan is subject to scheduled mandatory repayments, and the Nexstar revolver is
subject to scheduled mandatory commitment reductions commencing in 2004.

12



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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

7.     Debt(Continued)

The Mission
Senior Secured Credit Facilities

On January 12, 2001, Mission entered into a credit agreement (the Mission credit
facility) with a group of commercial banks. The terms provided for the banks to make revolving loans to Mission, not to exceed the aggregate commitment of $43.0 million. On November 14, 2001, the Mission credit facility was amended to increase
the revolving facility to $58.0 million. The Mission credit facility was amended again on September 30, 2002 in order to permit the merger of Bastet Broadcasting, Inc. and Mission Broadcasting of Joplin, Inc. into Mission. Nexstar has entered into a
guarantor agreement, whereby Nexstar guarantees full payment of any obligations outstanding in the event of  Missions default. Prior to the refinancing described below, the Mission credit facility would have been due and payable on the
maturity date, January 12, 2007. Any excess amount outstanding at the time of a mandatory reduction would have been payable at that time.

On February 13, 2003, Mission obtained new senior secured credit facilities (the New Mission Facilities). The New Mission Facilities consist of a $55.0
million term loan and a $30.0 million revolver. Mission used the proceeds from the loans to refinance its existing senior secured credit facility, pay related debt financing costs and provide additional working capital. Financial covenants under the
New Mission Facilities include a total leverage ratio of 7.25 times the last twelve months operating cash flow (as defined in the credit agreement) through March 30, 2004 and a senior leverage ratio of 4.25 times the last twelve months operating
cash through June 29, 2004. Covenants also include, among others, an interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of 1.10 to 1.00 through September 29, 2004. The term loan amortizes at 1% annually
in years 2004 through 2009, with the remaining 94% due in 2010. The outstanding principal amount on the revolving loans mature on December 31, 2009. As of June 30, 2003, Mission had drawn $55.0 million on its term loan and $12.2 million under its
revolver. Interest rates associated with the New Mission Facilities are based, at the option of Mission, on the prevailing prime rate plus an applicable margin or LIBOR plus an applicable margin, as defined in the credit agreement (ranging from
4.29% to 4.54% at June 30, 2003). Interest is fixed for a period ranging from one month to 12 months, depending on availability of the interest basis selected, except if Mission selects a prime-based loan, in which case the interest rate will
fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of interest rate selected. In addition, Mission is required to pay quarterly commitment fees on the unused portion of the Mission revolver
loan commitment based on the Companys leverage ratio for that particular quarter. The Mission term loan is subject to scheduled mandatory repayments, and the Mission revolver is subject to scheduled mandatory commitment reductions commencing
in 2004.

The refinancing of the senior credit facilities for Nexstar and Mission resulted in the write off during the first quarter of
2003 of $5.8 million of certain debt financing costs capitalized at December 31, 2002. The amount is included in interest expense.

Based
on borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the fair value of the Companys credit facilities approximates their carrying value.

Senior Subordinated Notes

On March 16, 2001, Nexstar issued $160.0 million
of 12.0% senior subordinated notes (the notes) at a price of 96.012%. The notes mature on April 1, 2008. Interest is payable every six months in arrears on April 1 and October 1. The notes are guaranteed by all of the domestic existing
and future restricted subsidiaries of Nexstar and by Mission. They are general unsecured senior subordinated obligations subordinated to all of the Companys senior secured credit facilities. The notes are redeemable on or after April 1, 2005,
at declining premiums, and Nexstar may redeem, at a premium, up to 35.0% of the aggregate principal amount of the notes before April 1, 2004 with the net cash proceeds from qualified equity offerings. The notes are not redeemable by either the
issuer or the note holder between April 1, 2004 and March 31, 2005. The proceeds of the offering were used to partially refinance existing indebtedness of Nexstar and fund working capital needs.

Debt Covenants

The bank debt agreements and the notes described above
contain covenants which require the Company to comply with certain financial ratios, capital expenditures, cash film payments and other limits. The Company was in compliance with all such covenants at  June 30, 2003.

13



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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

8.     Income Taxes

The Companys income tax benefit for the six months ended June 30, 2002 was $1.1 million, compared to the income tax expense of $0.2 million for the six months
ended June 30, 2003. The Companys effective tax rate was 9.1% for the six months ended June 30, 2002 as compared to the effective tax rate of 1.1% for the six months ended June 30, 2003. The significant differences from the statutory tax rate
and the effective tax rate for the six months ended June 30, 2003 include an increase in the valuation allowance, income earned by entities not subject to corporate income tax, and state taxes, net of the federal benefit.

9.     Commitments and Contingencies

Digital Conversion

FCC regulations required the Company to commence digital operations by May 1, 2002, in addition to continuing the Companys analog operations, unless an
extension of time was granted. The Company received extensions of time to begin digital operations at all of the stations except WCIA and WCFN, which met the May 1, 2002 deadline. All of the Companys stations currently are operating low power
digital facilities. The Company is currently working with Bahakel Communications to initiate low power digital facilities for WBAK, which has until September 14, 2003 to begin digital operations. The purchase of WBAK by Mission is due to close
during the fourth quarter of 2003. The Company estimates that digital conversion required an average initial capital expenditure of $0.2 million per station for low-power transmission of digital signal programming and will require an average
additional capital expenditure of $0.7 million per station to modify the transmitter for full-power digital signal transmission. Digital conversion expenditures were $1.5 million and $2.0 million for the year ended December 31, 2002 and the six
months ended June 30, 2003, respectively. The Company has entered into a commitment of approximately $0.2 million payable in 2003 for the WBAK digital conversion. The Company anticipates that digital conversion expenditures will be funded through
available cash on hand and cash generated from operations.

Guarantor Arrangements

In November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others (FIN No. 45). FIN No. 45 requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken by issuing the guarantee. FIN No. 45 also requires
additional disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees it has issued. The accounting requirements for the initial recognition of guarantees are applicable on a
prospective basis for guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for all guarantees outstanding, regardless of when they were issued or modified, during the first quarter of fiscal 2003. The
adoption of FIN No. 45 did not have a material effect on the accompanying consolidated financial statements. The following is a summary of the Companys agreements that have been determined to be within the scope of FIN No. 45.

As permitted under Delaware law, the Company has agreements whereby the Company indemnifies its officers and directors for certain events or
occurrences while the officer or director is, or was, serving at the Companys request in such capacity. The term of the indemnification period is for the officers or directors lifetime. The maximum potential amount of future
payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that may limit the Companys exposure and enable it to recover a portion of any
future amount paid. As a result of the insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal.

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless,
and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The
Company believes the estimated fair value of these agreements is minimal. Accordingly, there are no liabilities recorded for these agreements as of December 31, 2002 and June 30, 2003.

When, as part of an acquisition, the Company acquires all of the assets and liabilities or all of the stock of a company, the Company assumes the liability for
certain events or occurrences that took place prior to the date of acquisition. The maximum potential amount of future payments that could be required to be made by the Company for such obligations is undeterminable at this time.

In connection with most of the Companys acquisitions, the Company enters into local service agreements for specified periods of time, usually six
months or less, whereby the Company indemnifies the owner and operator of the television station, their employees,

14



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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

9.     Commitments and Contingencies(Continued)

agents and contractors
from liability, claims, and damages arising from the activities of operating the television station. The maximum potential amount of future payments the Company could be required to make for such obligations is undeterminable at this time. The
Company has not incurred significant costs to defend lawsuits or settle claims related to these indemnification agreements.

Litigation

From time to time, the Company is involved with claims that arise out of the normal course of its business. In the opinion of management, any resulting
liability with respect to these claims would not have a material adverse effect on the Companys financial condition or results of operations.

10.     Members Interest

Nexstar is 100% owned and controlled by one
member, Nexstar Finance Holdings, L.L.C. (Holdings). In March 2002, Nexstar made a $1.4 million distribution to Holdings. In March 2003, Nexstar made a $1.5 million distribution to Holdings. Additionally, in March 2003, Nexstar received
a capital contribution of $71.4 million from Holdings. Holdings issued $130.0 million senior discount notes at a price of 57.442% in March 2003 and contributed the proceeds, net of issuance costs, to Nexstar.

11.     Condensed Consolidating Financial Information

As a result of the service
agreements, options and debt guarantees between Nexstar and Mission, as described in Note 2, Note 4 and Note 7, the financial position, results of operations and cash flows of Nexstar and Mission are consolidated.

The notes and borrowings under amounts drawn against the senior secured credit facilities are guaranteed on a joint and several, full and unconditional basis by
Nexstar, its wholly-owned subsidiaries and by Mission (See Note 7).

Nexstar has no independent assets or operations. All of its
subsidiaries are wholly-owned by Nexstar and are guarantors of Nexstars debt. Therefore, Nexstar has included consolidated information with respect to its subsidiaries in the column entitled Nexstar.

The following 2003 and 2002 condensed consolidating financial information presents the financial position, results of operations and cash flows of Nexstar and
Mission, as well as the consolidating entries needed to arrive at the information for the Company on a consolidated basis. The consolidating entries consist of fees and reimbursable expenses charged between Nexstar and Mission as a result of the
local service arrangements or the unpaid balances of these charges.

Balance Sheet  June 30, 2003

|                                         |  | Nexstar |         | Mission |   | Consolidating Entries |   | Consolidated Company |    
|---------------------------------------- |  | ------- | ------- | ------- | - | --------------------- | - | -------------------- | ---
|                                         |  |         |         |         |   |                       |   |                      |    
|ASSETS                                   |  |         |         |         |   |                       |   |                      |    
|Current assets                           |  | $       | 126,303 |         | $ | 6,540                 |   | $                    |   
|Property and equipment, net              |  |         | 47,646  |         |   | 11,211                |   |                      | (80
|Other noncurrent assets                  |  |         | 44,803  |         |   | 3,739                 |   |                      |   
|Intangible assets, net                   |  |         | 237,727 |         |   | 41,030                |   |                      |   
|                                         |  |         |         |         |   |                       |   |                      |    
|Total assets                             |  | $       | 456,479 |         | $ | 62,520                |   | $                    | (80
|                                         |  |         |         |         |   |                       |   |                      |    
|LIABILITIES AND MEMBERS INTEREST        |  |         |         |         |   |                       |   |                      |    
|Current liabilities                      |  | $       | 13,081  |         | $ | 10,388                |   | $                    | (5 
|Debt                                     |  |         | 288,152 |         |   | 66,875                |   |                      |   
|Other liabilities                        |  |         | 14,921  |         |   | 3,064                 |   |                      |   
|Minority interest in consolidated entity |  |         |        |         |   | 2,953                 |   |                      |   
|Members interest                        |  |         | 140,325 |         |   | (20,760               | ) |                      | (75
|                                         |  |         |         |         |   |                       |   |                      |    
|Total liabilities and members interest  |  | $       | 456,479 |         | $ | 62,520                |   | $                    | (80
|                                         |  |         |         |         |   |                       |   |                      |    

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

11.     Condensed Consolidating Financial Information(Continued)

Balance Sheet December 31, 2002

|                                        |  | Nexstar |         | Mission |   | Consolidating Entries |   | Consolidated Company |       
|--------------------------------------- |  | ------- | ------- | ------- | - | --------------------- | - | -------------------- | ------
|                                        |  |         |         |         |   |                       |   |                      |       
|ASSETS                                  |  |         |         |         |   |                       |   |                      |       
|Current assets                          |  | $       | 59,083  |         | $ | 5,067                 |   | $                    | (6,801
|Property and equipment, net             |  |         | 48,853  |         |   | 5,759                 |   |                      |      
|Other noncurrent assets                 |  |         | 6,415   |         |   | 3,284                 |   |                      |      
|Intangible assets, net                  |  |         | 245,818 |         |   | 34,810                |   |                      |      
|                                        |  |         |         |         |   |                       |   |                      |       
|Total assets                            |  | $       | 360,169 |         | $ | 48,920                |   | $                    | (6,801
|                                        |  |         |         |         |   |                       |   |                      |       
|LIABILITIES AND MEMBERS INTEREST       |  |         |         |         |   |                       |   |                      |       
|Current liabilities                     |  | $       | 25,651  |         | $ | 9,381                 |   | $                    | (6,801
|Debt                                    |  |         | 237,800 |         |   | 55,143                |   |                      |      
|Other liabilities                       |  |         | 15,388  |         |   | 2,047                 |   |                      |      
|Members interest                       |  |         | 81,330  |         |   | (17,651               | ) |                      |      
|                                        |  |         |         |         |   |                       |   |                      |       
|Total liabilities and members interest |  | $       | 360,169 |         | $ | 48,920                |   | $                    | (6,801
|                                        |  |         |         |         |   |                       |   |                      |       

Statement of Operations  For the Three Months Ended June 30, 2003

|                                                                      |  |   | Nexstar |   |   | Mission |   |   | Consolidating Entries |   |   | Consolidated Company |  
|--------------------------------------------------------------------- |  | - | ------- | - | - | ------- | - | - | --------------------- | - | - | -------------------- | -
|                                                                      |  |   |         |   |   |         |   |   |                       |   |   |                      |  
|Net revenue                                                           |  | $ | 33,603  |   | $ | 5,064   |   | $ | (1,912                | ) | $ | 36,755               |  
|Operating expenses                                                    |  |   | 27,110  |   |   | 4,954   |   |   | (1,912                | ) |   | 30,152               |  
|                                                                      |  |   |         |   |   |         |   |   |                       |   |   |                      |  
|Income from operations                                                |  |   | 6,493   |   |   | 110     |   |   |                      |   |   | 6,603                |  
|Interest expense                                                      |  |   | (7,524  | ) |   | (686    | ) |   |                      |   |   | (8,210               | )
|Interest income and other income (expense), net                       |  |   | 569     |   |   | 76      |   |   | (75                   | ) |   | 570                  |  
|                                                                      |  |   |         |   |   |         |   |   |                       |   |   |                      |  
|Loss before income taxes and minority interest in consolidated entity |  |   | (462    | ) |   | (500    | ) |   | (75                   | ) |   | (1,037               | )
|Income tax benefit (expense)                                          |  |   | 93      |   |   | (142    | ) |   |                      |   |   | (49                  | )
|Minority interest in consolidated entity                              |  |   |        |   |   | 105     |   |   |                      |   |   | 105                  |  
|                                                                      |  |   |         |   |   |         |   |   |                       |   |   |                      |  
|Net loss                                                              |  | $ | (369    | ) | $ | (537    | ) | $ | (75                   | ) | $ | (981                 | )
|                                                                      |  |   |         |   |   |         |   |   |                       |   |   |                      |  

Statement of Operations For the Three Months Ended June 30, 2002

|                                                |  | Nexstar |        | Mission |   | Consolidating Entries |   | Consolidated Company |       
|----------------------------------------------- |  | ------- | ------ | ------- | - | --------------------- | - | -------------------- | ------
|                                                |  |         |        |         |   |                       |   |                      |       
|Net revenue                                     |  | $       | 29,028 |         | $ | 4,076                 |   | $                    | (1,583
|Operating expenses                              |  |         | 25,139 |         |   | 3,520                 |   |                      | (1,583
|                                                |  |         |        |         |   |                       |   |                      |       
|Income from operations                          |  |         | 3,889  |         |   | 556                   |   |                      |      
|Interest expense                                |  |         | (7,969 | )       |   | (746                  | ) |                      |      
|Interest income and other income (expense), net |  |         | (1,238 | )       |   |                      |   |                      |      
|                                                |  |         |        |         |   |                       |   |                      |       
|Loss before income taxes                        |  |         | (5,318 | )       |   | (190                  | ) |                      |      
|Income tax benefit (expense)                    |  |         | 1,317  |         |   | (57                   | ) |                      |      
|                                                |  |         |        |         |   |                       |   |                      |       
|Net loss                                        |  | $       | (4,001 | )       | $ | (247                  | ) | $                    |      
|                                                |  |         |        |         |   |                       |   |                      |       

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##### Table of Contents

NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

11.Condensed Consolidating Financial Information(Continued)

Statement of Operations  For the Six Months Ended June 30, 2003

|                                                                      |  | Nexstar |         | Mission |   | Consolidating Entries |   | Consolidated Company |       
|--------------------------------------------------------------------- |  | ------- | ------- | ------- | - | --------------------- | - | -------------------- | ------
|                                                                      |  |         |         |         |   |                       |   |                      |       
|Net revenue                                                           |  | $       | 61,871  |         | $ | 9,205                 |   | $                    | (3,692
|Operating expenses                                                    |  |         | 54,226  |         |   | 9,535                 |   |                      | (3,692
|                                                                      |  |         |         |         |   |                       |   |                      |       
|Income (loss) from operations                                         |  |         | 7,645   |         |   | (330                  | ) |                      |      
|Interest expense                                                      |  |         | (19,697 | )       |   | (2,480                | ) |                      |      
|Interest income and other income (expense), net                       |  |         | 861     |         |   | 84                    |   |                      | (75   
|                                                                      |  |         |         |         |   |                       |   |                      |       
|Loss before income taxes and minority interest in consolidated entity |  |         | (11,191 | )       |   | (2,726                | ) |                      | (75   
|Income tax benefit (expense)                                          |  |         | 335     |         |   | (488                  | ) |                      |      
|Minority interest in consolidated entity                              |  |         |        |         |   | 105                   |   |                      |      
|                                                                      |  |         |         |         |   |                       |   |                      |       
|Net loss                                                              |  | $       | (10,856 | )       | $ | (3,109                | ) | $                    | (75   
|                                                                      |  |         |         |         |   |                       |   |                      |       

Statement of Operations For the Six Months Ended June 30, 2002

|                                                                                 |  | Nexstar |         | Mission |   | Consolidating Entries |   | Consolidated Company |       
|-------------------------------------------------------------------------------- |  | ------- | ------- | ------- | - | --------------------- | - | -------------------- | ------
|                                                                                 |  |         |         |         |   |                       |   |                      |       
|Net revenue                                                                      |  | $       | 55,065  |         | $ | 7,435                 |   | $                    | (2,656
|Operating expenses                                                               |  |         | 49,933  |         |   | 6,825                 |   |                      | (2,656
|                                                                                 |  |         |         |         |   |                       |   |                      |       
|Income from operations                                                           |  |         | 5,132   |         |   | 610                   |   |                      |      
|Interest expense                                                                 |  |         | (15,932 | )       |   | (1,458                | ) |                      |      
|Interest income and other income (expense), net                                  |  |         | (208    | )       |   | 4                     |   |                      |      
|                                                                                 |  |         |         |         |   |                       |   |                      |       
|Loss before income taxes                                                         |  |         | (11,008 | )       |   | (844                  | ) |                      |      
|Income tax benefit (expense)                                                     |  |         | 1,225   |         |   | (146                  | ) |                      |      
|                                                                                 |  |         |         |         |   |                       |   |                      |       
|Loss before income taxes and cumulative effect of change in accounting principle |  |         | (9,783  | )       |   | (990                  | ) |                      |      
|Loss before cumulative effect of change in accounting principle                  |  |         | (27,419 | )       |   |                      |   |                      |      
|                                                                                 |  |         |         |         |   |                       |   |                      |       
|Net loss                                                                         |  | $       | (37,202 | )       | $ | (990                  | ) | $                    |      
|                                                                                 |  |         |         |         |   |                       |   |                      |       

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NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

11.     Condensed Consolidating Financial Information(Continued)

Statement of Cash Flows For the Six Months Ended June 30, 2003

|                                                                   |  | Nexstar |          | Mission |   | Consolidating Entries |   | Consolidated Company |   
|------------------------------------------------------------------ |  | ------- | -------- | ------- | - | --------------------- | - | -------------------- | --
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Net cash provided by operating activities                          |  | $       | 5,644    |         | $ | 1,414                 |   | $                    | (5
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Cash flows from investing activities:                              |  |         |          |         |   |                       |   |                      |   
|Additions to property and equipment, net                           |  |         | (3,977   | )       |   | (319                  | ) |                      | 5 
|Acquisitions of broadcast properties and related transaction costs |  |         | (39,950  | )       |   | (10,383               | ) |                      |  
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Net cash used for investing activities                             |  |         | (43,927  | )       |   | (10,702               | ) |                      | 5 
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Cash flows from financing activities:                              |  |         |          |         |   |                       |   |                      |   
|Proceeds from debt issuance                                        |  |         | 130,000  |         |   | 55,000                |   |                      |  
|Proceeds from revolver draws                                       |  |         | 25,000   |         |   | 12,150                |   |                      |  
|Repayment of loans                                                 |  |         | (106,513 | )       |   | (55,143               | ) |                      |  
|Payments for debt finance costs                                    |  |         | (3,430   | )       |   | (1,483                | ) |                      |  
|Capital contributions, net                                         |  |         | 69,851   |         |   |                      |   |                      |  
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Net cash provided by financing activities                          |  |         | 114,908  |         |   | 10,524                |   |                      |  
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Net increase in cash and cash equivalents                          |  |         | 76,625   |         |   | 1,236                 |   |                      |  
|Cash and cash equivalents at beginning of period                   |  |         | 19,376   |         |   | 503                   |   |                      |  
|                                                                   |  |         |          |         |   |                       |   |                      |   
|Cash and cash equivalents at end of period                         |  | $       | 96,001   |         | $ | 1,739                 |   | $                    |  
|                                                                   |  |         |          |         |   |                       |   |                      |   



Statement of Cash Flows  For the Six Months Ended June 30, 2002

|                                                                   |  | Nexstar |        | Mission |   | Consolidating Entries |   | Consolidated Company |  
|------------------------------------------------------------------ |  | ------- | ------ | ------- | - | --------------------- | - | -------------------- | -
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Net cash provided by (used for) operating activities               |  | $       | 4,124  |         | $ | (98                   | ) | $                    | 
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Cash flows from investing activities:                              |  |         |        |         |   |                       |   |                      |  
|Additions to property and equipment, net                           |  |         | (3,855 | )       |   | (81                   | ) |                      | 
|Acquisitions of broadcast properties and related transaction costs |  |         |       |         |   | (35                   | ) |                      | 
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Net cash used for investing activities                             |  |         | (3,855 | )       |   | (116                  | ) |                      | 
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Cash flows from financing activities:                              |  |         |        |         |   |                       |   |                      |  
|Repayment of loans                                                 |  |         | (2,671 | )       |   |                      |   |                      | 
|Proceeds from revolver draws                                       |  |         | 2,500  |         |   |                      |   |                      | 
|Payments for debt finance costs                                    |  |         | (158   | )       |   | (4                    | ) |                      | 
|Distributions, net                                                 |  |         | (1,413 | )       |   |                      |   |                      | 
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Net cash used for financing activities                             |  |         | (1,742 | )       |   | (4                    | ) |                      | 
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Net decrease in cash and cash equivalents                          |  |         | (1,473 | )       |   | (218                  | ) |                      | 
|Cash and cash equivalents at beginning of period                   |  |         | 5,218  |         |   | 584                   |   |                      | 
|                                                                   |  |         |        |         |   |                       |   |                      |  
|Cash and cash equivalents at end of period                         |  | $       | 3,745  |         | $ | 366                   |   | $                    | 
|                                                                   |  |         |        |         |   |                       |   |                      |  

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NEXSTAR FINANCE, L.L.C.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)

12.     Initial Public Offering

On April 24, 2002, Nexstar Broadcasting Group, Inc., filed a registration statement for an initial public offering with the Securities and Exchange Commission
(SEC). Nexstar Broadcasting Group, L.L.C., Nexstars ultimate parent, will undertake a reorganization in connection with the consummation of the initial public offering whereby Nexstar Broadcasting Group, L.L.C. and certain of its
direct and indirect subsidiaries will be merged with and into Nexstar Broadcasting Group, Inc., which will be the surviving corporation.

13.     Recently Issued
Accounting Standards

On April 30, 2003, the FASB issued FASB Statement No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities (SFAS No. 149). SFAS No. 149 amends and clarifies the accounting guidance on (1) derivative instruments (including certain derivative instruments embedded in other contracts) and (2) hedging
activities that fall within the scope of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133). SFAS No. 149 amends SFAS No. 133 and certain other existing pronouncements, which
will result in more consistent reporting of contracts that are derivative in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS No. 149 is effective (1) for contracts entered into or modified after June 30,
2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS
150). This statement addresses financial accounting and reporting for financial instruments with characteristics of both liabilities and equity and is effective at the beginning of the first interim period beginning after June 12,
2003.

The Company is currently evaluating the accounting impact of the adoption of these new standards.

14.    Subsequent Event

On August 1, 2003, Nexstar purchased all of the stock of KARK,
the NBC affiliate in Little Rock, Arkansas, and WDHN, the ABC affiliate in Dothan, Alabama, from Morris Multimedia, Inc. for $90.0 million, exclusive of transaction costs. Pursuant to terms of the purchase agreement, Nexstar made a down payment of
$40.0 million against the purchase price on January 31, 2003, which has been included in noncurrent assets as of June 30, 2003, and paid the remaining $50.0 million upon consummation of the acquisition, exclusive of transaction costs.

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##### Table of Contents

ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking and Cautionary Statements

The following discussion and analysis should be read in
conjunction with the unaudited consolidated balance sheet as of June 30, 2003, unaudited consolidated statements of operations and other comprehensive loss and other unaudited financial statements for the three months and six months ended June 30,
2002 and 2003 and related notes included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934.  All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including: any projections or expectations of
earnings, revenue, financial performance, liquidity and capital resources or other financial items; any assumptions or projections about the television broadcasting industry; any statements of our plans, strategies and objectives for our future
operations, performance, liquidity and capital resources or other financial items; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of
belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words may, will, should, could, would, predicts,
potential, continue, expects, anticipates, future, intends, plans, believes, estimates and other similar words.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ from this projection or
assumption in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties, including those described in
Nexstars Annual Report on Form 10-K for the year ended December 31, 2002. The forward-looking statements are made only as of the date hereof, and we do not have or undertake any obligation to publicly update any forward-looking statements to
reflect subsequent events or circumstances unless otherwise required by law.

We make references throughout our Managements
Discussion and Analysis of Financial Condition and Results of Operations to comparisons on a same station basis in order to provide a more meaningful comparison of annual growth from internal operations which may be masked by
growth from acquisitions. These comparisons refer to stations that we have owned or provided services to at the beginning and end of a particular period. In particular, references to a comparison on a same station basis for the three months and six
months ended June 30, 2003 versus the three months and six months ended June 30, 2002 include the following stations: WYOU, KQTV, WTWO, WBRE, KFDX, KSNF, KBTV, WJET, WFXP, WROC, KJTL, KJBO-LP, KTAB, KMID, KTAL, WCIA, WMBD, WYZZ and KODE. As used in
the report, unless the context indicates otherwise, Nexstar refers to Nexstar Finance, L.L.C. and its consolidated subsidiaries including Nexstar Finance, Inc., and Mission refers to Mission Broadcasting, Inc. All references
to we, our, and us refer to Nexstar.

Introduction

We own and operate, through our subsidiaries, 14 television stations. Through various local service agreements with Mission Broadcasting, Inc. (Mission),
we provide various management, sales or other services to additional television stations. Mission is 100% owned by an independent third party. Mission owns and operates the following television stations: WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC and
KACB. In addition, Mission provides most of the programming for WBAK, pursuant to a time brokerage agreement. We do not own Mission or its television stations. In order for both Nexstar and Mission to continue to comply with FCC regulations, Mission
must maintain complete responsibility for and control over programming, finances, personnel and operations of its stations. However, as a result of Nexstars guarantee of Missions debt and our arrangements under the local service
agreements and purchase option agreements with Mission (described below), we are deemed under U.S. generally accepted accounting principles (U.S. GAAP) to have a controlling financial interest in Mission. Additionally, we have evaluated
the impact of accounting for Mission under Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51 (FIN
No. 46) and have determined that we will be required to continue consolidating Missions financial statements under U.S. GAAP.

| | Our ability to receive cash from Mission is governed by the following local service agreements:
| | -----------------------------------------------------------------------------------------------
| |                                                                                                
| |                                                                                               
| |                                                                                                
| |                                                                                               
| |                                                                                                
| |                                                                                               

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##### Table of Contents

| |  | applicable, with KJTL and KJBO-LP, except that the payment terms under the shared services agreements for WYOU, KRBC and KACB are a flat monthly fee.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

In addition to providing certain services to Missions television stations, we also guarantee Missions bank debt. Similarly,
Mission is a guarantor of the senior credit facilities entered into and the senior subordinated notes issued by Nexstar.

The shareholder
of Mission has granted to us a purchase option to acquire the assets and liabilities of each Mission station for consideration equal to the greater of (1) seven times the stations broadcast cash flow as defined in the option agreement less the
amount of its indebtedness as defined in the option agreement or (2) the amount of its indebtedness. These option agreements are freely exercisable or assignable by us without consent or approval by the shareholder of Mission.

Nexstar does not own Mission or Missions television stations. However, as a result of our guarantee of Missions debt and our arrangements under
the local service arrangements and purchase option agreements with Mission, we are deemed under U.S. GAAP to have a controlling financial interest in Mission while complying with the FCCs rules regarding ownership limits in television markets.
In order for both Nexstar and Mission to continue to comply with FCC regulations, Mission must maintain complete responsibility for and control over programming, finances, personnel and operations of its stations. As a result of our controlling
financial interest in Mission under U.S. GAAP and in order to present fairly our financial position, results of operations and cash flows, we consolidate the financial position, results of operations and cash flows of Mission as if it were a
wholly-owned entity. We believe this presentation is meaningful for understanding our financial performance. As discussed above, we have considered the method of accounting under FIN No. 46 and have determined that we will be required to continue
consolidating Missions financial statements. Therefore, the following discussion of our financial condition and results of operations includes Missions financial statements.

In addition to our agreements with Mission, pursuant to an outsourcing agreement with a subsidiary of Sinclair Broadcast Group, Inc. (Sinclair) that
became effective December 1, 2001, we provide engineering, production, sales and administrative services for WYZZ, the Fox affiliate in the Peoria-Bloomington, IL market. The parties share the combined broadcast cash flow, as defined in the
agreement, generated by WYZZ and Nexstar-owned WMBD. The outsourcing agreement was non-cancelable until May 31, 2003. Beginning thereafter it may be canceled by either party upon 180 days written notice. We have received notice from Sinclair of its
intent to cancel this outsourcing agreement effective December 31, 2003. The outsourcing agreement would have expired in December 2008. We evaluated the arrangement under FIN No. 46 and determined that we are not the primary beneficiary of
WYZZ.

The operating revenue of our stations is derived primarily from advertising revenue, which in turn depends on the economic
conditions of the markets in which we operate, the demographic makeup of those markets and the marketing strategy we employ in each market. The primary operating expenses consist of commissions on advertising revenue, employee compensation and
related benefits, newsgathering and programming costs. A large percentage of the costs involved in the operation of our stations remain relatively fixed.

Each of our stations has a network affiliation agreement pursuant to which the network provides programming to the station during specified time periods, including
prime time. Each of NBC, CBS and ABC compensates our affiliated stations for distributing the networks programming over the air and for allowing the network to keep a portion of advertising inventory during those time periods. Each station
acquires licenses to broadcast programming in non-news and non-network time periods. The licenses are either purchased from a program distributor for cash and/or the program distributor is allowed to sell some of the advertising inventory as
compensation to eliminate or reduce the cash cost for the license. The latter practice is referred to as barter broadcast rights. The station records the estimated fair market value of the licenses, including any advertising inventory given to the
program distributor, as a broadcast right asset and liability. The assets are amortized as a component of amortization of broadcast rights. Amortization is computed using the straight-line method based on the license period or usage, whichever is
greater. The cash broadcast rights liabilities are reduced by monthly payments while the barter liability is amortized over the life of the contract as a component of trade and barter revenue.

Advertising rates are based upon (1) a programs popularity among the viewers that an advertiser wishes to target, (2) the number of advertisers competing for
the available time, (3) the size and the demographic composition of the market served by the station, (4) the availability of alternative advertising media in the market area, and (5) the effectiveness of the stations sales force. Advertising
rates are also determined by a stations overall ability to attract viewers in its market area, as well as the stations ability to attract viewers among particular demographic groups that an advertiser may be targeting. Advertising
revenue is positively affected by strong local economies, national and regional political election campaigns, and certain events such as the Olympic Games or the Super Bowl. Because television broadcast stations rely on advertising revenue, declines
in advertising budgets, particularly in recessionary periods, adversely affect the broadcast industry, and as a result may contribute to a decrease in the revenue of broadcast television stations.

Most advertising contracts are short-term and generally run for a few weeks. Excluding political revenue, 65.6% of Nexstars and Missions spot revenue for
both the six months ended June 30, 2002 and 2003, respectively, was generated from local advertising. The remainder of our advertising revenue represents inventory sold for national or political advertising. Each station has an agreement with a
national representative firm that provides for representation outside the particular stations market. National commission rates vary within the industry and are governed by each stations agreement. All national and political revenue
derived from advertisements is placed by advertising agencies. The agencies receive a commission rate of 15.0% for the gross amount of advertising schedules placed by them. While the majority of local spot revenue is placed by local agencies, some
advertisers place their schedules directly with the local sales staff, thereby eliminating the agency commission.

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The advertising revenue of Nexstars and Missions stations is generally highest in the second and fourth
quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season. In addition, advertising revenue is generally higher during even-numbered
years as a result of political advertising and advertising aired during the Olympic Games.

Acquisitions and Station Agreements

The acquisitions and local service agreements described below, which were entered into by Nexstar and Mission during the fiscal year ended December 31, 2002 and the
six months ended June 30, 2003, affect the year-to-year comparability of the operating results discussed in this Quarterly Report on Form 10-Q:

| |  | On April 1, 2002, we entered into a shared services agreement with Mission to provide news production, technical maintenance and security for KODE, in exchange for monthly fees
paid to us. The services provided by us resulted in higher miscellaneous revenue and operating expenses for Nexstar-owned KSNF, the station providing the services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On April 1, 2002, we converted WCFN from a satellite station of WCIA to a UPN-affiliated station. As a result, WCFN became a full-power station capable of generating revenue of its own. For
discussion purposes on a same station basis, we have excluded WCFNs revenue and expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On December 13, 2002, Mission entered into a purchase agreement and local marketing agreement with LIN Television Corporation and two of its subsidiaries, which owned KRBC, the NBC
affiliate in Abilene-Sweetwater, Texas, and KACB, the NBC affiliate in San Angelo, Texas. Operations under the local marketing agreement commenced on January 1, 2003 and terminated upon the purchase of the stations. On June 13, 2003, Mission
purchased substantially all of the assets of the stations for $10.0 million. Pursuant to the terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price in December 2002 and paid the remaining $8.5 million
upon the consummation of the acquisition on June 13, 2003, exclusive of transaction costs. On June 13, 2003, Mission entered into a shared services agreement with KTAB, a Nexstar-owned station in the Abilene-Sweetwater, Texas market, whereby KTAB
provides news production, technical maintenance and security for KRBC and KACB in exchange for monthly payments to us.                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On December 30, 2002, Nexstar entered into a purchase agreement and time brokerage agreements with two subsidiaries of Morris Multimedia, Inc., which owned KARK, the NBC affiliate in Little
Rock, Arkansas, and WDHN, the ABC affiliate in Dothan, Alabama.  Operations under the time brokerage agreements commenced on February 1, 2003. On August 1, 2003, Nexstar purchased all of the stock of the stations for $90.0 million, and the time
brokerage agreements were terminated.  Pursuant to terms of the purchase agreement, Nexstar made a down payment of $40.0 million against the purchase price on January 31, 2003 and paid the remaining $50.0 million upon the consummation of the
acquisition, exclusive of transaction costs.                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On May 8, 2003, Mission entered into a purchase agreement and a time brokerage agreement with Bahakel Communications and certain of its subsidiaries, the current owner of WBAK, the Fox
affiliate in Terre Haute, Indiana. Operations under the time brokerage agreement commenced on May 9, 2003. Following FCC consent to the transaction, Mission will purchase substantially all of the assets of WBAK for $3.0 million. Pursuant to the
terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price on May 9, 2003. Mission entered into a shared services agreement with WTWO, a Nexstar-owned station in the Terre Haute, Indiana market, whereby
WTWO provides news production, technical maintenance and security for WBAK. Mission also entered into a joint sales agreement, effective May 9, 2003, whereby Nexstar-owned WTWO purchases all of the advertising time on WBAK and retains the
advertising revenue in return for payments to Mission of $0.1 million per month, subject to adjustment to assure that each payment equals Missions actual operating costs plus $10.0 thousand per month.

Recent Developments

On February 13, 2003, Nexstar and Mission obtained new senior secured credit
facilities.  The facilities consist of a $185.0 million term loan (Nexstar-$130.0 million and Mission-$55.0 million) and an $80.0 million revolver (Nexstar-$50.0 million and Mission-$30.0 million).  We and Mission used the proceeds from
the term loan to refinance our existing senior credit facilities, pay for related debt financing costs and provide additional working capital. Financial covenants under the new senior credit facilities include a total leverage ratio of 7.25 times
the last twelve months operating cash flow (as defined in the credit agreement) through March 30, 2004 and a senior leverage ratio of 4.25 times the last twelve months operating cash flow (as defined in the credit agreement) through June 29,
2004.  Covenants also include, among others, an interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of 1.10 to 1.00 through September 29, 2004.  The term loans amortize at 1% annually in years
2004 through 2009, with the remaining 94% due in 2010.  The outstanding principal amount on the revolving loans mature on December 31, 2009.  As of June 30, 2003, Nexstar had drawn $130.0 million of term loans and had no borrowings
outstanding under its new revolver and Mission had drawn $55.0 million of term loans and $12.2 million under its new revolver.  The refinancing of the predecessor senior credit facilities resulted in the write off during the first quarter of
2003 of $5.8 million of certain debt financing costs capitalized at December 31, 2002.

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Capital Contributions/Distributions

In March 2002,
Nexstar made a $1.4 million distribution to its direct parent company, Nexstar Finance Holdings, L.L.C. (Holdings). In March 2003, Nexstar made a $1.5 million distribution to Holdings. Additionally, in March 2003, Nexstar received a
capital contribution of $71.4 million from Holdings. Holdings issued $130.0 million senior discount notes at a price of 57.442% in March 2003 and contributed the proceeds, net of issuance costs, to Nexstar.

Historical Performance

Revenue

The following table sets forth the principal types of revenue received by our stations for the periods indicated and each type of  broadcast revenue (other than
trade and barter) as a percentage of total broadcast revenue, as well as agency and national sales representative commissions:

|                                                     |  | Three Months Ended June 30, |        | Six Months Ended June 30, | 
|---------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | 
|                                                     |  |                             |        |                           | 
|                                                     |  | 2002                        |        | 2003                      | 
|                                                     |  |                             |        |                           | 
|                                                     |  | Amount                      |        | %                         | 
|                                                     |  |                             |        |                           | 
|                                                     |  | (dollars in thousands)      |        | (dollars in thousands)    | 
|Local                                                |  | $                           | 19,526 |                           | 
|National                                             |  |                             | 10,335 |                           | 
|Political                                            |  |                             | 1,627  |                           | 
|Network compensation.                                |  |                             | 1,660  |                           | 
|Other                                                |  |                             | 475    |                           | 
|                                                     |  |                             |        |                           | 
|Total broadcast revenue                              |  |                             | 33,623 |                           | 
|Less: Agency and national representative commissions |  |                             | 4,633  |                           | 
|                                                     |  |                             |        |                           | 
|Net broadcast revenue                                |  |                             | 28,990 |                           | 
|Trade and barter revenue                             |  |                             | 2,531  |                           | 
|                                                     |  |                             |        |                           | 
|Total net revenue                                    |  | $                           | 31,521 |                           | 
|                                                     |  |                             |        |                           | 

Results of Operations

The following table sets forth a summary of our operations for the periods indicated and their percentages of total net revenue:

|                                                   |  | Three Months Ended June 30, |        | Six Months Ended June 30, | 
|-------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | 
|                                                   |  |                             |        |                           | 
|                                                   |  | 2002                        |        | 2003                      | 
|                                                   |  |                             |        |                           | 
|                                                   |  | Amount                      |        | %                         | 
|                                                   |  |                             |        |                           | 
|                                                   |  | (dollars in thousands)      |        | (dollars in thousands)    | 
|Total net revenue                                  |  | $                           | 31,521 |                           | 
|Operating expenses:                                |  |                             |        |                           | 
|Corporate expenses                                 |  |                             | 939    |                           | 
|Station direct operating expenses, net of trade    |  |                             | 7,812  |                           | 
|Selling, general and administrative expenses       |  |                             | 7,528  |                           | 
|Trade and barter expense                           |  |                             | 2,466  |                           | 
|Depreciation and amortization                      |  |                             | 6,470  |                           | 
|Amortization of broadcast rights, excluding barter |  |                             | 1,861  |                           | 
|                                                   |  |                             |        |                           | 
|Income from operations                             |  | $                           | 4,445  |                           | 
|                                                   |  |                             |        |                           | 

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Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002

Net broadcast revenue for the three months ended June 30, 2003 was $34.3 million, an increase of $5.3 million, compared to $29.0 million for the three months ended
June 30, 2002. An increase in net broadcast revenue of $5.7 million was attributed to stations for which a local service arrangement was entered into after January 1, 2002 and WCFN. On a same station basis, net broadcast revenue for the three months
ended June 30, 2003 was $27.3 million as compared to $27.7 million for the three months ended June 30, 2002, a decrease of 1.5%, or $0.4 million. Of this decrease, $0.3 million was attributed to a decline in political revenue resulting from a lack
of election campaigns in most of our markets in 2003 and $0.2 million was attributed to a decrease in local demand, offset, in part, by an increase in national revenue of $0.1 million on a same station basis. We expect to have higher advertising
revenue during the even-numbered years as a result of revenue associated with the Olympic Games and political campaigns and lower advertising revenue during the odd-numbered years without Olympic Games and with nominal political
activity.

Station direct operating expenses, consisting primarily of news, engineering and programming, and selling,
general and administrative expenses, net of trade, for the three months ended June 30, 2003 were $18.3 million, compared to $15.3 million for the comparable period in 2002, an increase of $3.0 million. Of the $3.0 million increase, $3.3 million was
attributed to stations for which a local service arrangement was entered into after January 1, 2002 and WCFN. On a same station basis, station direct operating expenses and selling, general and administrative expenses for the three months ended June
30, 2003 were $14.0 million as compared to $14.3 million for the three months ended June 30, 2002, a decrease of 2.3%, or $0.3 million, which resulted primarily from the full impact of cost reductions in the Joplin, Missouri market.

Corporate expenses, related to costs associated with the centralized management of our stations, for the three months ended June 30, 2003 were $1.4
million, compared to $0.9 million for the three months ended June 30, 2002, an increase of $0.5 million. The increase was primarily attributed to an increase in personnel costs.

Amortization of broadcast rights, excluding barter, for the three months ended June 30, 2003 was $1.8 million, compared to $1.9 million for the three months ended
June 30, 2002, a decrease of $0.1 million.

Depreciation of property and equipment was $2.9 million for the three months ended June 30,
2003, compared to $3.3 million for the comparable period in 2002, a decrease of $0.4 million. The decrease in depreciation was attributed to the curtailment of depreciation on certain assets that became fully depreciated as of December 31, 2002. The
stations for which a local service arrangement was entered into after January 1, 2002 and WCFN had no material effect on depreciation.

The amortization of intangibles was $3.5 million for the three months ended June 30, 2003, compared to $3.2 million for the same period in 2002. The increase in
amortization was attributed to the amortization of intangible assets resulting from the KODE acquisition.

Income from operations for the
three months ended June 30, 2003 was $6.6 million as compared to $4.4 million for the three months ended June 30, 2002, an increase of $2.2 million. Income from operations in the amount of $2.0 million was attributed to stations for which a local
service arrangement was entered into after January 1, 2002 and WCFN. On a same station basis, income from operations for the three months ended June 30, 2003 was $4.6 million as compared to income from operations of $4.4 million for the three months
ended June 30, 2002. The $0.2 million increase in income from operations is primarily attributed to a decrease in station direct operating expenses and selling, general and administrative expenses, net of trade, as described above.

The change in market values of our derivative instruments and the marking-to-market of the interest rate swap agreement resulted in recognition of
$0.3 million in other income for the three months ended June 30, 2003 and a loss of $1.3 million recognized in other expenses for the three months ended June 30, 2002. The change was due to a fluctuation in market interest rates.

Interest expense, including amortization of debt financing costs, for the three months ended June 30, 2003 was $8.2 million, compared to $8.7 million
for the same period in 2002. The decrease in interest expense was primarily attributable to a decline in interest rates on the senior secured credit facilities during the three months ended June 30, 2003 as compared to the same period in
2002.

The minority interest in consolidated entity of $0.1 million for the three months ended June 30, 2003 relates to the recognition
of $0.1 million of expenses due to the application of FIN No. 46 as it pertains to the local service arrangement Mission has with WBAK (See Note 4 of the consolidated financial statements).

As a result of the factors discussed above, our net loss was $1.0 million for the three months ended June 30, 2003, compared to $4.2 million for the same period in
2002, a decrease in net loss of $3.2 million.

Six Months Ended June 30, 2003 Compared to Six Months Ended June 30,
2002

Net broadcast revenue for the six months ended June 30, 2003 was $61.8 million, an increase of $6.9 million, compared to $54.9 million for the six months ended June 30, 2002. An increase
in net broadcast revenue of $9.1 million was attributed to stations for which a local service arrangement was entered into after January 1, 2002 and WCFN. On a same station basis, net broadcast revenue for the six months ended June 30, 2003 was
$50.3 million as compared to $52.5 million for the six months ended June 30, 2002, a decrease of 4.3%, or $2.2 million. Of this decrease, $2.2 million was attributed to a decline in political revenue resulting from a lack of election campaigns in
most of our markets in 2003, offset, in part, by increases in local demand of $0.1 million and national revenue of $0.1

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million on a same station basis. In March 2003, we experienced cancellations and modifications of advertising schedules as a result of the news coverage of the war in Iraq. We
expect to have higher advertising revenue during the even-numbered years as a result of revenue associated with the Olympic Games and political campaigns and lower advertising revenue during the odd-numbered years without Olympic Games and with
nominal political activity.

Station direct operating expenses, consisting primarily of news, engineering and programming,
and selling, general and administrative expenses, net of trade, for the six months ended June 30, 2003 were $35.4 million, compared to $30.8 million for the comparable period in 2002, an increase of $4.6 million. Of the $4.6 million increase, $5.5
million was attributed to stations for which a local service arrangement was entered into after January 1, 2002 and WCFN. On a same station basis, station direct operating expenses and selling, general and administrative expenses for the six months
ended June 30, 2003 were $27.9 million as compared to $28.8 million for the six months ended June 30, 2002, a decrease of 3.2%, or $0.9 million, which resulted primarily from the full impact of cost reductions in markets where we can affect cost
reductions from operating both Nexstar and Mission stations.

Corporate expenses, related to costs associated with the centralized
management of our stations, for the six months ended June 30, 2003 were $2.5 million, compared to $1.9 million for the six months ended June 30, 2002, an increase of $0.6 million. The increase was primarily attributed to an increase in personnel
costs.

Amortization of broadcast rights, excluding barter, for the six months ended June 30, 2003 was $3.6 million, compared to $3.8
million for the six months ended June 30, 2002, a decrease of $0.2 million.

Depreciation of property and equipment was $5.8 million for
the six months ended June 30, 2003, compared to $6.4 million for the comparable period in 2002, a decrease of $0.6 million. The decrease in depreciation was attributed to the curtailment of depreciation on certain assets that became fully
depreciated as of December 31, 2002. The stations for which a local service arrangement was entered into after January 1, 2002 and WCFN had no material effect on depreciation.

The amortization of intangibles was $7.1 million for the six months ended June 30, 2003, compared to $6.5 million for the same period in 2002. The increase in
amortization was attributed to the amortization of intangible assets resulting from the KODE acquisition.

Income from operations for the
six months ended June 30, 2003 was $7.3 million as compared to $5.7 million for the six months ended June 30, 2002, an increase of $1.6 million. Income from operations in the amount of $2.5 million was attributed to stations for which a local
service arrangement was entered into after January 1, 2002 and WCFN. On a same station basis, income from operations for the six months ended June 30, 2003 was $4.5 million as compared to income from operations of $5.4 million for the six months
ended June 30, 2002. The $0.9 million decrease in income from operations is primarily attributed to a decrease in net revenue as described above.

The change in market values of our derivative instruments and the marking-to-market of the interest rate swap agreement resulted in recognition of $0.5 million in
other income for the six months ended June 30, 2003 and a loss of $0.2 million recognized in other expenses for the six months ended June 30, 2002. The change was due to a fluctuation in market interest rates.

Interest expense, including amortization of debt financing costs, for the six months ended June 30, 2003 was $22.2 million, compared to $17.4 million for the same
period in 2002. The increase in interest expense was primarily attributable to the refinancing of the predecessor senior credit facilities which resulted in the write off during the first quarter of 2003 of $5.8 million of certain debt financing
costs capitalized at December 31, 2002, partially offset by an overall decline in interest rates on the senior secured credit facilities.

During the first quarter of 2002, we incurred a write-down of $27.4 million, net of taxes, related to the impairment of goodwill for two of our stations.  The
write-down was the result of us adopting Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142) on January 1, 2002 and was accounted for as a cumulative effect of change in
accounting principle.  SFAS No. 142 required us to test goodwill for impairment based on fair values as of January 1, 2002.

The
minority interest in consolidated entity of $0.1 million for the six months ended June 30, 2003 relates to the recognition of $0.1 million of expenses due to the application of FIN No. 46 as it pertains to the local service arrangement Mission has
with WBAK (See Note 4 of the consolidated financial statements).

As a result of the factors discussed above, our net loss was $14.0
million for the six months ended June 30, 2003, compared to $38.2 million for the same period in 2002, a decrease in net loss of $24.2 million.

Liquidity and Capital Resources

As of June 30, 2003, cash and cash equivalents were $97.7 million, compared to $4.1 million as of June 30, 2002. Our primary sources of liquidity
are cash flows from operating activities, borrowings from our senior credit facilities and capital contributions.

Cash flows provided
by operating activities were $7.1 million for the six months ended June 30, 2003, as compared to $4.0 million for the six months ended June 30, 2002. The comparative increase in cash flows provided by operations of $3.1 million is primarily due to
the timing of payments made or received on operating assets and liabilities along with better operating results for the six months ended June 30, 2003 compared to the same period in 2002.

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Cash flows used for investing activities were $54.7 million for the six months ended June 30, 2003, as compared to
$4.0 million for the six months ended June 30, 2002. Investing activities for the six months ended June 30, 2003 included a down payment of $40.0 million against the purchase price for KARK and WDHN, the remaining $8.5 million payment by Mission for
its acquisition of KRBC and KACB, a down payment by Mission of $1.5 million against the purchase price of WBAK, and ongoing capital expenditures. We paid the remaining $50.0 million purchase price for KARK and WDHN on August 1, 2003. We expect that
Mission will pay the remaining $1.5 million purchase price for WBAK during the fourth quarter of 2003. Investing activities for the same period in 2002 were primarily ongoing equipment purchases.

Cash flows provided by financing activities were $125.4 million for the six months ended June 30, 2003, as compared to cash flows used for financing activities of
$1.7 million for the six months ended June 30, 2002. The change in cash flows from financing activities for the six months ended June 30, 2003 was primarily the result of (1) borrowings under the senior secured credit facilities of $222.2 million,
(2) the repayment of $161.7 million of previous borrowings as a result of the refinancing of the senior credit facilities on February 13, 2003, (3) additional equity proceeds of $69.9 million (net of a $1.5 million distribution), and (4) financing
costs of approximately $4.9 million. For the six months ended June 30, 2002, the change in cash flows from financing activities was the result of (1) borrowings under the senior credit facilities of $2.5 million (2) the repayment of $2.7 million of
previous borrowings, and (3) the $1.4 million distribution to Holdings. As of June 30, 2003, there was approximately $67.9 million of unused commitments under the senior credit facilities, all of which could be drawn in compliance with the financial
covenants under the senior credit facilities. We were in compliance with all covenants contained in the credit agreements governing our senior secured credit facilities and the indenture governing our senior subordinated notes at June 30, 2003. Our
and Missions credit agreements were refinanced in February 2003 as a result of our pending acquisitions. The terms of the amended credit facilities are described below.

Senior Secured
Credit Facilities

On January 12, 2001, Nexstar and Mission each entered into senior secured credit facilities with a group of
commercial banks. The terms of the credit agreement governing the Nexstar facilities provided for a reducing revolving credit facility in the amount of $122.0 million, which was subsequently reduced to $72.0 million after the issuance of
Nexstars senior subordinated notes, a term loan facility in the amount of $110.0 million and an uncommitted acquisition facility of $100.0 million. The Nexstar facilities were subsequently amended on June 14, 2001, to allow for a $50.0 million
Term A loan facility, a $75.0 million Term B loan facility and a $57.0 million reducing revolving facility. On November 14, 2001, the credit facilities were further amended to adjust certain financial covenants effective September 30, 2001 and for
future periods because we were not in compliance with the consolidated total leverage ratio as of September 30, 2001, due in large part to the negative impact on advertising revenue resulting from the events of September 11, 2001 and anticipated
noncompliance in future periods. The financial covenants setting forth the consolidated total leverage ratio and consolidated interest coverage ratio were amended to relax the thresholds that we had to meet pursuant to the credit agreement.  In
addition, we reduced the revolving facility from $57.0 million to $42.0 million. The terms of the credit agreement governing the Mission facility provided for a revolving credit facility in the amount of $43.0 million. On November 14, 2001, the
credit facility was amended to increase the revolving facility to $58.0 million. Prior to the refinancing described below, the Nexstar revolving and Term A facilities along with Missions credit facility matured on January 12, 2007, while the
Nexstar Term B facility matured on July 12, 2007.

On February 13, 2003, Nexstar and Mission obtained new senior credit
facilities.  The facilities consist of a $185.0 million term loan (Nexstar-$130.0 million and Mission-$55.0 million) and an $80.0 million revolver (Nexstar-$50.0 million and Mission-$30.0 million).  Nexstar and Mission used the proceeds to
refinance their existing senior credit facilities, pay for related debt financing costs and provide additional working capital. Financial covenants under the new senior credit facilities include a total leverage ratio of 7.25 times the last twelve
months operating cash flow (as defined in the credit agreement) through March 30, 2004 and a senior leverage ratio of 4.25 times the last twelve months operating cash flow through June 29, 2004.  Covenants also include, among others, an
interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of 1.10 to 1.00 through September 29, 2004.  The senior credit facilities contain covenants which require us to comply with certain limitations on
the incurrence of additional indebtedness, issuance of equity, payment of dividends and on certain other business activities. Nexstar and Mission were in compliance with all covenants contained in the credit agreements governing our senior credit
facilities at June 30, 2003. The term loans amortize at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010.  The outstanding principal amount on the revolving loans mature on December 31, 2009. As of June 30, 2003,
Nexstar had drawn $130.0 million of term loans and had no borrowings outstanding under its new revolver, and Mission had drawn $55.0 million of term loans and $12.2 million under its new revolver.  Interest rates associated with the Nexstar and
the Mission credit facilities are based, at the borrowers option, on the prevailing prime rate plus an applicable margin or LIBOR plus an applicable margin. Interest is fixed for a period ranging from one month to 12 months, depending on
availability of the interest basis selected, except if we select a prime-based loan, in which case the interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of interest rate
selected. In addition, Nexstar and Mission are required to pay quarterly commitment fees on the unused portion of the revolving commitments based on their combined consolidated total leverage ratio for that particular quarter. The refinancing of the
predecessor senior credit facilities resulted in the write off during the first quarter of 2003 of $5.8 million of certain debt financing costs capitalized at December 31, 2002.

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Debt Covenants

The bank
debt agreements and the senior subordinated notes described in Note 7 contain covenants which require Nexstar and Mission to comply with certain financial ratios, capital expenditures, cash film payments and other limits. Nexstar and Mission were in
compliance with all such covenants at June 30, 2003.

Digital Conversion

FCC regulations required us to commence digital operations by May 1, 2002, in addition to continuing our analog operations, unless an extension of time was granted.
We received extensions of time to begin digital operations at all of the stations except WCIA and WCFN, which met the May 1, 2002 deadline. All of our stations currently are operating low power digital facilities. We are currently working with
Bahakel Communications to initiate low power digital facilities for WBAK, which has until September 14, 2003 to begin digital operations. The purchase of WBAK by Mission is due to close during the fourth quarter of 2003. We estimate that the digital
conversion required an average initial capital expenditure of $0.2 million per station for low-power transmission of digital signal programming and will require an average additional capital expenditure of $0.7 million per station to modify the
transmitter for full-power digital signal transmission. Digital conversion expenditures were $1.5 million and $2.0 million for the year ended December 31, 2002 and the six months ended June 30, 2003, respectively. We have entered into a commitment
of approximately $0.2 million payable in 2003 for the WBAK digital conversion. We anticipate that digital conversion expenditures will be funded through available cash on hand and cash generated from operations.

Contractual Obligations

The following summarizes our contractual
obligations at June 30, 2003, and the effect such obligations are expected to have on our liquidity and cash flow in future periods.

|                                           |  | Total                  |         | 2003 |   | 2004-2005 |  | 2006-2007 |        | Thereafter |  
|------------------------------------------ |  | ---------------------- | ------- | ---- | - | --------- |  | --------- | ------ | ---------- | -
|                                           |  |                        |         |      |   |           |  |           |        |            |  
|                                           |  | (dollars in thousands) |        
|Nexstar Senior credit facilities           |  | $                      | 130,000 |      | $ |           |  | $         | 2,600  |            | $
|Mission Senior credit facility             |  |                        | 67,150  |      |   |          |  |           | 1,100  |            |  
|12% senior subordinated notes due 2008     |  |                        | 160,000 |      |   |          |  |           |       |            |  
|Cash interest on debt                      |  |                        | 174,802 |      |   | 14,478    |  |           | 61,068 |            |  
|Broadcast rights current commitments       |  |                        | 5,120   |      |   | 2,250     |  |           | 2,659  |            |  
|Broadcast rights future commitments        |  |                        | 12,023  |      |   | 5,589     |  |           | 6,126  |            |  
|Executive employee contracts               |  |                        | 9,284   |      |   | 1,003     |  |           | 3,909  |            |  
|Capital commitments for digital television |  |                        | 150     |      |   | 150       |  |           |       |            |  
|KARK and WDHN purchase price obligation    |  |                        | 50,000  |      |   | 50,000    |  |           |       |            |  
|Time brokerage fees                        |  |                        | 80      |      |   | 80        |  |           |       |            |  
|Operating lease obligations                |  |                        | 9,221   |      |   | 460       |  |           | 1,526  |            |  
|                                           |  |                        |         |      |   |           |  |           |        |            |  
|Total contractual cash obligations         |  | $                      | 617,830 |      | $ | 74,010    |  | $         | 78,988 |            | $
|                                           |  |                        |         |      |   |           |  |           |        |            |  

We have remaining commitments on our
announced acquisitions of $50.0 million.  For the KARK and WDHN stations, Nexstar paid a deposit of $40.0 million in January 2003, and paid the remaining $50.0 million on August 1, 2003.

We do not have any rating downgrade triggers that would accelerate the maturity dates of our debt. However, a downgrade in our credit rating could adversely affect
our ability to renew existing, or obtain access to new credit facilities in the future and could increase the cost of such facilities.

We are highly leveraged, which makes us vulnerable to changes in general economic conditions. Our ability to repay or refinance our debt will depend on, among other
things, financial, business, market, competitive and other conditions, many of which are beyond our control.  Based on the current operations and anticipated future growth, we believe that our available cash, anticipated cash flow from
operations, and available borrowings under our senior credit facilities will be sufficient to fund our working capital, capital expenditure requirements, interest payments and scheduled principal payments for at least the next twelve months.

Critical Accounting Policies and Estimates

Claims and Legal Proceedings

In the normal course of business, we are party to various claims and legal proceedings. We record a reserve for these matters when an adverse outcome is
probable and we can reasonably estimate our potential liability. Although the ultimate outcome of these matters is currently not determinable, we do not believe that the resolution of these matters in a manner adverse to our interests will have a
material effect upon our financial condition, results of operations or cash flows for an interim or annual period.

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Recently Issued Accounting Standards

On April 30,
2003, the FASB issued FASB Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS No. 149). SFAS No. 149 amends and clarifies the accounting guidance on (1) derivative instruments
(including certain derivative instruments embedded in other contracts) and (2) hedging activities that fall within the scope of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No.
133). SFAS No. 149 amends SFAS No. 133 and certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivative in their entirety or that contain embedded derivatives that warrant separate
accounting. SFAS No. 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity (SFAS 150). This statement addresses financial accounting and reporting for financial instruments with characteristics of both liabilities and equity and is effective at the beginning of the first interim period beginning
after June 12, 2003.

We are currently evaluating the accounting impact of the adoption of these new standards.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest
rates relates primarily to our long-term debt obligations.

All borrowings at June 30, 2003 under our senior credit facilities bear
interest ranging from 4.29% to 4.54%, which represents the base rate, or LIBOR, plus the applicable margin, as defined. Interest is payable in accordance with the credit agreements.

The following table estimates the changes to cash flow from operations if interest rates were to fluctuate by 100 or 50 basis points, or BPS (where 100 basis points
represents one percentage point), for a twelve-month time horizon after giving effect to the interest rate swap agreement described below:

|                                       |  | Interest rate decrease |        | No change to interest rate |   | Interest rate increase |       
|-------------------------------------- |  | ---------------------- | ------ | -------------------------- | - | ---------------------- | ------
|                                       |  |                        |        |                            |   |                       
|                                       |  | 100 BPS                |        | 50 BPS                     |   |                        | 50 BPS
|                                       |  |                        |        |                            |   |                        |       
|                                       |  | (dollars in thousands) |       
|Senior credit facilities               |  | $                      | 11,048 |                            | $ | 11,567                 |       
|12% senior subordinated notes due 2008 |  |                        | 19,200 |                            |   | 19,200                 |       
|                                       |  |                        |        |                            |   |                        |       
|Total                                  |  | $                      | 30,248 |                            | $ | 30,767                 |       
|                                       |  |                        |        |                            |   |                        |       

We use derivative instruments to manage our
exposures to interest rate risks.  Our objective for holding derivatives is to minimize these risks using the most effective methods to eliminate or reduce the impacts of these exposures.  We used interest rate swap arrangements, not
designated as hedging instruments under SFAS No. 133, in connection with our variable rate senior credit facilities.  We do not use derivative financial instruments for speculative or trading purposes.

At June 30, 2003, we had in effect an interest rate swap agreement with a commercial bank, with a notional amount of $93.3 million. This interest
rate swap agreement requires us to pay a fixed rate and receive a floating rate thereby creating fixed rate debt. The differential to be paid or received on the swap is accrued as an adjustment to interest expense. We are exposed to credit loss in
the event of nonperformance by the counterparty. The net fair value of the interest rate swap agreement, which represents the cash that we would pay to settle the agreement, was approximately $5.1 million and $5.6 million at June 30, 2003 and
December 31, 2002, respectively.

ITEM 4.     CONTROLS AND PROCEDURES

(a)  Nexstar carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of
Nexstars management, including Nexstars president and chief executive officer along with the Nexstars chief financial officer, of the effectiveness of the design and operation of Nexstars disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15(d) under the Securities Exchange Act of 1934. Based upon that evaluation, Nexstars president and chief executive officer and chief financial officer concluded that Nexstars disclosure controls and
procedures (1) were effective in timely alerting them  to material information relating to Nexstar (including its consolidated subsidiaries) required to be included in Nexstars periodic SEC filings and (2) were adequate to ensure that
information required to be disclosed by Nexstar in the reports filed or submitted by Nexstar under the Securities Exchange Act of 1934 is recorded, processed and summarized and reported within the time periods specified in the SECs rules and
forms.

(b)  There have been no significant changes in Nexstars internal control over financial reporting identified in
connection with the evaluation described in paragraph (a) above, that have materially affected or are reasonably likely to materially affect, the Companys internal control over financial reporting.

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PART II

ITEM 1.     LEGAL PROCEEDINGS

Not
applicable.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5.     OTHER INFORMATION

Not
applicable.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

|Exhibit No. |  | Exhibit                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                          
|31.1        |  | Certification of Perry A. Sook pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|            |  |                                                                                                                                          
|31.2        |  | Certification of G. Robert Thompson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                           
|            |  |                                                                                                                                          
|32.1        |  | Certification of Perry A. Sook pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     
|            |  |                                                                                                                                          
|32.2        |  | Certification of G. Robert Thompson pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

b. Reports on Form 8-K.

|(1) | Current Report on Form 8-K filed by Nexstar Finance, L.L.C. and Nexstar Finance, Inc. on April 4, 2003, providing Regulation FD Disclosure regarding Nexstars agreement
with Morris Network, Inc. to purchase two subsidiaries of Morris.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                           
|(2) | Current Report on Form 8-K filed by Nexstar Finance, L.L.C. and Nexstar Finance, Inc. on May 16, 2003, reporting its financial results for the quarter ended March 31, 2003.                                                              

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| | NEXSTAR FINANCE, L.L.C.   
| | --------------------------
| | NEXSTAR FINANCE, INC.     
| |                           
| | /s/    PERRY A. SOOK      
| |                           
| | By:                       
| | Its:                      
| |                           
| | /s/     G. ROBERT THOMPSON
| |                           
| | By:                       
| | Its:                      

Dated: August 14,
2003

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