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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2006

OR



| ̈ | 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: 333-62916-02



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MISSION
BROADCASTING, INC.

(Exact name of registrant as specified in its charter)



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|                                         |  |                                  
|---------------------------------------- |  | ---------------------------------
|Delaware                                 |  | 51-0388022                       
|(State of Organization or Incorporation) |  | (IRS Employer Identification No.)



|                                                             |  |                                                     
|------------------------------------------------------------ |  | ----------------------------------------------------
|7650 Chippewa Road, Suite 305 Brecksville, Ohio 44141        |  | (440) 526-2227                                      
|(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 ̈

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.(check one):

Large accelerated
filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

As of June 30, 2006, Mission Broadcasting, Inc. had one shareholder, David S. Smith. Mr. Smith held all 1,000 shares of the outstanding common stock of Mission Broadcasting, Inc. at June 30, 2006. As of July 31, 2006,
Mission Broadcasting, Inc. had 1,000 shares of outstanding common stock.



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##### Table of Contents

TABLE OF CONTENTS



|                             |  |                                                                                              |  |     
|---------------------------- |  | -------------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                              |  | Page
|                             | 
|PART I
FINANCIAL INFORMATION |  |                                                                                             
|                             |  |                                                                                             
|ITEM 1.                      |  | Financial Statements (Unaudited)                                                             |  |     
|                             |  |                                                                                             
|                             |  | Condensed Balance Sheets at June 30, 2006 and December 31, 2005                              |  | 1   
|                             |  |                                                                                             
|                             |  | Condensed Statements of Operations for the three and six months ended June 30, 2006 and 2005 |  | 2   
|                             |  |                                                                                             
|                             |  | Condensed Statements of Cash Flows for the six months ended June 30, 2006 and 2005           |  | 3   
|                             |  |                                                                                             
|                             |  | Notes to Condensed Financial Statements                                                      |  | 4   
|                             |  |                                                                                             
|ITEM 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations        |  | 11  
|                             |  |                                                                                             
|ITEM 3.                      |  | Quantitative and Qualitative Disclosures about Market Risk                                   |  | 18  
|                             |  |                                                                                             
|ITEM 4.                      |  | Controls and Procedures                                                                      |  | 18  
|                             | 
|PART II
OTHER INFORMATION    |  |                                                                                             
|                             |  |                                                                                             
|ITEM 1.                      |  | Legal Proceedings                                                                            |  | 19  
|                             |  |                                                                                             
|ITEM 1A.                     |  | Risk Factors                                                                                 |  | 19  
|                             |  |                                                                                             
|ITEM 2.                      |  | Unregistered Sales of Equity Securities and Use of Proceeds                                  |  | 19  
|                             |  |                                                                                             
|ITEM 3.                      |  | Defaults Upon Senior Securities                                                              |  | 19  
|                             |  |                                                                                             
|ITEM 4.                      |  | Submission of Matters to a Vote of Security Holders                                          |  | 19  
|                             |  |                                                                                             
|ITEM 5.                      |  | Other Information                                                                            |  | 19  
|                             |  |                                                                                             
|ITEM 6.                      |  | Exhibits                                                                                     |  | 19  
|                             | 
|EXHIBIT INDEX                |  | 19                                                                                          



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##### Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

MISSION BROADCASTING, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share information)



|                                                                                                                                     |  |               |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                     |  | June 30, 2006 |         |   | December 31, 2005 |  
|                                                                                                                                     |  | (Unaudited)   |        
|ASSETS                                                                                                                               |  |               |         |   |                   |   |         |  
|Current assets:                                                                                                                      |  |               |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                                            |  | $             | 1,254   |   |                   | $ | 1,404   |  
|Accounts receivable (allowance for doubtful accounts of $0 and $0, respectively)                                                     |  |               | 680     |   |                   |   | 356     |  
|Current portion of broadcast rights                                                                                                  |  |               | 1,068   |   |                   |   | 2,489   |  
|Prepaid expenses and other current assets                                                                                            |  |               | 20      |   |                   |   | 123     |  
|Deferred tax asset                                                                                                                   |  |               | 50      |   |                   |   |        |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Total current assets                                                                                                                 |  |               | 3,072   |   |                   |   | 4,372   |  
|                                                                                                                                     |  |              
|Property and equipment, net                                                                                                          |  |               | 20,078  |   |                   |   | 21,102  |  
|Broadcast rights                                                                                                                     |  |               | 1,533   |   |                   |   | 730     |  
|FCC licenses                                                                                                                         |  |               | 28,736  |   |                   |   | 28,736  |  
|Goodwill                                                                                                                             |  |               | 16,651  |   |                   |   | 16,651  |  
|Other intangible assets, net                                                                                                         |  |               | 44,899  |   |                   |   | 47,597  |  
|Other noncurrent assets                                                                                                              |  |               | 568     |   |                   |   | 616     |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Total assets                                                                                                                         |  | $             | 115,537 |   |                   | $ | 119,804 |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                |  |               |         |   |                   |   |         |  
|Current liabilities:                                                                                                                 |  |               |         |   |                   |   |         |  
|Current portion of debt                                                                                                              |  | $             | 1,727   |   |                   | $ | 1,727   |  
|Current portion of broadcast rights payable                                                                                          |  |               | 1,223   |   |                   |   | 2,669   |  
|Accounts payable                                                                                                                     |  |               | 246     |   |                   |   | 21      |  
|Accrued expenses                                                                                                                     |  |               | 545     |   |                   |   | 508     |  
|Interest payable                                                                                                                     |  |               | 35      |   |                   |   | 61      |  
|Deferred revenue                                                                                                                     |  |               | 778     |   |                   |   | 577     |  
|Due to Nexstar Broadcasting, Inc.                                                                                                    |  |               | 20,646  |   |                   |   | 22,215  |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Total current liabilities                                                                                                            |  |               | 25,200  |   |                   |   | 27,778  |  
|                                                                                                                                     |  |              
|Debt                                                                                                                                 |  |               | 169,678 |   |                   |   | 170,541 |  
|Broadcast rights payable                                                                                                             |  |               | 1,681   |   |                   |   | 958     |  
|Deferred tax liabilities                                                                                                             |  |               | 5,092   |   |                   |   | 4,490   |  
|Deferred revenue                                                                                                                     |  |               | 252     |   |                   |   | 126     |  
|Deferred gain on sale of assets                                                                                                      |  |               | 2,344   |   |                   |   | 2,431   |  
|Other liabilities                                                                                                                    |  |               | 2,634   |   |                   |   | 2,491   |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Total liabilities                                                                                                                    |  |               | 206,881 |   |                   |   | 208,815 |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Commitments and contingencies                                                                                                        |  |               |         |   |                   |   |         |  
|Shareholders deficit:                                                                                                               |  |               |         |   |                   |   |         |  
|Common stock, $1 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at both June 30, 2006 and December 31,
2005 |  |               | 1       |   |                   |   | 1       |  
|Subscription receivable                                                                                                              |  |               | (1      | ) |                   |   | (1      | )
|Accumulated deficit                                                                                                                  |  |               | (91,344 | ) |                   |   | (89,011 | )
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Total shareholders deficit                                                                                                          |  |               | (91,344 | ) |                   |   | (89,011 | )
|                                                                                                                                     |  |               |         |   |                   |   |         |  
|Total liabilities and shareholders deficit                                                                                          |  | $             | 115,537 |   |                   | $ | 119,804 |  
|                                                                                                                                     |  |               |         |   |                   |   |         |  

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



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##### Table of Contents

MISSION BROADCASTING, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands)



|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                  |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                                                                                                                  |  | 2006                        |        |   | 2005                      |   |        | 2006 |  |   | 2005   |  
|                                                                                                                  |  | (Unaudited)                 |        |   | (Unaudited)               |  
|Net broadcast revenue (including trade and barter)                                                                |  | $                           | 1,379  |   |                           | $ | 1,149  |      |  | $ | 2,748  |   |  | $ | 2,575  |  
|Revenue from Nexstar Broadcasting, Inc.                                                                           |  |                             | 7,808  |   |                           |   | 7,287  |      |  |   | 14,784 |   |  |   | 13,965 |  
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Net revenue                                                                                                       |  |                             | 9,187  |   |                           |   | 8,436  |      |  |   | 17,532 |   |  |   | 16,540 |  
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Operating expenses:                                                                                               |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Direct operating expenses (exclusive of depreciation and amortization shown separately below)                     |  |                             | 1,165  |   |                           |   | 1,022  |      |  |   | 2,304  |   |  |   | 2,035  |  
|Selling, general, and administrative expenses (exclusive of depreciation and amortization shown separately below) |  |                             | 589    |   |                           |   | 540    |      |  |   | 1,090  |   |  |   | 1,026  |  
|Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc.                                |  |                             | 1,950  |   |                           |   | 2,850  |      |  |   | 3,900  |   |  |   | 5,700  |  
|Amortization of broadcast rights                                                                                  |  |                             | 868    |   |                           |   | 1,050  |      |  |   | 1,813  |   |  |   | 2,233  |  
|Amortization of intangible assets                                                                                 |  |                             | 1,349  |   |                           |   | 1,529  |      |  |   | 2,698  |   |  |   | 3,172  |  
|Depreciation                                                                                                      |  |                             | 873    |   |                           |   | 698    |      |  |   | 1,654  |   |  |   | 1,400  |  
|Loss on asset disposal, net                                                                                       |  |                             |       |   |                           |   | 4      |      |  |   | 7      |   |  |   | 53     |  
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                                                                          |  |                             | 6,794  |   |                           |   | 7,693  |      |  |   | 13,466 |   |  |   | 15,619 |  
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Income from operations                                                                                            |  |                             | 2,393  |   |                           |   | 743    |      |  |   | 4,066  |   |  |   | 921    |  
|Interest expense, including amortization of debt financing costs                                                  |  |                             | (3,083 | ) |                           |   | (2,140 | )    |  |   | (5,872 | ) |  |   | (4,167 | )
|Loss on extinguishment of debt                                                                                    |  |                             |       |   |                           |   | (508   | )    |  |   |       |   |  |   | (508   | )
|Interest income                                                                                                   |  |                             | 12     |   |                           |   | 4      |      |  |   | 25     |   |  |   | 10     |  
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Loss before income taxes                                                                                          |  |                             | (678   | ) |                           |   | (1,901 | )    |  |   | (1,781 | ) |  |   | (3,744 | )
|                                                                                                                  |  |                             |        |  
|Income tax expense                                                                                                |  |                             | (215   | ) |                           |   | (337   | )    |  |   | (552   | ) |  |   | (678   | )
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Net loss                                                                                                          |  | $                           | (893   | ) |                           | $ | (2,238 | )    |  | $ | (2,333 | ) |  | $ | (4,422 | )
|                                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  

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



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MISSION BROADCASTING, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                |  |                           |        |   |      |   |          |  
|------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | -------- | -
|                                                                                |  | Six Months Ended June 30, |       
|                                                                                |  | 2006                      |        |   | 2005 |  
|                                                                                |  | (Unaudited)               |       
|Cash flows from operating activities:                                           |  |                           |        |   |      |   |          |  
|Net loss                                                                        |  | $                         | (2,333 | ) |      | $ | (4,422   | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                           |        |   |      |   |          |  
|Deferred income taxes                                                           |  |                           | 552    |   |      |   | 672      |  
|Depreciation of property and equipment                                          |  |                           | 1,654  |   |      |   | 1,400    |  
|Amortization of intangible assets                                               |  |                           | 2,698  |   |      |   | 3,172    |  
|Amortization of debt financing costs                                            |  |                           | 47     |   |      |   | 43       |  
|Amortization of broadcast rights, excluding barter                              |  |                           | 802    |   |      |   | 932      |  
|Payments for broadcast rights                                                   |  |                           | (905   | ) |      |   | (1,146   | )
|Loss on asset disposal, net                                                     |  |                           | 7      |   |      |   | 53       |  
|Loss on extinguishment of debt                                                  |  |                           |       |   |      |   | 508      |  
|Deferred gain recognition                                                       |  |                           | (87    | ) |      |   | (86      | )
|Changes in operating assets and liabilities, net of acquisitions:               |  |                           |        |   |      |   |          |  
|Accounts receivable                                                             |  |                           | (324   | ) |      |   | 138      |  
|Prepaid expenses and other current assets                                       |  |                           | 103    |   |      |   | 132      |  
|Other noncurrent assets                                                         |  |                           | (1     | ) |      |   | 209      |  
|Taxes payable                                                                   |  |                           |       |   |      |   | (4       | )
|Accounts payable and accrued expenses                                           |  |                           | 262    |   |      |   | (471     | )
|Interest payable                                                                |  |                           | (26    | ) |      |   | 5        |  
|Deferred revenue                                                                |  |                           | 327    |   |      |   | 243      |  
|Other noncurrent liabilities                                                    |  |                           | 143    |   |      |   | 66       |  
|Due to Nexstar Broadcasting, Inc.                                               |  |                           | (1,569 | ) |      |   | 492      |  
|                                                                                |  |                           |        |   |      |   |          |  
|Net cash provided by operating activities                                       |  |                           | 1,350  |   |      |   | 1,936    |  
|                                                                                |  |                           |        |   |      |   |          |  
|Cash flows from investing activities:                                           |  |                           |        |   |      |   |          |  
|Additions to property and equipment                                             |  |                           | (647   | ) |      |   | (517     | )
|Proceeds from sale of assets                                                    |  |                           | 10     |   |      |   | 16       |  
|Acquisition of broadcast properties and related transaction costs               |  |                           |      |   |      |   | (6,143   | )
|                                                                                |  |                           |        |   |      |   |          |  
|Net cash used for investing activities                                          |  |                           | (637   | ) |      |   | (6,644   | )
|                                                                                |  |                           |        |   |      |   |          |  
|Cash flows from financing activities:                                           |  |                           |        |   |      |   |          |  
|Proceeds from debt issuance                                                     |  |                           |       |   |      |   | 172,700  |  
|Repayment of long-term debt                                                     |  |                           | (863   | ) |      |   | (172,740 | )
|Payments for debt financing costs                                               |  |                           |       |   |      |   | (790     | )
|                                                                                |  |                           |        |   |      |   |          |  
|Net cash used for financing activities                                          |  |                           | (863   | ) |      |   | (830     | )
|                                                                                |  |                           |        |   |      |   |          |  
|Net decrease in cash and cash equivalents                                       |  |                           | (150   | ) |      |   | (5,538   | )
|                                                                                |  |                          
|Cash and cash equivalents at beginning of period                                |  |                           | 1,404  |   |      |   | 6,981    |  
|                                                                                |  |                           |        |   |      |   |          |  
|Cash and cash equivalents at end of period                                      |  | $                         | 1,254  |   |      | $ | 1,443    |  
|                                                                                |  |                           |        |   |      |   |          |  
|Supplemental schedule of cash flow information:                                 |  |                           |        |   |      |   |          |  
|Cash paid for interest, net                                                     |  | $                         | 5,851  |   |      | $ | 4,206    |  
|                                                                                |  |                          
|Cash paid for income taxes, net                                                 |  | $                         |      |   |      | $ | 11       |  

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



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Organization and Business Operations

As of
June 30, 2006, Mission Broadcasting, Inc. (Mission or the Company) owned and operated 15 television stations, 14 of which are affiliated with the NBC, ABC, CBS, Fox or UPN television networks and one of which is an
independent station, in markets located in New York, Pennsylvania, Illinois, Indiana, Missouri, Texas and Montana. Through local service agreements, Nexstar Broadcasting, Inc. (Nexstar) provides sales and operating services to all of the
Mission television stations (see Note 4).

The Company is highly leveraged, which makes it vulnerable to changes in general economic
conditions. The Company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 its control, as well as Nexstar maintaining its pledge
to continue the local service agreements with the Companys stations.

On January 24, 2006, the owners of UPN and WB announced
that the two television networks will merge to form a new network called The CW. The Company operates one UPN affiliated station located in Wichita Falls, Texas. This station will not be joining The CW network, but instead will become an affiliate
of My Network TV, a new primetime programming network to be launched in September 2006. Management believes the change in affiliation for this station will not have a material impact on the Companys condensed financial position and results of
operations.

2. Summary of Significant Accounting Policies

Basis of Presentation

Certain prior year financial statement amounts have been reclassified
to conform to the current year presentation.

Interim Financial Statements

The condensed financial statements as of June 30, 2006, and for the three and six months ended June 30, 2006 and 2005 are unaudited. However, in
the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of the condensed 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 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. These financial statements should be read in conjunction with the
financial statements and related notes included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2005. The balance sheet at December 31, 2005 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.

Recent
Accounting Pronouncements

In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155,
Accounting for Hybrid Financial Instruments  an amendment to of FASB Statements No. 133 and 140 (SFAS No. 155). SFAS No. 155 provides a fair value measurement option for certain hybrid financial instruments
that contain an embedded derivative that otherwise would require bifurcation. Under SFAS No. 155, an entity must irrevocably elect, on an instrument-by-instrument basis, to apply fair value accounting to a hybrid financial instrument in its
entirety in lieu of separately accounting for the instrument as a host contract and derivative instrument. Additionally, SFAS No. 155 clarifies that both interest-only and principal-only strips are not subject to the provision of SFAS
No. 133 and establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding versus those that are embedded derivatives. SFAS No. 155 is effective for all financial instruments
acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006, which for the Company is January 1, 2007. Earlier adoption is permitted as of the beginning of an entitys fiscal year.
The Company will adopt the provisions of SFAS No. 155 beginning in fiscal 2007. The Company does not intend to issue or acquire the hybrid financial instruments included in the scope of SFAS No. 155 and does not expect the adoption of this
Statement to have a material impact on the Companys condensed financial position or results of operations.

In July 2006, the FASB
issued Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN No. 48). FIN No. 48 clarifies the accounting for uncertainty in income
taxes recognized in the financial statements for tax positions taken or expected to be taken in a tax return. FIN No. 48 requires that a tax position meet a more-likely-than-not threshold for the benefit of an uncertain tax position
to be recognized in the financial statements. Under the



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)

2. Summary of Significant
Accounting Policies-(Continued)

Interpretation, this threshold is met if it is determined that the tax position will be sustained, based on its
technical merits, upon examination by a taxing authority that has full knowledge of all relevant information. A tax position that meets the threshold is measured as the largest amount of benefit that is greater than 50 percent likely of being
recognized upon ultimate settlement. This Interpretation also provides guidance for presentation and disclosure of the tax benefit and other related matters in the financial statements. FIN No. 48 is effective for fiscal years beginning after
December 15, 2006, which is the Companys fiscal year beginning January 1, 2007. Management is currently evaluating the impact the adoption of FIN No. 48 will have on the Companys financial statements.

3. Pending Acquisition

On April 18, 2006,
Nexstar and Mission announced that they had filed an application with the Federal Communications Commission (FCC) for consent for Nexstar to sell KFTA Channel 24 (Ft. Smith, Arkansas) to Mission for $5.6 million. Pending FCC consent, and
upon completion of the sale, Mission intends to provide Fox programming to serve the Ft. Smith-Fayetteville-Springdale-Rogers, Arkansas designated market area. Upon closing the purchase of KFTA, Mission plans to enter into joint sales and shared
services agreements with Nexstars KNWA whereby KNWA will provide local news, sales and other non-programming services to KFTA.

On
May 22, 2006, two subsidiaries of Equity Broadcasting Corporation filed a petition to deny against the KFTA assignment application alleging that Nexstar improperly controls Mission and its stations. On June 6, 2006, Nexstar and Mission
submitted a joint opposition. The FCC is currently in the process of considering the KFTA assignment application. Although management believes that the petition has no merit, it is not possible to predict what action the FCC will take on the
petition to deny, or when it will take such action.

4. Local Service Agreements with Nexstar

Mission has entered into local service agreements with Nexstar to provide sales and operating services to all of Missions stations. Under the terms
of a shared services agreement (SSA), the Nexstar station in the market provides certain services including news production, technical maintenance and security, in exchange for monthly payments from Mission to Nexstar. For each station
that Mission has entered into an SSA, it has also entered into a joint sales agreement (JSA). Under the terms of the JSA, Nexstar sells the advertising time of the Mission station and retains a percentage of the net revenue it generates
in return for monthly payments to Mission of the remaining percentage of net revenue. Under the terms of a time brokerage agreement (TBA), Nexstar programs most of the stations broadcast time, sells the stations advertising
time and retains the advertising revenue it generates in exchange for monthly payments to Mission. JSA and TBA fees generated from, and SSA fees incurred by Nexstar under the agreements described in the table below are reported as Revenue from
Nexstar Broadcasting, Inc. and Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc. in the accompanying condensed statement of operations.

The arrangements under the SSAs and JSAs have had the effect of Nexstar receiving substantially all of the available cash, after debt service costs,
generated by the stations listed in the table. The arrangements under the TBAs have also had the effect of Nexstar receiving substantially all of the available cash generated by the TBA stations listed in the table. Mission anticipates that Nexstar
will continue to receive substantially all of Missions available cash, after payments for debt service costs, generated by the stations listed in the table.

Missions sole shareholder has granted Nexstar a purchase option to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent, for consideration equal to the greater of
(1) seven times the stations 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. Cash flow is defined as income or loss from
operations, plus depreciation and amortization (including amortization of broadcast rights), interest income, non-cash trade and barter expenses, nonrecurring expenses (including time brokerage agreement fees), network compensation payments received
or receivable and corporate management fees, less payments for broadcast rights, non-cash trade and barter revenue and network compensation revenue. These option agreements (which expire on various dates between 2008 and 2014) are freely exercisable
or assignable by Nexstar without consent or approval by Missions sole shareholder.

In order for both Nexstar and Mission to comply
with FCC regulations, Mission maintains complete responsibility for and control over programming, finances, personnel and operations of its stations.



5



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

4. Local Service Agreements with
Nexstar-(Continued)

The following table summarizes the various local service agreements Mission had in effect with Nexstar as of
June 30, 2006:



|                 |  |                              |  |             |  |                   |  |                |  |                                                                                                                         
|---------------- |  | ---------------------------- |  | ----------- |  | ----------------- |  | -------------- |  | ------------------------------------------------------------------------------------------------------------------------
|Station          |  | Market                       |  | Affiliation |  | Type of Agreement |  | Expiration     |  | Consideration received from or paid to Nexstar                                                                          
|                 |  |                              |  |            
|WFXP             |  | Erie, PA                     |  | Fox         |  | TBA               |  | 8/16/11        |  | Monthly payments received from Nexstar(1)                                                                               
|                 |  |                              |  |             | 
|KJTL and KJBO-LP |  | Wichita Falls, TX-Lawton, OK |  | FoxUPN      |  | SSAJSA            |  | 5/31/095/31/09 |  | $60 thousand per month paid to Nexstar(2) 70% of the KJTL/KJBO-LP net revenue collected each month received from Nexstar
|                 |  |                              |  |             | 
|WYOU             |  | Wilkes Barre-Scranton, PA    |  | CBS         |  | SSA               |  | 1/4/08         |  | $110 thousand per month paid to Nexstar(2)                                                                              
|                 |  |                              |  |             |  | JSA               |  | 9/30/14        |  | 70% of the WYOU net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|KODE             |  | Joplin, MO-Pittsburg, KS     |  | ABC         |  | SSA               |  | 3/31/12        |  | $75 thousand per month paid to Nexstar(2)                                                                               
|                 |  |                              |  |             |  | JSA               |  | 9/30/14        |  | 70% of the KODE net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|KRBC             |  | Abilene-Sweetwater, TX       |  | NBC         |  | SSA               |  | 6/12/13        |  | $25 thousand per month paid to Nexstar(2)                                                                               
|                 |  |                              |  |             |  | JSA               |  | 6/30/14        |  | 70% of the KRBC net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|KSAN             |  | San Angelo, TX               |  | NBC         |  | SSA               |  | 5/31/14        |  | $10 thousand per month paid to Nexstar(2)                                                                               
|                 |  |                              |  |             |  | JSA               |  | 5/31/14        |  | 70% of the KSAN net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|WFXW             |  | Terre Haute, IN              |  | Fox         |  | SSA               |  | 5/8/13         |  | $10 thousand per month paid to Nexstar                                                                                  
|                 |  |                              |  |             |  | JSA               |  | 5/8/13         |  | 70% of the WFXW net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|KCIT and         |  | Amarillo, TX                 |  | Fox         |  | SSA               |  | 4/30/09        |  | $50 thousand per month paid to Nexstar(2)                                                                               
|KCPN-LP          |  |                              |  |            |  | JSA               |  | 4/30/09        |  | 70% of the KCIT/KCPN-LP net revenue collected each month received from Nexstar                                          
|                 |  |                              |  |             | 
|KHMT             |  | Billings, MT                 |  | Fox         |  | TBA               |  | 12/13/09       |  | Monthly payments received from Nexstar(1)                                                                               
|                 |  |                              |  |             | 
|KAMC             |  | Lubbock, TX                  |  | ABC         |  | SSA               |  | 2/15/09        |  | $75 thousand per month paid to Nexstar(2)                                                                               
|                 |  |                              |  |             |  | JSA               |  | 2/15/09        |  | 70% of the KAMC net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|KOLR             |  | Springfield, MO              |  | CBS         |  | SSA               |  | 2/15/09        |  | $150 thousand per month paid to Nexstar                                                                                 
|                 |  |                              |  |             |  | JSA               |  | 2/15/09        |  | 70% of the KOLR net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|WUTR             |  | Utica, NY                    |  | ABC         |  | SSA               |  | 3/31/14        |  | $10 thousand per month paid to Nexstar                                                                                  
|                 |  |                              |  |             |  | JSA               |  | 3/31/14        |  | 70% of the WUTR net revenue collected each month received from Nexstar                                                  
|                 |  |                              |  |             | 
|WTVO             |  | Rockford, IL                 |  | ABC         |  | SSA               |  | 10/31/14       |  | $75 thousand per month paid to Nexstar(2)                                                                               
|                 |  |                              |  |             |  | JSA               |  | 10/31/14       |  | 70% of the WTVO net revenue collected each month received from Nexstar                                                  

---

|(1) | Payments are variable based on stations monthly operating expenses.
|--- | --------------------------------------------------------------------

|(2) | SSA was amended effective January 1, 2006.
|--- | ------------------------------------------

Under
these agreements, Mission is responsible for certain operating expenses of its stations and therefore may have unlimited exposure to any potential operating losses. Mission will continue to operate its stations under the SSAs and JSAs or TBAs until
the termination of such agreements. The SSAs and JSAs generally have a term of ten years. Nexstar indemnifies Mission from Nexstars activities pursuant to the local service agreement to which Nexstar is a party.



6



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)

5. Property and Equipment

On February 8, 2006, President Bush signed into law legislation that establishes February 17, 2009 as the deadline for
television broadcasters to complete their transition to digital transmission and return their analog spectrum to the FCC. As a result, the Company reassessed the estimated useful lives of its analog transmission equipment and has accelerated the
depreciation of certain equipment affected by the digital conversion. Equipment having a net book value of approximately $2.4 million as of February 1, 2006, which was previously being depreciated over various remaining useful lives which
extend from 2013 to 2020, is now being depreciated over a remaining useful life of three years. This change will increase annual depreciation expense by approximately $0.6 million. During the three and six months ended June 30, 2006, the
accelerated depreciation of analog transmission equipment increased depreciation expense and net loss by approximately $0.1 million and $0.2 million, respectively.

6. Intangible Assets and Goodwill

Intangible assets subject to amortization consisted of the following:



|                                                |  |                               |               |   |                          |                |   |         |   |       |   |                          |                |   |        |  |   |         |   |  |   |       
|----------------------------------------------- |  | ----------------------------- | ------------- | - | ------------------------ | -------------- | - | ------- | - | ----- | - | ------------------------ | -------------- | - | ------ |  | - | ------- | - |  | - | ------
|                                                |  | Estimated useful life (years) |               |   |                          |               
|                                                |  |                               | June 30, 2006 |   | December 31, 2005       
|                                                |  |                               | Gross         |   | Accumulated Amortization |                |   | Net     |   | Gross |   | Accumulated Amortization |                |   | Net   
|                                                |  |                               |               |   |                          | (in thousands) |   |         |   |       |   |                          | (in thousands) |   |        | 
|Network affiliation agreements                  |  | 15                            |               | $ | 66,744                   |                | $ | (28,881 | ) |       | $ | 37,863                   |                | $ | 66,744 |  | $ | (26,657 | ) |  | $ | 40,087
|Other definite-lived intangible assets          |  | 1-15                          |               |   | 14,117                   |                |   | (7,081  | ) |       |   | 7,036                    |                |   | 14,117 |  |   | (6,607  | ) |  |   | 7,510 
|                                                |  |                               |               |   |                          |                |   |         |   |       |   |                          |                |   |        |  |   |         |   |  |   |       
|Total intangible assets subject to amortization |  |                               |               | $ | 80,861                   |                | $ | (35,962 | ) |       | $ | 44,899                   |                | $ | 80,861 |  | $ | (33,264 | ) |  | $ | 47,597
|                                                |  |                               |               |   |                          |                |   |         |   |       |   |                          |                |   |        |  |   |         |   |  |   |       

The aggregate carrying value of indefinite-lived intangibles, consisting of FCC licenses and
goodwill, was $45.4 million at both June 30, 2006 and December 31, 2005. Indefinite-lived intangible assets are not subject to amortization, but are tested for impairment annually or whenever events or changes in circumstances indicate
that such assets might be impaired. As of June 30, 2006, the Company did not identify any events that would trigger an impairment assessment.

The change in the carrying amount of goodwill for the periods ended June 30, 2006 and December 31, 2005 was as follows:



|                  |  |                |        |                  |   |       
|----------------- |  | -------------- | ------ | ---------------- | - | ------
|                  |  | June 30,2006   |        | December 31,2005
|                  |  | (in thousands)
|Beginning balance |  | $              | 16,651 |                  | $ | 16,307
|Acquisitions      |  |                |      |                  |   | 344   
|                  |  |                |        |                  |   |       
|Ending balance    |  | $              | 16,651 |                  | $ | 16,651
|                  |  |                |        |                  |   |       

The consummation of the acquisition of WTVO during 2005 increased goodwill by approximately $0.3
million.

Total amortization expense from definite-lived intangibles was $1.3 million and $1.5 million for the three months ended
June 30, 2006 and 2005, respectively, and was $2.7 million and $3.2 million for the six months ended June 30, 2006 and 2005, respectively. The Companys estimate of amortization expense for definite-lived intangible assets recorded on
its books as of June 30, 2006 is approximately $5 million for each year for the years of 2006 through 2010.

7. Debt

Long-term debt consisted of the following:



|                      |  |                |         |   |                  |   |         |  
|--------------------- |  | -------------- | ------- | - | ---------------- | - | ------- | -
|                      |  | June 30,2006   |         |   | December 31,2005 |  
|                      |  | (in thousands) |        
|Term loans            |  | $              | 171,405 |   |                  | $ | 172,268 |  
|                      |  |               
|Less: current portion |  |                | (1,727  | ) |                  |   | (1,727  | )
|                      |  |                |         |   |                  |   |         |  
|                      |  | $              | 169,678 |   |                  | $ | 170,541 |  
|                      |  |                |         |   |                  |   |         |  



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS-(Continued)

7. Debt-(Continued)

Senior Secured Credit Facility

The Mission senior secured credit facility (the Mission Facility) consists of a Term Loan B and a $47.5 million revolving loan. As of June 30, 2006 and December 31, 2005, Mission had $171.4
million and $172.3 million, respectively, outstanding under its Term Loan B and no borrowings were outstanding under its revolving loan.

The Term Loan B, which matures in October 2012, is payable in consecutive quarterly installments amortized at 0.25% quarterly, which commenced on December 30, 2005, with the remaining 93.25% due at maturity. The revolving loan is
not subject to incremental reduction and matures in April 2012.

The total weighted-average interest rate of the Mission Facility was 7.25%
and 6.28% at June 30, 2006 and December 31, 2005, respectively. Interest is payable periodically based on the type of interest rate selected. Additionally, Mission is required to pay quarterly commitment fees on the unused portion of its
revolving loan commitment ranging from 0.375% to 0.50% per annum, based on the consolidated senior leverage ratio of Nexstar and Mission for that particular quarter.

Unused Commitments and Borrowing Availability

As of June 30, 2006, there were
approximately $47.5 million of unused commitments under Missions senior secured credit facility. As of June 30, 2006, there was approximately $28.4 million of total available borrowings that could be drawn under the Nexstar and Mission
senior secured credit facilities.

Collateralization and Guarantees of Debt

Nexstar Broadcasting Group, Inc. (Nexstars ultimate parent) and its subsidiaries guarantee full payment of all obligations under Missions bank
credit facility in the event of its default. Similarly, Mission is a guarantor of Nexstars bank credit facility and the senior subordinated notes issued by Nexstar. The bank credit facilities are collateralized by a security interest in
substantially all the combined assets, excluding FCC licenses, of Nexstar and Mission.

Debt Covenants

Missions bank credit facility agreement does not contain financial covenant ratio requirements, but does provide for default in the event Nexstar
does not comply with all covenants contained in its credit agreement.

8. Income Taxes

The Companys provision for income taxes is primarily comprised of deferred income taxes created by an increase in the deferred tax liabilities
position during the year resulting from the amortization of goodwill and other indefinite-lived intangible assets for income tax purposes which are not amortized for financial reporting purposes. These deferred tax liabilities do not reverse on a
scheduled basis and are not used to support the realization of deferred tax assets. The Companys deferred tax assets primarily result from federal and state net operating loss carryforwards (NOLs). The Companys NOLs are
available to reduce future taxable income if utilized before their expiration. The Company has provided a valuation allowance for certain deferred tax assets as it believes they may not be realized through future taxable earnings.

On May 18, 2006, the State of Texas enacted legislation to change its existing franchise tax from a tax based on taxable capital or earned surplus
to a new tax based on modified gross revenue (Margin Tax). The current Texas franchise tax structure will remain in existence until the end of 2006. Beginning in 2007, the Margin Tax imposes a 1% tax on revenues, less certain costs, as
specified in the legislation, generated from Texas activities. Additionally, the legislation provides a temporary credit for Texas business loss carryovers existing through 2006 to be used as an offset to the Margin Tax. In accordance with FASB
Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, the Company has recalculated its deferred tax assets and liabilities based on the change in tax law. The effect of the Margin Tax and temporary credit
decreased the Companys net deferred tax liabilities position resulting in approximately a $0.1 million reduction in the deferred state income tax provision for the three and six months ended June 30, 2006.



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)

9. Management Agreement

Missions sole shareholder and his spouse are parties to a management services agreement. Under this agreement, Mission pays its
sole shareholder up to $0.375 million per year for certain management services and pays his spouse by the hour for certain management services. Pursuant to the management services agreement, Mission paid compensation to its sole shareholder in the
amount of $0.1 million for each of the three months ended June 30, 2006 and 2005, and $0.2 million for each of the six months ended June 30, 2006 and 2005, which is included in selling, general and administrative expenses in the
Companys condensed statement of operations.

10. FCC Regulatory Matters

Television broadcasting is subject to the jurisdiction of the 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. The FCCs ongoing rule making
proceedings could have a significant future impact on the television industry and on the operation of the Companys stations. In addition, the U.S. Congress may act to amend the Communications Act in a manner that could impact the
Companys stations and the television broadcast industry in general.

Some of the more significant FCC regulatory matters impacting
the Companys operations are discussed below.

Digital Television (DTV) Conversion

FCC regulations required all commercial television stations in the United States to commence digital operations on a schedule determined by
the FCC and Congress, in addition to continuing their analog operations. All of the television stations we own and operate are broadcasting at least a low-power digital television signal and three television stations (WUTR, WTVO and WYOU) are
broadcasting with full-power digital television signals. The conversion to digital transmission required an average initial capital expenditure of $0.2 million per station for low-power transmission of a digital signal. Digital conversion
expenditures were $0.6 million and $0.4 million, respectively, for the six months ended June 30, 2006 and 2005.

On February 8,
2006, President Bush signed into law legislation that establishes February 17, 2009 as the deadline for television broadcasters to complete their transition to digital transmission and return their analog spectrum to the FCC. See Note 5 for a
discussion of the impact this new legislation is expected to have on the estimated useful lives of certain broadcasting equipment of the Company.

Full-Power DTV Facilities Construction

The FCC established dates by which all television stations were
required to be broadcasting a full-power DTV signal. As of June 30, 2006, Missions stations WUTR, WTVO and WYOU are transmitting full-power digital signals. Stations that were not able to comply with full-power DTV broadcasting dates were
permitted to request an extension of time from the FCC to complete the build-out of their DTV facilities. Mission filed a request for extension of time to construct full-power DTV facilities for its remaining stations. The FCC has not yet acted on
this request for extension of time.

The Company will incur various capital expenditures to modify its remaining stations DTV
transmitting equipment for full-power digital signal transmission, including costs for the transmitter, transmission line, antenna and installation, and estimated costs for tower upgrades and/or modifications. The Company anticipates these
expenditures will be funded through available cash on hand and cash generated from operations as incurred in future years.

Media
Ownership

On June 21, 2006, the FCC initiated a rulemaking proceeding seeking comment on how to address the issues
raised by the U.S. Court of Appeals for the Third Circuit in Prometheus v. FCC, which stayed and remanded several media ownership rules that the Commission had adopted in June 2003. The proceeding also opens a comprehensive
review of all of the media ownership rules, as required by the Communications Act. The Commission is considering rules relating to ownership of two or more TV stations in a market, ownership of local TV and radio stations by daily newspapers in the
same market, cross-ownership of local TV and radio stations, and changes to how the national TV ownership limits are calculated. The proceeding, which will include several public hearings to be held throughout the country, will likely extend into
2007. At this time, it is not possible to predict the outcome of any changes, if any, to the FCCs media ownership rules.



9



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)

11. Commitments and
Contingencies

Guarantees of Nexstar Debt

Mission is a guarantor of and has pledged substantially all its assets, excluding FCC licenses, to guarantee Nexstars bank credit facility. Nexstars bank credit facility, which matures in 2012, consists of
a Term Loan B and a $50.0 million revolving loan.

Mission is also a guarantor of $200.0 million of 7% senior subordinated notes (7%
Notes) due 2014 issued by Nexstar. The 7% Notes are general unsecured senior subordinated obligations subordinated to all of Missions senior debt.

Mission guarantees full payment of all obligations incurred under Nexstars bank credit facility agreement and senior subordinated notes. In the event that Nexstar is unable to repay amounts due under these debt
obligations, Mission will be obligated to repay such amounts. The maximum potential amount of future payments that Mission would be required to make under these guarantees would be generally limited to the amount of borrowings outstanding under
Nexstars bank credit facility and the 7% Notes. At June 30, 2006, Nexstar had issued an aggregate principal amount of $200.0 million of senior subordinated notes and had $166.5 million outstanding under its bank credit facility.

Purchase Options Granted to Nexstar

In consideration of Nexstar Broadcasting Groups guarantee of Missions bank credit facility, Missions sole shareholder has granted Nexstar a purchase option to acquire the assets and assume the
liabilities of each Mission station, subject to FCC consent, for consideration equal to the greater of (1) seven times the stations 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. Cash flow is defined as income or loss from operations, plus depreciation and amortization (including amortization of broadcast rights), interest income, non-cash trade and barter
expenses, nonrecurring expenses (including time brokerage agreement fees), network compensation payments received or receivable and corporate management fees, less payments for broadcast rights, non-cash trade and barter revenue and network
compensation revenue. These option agreements (which expire on various dates between 2008 and 2014) are freely exercisable or assignable by Nexstar without consent or approval by Missions sole shareholder.

Indemnification Obligations

In connection with certain agreements that the Company enters into in the normal course of its business, including local service agreements, business acquisitions and borrowing arrangements, the Company enters into contractual arrangements
under which the Company agrees to indemnify the third party to such arrangement from losses, claims and damages incurred by the indemnified party for certain events as defined within the particular contract. Such indemnification obligations may not
be subject to maximum loss clauses and the maximum potential amount of future payments the Company could be required to make under these indemnification arrangements may be unlimited. Historically, payments made related to these indemnifications
have been immaterial and 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 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 position or results of operations.



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##### Table of Contents

ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed balance sheet as of June 30, 2006, unaudited condensed statements of operations for the three and six months ended June 30, 2006 and
2005, unaudited condensed statements of cash flows for the six months ended June 30, 2006 and 2005 and related notes included elsewhere in this Quarterly Report on Form 10-Q and the financial statements contained in our Annual Report on Form
10-K for the year ended December 31, 2005.

Executive Summary

Overview of Operations

As of June 30, 2006, we owned and operated 15 television
stations. We have local service agreements with certain television stations owned by Nexstar Broadcasting, Inc. (Nexstar), through which Nexstar provides various programming, sales or other services to our television stations. In order
for both Nexstar and us to comply with Federal Communications Commission (FCC) regulations, we maintain complete responsibility for and control over programming, finances, personnel and operations of our stations.

The following table summarizes the various local service agreements our stations had in effect as of June 30, 2006 with Nexstar-owned stations:



|                   |  |                                                                                      
|------------------ |  | -------------------------------------------------------------------------------------
|Service Agreements |  | Stations                                                                             
|TBA Only(1)        |  | WFXP and KHMT                                                                        
|SSA & JSA(2)       |  | KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC, KRBC, KSAN, WUTR, WFXW, WYOU, KODE and WTVO

---

|(1) | We have a time brokerage agreement (TBA) for each of these stations which allows Nexstar to program most of each stations broadcast time, sell each stations
advertising time and retain the advertising revenue generated in exchange for monthly payments to us.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We have both a shared services agreement (SSA) and a joint services agreement (JSA) for each of these stations. The SSA allows the sharing of services
including news production, technical maintenance and security, in exchange for Nexstars right to receive certain payments from us as described in the SSAs. The JSAs permit Nexstar to sell and retain a percentage of the net revenue from the
stations advertising time in return for monthly payments to us of the remaining percentage of the net revenue, as described in the JSAs.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The arrangements under the SSAs and JSAs have had the effect of Nexstar receiving substantially all of the available cash, after debt service costs, generated by the stations listed above. The arrangements under the
TBAs have the effect of Nexstar receiving substantially all of the available cash generated by the TBA stations listed above. Mission anticipates that Nexstar will continue to receive substantially all of Missions available cash, after
payments for debt service costs, generated by the stations listed above. For more information about our local service agreements with Nexstar, refer to Note 4 of our condensed financial statements in Part I, Item 1 of this Quarterly Report on
Form 10-Q.

Nexstar Broadcasting Group, Inc. and its subsidiaries (Nexstar Broadcasting Group) guarantee the obligations
incurred under our senior credit facility. We are a guarantor of the senior credit facility entered into by Nexstar and the senior subordinated notes issued by Nexstar. In consideration of Nexstars guarantee of our senior credit facility, our
sole shareholder has granted Nexstar purchase options to acquire the assets and assume the liabilities of each of our television stations, subject to FCC consent. These option agreements (which expire on various dates between 2008 and 2014) are
freely exercisable or assignable by Nexstar without consent or approval by our sole shareholder.

Recent Developments

As of June 30, 2006, we have completed multi-year retransmission consent agreements with all of the content distributors which
carry our stations signals in all 13 markets in which we broadcast.

On April 18, 2006, we and Nexstar announced that we had
filed an application with the FCC for consent for Nexstar to sell KFTA Channel 24 (Ft. Smith, Arkansas) to us for $5.6 million. Pending FCC consent, and upon completion of the sale, we intend to provide Fox programming to serve the Ft.
Smith-Fayetteville-Springdale-Rogers, Arkansas designated market area. Upon closing the purchase of KFTA, we plan to enter into joint sales and shared services agreements with Nexstars KNWA whereby KNWA will provide local news, sales and other
non-programming services to KFTA.

On May 22, 2006, two subsidiaries of Equity Broadcasting Corporation filed a petition to deny
against the KFTA assignment application alleging that Nexstar improperly controls us and our stations. On June 6, 2006, we and Nexstar submitted a joint opposition. The FCC is currently in the process of considering the KFTA assignment
application. Although management believes that the petition has no merit, it is not possible to predict what action the FCC will take on the petition to deny, or when it will take such action.



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##### Table of Contents

Historical Performance

Revenue

The following table sets forth the principal types of revenue earned by our stations
for the periods indicated and each type of revenue (other than barter revenue and revenue from Nexstar Broadcasting, Inc.) as a percentage of total gross revenue:



|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      
|--------------------------------------- |  | ---------------------------------- | ----- | ---------------------------------- | ----- | ------ | - | ----- |  | ------ |  | - | ------ | ------ | ----- | - | - | ------ |  | -----
|                                        |  | Three Months Ended June 30,        |       | Six Months Ended June 30,         
|                                        |  | 2006                               |       | 2005                               |       | 2006   |   | 2005 
|                                        |  | Amount                             |       | %                                  |       | Amount |   | %     |  | Amount |  | % |        | Amount |       | %
|                                        |  | (in thousands, except percentages) |       | (in thousands, except percentages)
|Network compensation                    |  | $                                  | 371   |                                    | 41.9  |        | $ | 333   |  | 61.9   |  | $ | 715    |        | 41.2  |   | $ | 903    |  | 70.9 
|Retransmission compensation             |  |                                    | 488   |                                    | 55.2  |        |   | 179   |  | 33.3   |  |   | 963    |        | 55.4  |   |   | 316    |  | 24.8 
|Other                                   |  |                                    | 26    |                                    | 2.9   |        |   | 26    |  | 4.8    |  |   | 59     |        | 3.4   |   |   | 55     |  | 4.3  
|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      
|Total gross revenue                     |  |                                    | 885   |                                    | 100.0 |        |   | 538   |  | 100.0  |  |   | 1,737  |        | 100.0 |   |   | 1,274  |  | 100.0
|Barter revenue                          |  |                                    | 494   |                                    |       |        |   | 611   |  |        |  |   | 1,011  |        |       |   |   | 1,301  |  |      
|Revenue from Nexstar Broadcasting, Inc. |  |                                    | 7,808 |                                    |       |        |   | 7,287 |  |        |  |   | 14,784 |        |       |   |   | 13,965 |  |      
|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      
|Net revenue                             |  | $                                  | 9,187 |                                    |       |        | $ | 8,436 |  |        |  | $ | 17,532 |        |       |   | $ | 16,540 |  |      
|                                        |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |   |        |  |      

Results of Operations

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



|                                                                                   |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |         |  |       |  |  |  | 
|---------------------------------------------------------------------------------- |  | ---------------------------------- | ----- | ---------------------------------- | ----- | ------ | - | ----- |  | ------ |  | - | ------ | ------ | ----- | - | ------- |  | ----- |  |  |  | 
|                                                                                   |  | Three Months Ended June 30,        |       | Six Months Ended June 30,         
|                                                                                   |  | 2006                               |       | 2005                               |       | 2006   |   | 2005 
|                                                                                   |  | Amount                             |       | %                                  |       | Amount |   | %     |  | Amount |  | % |        | Amount |       | %
|                                                                                   |  | (in thousands, except percentages) |       | (in thousands, except percentages)
|Net revenue                                                                        |  | $                                  | 9,187 |                                    | 100.0 |        | $ | 8,436 |  | 100.0  |  | $ | 17,532 |        | 100.0 |   | $16,540 |  | 100.0
|Operating expenses:                                                                |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |         |  |      
|Corporate expenses                                                                 |  |                                    | 248   |                                    | 2.7   |        |   | 202   |  | 2.4    |  |   | 402    |        | 2.3   |   | 353     |  | 2.1  
|Station direct operating expenses, net of trade                                    |  |                                    | 1,165 |                                    | 12.7  |        |   | 1,022 |  | 12.1   |  |   | 2,304  |        | 13.1  |   | 2,035   |  | 12.3 
|Selling, general and administrative expenses                                       |  |                                    | 341   |                                    | 3.7   |        |   | 338   |  | 4.0    |  |   | 688    |        | 3.9   |   | 673     |  | 4.1  
|Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc. |  |                                    | 1,950 |                                    | 21.2  |        |   | 2,850 |  | 33.8   |  |   | 3,900  |        | 22.2  |   | 5,700   |  | 34.5 
|Loss on asset disposal, net                                                        |  |                                    |      |                                    |      |        |   | 4     |  |       |  |   | 7      |        |      |   | 53      |  | 0.3  
|Barter expense                                                                     |  |                                    | 494   |                                    | 5.4   |        |   | 611   |  | 7.2    |  |   | 1,011  |        | 5.8   |   | 1,301   |  | 7.9  
|Depreciation and amortization                                                      |  |                                    | 2,222 |                                    | 24.2  |        |   | 2,227 |  | 26.4   |  |   | 4,352  |        | 24.8  |   | 4,572   |  | 27.6 
|Amortization of broadcast rights, excluding barter                                 |  |                                    | 374   |                                    | 4.1   |        |   | 439   |  | 5.2    |  |   | 802    |        | 4.6   |   | 932     |  | 5.6  
|                                                                                   |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |         |  |       |  | 
|Income from operations                                                             |  | $                                  | 2,393 |                                    |       |        | $ | 743   |  |        |  | $ | 4,066  |        |       |   | $921    |  |      
|                                                                                   |  |                                    |       |                                    |       |        |   |       |  |        |  |   |        |        |       |   |         |  |       |  | 

Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005.

Revenue

Net revenue for the
three months ended June 30, 2006, increased by $0.8 million, or 8.9% from the same period of 2005. This increase was primarily attributed to the increases in revenue from Nexstar and retransmission compensation. As of January 1, 2005, we
receive no advertising revenue because Nexstar sells all of the advertising time of our stations.

Retransmission compensation was $0.5
million for the three months ended June 30, 2006, compared to $0.2 million for the same period in 2005, an increase of $0.3 million, or 172.6%. The increase in retransmission compensation was primarily the result of a significant increase in
the number of retransmission consent agreements with compensation terms entered into with content distributors that provide for cash compensation, the majority of which were completed in late 2005.

Revenue from Nexstar was $7.8 million for the three months ended June 30, 2006, compared to $7.3 million for the same period in 2005, an increase of
$0.5 million, or 7.1%. The increase was primarily attributed to an increase in the net revenue that Nexstar generated from selling all of the advertising of our stations, which in turn increased the revenue we earned from Nexstar through the JSAs.

Operating Expenses

Corporate expenses, related to costs associated with the centralized management of our stations, were $0.2 million for both the three months ended June 30, 2006 and 2005.



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Station direct operating expenses, consisting primarily of news, engineering and programming, and
selling, general and administrative expenses, net of trade, increased by $0.1 million, or 10.7% for the three months ended June 30, 2006, compared to the same period in 2005. The increase was primarily due to higher programming costs relating
to fees attributed to the renewal of network affiliation agreements, along with an increase in fees for news services provided by the networks.

Fees incurred pursuant to local service agreements with Nexstar relate to fees for services provided by Nexstar for the production of newscasts, technical maintenance, promotional and administrative support. For the three months ended
June 30, 2006, these expenses decreased $0.9 million, or 31.6% from the same period in 2005. The decrease was primarily attributed to the amendment of certain SSAs effective January 1, 2006, which decreased our payments to Nexstar.

Amortization of broadcast rights, excluding barter, for the three months ended June 30, 2006, decreased by $0.1 million, or 14.8%
from the same period in 2005. The decrease was primarily attributed to broadcast rights being replaced with negotiated lower cost of broadcast programming.

Amortization of intangible assets for the three months ended June 30, 2006, decreased by $0.2 million, or 11.8% compared to the same period in 2005. The decrease was primarily the result of intangible assets at
certain stations becoming fully amortized.

Depreciation of property and equipment for the three months ended June 30, 2006, increased
by $0.2 million, or 25.1%, compared to the same period in 2005. The increase was primarily attributed to accelerating the depreciation of certain assets due to the Companys reassessment of their estimated remaining useful lives.

Income from Operations

Income
from operations was $2.4 million for the three months ended June 30, 2006, compared to $0.7 million for the same period of 2005, an increase of $1.7 million, or 222.1%. The increase in income from operations for the three months ended
June 30, 2006 was primarily attributed to the increase in total net revenue and decrease in fees incurred pursuant to local service agreements with Nexstar, as discussed above.

Interest Expense

Interest
expense, including amortization of debt financing costs, increased by $0.9 million, or 44.1%, for the three months ended June 30, 2006, compared to the same period in 2005. The increase in interest expense was primarily attributed to higher
interest rates in 2006 under our senior credit facility.

Loss on Extinguishment of Debt

Loss on extinguishment of debt of $0.5 million for the three months ended June 30, 2005 consisted of the write off of $0.1 million of previously
capitalized debt financing costs and $0.4 million of transaction costs related to the refinancing of our senior secured credit facility in April 2005.

Income Taxes

Income taxes were $0.2 million for the three months ended June 30, 2006,
compared to $0.3 million for the same period in 2005, a decrease of $0.1 million, or 36.2%. The decrease in income taxes was primarily due to a $0.1 million reduction in our net deferred tax liabilities position resulting from enactment of the new
Texas Margin Tax in the second quarter of 2006. Our provision for income taxes is primarily created by an increase in the deferred tax liabilities position during the year arising from the amortizing of goodwill and other indefinite-lived intangible
assets for income tax purposes which are not amortized for financial reporting purposes. This expense has no impact on our cash flows. No tax benefit was recorded with respect to the losses for 2006 and 2005, as the utilization of such losses is not
likely to be realized in the foreseeable future.

Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005.

Revenue

Net revenue for the six months ended June 30, 2006, increased by $1.0 million, or 6.0% from the same period of 2005. This increase was primarily attributed to the increases in revenue from Nexstar and retransmission compensation. As of
January 1, 2005, we receive no advertising revenue because Nexstar sells all of the advertising time of our stations.

Retransmission
compensation was $1.0 million for the six months ended June 30, 2006, compared to $0.3 million for the same period in 2005, an increase of $0.7 million, or 204.7%. The increase in retransmission compensation was primarily the result of a
significant increase in the number of retransmission consent agreements with compensation terms entered into with content distributors that provide for cash compensation, the majority of which were completed in late 2005.



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Revenue from Nexstar was $14.8 million for the six months ended June 30, 2006, compared to $14.0
million for the same period in 2005, an increase of $0.8 million, or 5.9%. The increase was primarily attributed to an increase in the net revenue that Nexstar generated from selling all of the advertising of our stations, which in turn increased
the revenue we earned from Nexstar through the JSAs.

Operating Expenses

Corporate expenses, related to costs associated with the centralized management of our stations, were $0.4 million for both the six months ended
June 30, 2006 and 2005.

Station direct operating expenses, consisting primarily of news, engineering and programming, and selling,
general and administrative expenses, net of trade, increased by $0.3 million, or 10.5% for the six months ended June 30, 2006, compared to the same period in 2005. The increase was primarily due to higher programming costs relating to fees
attributed to the renewal of network affiliation agreements, along with an increase in fees for news services provided by the networks.

Fees incurred pursuant to local service agreements with Nexstar relate to fees for services provided by Nexstar for the production of newscasts, technical maintenance, promotional and administrative support. For the six months ended
June 30, 2006, these expenses decreased $1.8 million, or 31.6% from the same period in 2005. The decrease was primarily attributed to the amendment of certain SSAs effective January 1, 2006, which decreased our payments to Nexstar.

Amortization of broadcast rights, excluding barter, for the six months ended June 30, 2006, decreased by $0.1 million, or 13.9% from
the same period in 2005. The decrease was primarily attributed to broadcast rights being replaced with negotiated lower cost of broadcast programming.

Amortization of intangible assets for the six months ended June 30, 2006, decreased by $0.5 million, or 14.9% compared to the same period in 2005. The decrease was primarily the result of intangible assets at
certain stations becoming fully amortized.

Depreciation of property and equipment for the six months ended June 30, 2006, increased
by $0.3 million, or 18.1%, compared to the same period in 2005. The increase was primarily attributed to accelerating the depreciation of certain assets due to the Companys reassessment of their estimated remaining useful lives.

Income from Operations

Income
from operations was $4.1 million for the six months ended June 30, 2006, compared to $0.9 million for the same period of 2005, an increase of $3.2 million, or 341.5%. The increase in income from operations for the six months ended June 30,
2006 was primarily attributed to the increase in total net revenue and decrease in fees incurred pursuant to local service agreements with Nexstar, as discussed above.

Interest Expense

Interest expense, including amortization of debt financing costs, increased
by $1.7 million, or 40.9%, for the six months ended June 30, 2006, compared to the same period in 2005. The increase in interest expense was primarily attributed to higher interest rates in 2006 under our senior credit facility.

Loss on Extinguishment of Debt

Loss on extinguishment of debt of $0.5 million for the six months ended June 30, 2005 consisted of the write off of $0.1 million of previously capitalized debt financing costs and $0.4 million of transaction costs related to the
refinancing of our senior secured credit facility in April 2005.

Income Taxes

Income taxes were $0.6 million for the six months ended June 30, 2006, compared to $0.7 million for the same period in 2005, a decrease of $0.1
million, or 18.6%. The decrease in income taxes was primarily due to a $0.1 million reduction in our net deferred tax liabilities position resulting from enactment of the new Texas Margin Tax in the second quarter of 2006. Our provision for income
taxes is primarily created by an increase in the deferred tax liabilities position during the year arising from the amortizing of goodwill and other indefinite-lived intangible assets for income tax purposes which are not amortized for financial
reporting purposes. This expense has no impact on our cash flows. No tax benefit was recorded with respect to the losses for 2006 and 2005, as the utilization of such losses is not likely to be realized in the foreseeable future.



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Liquidity and Capital Resources

We are highly leveraged, which makes us vulnerable to changes in general economic conditions. Our ability to meet the future cash requirements described below depends on our ability to generate cash in the future,
which is subject to general economic, financial, competitive, legislative, regulatory and other conditions, many of which are beyond our control. On March 8, 2006, Nexstar represented to us that it will continue the various local service
agreements under which it provides sales and other services to our television stations thereby providing financial support to enable us to continue to operate as a going concern. We believe that our available cash, the residual cash flows we retain
under the local service agreements with Nexstar and available borrowings under our senior credit facility should be sufficient to fund working capital, capital expenditure requirements, interest payments and scheduled debt principal payments for at
least the next twelve months. In order to meet future cash needs we may, from time to time, borrow under our available credit facility. We will continue to evaluate the best use of our operating cash flow among capital expenditures, acquisitions and
debt reduction.

Overview

The following tables present summarized financial information management believes is helpful in evaluating the Companys liquidity and capital resources:



|                                                   |  |                           |         |   |                  |   |         |  
|-------------------------------------------------- |  | ------------------------- | ------- | - | ---------------- | - | ------- | -
|                                                   |  | Six Months Ended June 30, |        
|                                                   |  | 2006                      |         |   | 2005             |  
|                                                   |  | (in thousands)            |        
|Net cash provided by operating activities          |  | $                         | 1,350   |   |                  | $ | 1,936   |  
|Net cash used for investing activities             |  |                           | (637    | ) |                  |   | (6,644  | )
|Net cash used for financing activities             |  |                           | (863    | ) |                  |   | (830    | )
|                                                   |  |                           |         |   |                  |   |         |  
|Net decrease in cash and cash equivalents          |  | $                         | (150    | ) |                  | $ | (5,538  | )
|                                                   |  |                           |         |   |                  |   |         |  
|Cash paid for interest, net                        |  | $                         | 5,851   |   |                  | $ | 4,206   |  
|Cash paid for income taxes, net                    |  | $                         |        |   |                  | $ | 11      |  
|                                                   |  |                          
|                                                   |  | June 30,2006              |         |   | December 31,2005 |  
|                                                   |  | (in thousands)            |        
|Cash and cash equivalents                          |  | $                         | 1,254   |   |                  | $ | 1,404   |  
|Long-term debt including current portion           |  | $                         | 171,405 |   |                  | $ | 172,268 |  
|Unused commitments under senior credit facility(1) |  | $                         | 47,500  |   |                  | $ | 47,500  |  

---

|(1) | As of June 30, 2006, there was approximately $28.4 million of total available borrowings that could be drawn under the Nexstar and Mission senior secured credit facilities.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cash Flows  Operating Activities

The comparative net cash flows provided by operating activities decreased by $0.6 million during the six months ended June 30, 2006 compared to the
same period in 2005. The decrease was primarily due to the timing of payments made to Nexstar.

Cash paid for interest increased by $1.6
million during the six months ended June 30, 2006 compared to the same period in 2005 due to higher interest rates in 2006 under our senior credit facility.

Due to our recent history of net operating losses, we currently do not pay any federal income taxes. These net operating losses may be carried forward, subject to expiration and certain limitations, and used to
reduce taxable earnings in future years. Through the use of available loss carryforwards, it is possible that we may not pay significant amounts of federal income taxes in the foreseeable future.

Cash Flows  Investing Activities

The comparative net cash used for investing activities decreased by $6.0 million during the six months ended June 30, 2006 compared to the same period in 2005. Cash flows from investing activities consist primarily of cash used for
capital additions and station acquisitions. The decrease was due to a decrease in acquisition related payments.

Capital
expenditures were $0.6 million for the six months ended June 30, 2006, compared to $0.5 million for the six months ended June 30, 2005. The increase was primarily attributable to digital conversion expenditures, which increased from $0.4
million for the six months ended June 30, 2005 to $0.6 million for the same period in 2006.

There was no cash
used for station acquisitions for the six months ended June 30, 2006, compared to $6.1 million for the six months ended June 30, 2005. Acquisition related payments for the six months ended June 30, 2005 included the remaining payment
of $5.75 million, exclusive of transaction costs, for the acquisition of WTVO.



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Cash Flows  Financing Activities

There was no change for the comparative net cash flows used for financing activities for the six months ended June 30, 2006 compared to the same
period in 2005, as the increase in repayments of term loans during 2006 under our senior secured credit facility was offset by payments of debt financing costs of $0.8 million made in connection with the April 2005 refinancing of our senior secured
credit facility.

The April 2005 refinancing of our senior credit facility provided net cash proceeds of $0.3 million, before the payment
of transaction fees and expenses, consisting of gross proceeds obtained under senior credit facility term loans of $172.7 million and the repayments of previous senior credit facility term and revolving borrowings of $172.4 million.

There were $0.9 million of scheduled term loan maturities for the six months ended June 30, 2006, compared to $0.4 million for the six months ended
June 30, 2005, an increase of $0.5 million.

Although our senior credit facility now allows for the payment of cash dividends, we do
not currently intend to declare or pay a cash dividend.

Future Sources of Financing and Debt Service Requirements

As of June 30, 2006, we had debt of $171.4 million, which represented 214.1% of our total capitalization. Our high level of
debt requires that a substantial portion of cash flow be dedicated to pay principal and interest on debt which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes.

The following table summarizes the approximate aggregate amount of principal indebtedness scheduled to mature for the periods referenced as of
June 30, 2006:



|                          |  |       |         |                  |   |           |  |           |       |            |   |       |  |   |        
|------------------------- |  | ----- | ------- | ---------------- | - | --------- |  | --------- | ----- | ---------- | - | ----- |  | - | -------
|                          |  | Total |         | Remainderof 2006 |   | 2007-2008 |  | 2009-2010 |       | Thereafter
|                          |  |       |         | (in thousands)   |   |          
|Senior credit facility(1) |  | $     | 171,405 |                  | $ | 864       |  | $         | 3,454 |            | $ | 3,454 |  | $ | 163,633

---

|(1) | Quarterly principal payments under our senior credit facility term loan commenced on December 30, 2005.
|--- | -------------------------------------------------------------------------------------------------------

Interest payments on our senior credit facility are generally paid every one to three months and are payable based on the type of interest rate selected.

The terms of our senior credit facility limit, but do not prohibit us from incurring substantial amounts of additional debt in the future.

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.

Collateralization and Guarantees of Debt

Nexstar Broadcasting Group, Inc. (Nexstars
ultimate parent) and its subsidiaries guarantee full payment of all obligations under our bank credit facility in the event of our default. Similarly, we are a guarantor of Nexstars bank credit facility and the senior subordinated notes issued
by Nexstar. The bank credit facilities are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, of Nexstar and us. As of June 30, 2006, Nexstar has a maximum commitment of $216.5 million under
its bank credit facility, of which $166.5 million of debt is outstanding, and had issued an aggregate principal amount of $200.0 million of senior subordinated notes.

Debt Covenants

Our bank credit facility agreement does not contain financial covenant ratio
requirements, but does provide for default in the event Nexstar does not comply with all covenants contained in its credit agreement.

Cash Requirements for Digital Television (DTV) Conversion

It will be expensive to convert our stations
from the current analog format to the digital broadcast format. This conversion required an average initial capital expenditure of approximately $0.2 million per station for low-power transmission of digital signal programming. All of the television
stations we own and operate are broadcasting at least a low power digital television signal. Digital conversion expenditures were $0.6 million and $0.4 million for the six months ended June 30, 2006 and 2005, respectively.



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##### Table of Contents

We estimate that it will require an average capital expenditure of approximately $1.5 million per station
(for 10 stations) to modify our remaining stations DTV transmitting equipment for full-power digital signal transmission, including costs for the transmitter, transmission line, antenna and installation, and estimated costs for tower upgrades
and/or modifications. We anticipate these expenditures will be funded through available cash on hand and cash generated from operations as incurred in future years. The FCC established dates by which all television stations were required to be
broadcasting a full-power DTV signal. As of June 30, 2006, our stations WUTR, WTVO and WYOU are broadcasting with full-power digital signals. Stations that were not able to comply with full-power DTV broadcasting dates were permitted to request
an extension of time from the FCC to complete the build-out of their DTV facilities. We filed a request for extension of time to construct full-power DTV facilities for our remaining stations. The FCC has not yet acted on this request for extension
of time.

No Off-Balance Sheet Arrangements

At June 30, 2006, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We are, therefore, not materially exposed to any
financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Critical Accounting Policies and Estimates

Our condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (U.S. GAAP) which require us 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 condensed financial
statements and reported amounts of revenue and expenses during the period. On an ongoing basis, we evaluate our estimates, including those related to intangible assets, bad debts, broadcast rights, trade and barter, income taxes, commitments and
contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year.

Information with respect to our critical accounting policies which we believe could have the most significant effect on our reported results and require
subjective or complex judgments by management is contained on pages 32 through 33 in Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2005. Management believes that as of June 30, 2006 there has been no material change to this information.

Recent
Accounting Pronouncements

Refer to Note 2 of our condensed financial statements in Part I, Item 1 of this Quarterly Report on Form
10-Q for a discussion of the recently issued accounting pronouncements including our expected date of adoption and effects on results of operations and financial position.

Cautionary Note Regarding Forward-Looking Statements

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 position and results of operations, as well
as any forward-looking statements, are subject to change and inherent risks and uncertainties, including those described in our Annual Report on Form 10-K for the year ended December 31, 2005 and in our other filings with the Securities and
Exchange Commission. The forward-looking statements made in this Quarterly Report on Form 10-Q are made only as of the date hereof, and we do not have or undertake any obligation to update any forward-looking statements to reflect subsequent events
or circumstances unless otherwise required by law.



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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, 2006 under our senior credit facility bear interest at 7.25%, which represented the base rate, or LIBOR, plus the
applicable margin, as defined. Interest is payable in accordance with the credit agreement.

The following table estimates the changes to
cash flow from operations as of June 30, 2006 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 period:



|                       |  |                        |        |                            |   |                        |        |   |         |  |   |        |  |   |       
|---------------------- |  | ---------------------- | ------ | -------------------------- | - | ---------------------- | ------ | - | ------- |  | - | ------ |  | - | ------
|                       |  | Interest rate decrease |        | No change to interest rate |   | Interest rate increase
|                       |  | 100 BPS                |        | 50 BPS                     |   |                        | 50 BPS |   | 100 BPS
|                       |  | (in thousands)        
|Senior credit facility |  | $                      | 10,713 |                            | $ | 11,570                 |        | $ | 12,427  |  | $ | 13,284 |  | $ | 14,141

Impact of Inflation

We believe that our results of operations are not affected by moderate changes in the inflation rate.

ITEM 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Mission
carried out an evaluation as of the end of the period covered in this report, under the supervision and with the participation of Missions management, including Missions president and treasurer (who is Missions principal executive
officer and principal financial and accounting officer), of the effectiveness of the design and operation of Missions disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(d) and 15d-15(e) under the Securities Exchange Act of
1934. Based upon that evaluation, Missions president and treasurer (its principal executive officer and principal financial and accounting officer) concluded that Missions disclosure controls and procedures (1) were effective in
timely alerting him to material information relating to Mission required to be included in Missions periodic SEC filings and (2) were adequate to ensure that information required to be disclosed by Mission in the reports filed or
submitted by Mission 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) Changes in Internal Control over Financial Reporting. There have been no changes in Mission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, Missions internal control over financial reporting.



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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

From time to time, we are involved in litigation that arises from the ordinary
operations of business, such as contractual or employment disputes or other general actions. In the event of an adverse outcome of these proceedings, we believe the resulting liabilities would not have a material adverse effect on our financial
condition or results of operations.

ITEM 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in Part
I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2005.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Submission of Matters to a Vote of Security Holders

None.

ITEM 5. Other Information

None.

ITEM 6. Exhibits



|            |  |                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Index                                                                              
|31.1        |  | Certification of David S. Smith pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|            | 
|32.1        |  | Certification of David S. Smith pursuant to 18 U.S.C. ss. 1350.*                           

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|* | Filed herewith
|- | --------------



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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.



MISSION BROADCASTING, INC.By:

/s/ DAVID S. SMITHDavid S. SmithIts:

President and Treasurer (Principal Executive
Officer and Principal Financial and Accounting Officer)


Dated: August 9, 2006



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