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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 March 31, 2005



| ̈ | 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 an accelerated filer (as
defined in Exchange Act Rule 12b-2).    Yes ̈No  x



As of June 30, 2004, 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, 2004.



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##### Table of Contents

TABLE OF CONTENTS



|              |  |                                                                                       |  |     
|------------- |  | ------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                       |  | Page
|PART I        |  | FINANCIAL INFORMATION                                                                 |  |     
|              |  |                                                                                      
|ITEM 1.       |  | Financial Statements (Unaudited)                                                      |  |     
|              |  |                                                                                      
|              |  | Condensed Balance Sheets at December 31, 2004 and March 31, 2005                      |  | 1   
|              |  |                                                                                      
|              |  | Condensed Statements of Operations for the three months ended March 31, 2004 and 2005 |  | 2   
|              |  |                                                                                      
|              |  | Condensed Statements of Cash Flows for the three months ended March 31, 2004 and 2005 |  | 3   
|              |  |                                                                                      
|              |  | Notes to Condensed Financial Statements                                               |  | 4   
|              |  |                                                                                      
|ITEM 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12  
|              |  |                                                                                      
|ITEM 3.       |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 19  
|              |  |                                                                                      
|ITEM 4.       |  | Controls and Procedures                                                               |  | 19  
|              |  |                                                                                      
|PART II       |  | OTHER INFORMATION                                                                     |  |     
|              |  |                                                                                      
|ITEM 1.       |  | Legal Proceedings                                                                     |  | 20  
|              |  |                                                                                      
|ITEM 2.       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 20  
|              |  |                                                                                      
|ITEM 3.       |  | Defaults Upon Senior Securities                                                       |  | 20  
|              |  |                                                                                      
|ITEM 4.       |  | Submission of Matters to a Vote of Security Holders                                   |  | 20  
|              |  |                                                                                      
|ITEM 5.       |  | Other Information                                                                     |  | 20  
|              |  |                                                                                      
|ITEM 6.       |  | Exhibits                                                                              |  | 20  
|              | 
|EXHIBIT INDEX |  | 20                                                                                   



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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)



|                                                                                                                                      |  |                   |         |   |                |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | -------------- | - | ------- | -
|                                                                                                                                      |  | December 31, 2004 |         |   | March 31, 2005 |  
|                                                                                                                                      |  | (Unaudited)       |        
|ASSETS                                                                                                                                |  |                   |         |   |                |   |         |  
|Current assets:                                                                                                                       |  |                   |         |   |                |   |         |  
|Cash and cash equivalents                                                                                                             |  | $                 | 6,981   |   |                | $ | 746     |  
|Accounts receivable (allowance for doubtful accounts of $0 and $0, respectively)                                                      |  |                   | 415     |   |                |   | 332     |  
|Current portion of broadcast rights                                                                                                   |  |                   | 3,701   |   |                |   | 2,907   |  
|Prepaid expenses and other current assets                                                                                             |  |                   | 142     |   |                |   | 67      |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Total current assets                                                                                                                  |  |                   | 11,239  |   |                |   | 4,052   |  
|Property and equipment, net                                                                                                           |  |                   | 22,574  |   |                |   | 22,032  |  
|Broadcast rights                                                                                                                      |  |                   | 1,700   |   |                |   | 1,009   |  
|Goodwill, net                                                                                                                         |  |                   | 16,307  |   |                |   | 16,665  |  
|Intangible assets, net                                                                                                                |  |                   | 82,443  |   |                |   | 80,799  |  
|Other noncurrent assets                                                                                                               |  |                   | 631     |   |                |   | 545     |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Total assets                                                                                                                          |  | $                 | 134,894 |   |                | $ | 125,102 |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                 |  |                   |         |   |                |   |         |  
|Current liabilities:                                                                                                                  |  |                   |         |   |                |   |         |  
|Current portion of debt                                                                                                               |  | $                 | 1,520   |   |                | $ | 1,520   |  
|Current portion of broadcast rights payable                                                                                           |  |                   | 4,044   |   |                |   | 3,276   |  
|Accounts payable                                                                                                                      |  |                   | 108     |   |                |   | 143     |  
|Accrued expenses                                                                                                                      |  |                   | 884     |   |                |   | 756     |  
|Taxes payable                                                                                                                         |  |                   | 14      |   |                |   | 6       |  
|Interest payable                                                                                                                      |  |                   | 21      |   |                |   | 30      |  
|Deferred revenue                                                                                                                      |  |                   | 192     |   |                |   | 190     |  
|Due to Nexstar Broadcasting, Inc.                                                                                                     |  |                   | 20,922  |   |                |   | 20,711  |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Total current liabilities                                                                                                             |  |                   | 27,705  |   |                |   | 26,632  |  
|                                                                                                                                      |  |                  
|Debt                                                                                                                                  |  |                   | 171,220 |   |                |   | 170,840 |  
|Broadcast rights payable                                                                                                              |  |                   | 1,997   |   |                |   | 1,189   |  
|Deferred tax liabilities                                                                                                              |  |                   | 3,163   |   |                |   | 3,499   |  
|Deferred gain on sale of assets                                                                                                       |  |                   | 2,604   |   |                |   | 2,561   |  
|Other liabilities                                                                                                                     |  |                   | 2,273   |   |                |   | 2,352   |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Total liabilities                                                                                                                     |  |                   | 208,962 |   |                |   | 207,073 |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Commitments and contingencies                                                                                                         |  |                   |         |   |                |   |         |  
|                                                                                                                                      |  |                  
|Minority interest in consolidated entity                                                                                              |  |                   | 5,719   |   |                |   |        |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Shareholders deficit:                                                                                                                |  |                   |         |   |                |   |         |  
|Common stock, $1 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at both December 31, 2004 and March 31,
2005 |  |                   | 1       |   |                |   | 1       |  
|Subscription receivable                                                                                                               |  |                   | (1      | ) |                |   | (1      | )
|Accumulated deficit                                                                                                                   |  |                   | (79,787 | ) |                |   | (81,971 | )
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Total shareholders deficit                                                                                                           |  |                   | (79,787 | ) |                |   | (81,971 | )
|                                                                                                                                      |  |                   |         |   |                |   |         |  
|Total liabilities and shareholders deficit                                                                                           |  | $                 | 134,894 |   |                | $ | 125,102 |  
|                                                                                                                                      |  |                   |         |   |                |   |         |  



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



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MISSION BROADCASTING, INC.



CONDENSED STATEMENTS OF OPERATIONS

(in thousands)



|                                                                                                                  |  |                              |        |   |      |   |        |  
|----------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                  |  | Three Months Ended March 31, |       
|                                                                                                                  |  | 2004                         |        |   | 2005 |  
|                                                                                                                  |  | (Unaudited)                  |       
|Revenue (excluding trade and barter)                                                                              |  | $                            | 4,731  |   |      | $ | 736    |  
|Less: commissions                                                                                                 |  |                              | (638   | ) |      |   |       |  
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Net broadcast revenue (excluding trade and barter)                                                                |  |                              | 4,093  |   |      |   | 736    |  
|Trade and barter revenue                                                                                          |  |                              | 546    |   |      |   | 690    |  
|Revenue from Nexstar Broadcasting, Inc.                                                                           |  |                              | 3,247  |   |      |   | 6,678  |  
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Total net revenue                                                                                                 |  |                              | 7,886  |   |      |   | 8,104  |  
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Operating expenses:                                                                                               |  |                              |        |   |      |   |        |  
|Direct operating expenses (exclusive of depreciation and amortization shown separately below)                     |  |                              | 1,000  |   |      |   | 1,056  |  
|Selling, general, and administrative expenses (exclusive of depreciation and amortization shown separately below) |  |                              | 1,211  |   |      |   | 482    |  
|Selling, general and administrative expenses paid to Nexstar Broadcasting, Inc.                                   |  |                              | 3,272  |   |      |   | 2,850  |  
|Amortization of broadcast rights                                                                                  |  |                              | 1,125  |   |      |   | 1,183  |  
|Amortization of intangible assets                                                                                 |  |                              | 1,286  |   |      |   | 1,643  |  
|Depreciation                                                                                                      |  |                              | 768    |   |      |   | 702    |  
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Total operating expenses                                                                                          |  |                              | 8,662  |   |      |   | 7,916  |  
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Income (loss) from operations                                                                                     |  |                              | (776   | ) |      |   | 188    |  
|Interest expense, including amortization of debt financing costs                                                  |  |                              | (1,350 | ) |      |   | (2,027 | )
|Interest income                                                                                                   |  |                              | 2      |   |      |   | 6      |  
|Other income                                                                                                      |  |                              | 35     |   |      |   | (6     | )
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Loss before income taxes                                                                                          |  |                              | (2,089 | ) |      |   | (1,839 | )
|                                                                                                                  |  |                             
|Income tax expense                                                                                                |  |                              | (272   | ) |      |   | (345   | )
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Loss before minority interest in consolidated entity                                                              |  |                              | (2,361 | ) |      |   | (2,184 | )
|                                                                                                                  |  |                             
|Minority interest in consolidated entity                                                                          |  |                              | 158    |   |      |   |       |  
|                                                                                                                  |  |                              |        |   |      |   |        |  
|Net loss                                                                                                          |  | $                            | (2,203 | ) |      | $ | (2,184 | )
|                                                                                                                  |  |                              |        |   |      |   |        |  



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)



|                                                                  |  |                             |       |   |      |   |        |  
|----------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ------ | -
|                                                                  |  | Three Months EndedMarch 31, |      
|                                                                  |  | 2004                        |       |   | 2005 |  
|                                                                  |  | (Unaudited)                 |      
|Net cash flows provided by (used for) operating activities        |  | $                           | (379  | ) |      | $ | 467    |  
|                                                                  |  |                             |       |   |      |   |        |  
|                                                                  |  |                            
|Cash flows from investing activities:                             |  |                             |       |   |      |   |        |  
|Additions to property and equipment, net                          |  |                             | (10   | ) |      |   | (194   | )
|Proceeds from sale of assets                                      |  |                             |      |   |      |   | 15     |  
|Acquisition of broadcast properties and related transaction costs |  |                             |      |   |      |   | (6,143 | )
|                                                                  |  |                             |       |   |      |   |        |  
|Net cash used for investing activities                            |  |                             | (10   | ) |      |   | (6,322 | )
|                                                                  |  |                             |       |   |      |   |        |  
|Cash flows from financing activities:                             |  |                             |       |   |      |   |        |  
|Repayment of long-term debt                                       |  |                             | (350  | ) |      |   | (380   | )
|Payments for debt finance costs                                   |  |                             | (8    | ) |      |   |       |  
|                                                                  |  |                             |       |   |      |   |        |  
|Net cash used for financing activities                            |  |                             | (358  | ) |      |   | (380   | )
|                                                                  |  |                             |       |   |      |   |        |  
|Net decrease in cash and cash equivalents                         |  |                             | (747  | ) |      |   | (6,235 | )
|Cash and cash equivalents at beginning of period                  |  |                             | 1,857 |   |      |   | 6,981  |  
|                                                                  |  |                             |       |   |      |   |        |  
|Cash and cash equivalents at end of period                        |  | $                           | 1,110 |   |      | $ | 746    |  
|                                                                  |  |                             |       |   |      |   |        |  



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



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MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS



1. Organization and
Business Operations



Mission Broadcasting, Inc.
(Mission or the Company) owns and operates 14 television stations affiliated with the NBC, ABC, CBS, Fox or UPN television networks and one independent television station, in markets located in New York, Pennsylvania,
Illinois, Indiana, Missouri, Texas and Montana. Through local service agreements (as more fully described below), Nexstar Broadcasting, Inc. (Nexstar) programs two of Missions television stations under Time Brokerage Agreements
(TBA) and has Shared Services Agreements (SSA) and Joint Sales Agreements (JSA) with Missions remaining television stations (see Note 4).



The Company is highly vulnerable to changes in general economic conditions because of its high level of debt. 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 of March 22, 2005, Nexstar represented to the Company
that it will provide necessary financial support to enable Mission to continue to operate as a going concern through the continuation of various local service agreements under which Nexstar operates Missions television stations. Management
believes that, taken together, Nexstars pledge of financial support, Missions current cash balances, internally generated cash flow and availability under its bank credit facility should result in the Company having adequate cash
resources to meet its debt service and other financial obligations for at least the next twelve months from March 31, 2005, enabling Mission to continue to operate as a going concern. As further discussed in Note 6, on April 1, 2005, Mission
refinanced its senior secured credit facility.



2. Summary of Significant
Accounting Policies



Interim Financial Statements



The condensed financial statements as of March 31,
2005 and for the three months ended March 31, 2004 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, 2004. The balance sheet at December
31, 2004 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.



Basis of Presentation



Mission owns and operates the following television stations as of March 31,
2005: WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC, KSAN (formerly KACB), KOLR, KCIT, KCPN-LP, KAMC, KHMT, WUTR, WBAK and WTVO.



Local Service Agreements and Purchase Options



The following table summarizes the various local service agreements Missions stations have implemented as of March 31, 2005 with Nexstar-owned
stations:



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

---

|(1) | Mission has a 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 Mission.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Mission has both an SSA and a 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 Mission 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 Mission of
the remaining percentage of the net revenue, as described in the JSAs.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Nexstar does not own or control Mission or its television stations; however, Nexstar is deemed to have a controlling financial interest in Mission under U.S. GAAP due to Nexstars guarantee of the obligations
incurred under Missions senior credit facility and the service and purchase option agreements described above. In order for both Nexstar and Mission to comply with the Federal



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MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



2. Summary of Significant Accounting Policies(Continued)



Communications Commission (FCC) rules regarding ownership limits in television markets, Mission maintains complete
responsibility for and control over programming, finances, personnel and operations of its stations.



Recent Accounting Pronouncements



In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29 (SFAS No. 153). SFAS No. 153 requires that exchanges of nonmonetary assets be accounted for at fair value of the assets exchanged, unless the exchange lacks commercial substance. A nonmonetary exchange has commercial
substance when the future cash flows of the entity are expected to change significantly as a result of the exchange. This new Standard eliminates a provision in APB Opinion No. 29 that exempted nonmonetary exchanges of similar productive assets from
fair value accounting. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after
the date of issuance. The Company will adopt SFAS No. 153 for its fiscal year beginning January 1, 2006. Management does not believe that the adoption of this new Standard will have a material impact on the Companys financial position or
results of operations.



In March 2005, the FASB issued
Financial Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143 (FIN No. 47). FIN No. 47 clarifies that an entity must record a liability for a conditional
asset retirement obligation if the fair value of the obligation can be reasonably estimated. A conditional asset retirement obligation is a term used in Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations, that refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN No. 47 is
effective no later than the end of fiscal years ending after December 15, 2005, which is the Companys current fiscal year ending December 31, 2005. Management is currently evaluating the impact the adoption of FIN No. 47 will have on the
Companys financial position or results of operations.



3. Acquisitions



During the three months ended March 31, 2005, the Company
consummated the acquisition listed below. This acquisition has been accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to assets acquired based on their estimated fair value on the acquisition
date. The excess of the purchase price over the fair values assigned to the assets acquired is recorded as goodwill. The financial statements include the operating results of the business from November 1, 2004, the date on which Mission commenced
programming the station under a TBA.



|        |  |                     |  |                    |  |                   
|------- |  | ------------------- |  | ------------------ |  | ------------------
|Station |  | Network Affiliation |  | Market             |  | Date Acquired     
|WTVO    |  | ABC                 |  | Rockford, Illinois |  | January 4, 2005(1)

---

|(1) | The TBA terminated on the date of acquisition.
|--- | ----------------------------------------------



WTVO



On October 4, 2004, Mission entered into a purchase agreement and a TBA with Young Broadcasting, Inc. (Young) and Winnebago Television
Corporation (Winnebago), which owned WTVO, the ABC affiliate in Rockford, Illinois. Mission commenced operations under the TBA on November 1, 2004 which terminated upon the purchase of the station. On January 4, 2005, Mission completed
the acquisition of WTVO for total consideration of $20.75 million, exclusive of transaction costs. Pursuant to terms of the purchase agreement, Mission made an initial payment of $15.0 million against the purchase price on November 1, 2004, to
acquire substantially all of the assets of WTVO, except for its FCC license and certain transmission equipment. Mission paid the remaining $5.75 million on January 4, 2005, exclusive of transaction costs, for the purchase of WTVOs FCC license
and certain transmission equipment.



The following table
summarizes the estimated fair values of the assets acquired. Mission obtained third-party valuations of certain acquired intangible assets (in thousands).



|                                      |  |   |       
|------------------------------------- |  | - | ------
|Property and equipment                |  | $ | 7,161 
|Intangible assets                     |  |   | 10,279
|Goodwill, including transaction costs |  |   | 3,658 
|                                      |  |   |       
|Assets acquired                       |  | $ | 21,098
|                                      |  |   |       



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MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



3. Acquisitions(Continued)



Of the $10.3 million of acquired intangible assets, $2.9 million was assigned to FCC licenses that are not subject to amortization and $6.7 million was
assigned to network affiliation agreements (estimated useful life of 15 years). The remaining $0.7 million of acquired intangible assets have an estimated useful life of approximately 1 year. Goodwill of $3.7 million is expected to be deductible for
tax purposes.



The following unaudited pro forma information
has been presented as if the acquisition of WTVO had occurred on January 1, 2004:



|                                                   |  |                                  |        |  
|-------------------------------------------------- |  | -------------------------------- | ------ | -
|                                                   |  | Three Months EndedMarch 31, 2004 |       
|                                                   |  | (in thousands)                   |       
|Net broadcast revenue (excluding trade and barter) |  | $                                | 5,448  |  
|Total net revenue                                  |  |                                  | 9,248  |  
|Loss from operations                               |  |                                  | (1,126 | )
|Net loss                                           |  | $                                | (2,826 | )



There is no pro forma
information presented for the three months ended March 31, 2005 as the pro forma results would not be materially different from the Companys results of operations as reported because the WTVO acquisition was consummated on January 4, 2005.



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



4. Related Party Transactions



Time Brokerage Agreements, Shared Services Agreements, and Joint Sales
Agreements



As of March 31, 2005, Mission has
agreements in place with subsidiaries of Nexstar in all of its markets as follows:



In Erie, Pennsylvania, Mission and Nexstar are parties to an amended TBA dated as of April 1, 1996, which expires on August 16, 2006 and may be renewed for one term of five years with 90 days notice. This
agreement allows Nexstar to program most of WFXPs broadcast time, sell the stations advertising time and retain the advertising revenue, in return for monthly payments to Mission.



In Wichita Falls, Texas-Lawton, Oklahoma, Mission and Nexstar are parties to
an SSA dated as of June 1, 1999, which has an initial term of ten years. Under this agreement, Mission agreed with Nexstar to share the costs of certain services that Nexstars station, KFDX, and Missions stations, KJTL and KJBO-LP,
individually incur. These shared services include news production, technical maintenance and security, among other services, but do not include the services of senior management personnel, programming or sales. In consideration of the services
provided to KJTL and KJBO-LP by Nexstar personnel, Mission pays Nexstar a monthly service fee, which was amended on January 1, 2004, to a flat fee of $70 thousand per month.



In Wichita Falls, Texas-Lawton, Oklahoma, Mission and Nexstar are also parties to a JSA dated June 1, 1999, which has an
initial term of ten years. Under this JSA, Nexstar purchases all of the advertising time on KJTL and KJBO-LP and retains the advertising revenue in return for payments to Mission of 70% of the KJTL/KJBO-LP net revenue collected each month.



In Wilkes Barre-Scranton, Pennsylvania, Mission and Nexstar
are parties to an SSA dated as of January 5, 1998, which has an initial term of ten years. The terms of this agreement are substantially similar to the terms of Missions SSA with Nexstar for KJTL and KJBO-LP and provides for the parties to
share the costs of certain services that Nexstars station, WBRE, and Missions station, WYOU, otherwise would separately incur. In consideration of the services provided to WYOU by Nexstar personnel, Mission pays Nexstar a flat fee of
$200 thousand per month, as amended on January 1, 2005.



Also
in Wilkes Barre-Scranton, Pennsylvania, Mission and Nexstar have a JSA for the sale of commercial time for WYOU dated as of June 30, 2003, the term of which began on October 1, 2004. The terms of this agreement are substantially similar to the terms
of Missions JSAs in Wichita Falls. Nexstar pays Mission 70% of the WYOU net revenue collected each month.



In Joplin, Missouri-Pittsburg, Kansas, effective April 1, 2002, Mission entered into an SSA with Nexstar which has an initial term of ten years, whereby
Nexstars station KSNF provides certain services to KODE. In consideration for certain services provided to KODE by Nexstar personnel, Mission pays Nexstar a flat fee of $100 thousand per month, as amended on January 1, 2005.



6



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##### Table of Contents

MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



4. Related Party Transactions(Continued)



Also in Joplin, Missouri-Pittsburg, Kansas, Mission and Nexstar have a JSA for the sale of commercial time for KODE dated as
of June 30, 2003, the term of which began on October 1, 2004. The terms of this agreement are substantially similar to the terms of Missions JSAs in Wichita Falls. Nexstar pays Mission 70% of the KODE net revenue collected each month.



In Abilene, Texas, Mission entered into an SSA with Nexstar,
effective June 13, 2003, which has an initial term of ten years, whereby Nexstars station, KTAB, provides certain services for KRBC and KSAN (formerly KACB). In consideration for the services provided by Nexstar personnel, Mission pays Nexstar
a flat monthly fee. The SSA was amended effective June 1, 2004, to exclude KSAN. Mission entered into a JSA with KRBC, effective July 1, 2004, whereby KTAB purchases all of the advertising time on KRBC and retains the advertising revenue in return
for payments to Mission equal to 70% of the KRBC net revenue collected each month.



In San Angelo, Texas, Mission entered into an SSA with Nexstar, effective June 1, 2004, whereby Nexstars station KLST provides certain services to KSAN in exchange for a flat fee of $50 thousand per month from
Mission. Mission entered into a JSA, effective June 1, 2004, whereby KLST purchases all of the advertising time on KSAN and retains the advertising revenue in return for payments to Mission equal to 70% of the KSAN net revenue collected each month.



In Terre Haute, Indiana, Mission entered into an SSA with
Nexstar, effective May 9, 2003, whereby Nexstar-owned WTWO provides certain services to WBAK. In consideration of services provided to WBAK by Nexstar personnel, Mission pays Nexstar a flat fee of $10 thousand per month, as amended on January 1,
2005. Mission also entered into a JSA, effective May 9, 2003, whereby Nexstar-owned WTWO purchases all of the advertising time on WBAK and retains the advertising revenue in return for payments to Mission of 70% of the WBAK net revenue collected
each month. The initial term of these agreements is ten years.



In Amarillo, Texas, Mission has an SSA, dated as of May 1, 1999, which has an initial term of 10 years. Under this agreement, Nexstar shares the costs of certain services that Nexstars station, KAMR, and Missions stations, KCIT
and KCPN-LP, individually incur. In consideration of services provided to KCIT and KCPN-LP by Nexstar personnel, Mission pays Nexstar a monthly fee, which was amended on December 30, 2003, to a flat fee of $60 thousand per month.



Also in Amarillo, Texas, Mission has a JSA, dated as of May 1, 1999, which
has an initial term of ten years. Under this agreement, Nexstar purchases all of the advertising time on KCIT and KCPN-LP and retains the advertising revenue for monthly payments of 70% of the KCIT/KCPN-LP net revenue collected each month.



In Billings, Montana, Mission has a TBA, dated as of December
14, 1994 (as amended), which had an initial term of 10 years. This agreement allows Nexstar to program most of KHMTs broadcast time, sell the advertising time and retain the advertising revenue in exchange for monthly payments to Mission. On
June 1, 2004, Nexstar notified Mission of its intent to extend the TBA for an additional ten year term, effective December 14, 2004.



In Lubbock, Texas, Mission has an SSA, dated as of February 16, 1999, which has an initial term of 10 years. Under this agreement, Nexstar shares the
costs of certain services that Nexstars station, KLBK, and Missions station, KAMC, individually incur. In consideration of services provided to KAMC by KLBK personnel, Mission pays Nexstar a flat fee of $100 thousand per month, as
amended on January 1, 2005.



Also in Lubbock, Texas, Mission
has a JSA, dated February 16, 1999, which has an initial term of 10 years. Under this agreement, Nexstar purchases all of the advertising time on KAMC and retains the advertising revenue for monthly payments to Mission of 70% of the KAMC net revenue
collected each month.



In Springfield, Missouri, Mission has an
SSA, dated as of February 16, 1999, which has an initial term of 10 years. The agreement obligates Nexstars station, KSFX (formerly KDEB), to perform certain services for Missions station, KOLR. On December 30, 2003, the shared services
fee was amended to a flat fee of $150 thousand per month.



Also
in Springfield, Missouri, Mission has a JSA, dated February 16, 1999, which has an initial term of 10 years. Under this agreement, Nexstar purchases all of the advertising time on KOLR and retains the advertising revenue for monthly payments to
Mission. On December 30, 2003, the fee related to the JSA was amended to be 70% of the KOLR net revenue collected each month.



In Utica, New York, Mission has an SSA, dated as of April 1, 2004, which has an initial term of 10 years. Under this agreement, Nexstar shares the costs
of services that Nexstars station WFXV and Missions station WUTR, individually incur. In consideration of services provided to WUTR by WFXV personnel, Mission pays Nexstar a monthly fee of $10 thousand per month.



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##### Table of Contents

MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



4. Related Party Transactions(Continued)



Also in Utica, New York, Mission has a JSA, dated April 1, 2004, which has an initial term of 10 years. Under this
agreement, Nexstars station WFXV, purchases all of the advertising time on WUTR and retains the advertising revenue in return for payments to Mission equal to 70% of the WUTR net revenue collected each month.



In Rockford, Illinois, Mission has an SSA, dated as of November 1, 2004,
which has an initial term of 10 years. Under this agreement, Nexstar shares the costs of services that Nexstars station WQRF and Missions station WTVO, individually incur. In consideration of services provided to WTVO by WQRF personnel,
Mission pays Nexstar a flat fee of $100 thousand per month, as amended on January 1, 2005.



Also in Rockford, Illinois, Mission has a JSA, dated November 1, 2004, which has an initial term of 10 years. Under this agreement, Nexstars station WQRF purchases all of the advertising time on WTVO and retains
the advertising revenue in return for payments to Mission equal to 70% of the WTVO net revenue collected each month.



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 the stations under the time brokerage, shared services and joint sales agreements until the termination of such agreements. The shared services and joint sales agreements generally have a term of
ten years. Nexstar indemnifies Mission from Nexstars activities pursuant to the various time brokerage, shared services and joint sales agreements to which Nexstar is a party.



Management Agreement



Missions principal stockholder and his spouse are parties to a management services agreement. Under this agreement, Mission pays its principal
stockholder 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 principal stockholder in the
amount of $64 thousand and $58 thousand, respectively, for the three months ended March 31, 2004 and 2005, which is included in selling, general and administrative expenses.



5. Intangible Assets and Goodwill



Intangible assets and goodwill consisted of the following:



Estimated useful life (years)

December 31,2004


March 31,2005(in thousands)Network affiliation agreements

15

$
66,744


$
66,744FCC licenses

indefinite


33,538



33,538Other intangible assets

1-15


15,296



15,123115,578



115,405Less: accumulated amortization




(33,135
)


(34,606
)Intangible assets, net of accumulated amortization




82,443



80,799Goodwill, net

indefinite


16,307



16,665Intangible assets and goodwill, net



$
98,750


$
97,464




Total
amortization expense from definite-lived intangibles for the three months ended March 31, 2004 and 2005 was $1.3 million and $1.6 million, respectively.



The carrying value of indefinite-lived intangibles, excluding goodwill, at both December 31, 2004 and March 31, 2005 was $28.7 million (net of accumulated
amortization of $4.8 million).



The Company completed its
annual test of impairment for goodwill and FCC licenses as of December 31, 2004. This test resulted in no impairment being recognized. As of March 31, 2005, the Company did not identify any events that would trigger an impairment assessment.





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##### Table of Contents

MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



5. Intangible Assets and Goodwill(Continued)



The change in the carrying amount of goodwill for the three months ended March 31, 2005 was as follows (in thousands):



|                              |  |   |       
|----------------------------- |  | - | ------
|Balance as of January 1, 2005 |  | $ | 16,307
|Acquisitions                  |  |   | 358   
|                              |  |   |       
|Balance as of March 31, 2005  |  | $ | 16,665
|                              |  |   |       



The consummation of
the acquisition of WTVO during the first quarter of 2005 increased goodwill by approximately $0.4 million.



6. Debt



Long-term debt
consisted of the following:



|                          |  |                  |         |   |                |   |         |  
|------------------------- |  | ---------------- | ------- | - | -------------- | - | ------- | -
|                          |  | December 31,2004 |         |   | March 31, 2005 |  
|                          |  | (in thousands)   |        
|Term loans                |  | $                | 151,240 |   |                | $ | 150,860 |  
|Revolving credit facility |  |                  | 21,500  |   |                |   | 21,500  |  
|                          |  |                  |         |   |                |   |         |  
|                          |  |                  | 172,740 |   |                |   | 172,360 |  
|Less: current portion     |  |                  | (1,520  | ) |                |   | (1,520  | )
|                          |  |                  |         |   |                |   |         |  
|                          |  | $                | 171,220 |   |                | $ | 170,840 |  
|                          |  |                  |         |   |                |   |         |  



In April 2005, the
Company refinanced its bank credit facility agreement. The accompanying balance sheet as of March 31, 2005 does not include any adjustment for changes in the terms of the credit agreement resulting from the Companys new credit facility
agreement described below.



The Mission Senior Secured
Credit Facility



Mission had a senior secured credit
facility with a group of commercial banks which consisted of a $152.0 million term loan and a $30.0 million revolving loan. As of December 31, 2004 and March 31, 2005, Mission had $151.2 million and $150.9 million, respectively, outstanding under
its term loan and $21.5 million, respectively, of borrowings were outstanding under its revolving loan.



As of March 31, 2005, there was approximately $8.5 million of total unused commitments under the Companys senior secured credit facility.



Refinancing of Mission and Nexstar Credit Facilities



On April 1, 2005, the Company entered into a new
senior secured credit facility which replaced its previous senior secured credit facility. The Companys new senior secured credit facility consists of a $172.7 million term loan and a $47.5 million revolving loan. All borrowings outstanding
under this new senior secured credit facility are due to mature in 2012. The term loan, which matures in October 2012, is payable in consecutive quarterly installments amortized at 0.25% quarterly commencing on December 31, 2005, with the remaining
93.25% due at maturity. The term loan bears interest at either the higher of the prevailing prime rate or the Federal Funds Rate plus 0.50% (the Base Rate), plus an applicable margin ranging between 0.00% and 0.75%; or LIBOR plus 1.75%.
The revolving loan bears interest at either the Base Rate plus an applicable margin ranging between 0.00% and 0.75%; or LIBOR plus an applicable margin ranging between 0.75% and 2.00%. Financial covenants under the new senior secured credit facility
agreement will include a maximum total combined leverage ratio of Nexstar and the Company of 7.50 times the last twelve months operating cash flow (as defined in the credit agreement) through June 30, 2006 and a maximum combined senior leverage
ratio of Nexstar and the Company of 5.25 times the last twelve months operating cash flow through June 30, 2006. Covenants will also include a minimum combined interest coverage ratio of 1.50 to 1.00 through December 30, 2008 and a fixed charge
coverage ratio of 1.15 to 1.00.



On April 1, 2005, Nexstar also
entered into a new senior secured credit facility which replaced its previous senior secured credit facility. Nexstars new senior secured credit facility consists of a $182.3 million term loan and a $50.0 million revolving loan. Terms of
Nexstars new senior secured credit facility, including debt covenants and maturity, are the same as the terms of the Companys new senior secured credit facility described above.



Nexstar Broadcasting Group, Inc. and its subsidiaries guarantee full payment
of any obligations under Nexstars and the Companys new senior secured credit facilities. In addition, the Company guarantees full payment of any obligations under Nexstars new senior secured credit facility.



Guarantee of Nexstars 7% Notes



On April 1, 2005, Nexstar issued 7% senior subordinated notes due 2014
(7% Notes) pursuant to a Supplemental Indenture, dated April 1, 2005, among Nexstar Broadcasting Group, Inc., Nexstar, Mission and The Bank of New York, as trustee, in the aggregate principal amount of $75.0 million. Nexstar Broadcasting
Group, Inc. and Mission guarantee the obligations under the 7% Notes.



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##### Table of Contents

MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



7. 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 net operating loss carryforwards (NOLs). The Companys NOLs are available
to reduce future taxable income if utilized before their expiration. Utilization of NOLs in the future may be limited if changes in the Companys ownership occurs. The Company provides a full valuation allowance for net deferred tax assets as
it believes that it is more likely than not that the deferred tax assets will not be realized.



8. Guarantor of Senior Subordinated Notes



Mission is a guarantor of Nexstars $160.0 million of 12% senior subordinated notes (12% Notes). The 12% Notes mature on April 1, 2008. Interest is payable every six months in arrears on April 1 and
October 1. The 12% Notes are general unsecured senior subordinated obligations subordinated to all of Missions senior debt. The 12% Notes were redeemed by Nexstar on April 1, 2005.



Mission is a guarantor of Nexstars $125.0 million of 7% senior subordinated notes (7% Notes). The 7% Notes
mature on January 15, 2014. Interest is payable every six months in arrears on January 15 and July 15. The 7% Notes are general unsecured senior subordinated obligations subordinated to all of Missions senior debt. In conjunction with the
redemption of the 12% Notes, Nexstar issued $75.0 million in the aggregate principal amount of additional 7% Notes at a price of 98.01% on April 1, 2005.



9. 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.



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



Cable
Retransmission Consent Rights



The Communications Act
grants television broadcasters retransmission consent rights in connection with the carriage of their stations signal by cable companies. If a broadcaster chooses to exercise retransmission consent rights, a cable television system which is
subject to that election may not carry a stations signal without the broadcasters consent. This generally requires the cable system operator and the television broadcaster to negotiate the terms under which the broadcaster will consent
to the cable systems carriage of its stations signal. Mission has elected to exercise retransmission consent rights for some of its stations and has negotiated agreements with cable companies for the carriage of those stations
signals.



On December 31, 2004, certain retransmission consent
agreements expired for Missions television stations KRBC (Abilene) and KODE (Joplin). As a result, two of the cable television system operators (the Cable Operators) in these markets are no longer permitted by law to carry these
stations signals without Missions consent.



Mission
has requested that the Cable Operators pay a cash per subscriber fee in exchange for the Cable Operators rights to carry the stations under new agreements. The Cable Operators have informed Mission that they will not pay any cash fees for the
carriage of the stations on their systems. On January 19, 2005, a Cable Operator submitted a Complaint for Enforcement to the FCC requesting that the FCC instruct Mission to negotiate in good faith for a retransmission consent agreement for KRBC. On
February 8, 2005, Mission submitted its response to the complaint. On February 24, 2005, a Cable Operator filed its response to the filing made by Mission. This matter remains pending before the FCC.



Digital Television Conversion



All commercial television stations in the United States were required to
commence digital television (DTV) transmission operations by May 1, 2002, in addition to continuing their analog operations. 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 $0.2 million for the three months ended March 31, 2005. There were no digital conversion expenditures incurred during the three months ended March 31, 2004.



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##### Table of Contents

MISSION BROADCASTING, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS(Continued)



9. FCC Regulatory Matters(Continued)



Stations may broadcast both analog and digital signals until at least December 31, 2006. After December 31, 2006, on a date determined by Congress or
the FCC, stations will operate with digital only facilities. The digital transmissions may initially be low-power, but as discussed below, full-power transmission will be required.



The FCCs ongoing rule making proceeding concerning implementation of the transition from analog to digital television
broadcasts is likely to have a significant impact on the television industry and the operation of the Companys stations.



Full-Power DTV Facilities Construction



On August 4, 2004, the FCC released rules setting the dates by which all television stations must be broadcasting a full-power DTV signal. Under these
rules, stations affiliated with the four largest networks (ABC, CBS, NBC and Fox) in the top-100 markets are required to construct full-power DTV facilities by July 1, 2005. All other stations are required to construct full-power DTV facilities by
July 1, 2006. Management estimates that it will require an average capital expenditure of approximately $1.5 million per station (for 11 stations) to modify Missions stations DTV transmitters 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. Stations that fail to meet these build-out deadlines will lose interference protection for their signals outside their low-power coverage areas. As of March 31, 2005, only Missions
stations WUTR and WTVO are transmitting full-power digital signals.



The FCC has a limited waiver process for stations that cannot meet the full-power DTV deadlines due to severe financial constraints or circumstances beyond licensee control (such as zoning issues). Mission intends to request extensions of
the applicable deadlines from the FCC.



Other New DTV
Requirements



The FCC also adopted additional Program
System and Information Protocol (PSIP) requirements. All DTV stations were required to comply with the FCCs revised PSIP requirements by February 1, 2005. Mission requested an extension of time from the FCC to comply with the PSIP
requirements due to vendor delivery and installation issues. The installation of the equipment necessary to meet the PSIP requirements cost approximately $0.4 million in total for all of the television stations the Company owns and operates. These
expenditures are being funded in 2005 through available cash on hand and cash generated from operations.



10. Commitments and Contingencies



Guarantee of Nexstar Debt



Mission guarantees full payment of any obligations incurred under Nexstars senior 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
the Nexstar credit facility and senior subordinated notes. At March 31, 2005, Nexstar had $82.4 million outstanding under its senior credit facility and had issued an aggregate principal amount of $285.0 million of senior subordinated notes.



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



Forward-Looking and Cautionary Statements



The following discussion and analysis should be read in conjunction with the unaudited condensed balance sheet as of March 31, 2005, unaudited condensed
statements of operations and other unaudited condensed financial statements for the three months ended March 31, 2004 and 2005, and related notes included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking
statements for purposes of federal and state securities laws, including: any projections or expectations of earnings, revenue, financial performance, liquidity and capital resources or other financial items; any assumptions or projections
about the television broadcasting industry; any statements of our plans, strategies and objectives for our future operations, performance, liquidity and capital resources or other financial items; any statements concerning proposed new products,
services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words
may, will, should, could, would, predicts, potential, continue, expects, anticipates, future, intends,
plans, believes, estimates and other similar words.



Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ from this projection or assumption in any of our forward-looking statements. Our
future financial 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 Missions Annual Report on Form 10-K for the year ended
December 31, 2004 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.



We make references throughout our Managements Discussion and Analysis of Financial Condition and Results of Operations to comparisons on
a same station basis in order to provide a more meaningful comparison of annual growth from internal operations which may be masked by growth from acquisitions. Same station basis refers to the television markets in which we owned a
television station at the beginning and end of a particular period. Television markets in the United States of America are generally recognized as Designated Market Areas, or DMAs, as reported by the A.C. Nielsen Company. In particular, references
to a comparison on a same station basis for the three months ended March 31, 2005 versus the three months ended March 31, 2004, include the following stations: WYOU, WFXP, KJTL, KJBO-LP, KODE, KOLR, KCIT, KCPN-LP, KAMC, KHMT, KSAN (formerly KACB)
and KRBC. As used in the report, unless the context indicates otherwise, Mission refers to Mission Broadcasting, Inc., and all references to we, our, and us refer to Mission.



Introduction



As of March 31, 2005, we own and operate the following 15 television stations: WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC, KSAN
(formerly KACB), KOLR, KCIT, KCPN-LP, KAMC, KHMT, WUTR, WBAK and WTVO. We have various local service agreements with certain television stations of 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 Communication 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 have implemented as of March 31, 2005 with Nexstar-owned stations:



|                   |  |                                                                                                      
|------------------ |  | -----------------------------------------------------------------------------------------------------
|Service Agreements |  | Stations                                                                                             
|TBA (1)            |  | WFXP and KHMT                                                                                        
|                   | 
|SSA & JSA (2)      |  | KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC, KRBC, KSAN (formerly KACB), WUTR, WBAK, 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.



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##### Table of Contents

For more information about our local service agreements with Nexstar, see Note 4 to the condensed
financial statements.



In addition to providing certain
services to our television stations, Nexstar also guarantees 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.



Our sole shareholder has granted Nexstar purchase options to
acquire the assets and liabilities of each of our television stations, subject to FCC consent. These option agreements are freely exercisable or assignable by Nexstar without consent or approval by our sole shareholder.



The operating revenue of our stations is derived primarily from advertising
revenue collected by Nexstar and paid to us under the JSAs, which in turn depends on the economic conditions of the markets in which we operate, the demographic makeup of those markets and the marketing strategy we employ in each market.



Each of our stations, except for KCPN-LP, has a network affiliation
agreement pursuant to which the network provides programming to the station during specified time periods, including prime time. Each of NBC, CBS and ABC compensates our affiliated stations for distributing the networks programming over the
air and for allowing the network to keep a portion of advertising inventory during those time periods. The affiliation agreements with Fox and UPN do not provide for compensation.



Each station acquires licenses to broadcast programming in non-news and non-network time periods. The licenses are either
purchased from a program distributor for cash or the program distributor is allowed to sell some of the advertising inventory as compensation to eliminate or reduce the cash cost for the license. The latter practice is referred to as barter
broadcast rights. The station records the estimated fair market value of the licenses, including any advertising inventory given to the program distributor, as a broadcast right asset and liability. Barter broadcast rights are recorded at
managements estimate of the value of the advertising time exchanged using historical advertising rates, which approximates the fair value of the program material received. The assets are amortized as a component of amortization of broadcast
rights. Amortization is computed using the straight-line method based on the license period or usage, whichever yields the greater expense. The cash broadcast rights liabilities are reduced by monthly payments while the barter liability is amortized
over the life of the contract as a component of trade and barter revenue.



Our primary operating expenses consist of fixed monthly fees paid to Nexstar for news production and technical and other services.



Recent Developments



Cable Television Retransmission



On December 31, 2004, retransmission consent agreements expired for Missions television stations KRBC (Abilene) and KODE (Joplin). As a result, two
of the cable television system operators (the Cable Operators) in these markets are no longer permitted by law to carry these stations signals without Missions consent.



We have requested that the Cable Operators pay a cash per subscriber fee in
exchange for the Cable Operators rights to carry the stations signals under new agreements. The Cable Operators have informed us that they will not pay any cash fees for the carriage of the stations signals on their systems. On
January 19, 2005, a Cable Operator submitted a Complaint for Enforcement to the FCC requesting that the FCC instruct us to negotiate in good faith for a retransmission consent agreement for KRBC. On February 8, 2005, we submitted our response to the
complaint. On February 24, 2005, a Cable Operator filed its response to the filing made by us. This matter remains pending before the FCC. If we do not reach new agreements with the Cable Operators, the stations in the affected markets could lose
audience share which may impact the stations revenue. We are currently unable to determine the ultimate outcome of these matters, but do not believe they will have a material effect on our financial position or results of operations.



Refinancing of Mission and Nexstar Credit Facilities



On March 14, 2005, we entered into a binding
commitment with a syndicate of commercial banks to refinance our senior secured credit facility. On April 1, 2005, we entered into a new senior secured credit facility which replaced our previous senior secured credit facility. Our new senior
secured credit facility consists of a $172.7 million term loan and a $47.5 million revolving loan. All borrowings outstanding under this new senior secured credit facility are due to mature in 2012. The term loan, which matures in October 2012, is
payable in consecutive quarterly installments amortized at 0.25% quarterly commencing on December 31, 2005, with the remaining 93.25% due at maturity. The term loan bears interest at either the higher of the prevailing prime rate or the Federal
Funds Rate plus 0.50% (the Base Rate), plus an applicable margin ranging between 0.00% and 0.75%; or LIBOR plus 1.75%. The revolving loan bears interest at either the Base Rate plus an applicable margin ranging between 0.00% and 0.75%;
or LIBOR plus an applicable margin ranging between 0.75% and 2.00%. Financial covenants under the new senior secured credit facility will include a maximum total combined leverage ratio of Nexstar and Mission of 7.50 times the last twelve months
operating cash flow (as defined in the credit agreement) through June 30, 2006 and a maximum combined senior leverage ratio of Nexstar and Mission of 5.25 times the last twelve months operating cash flow through June 30, 2006. Covenants will also
include a minimum combined interest coverage ratio of 1.50 to 1.00 through December 30, 2008 and a fixed charge coverage ratio of 1.15 to 1.00.



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##### Table of Contents

On April 1, 2005, Nexstar also entered into a new senior secured credit facility which replaced its
previous senior secured credit facility. Nexstars new senior secured credit facility consists of a $182.3 million term loan and a $50.0 million revolving loan. Terms of Nexstars new senior secured credit facility, including debt
covenants and maturity, are the same as the terms of our new senior secured credit facility described above.



Nexstar Broadcasting Group, Inc. and its subsidiaries guarantee full payment of any obligations under Nexstars and our new senior secured credit
facilities. In addition, we guarantee full payment of any obligations under Nexstars new senior secured credit facility.



Guarantee of Nexstars 7% Notes



On April 1, 2005, Nexstar issued 7% senior subordinated notes due 2014 (7% Notes) pursuant to a Supplemental Indenture, dated April 1, 2005,
among Nexstar Broadcasting Group, Inc., Nexstar, us and The Bank of New York, as trustee, in the aggregate principal amount of $75.0 million. Nexstar Broadcasting Group, Inc. and we guarantee the obligations under the 7% Notes.



Historical Performance



Revenue



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



|                                                     |  |                                    |       |      |       |        |   |       |  |      
|---------------------------------------------------- |  | ---------------------------------- | ----- | ---- | ----- | ------ | - | ----- |  | -----
|                                                     |  | Three Months Ended March 31,      
|                                                     |  | 2004                               |       | 2005
|                                                     |  | Amount                             |       | %    |       | Amount |   | %    
|                                                     |  | (in thousands, except percentages)
|Local                                                |  | $                                  | 2,680 |      | 56.6  |        | $ |      |  |     
|National                                             |  |                                    | 1,399 |      | 29.6  |        |   |      |  |     
|Political                                            |  |                                    | 178   |      | 3.8   |        |   |      |  |     
|Network compensation                                 |  |                                    | 437   |      | 9.2   |        |   | 570   |  | 77.4 
|Other                                                |  |                                    | 37    |      | 0.8   |        |   | 166   |  | 22.6 
|                                                     |  |                                    |       |      |       |        |   |       |  |      
|Total gross revenue                                  |  |                                    | 4,731 |      | 100.0 |        |   | 736   |  | 100.0
|Less: Agency and national representative commissions |  |                                    | 638   |      | 13.5  |        |   |      |  |     
|                                                     |  |                                    |       |      |       |        |   |       |  |      
|Net broadcast revenue                                |  |                                    | 4,093 |      | 86.5  |        |   | 736   |  | 100.0
|Trade and barter revenue                             |  |                                    | 546   |      |       |        |   | 690   |  |      
|Revenue from Nexstar Broadcasting, Inc.              |  |                                    | 3,247 |      |       |        |   | 6,678 |  |      
|                                                     |  |                                    |       |      |       |        |   |       |  |      
|Total net revenue                                    |  | $                                  | 7,886 |      |       |        | $ | 8,104 |  |      
|                                                     |  |                                    |       |      |       |        |   |       |  |      



Results of
Operations



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



|                                                                                |  |                                    |       |      |   |       |        |   |       |  |      
|------------------------------------------------------------------------------- |  | ---------------------------------- | ----- | ---- | - | ----- | ------ | - | ----- |  | -----
|                                                                                |  | Three Months Ended March 31,      
|                                                                                |  | 2004                               |       | 2005
|                                                                                |  | Amount                             |       |      | % |       | Amount |   | %    
|                                                                                |  | (in thousands, except percentages)
|Total net revenue                                                               |  | $                                  | 7,886 |      |   | 100.0 |        | $ | 8,104 |  | 100.0
|Operating expenses:                                                             |  |                                    |       |      |   |       |        |   |       |  |      
|Corporate expenses                                                              |  |                                    | 117   |      |   | 1.5   |        |   | 147   |  | 1.8  
|Station direct operating expenses, net of trade                                 |  |                                    | 935   |      |   | 11.9  |        |   | 1,056 |  | 13.0 
|Selling, general and administrative expenses                                    |  |                                    | 1,095 |      |   | 13.9  |        |   | 335   |  | 4.1  
|Selling, general and administrative expenses paid to Nexstar Broadcasting, Inc. |  |                                    | 3,272 |      |   | 41.5  |        |   | 2,850 |  | 35.2 
|Trade and barter expense                                                        |  |                                    | 494   |      |   | 6.3   |        |   | 690   |  | 8.5  
|Depreciation and amortization                                                   |  |                                    | 2,054 |      |   | 26.0  |        |   | 2,345 |  | 28.9 
|Amortization of broadcast rights, excluding barter                              |  |                                    | 695   |      |   | 8.8   |        |   | 493   |  | 6.1  
|                                                                                |  |                                    |       |      |   |       |        |   |       |  |      
|Income (loss) from operations                                                   |  | $                                  | (776  | )    |   |       |        | $ | 188   |  |      
|                                                                                |  |                                    |       |      |   |       |        |   |       |  |      



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##### Table of Contents

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004.



Revenue



Total net revenue for the three months ended March 31, 2005, increased by
$0.2 million, or 2.8% over the same period of 2004. On a same station basis, total net revenue for the three months ended March 31, 2005, decreased by $1.3 million, or 16.4% from the same period in 2004.



Local and national advertising revenue for the three months ended March 31,
2005, decreased by $4.1 million, or 100.0% compared to the same period in 2004. This decrease is partially attributed to the JSA effective in June 2004 at KSAN, the JSA effective in July 2004 at KRBC and the JSA effective in October 2004 at each of
WYOU and KODE.



Political advertising revenue for the three
months ended March 31, 2005, decreased by $0.2 million, or 100.0% compared to the same period in 2004. This decrease was primarily attributed to presidential and/or statewide races held in 2004 in Pennsylvania and Missouri.



Revenue from Nexstar for the three months ended March 31, 2005, increased by
$3.4 million, or 105.7% over the same period in 2004. Of the $3.4 million increase, $1.1 million was primarily attributed to our acquisitions of WUTR, WBAK and WTVO and the related JSAs with Nexstar. On a same station basis, revenue from Nexstar
increased $2.3 million as a result of restructuring and amending of the JSA effective in June 2004 at KSAN, the JSA effective in July 2004 at KRBC and the JSA effective in October 2004 at each of WYOU and KODE.



Operating Expenses



Corporate expenses are costs associated with the centralized management of
our stations. For both the three months ended March 31, 2005 and 2004, corporate expenses were $0.1 million.



Station direct operating expenses, consisting primarily of news, engineering and programming, and selling, general and administrative expenses, net of
trade, decreased by $0.6 million, or 31.5% for the three months ended March 31, 2005, compared to the same period in 2004. The $0.6 million decrease was primarily attributed to a reduction in salary expense for production, technical and
administrative personnel for services that are now provided by Nexstar under the SSAs.



Selling, general and administrative expenses paid to Nexstar relate to the fees as designated by the SSAs for services provided in the production of newscasts, technical maintenance, promotional and administrative
support. For the three months ended March 31, 2005, these expenses decreased $0.4 million, or 12.9% over the same period in 2004. An increase of $0.1 million was attributed to the SSAs of WUTR and WTVO that were not in place during the three months
ended March 31, 2004, partially offset by a lower amount of SSA fees resulting from the amendment of the SSA of WBAK effective January 1, 2005. On a same station basis, a $0.5 million decrease was primarily attributed to a lower amount of net SSA
fees resulting from the amendment of four SSAs effective January 1, 2005.



Depreciation of property and equipment for the three months ended March 31, 2005, decreased by $0.1 million, or 8.6%, compared to the same period in 2004. The decrease was primarily attributed to assets at certain
stations becoming fully depreciated during the second quarter of 2004.



Amortization of intangible assets for the three months ended March 31, 2005, increased by $0.4 million, or 27.8% over the same period in 2004. The increase was primarily the result of the newly acquired television stations WUTR, WBAK and
WTVO.



Amortization of broadcast rights, excluding barter, for
the three months ended March 31, 2005, decreased by $0.2 million, or 29.1% over the same period in 2004. The decrease was primarily attributed to an increased use of barter programming during the first three months of 2005 as compared to cash
programming, partially offset by an increase in amortization of broadcast rights from newly acquired television stations WUTR, WBAK and WTVO.



Income (Loss) from Operations



Income from operations was $0.2 million for the three months ended March 31, 2005, an increase of $1.0 million over the loss from operations of $0.8
million for the same period of 2004. The increase in income from operations for the first three months of 2005 was primarily attributed to the increase in total net revenue and the decrease in selling, general and administrative expenses paid to
Nexstar as discussed above.



Interest Expense



Interest expense, including amortization of debt
financing costs, increased by $0.7 million, or 50.1%, for the three months ended March 31, 2005, compared to the same period in 2004. The increase in interest expense was primarily attributed to higher interest rates and greater amount of debt
outstanding in 2005 under our senior credit facility.





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##### Table of Contents

Income Taxes



Income taxes for both the three months ended March 31, 2004 and 2005, was $0.3 million. Our provision for income taxes is
primarily created by an increase in the deferred tax liabilities position during the year arising from the amortization 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. Based primarily on our recent history of net operating losses, we do not consider the realization of our net deferred tax assets to be more likely than not. Accordingly, we have provided a
valuation allowance for net deferred tax assets excluding deferred tax liabilities attributable to goodwill and indefinite-lived intangible assets. No tax benefit was recorded with respect to the losses for 2005, as the utilization of such loss is
not likely to be realized in the foreseeable future.



Minority Interest in Consolidated Entity



The minority interest of $0.2 million for the three months ended March 31, 2004, relates to the recognition of $0.2 million of expenses due to the application of FIN No. 46 as it pertains to the local service arrangement we had with WBAK
from May 9, 2003 to April 6, 2004.



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. As of March 22, 2005, Nexstar represented to the Company that it will provide necessary financial support to enable Mission to continue to operate as a going concern through the continuation of
various local service agreements under which Nexstar operates Missions television stations. Taken together with Nexstars pledge of financial support, we believe that our available cash, anticipated cash flow from operations and available
borrowings under our senior credit facility should be sufficient to fund working capital, capital expenditure requirements, interest payments and scheduled principal payments for at least the next twelve months from March 31, 2005, enabling us to
continue to operate as a going concern. In order to meet future cash needs we may, from time to time, borrow under our available credit facility.



Sources and Uses of Cash for the Three Months Ended March 31, 2005 and 2004



Cash Flows - Overview



Cash and cash equivalents decreased by $6.2 million and $0.7 million for the three months ended March 31, 2005 and 2004,
respectively. The major components of these changes are discussed below. Our primary sources of liquidity are cash flows from operating activities, including the timing of payments from Nexstar, and the senior credit facility.



Cash Flows  Operating Activities



Cash flows provided by operating activities were $0.5 million for the three
months ended March 31, 2005, compared to cash flows used for operating activities of $0.4 million for the three months ended March 31, 2004.



Cash flows from operating activities include net loss adjusted for non-cash items and the effects of changes in working capital, including changes in
accounts receivable, accounts payable, broadcast rights assets and liability and other accrued assets and liabilities.



The comparative increase in cash flows of $0.9 million is primarily due to the timing of payments made to Nexstar.



Cash Flows  Investing Activities



Cash flows used for investing activities were $6.3 million for the three
months ended March 31, 2005, compared to $10 thousand for the three months ended March 31, 2004. Cash flows from investing activities consist primarily of cash used for capital additions and funding of acquisitions.



Cash flows used for investing activities for the three months ended March 31,
2005 included the remaining $5.75 million payment, exclusive of transaction costs, for the acquisition of WTVO and ongoing capital expenditures. Cash flows used for investing activities for the three months ended March 31, 2004 was the result of
ongoing capital expenditures.



Cash Flows 
Financing Activities



Cash flows used for financing
activities were $0.4 million for both the three months ended March 31, 2005 and 2004.



Cash flows from financing activities for the three months ended March 31, 2005 was the result of the repayment of $0.4 million of previous borrowings under the senior credit facility. Cash flows from financing
activities for the three months ended March 31, 2004 was the result of the repayment of $0.4 million of previous borrowings under the senior credit facility.





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##### Table of Contents

Future Sources of Liquidity and Cash Requirements



We believe that our existing cash and cash equivalents of $0.7 million at
March 31, 2005 and net cash provided by operating activities will be sufficient to meet the future cash requirements and obligations described below. As of March 31, 2005, there was approximately $8.5 million of unused commitments under our senior
secured credit facility. As of April 1, 2005, after giving effect to the April 1, 2005 refinancing, there was $47.5 million of total unused commitments under our senior secured credit facility. We believe that cash generated through future
operations and availability of borrowings under our credit facility will be sufficient to fund our debt service and working capital requirements for the foreseeable future. We anticipate that our capital expenditures and future acquisitions will be
financed through cash flow generated from operations and borrowings available under our credit facility. We will continue to evaluate the best use of our operating cash flow among capital expenditures, acquisitions and debt reduction.



Our credit facility does not allow for the payment of cash dividends,
therefore, we have not declared or paid a cash dividend and the payment of cash dividends is not anticipated in the foreseeable future.



Future Sources of Financing and Debt Service Requirements



As of March 31, 2005, we had debt of $172.4 million, which represented 190.7% 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 will reduce 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 March 31, 2005, and does not include any adjustment for changes in the terms of long-term debt obligations resulting from the Companys new credit facility agreement
which occurred on April 1, 2005:



|                               |  |                |         |                  |   |           |  |           |       |            |   |        |  |   |        
|------------------------------ |  | -------------- | ------- | ---------------- | - | --------- |  | --------- | ----- | ---------- | - | ------ |  | - | -------
|                               |  | Total          |         | Remainderof 2005 |   | 2006-2007 |  | 2008-2009 |       | Thereafter
|                               |  | (in thousands)
|Mission senior credit facility |  | $              | 172,360 |                  | $ | 1,140     |  | $         | 3,040 |            | $ | 24,540 |  | $ | 143,640



The following table
summarizes the approximate aggregate amount of principal indebtedness scheduled to mature for the periods referenced as of April 1, 2005, after giving effect to the April 1, 2005 refinancing:



|                               |  |                |         |                  |   |           |  |           |       |            |   |       |  |   |        
|------------------------------ |  | -------------- | ------- | ---------------- | - | --------- |  | --------- | ----- | ---------- | - | ----- |  | - | -------
|                               |  | Total          |         | Remainderof 2005 |   | 2006-2007 |  | 2008-2009 |       | Thereafter
|                               |  | (in thousands)
|Mission senior credit facility |  | $              | 172,700 |                  | $ | 432       |  | $         | 3,454 |            | $ | 3,454 |  | $ | 165,360



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 Cross Guarantees of Debt



Nexstar and its subsidiaries guarantee full payment of any obligations under our credit facility in the event of our default. Similarly, we are a
guarantor of the Nexstar 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 March 31, 2005, Nexstar has a maximum commitment of $132.4 million under its senior credit facility, of which $82.4 million of debt is outstanding and had issued an aggregate principal amount of $285.0 million of senior subordinated notes.



Debt Covenants



The bank credit facility agreements described above contain covenants which
require the Company to comply with certain financial ratios, including: (a) maximum total and senior leverage ratios, (b) a minimum interest coverage ratio, and (c) a minimum fixed charge coverage ratio. In addition, the credit facility agreements
limit the amount of capital expenditures, cash payments for broadcast rights and impose other restrictions. The covenants, which are formally calculated on a quarterly basis, are based on the combined results of Nexstar and Mission.



As of March 31, 2005, the Company believes that it was in compliance with all
covenants contained in the credit agreement governing the senior secured credit facility. Management of the Company anticipates compliance with all the covenants through December 31, 2005. For a discussion of the subsequent modification of these
ratios, we refer you to Note 6 of our financial statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q.



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##### Table of Contents

Guarantor of Senior Subordinated Notes



We are a guarantor of Nexstars $160.0 million of 12% senior
subordinated notes (12% Notes). The 12% Notes mature on April 1, 2008. Interest is payable every six months in arrears on April 1 and October 1. The 12% Notes are general unsecured senior subordinated obligations subordinated to all of
our senior debt. The 12% Notes were redeemed by Nexstar on April 1, 2005.



We are a guarantor of Nexstars $125.0 million of 7% senior subordinated notes (7% Notes). The 7% Notes mature on January 15, 2014. Interest is payable every six months in arrears on January 15 and
July 15. The 7% Notes are general unsecured senior subordinated obligations subordinated to all of our senior debt. In conjunction with the redemption of the 12% Notes, Nexstar issued $75.0 million in the aggregate principal amount of additional 7%
Notes at a price of 98.01% on April 1, 2005.



Future Cash
Requirements for Digital Television (DTV) Conversion



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 $0.2 million for the three months ended March 31, 2005. There were no digital
conversion expenditures incurred during the three months ended March 31, 2004.



Full-Power DTV Facilities Construction



We estimate that it will require an average capital expenditure of approximately $1.5 million per station (for 11 stations) to modify our stations DTV transmitters 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. Stations that fail to meet FCCs build-out deadlines will lose interference protection for their signals outside their low-power coverage areas. As of March 31, 2005, only our stations WUTR and WTVO are
transmitting full-power digital signals.



Other New DTV
Requirements



The FCC also adopted additional Program
System and Information Protocol (PSIP) requirements. All DTV stations were required to comply with the PSIP requirements by February 1, 2005. We requested an extension of time from the FCC to comply with the PSIP requirements due to
vendor delivery and installation issues. The installation of the equipment necessary to meet the PSIP requirements cost approximately $0.4 million in total for our stations. These expenditures are being funded in 2005 through available cash on hand
and cash generated from operations.



No Off-Balance Sheet
Arrangements



At March 31, 2005, 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.



Contractual Obligations



The following summarizes our contractual obligations at April 1, 2005, after
giving effect to the April 1, 2005 refinancing, and the effect such obligations are expected to have on our liquidity and cash flow in future periods.



|                                     |  |                |         |                   |   |             |  |             |        |            |   |        |  |   |        
|------------------------------------ |  | -------------- | ------- | ----------------- | - | ----------- |  | ----------- | ------ | ---------- | - | ------ |  | - | -------
|                                     |  | Total          |         | Remainder of 2005 |   | 2006  2007 |  | 2008  2009 |        | Thereafter
|                                     |  | (in thousands)
|Senior credit facility               |  | $              | 172,700 |                   | $ | 432         |  | $           | 3,454  |            | $ | 3,454  |  | $ | 165,360
|Cash interest on debt                |  |                | 80,406  |                   |   | 8,767       |  |             | 18,638 |            |   | 21,190 |  |   | 31,811 
|Broadcast rights current obligations |  |                | 2,361   |                   |   | 1,414       |  |             | 885    |            |   | 62     |  |   |       
|Broadcast rights future commitments  |  |                | 1,629   |                   |   | 159         |  |             | 846    |            |   | 393    |  |   | 231    
|Capital commitments                  |  |                | 5,601   |                   |   | 185         |  |             | 2,564  |            |   | 2,852  |  |   |       
|Operating lease obligations          |  |                | 19,765  |                   |   | 952         |  |             | 1,701  |            |   | 1,797  |  |   | 15,315 
|                                     |  |                |         |                   |   |             |  |             |        |            |   |        |  |   |        
|Total contractual cash obligations   |  | $              | 282,462 |                   | $ | 11,909      |  | $           | 28,088 |            | $ | 29,748 |  | $ | 212,717
|                                     |  |                |         |                   |   |             |  |             |        |            |   |        |  |   |        





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Critical Accounting Policies and Estimates



Our condensed financial statements have been prepared in accordance with 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 34 through 36 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, 2004. Management believes that as of March 31, 2005 there has been no material change to this information.



Recent Accounting Pronouncements



Refer to Note 2 of our financial statements in Part 1, 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.



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 March 31, 2005 under our senior credit facility bear
interest ranging from 6.25% to 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 April 1, 2005, after giving effect to the April
1, 2005 refinancing, 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 |  | $                      | 9,067 |                            | $ | 9,930                  |        | $ | 10,794  |  | $ | 11,657 |  | $ | 12,521



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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##### Table of Contents

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 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.*                           

---

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



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##### Table of Contents

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./s/ DAVID S. SMITHBy:

David S. SmithIts:

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




|Dated: | May 9, 2005
|------ | -----------



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