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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC
20549

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FORM 10-Q

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

Commission File Number:
333-62916-02

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MISSION BROADCASTING, INC. (Exact name of registrant as
specified in its charter)

|Delaware                                                     |  | 51-0388022                                          
|------------------------------------------------------------ |  | ----------------------------------------------------
|(State of Organization or Incorporation)                     |  | (IRS Employer Identification No.)                   
|                                                             |  |                                                     
|409 Lackawanna Avenue                                        |  |                                                     
|Scranton, PA  18503                                          |  | (570) 961-2222                                      
|(Address of Principal Executive Offices, including Zip Code) |  | (Registrants Telephone Number, Including Area Code)
|                                                             |  |                                                     

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

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

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

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

As of June 30, 2003, Mission Broadcasting, Inc. had one shareholder, David S. Smith.  Mr. Smith owned 1,000 shares of common stock at June 30, 2003.

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TABLE OF CONTENTS

|           |                                                                                                                                         | Page
|---------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----
|           |                                                                                                                                         |     
|PART I     | FINANCIAL INFORMATION                                                                                                                   |     
|           |                                                                                                                                         |     
|ITEM 1.    | Financial Statements (Unaudited)                                                                                                        |     
|           |                                                                                                                                         |     
|           | Balance Sheets - December 31, 2002 and June 30, 2003                                                                                    | 1   
|           |                                                                                                                                         |     
|           | Statements of Operations for the three months and six months ended June 30, 2002 and 2003                                               | 2   
|           |                                                                                                                                         |     
|           | Statements of Changes in Shareholders Deficit for the year ended December 31, 2002 and for the six months ended June 30, 2002 and 2003 | 3   
|           |                                                                                                                                         |     
|           | Statements of Cash Flows for the six months ended June 30, 2002 and 2003                                                                | 4   
|           |                                                                                                                                         |     
|           | Notes to Financial Statements                                                                                                           | 5   
|           |                                                                                                                                         |     
|ITEM 2.    | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                   | 14  
|           |                                                                                                                                         |     
|ITEM 3.    | Quantitative and Qualitative Disclosures about Market Risk                                                                              | 21  
|           |                                                                                                                                         |     
|ITEM 4.    | Controls and Procedures                                                                                                                 | 22  
|           |                                                                                                                                         |     
|PART II    | OTHER INFORMATION                                                                                                                       |     
|           |                                                                                                                                         |     
|ITEM 1.    | Legal Proceedings                                                                                                                       | 23  
|           |                                                                                                                                         |     
|ITEM 2.    | Changes in Securities and Use of Proceeds                                                                                               | 23  
|           |                                                                                                                                         |     
|ITEM 3.    | Defaults Upon Senior Securities                                                                                                         | 23  
|           |                                                                                                                                         |     
|ITEM 4.    | Submission of Matters to a Vote of Security Holders                                                                                     | 23  
|           |                                                                                                                                         |     
|ITEM 5.    | Other Information                                                                                                                       | 23  
|           |                                                                                                                                         |     
|ITEM 6.    | Exhibits and Reports on Form 8-K                                                                                                        | 23  
|           |                                                                                                                                         |     
|SIGNATURES | 24                                                                                                                                     

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PART I.     FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

MISSION BROADCASTING, INC.

BALANCE SHEETS

|                                                                                                                                    |  | December 31, 2002                   |         | June 30,  2003 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------- | -------------- | -
|                                                                                                                                    |  |                                     |         |                |  
|                                                                                                                                    |  | (Unaudited)  (dollars in thousands) |        
|ASSETS                                                                                                                              |  |                                     |         |                |  
|Current assets:                                                                                                                     |  |                                     |         |                |  
|Cash and cash equivalents                                                                                                           |  | $                                   | 503     |                | $
|Accounts receivable, net of allowance for doubtful accounts of $55 and $176, respectively                                           |  |                                     | 2,690   |                |  
|Current portion of broadcast rights                                                                                                 |  |                                     | 1,799   |                |  
|Prepaid expenses and other current assets                                                                                           |  |                                     | 13      |                |  
|Taxes receivable                                                                                                                    |  |                                     | 62      |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Total current assets                                                                                                                |  |                                     | 5,067   |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Property and equipment, net                                                                                                         |  |                                     | 5,759   |                |  
|Broadcast rights                                                                                                                    |  |                                     | 1,715   |                |  
|Other noncurrent assets                                                                                                             |  |                                     | 1,569   |                |  
|Goodwill, net                                                                                                                       |  |                                     | 8,046   |                |  
|Intangible assets, net                                                                                                              |  |                                     | 26,764  |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Total assets                                                                                                                        |  | $                                   | 48,920  |                | $
|                                                                                                                                    |  |                                     |         |                |  
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                               |  |                                     |         |                |  
|Current liabilities:                                                                                                                |  |                                     |         |                |  
|Current portion of debt                                                                                                             |  | $                                   |        |                | $
|Current portion of broadcast rights payable                                                                                         |  |                                     | 2,024   |                |  
|Accounts payable                                                                                                                    |  |                                     | 44      |                |  
|Accrued expenses                                                                                                                    |  |                                     | 407     |                |  
|Interest payable                                                                                                                    |  |                                     | 80      |                |  
|Deferred revenue                                                                                                                    |  |                                     | 25      |                |  
|Due to Nexstar Finance, L.L.C                                                                                                       |  |                                     | 6,801   |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Total current liabilities                                                                                                           |  |                                     | 9,381   |                |  
|Debt                                                                                                                                |  |                                     | 55,143  |                |  
|Broadcast rights payable                                                                                                            |  |                                     | 2,047   |                |  
|Deferred tax liabilities                                                                                                            |  |                                     |        |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Total liabilities                                                                                                                   |  |                                     | 66,571  |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Commitments and contingencies (Note 10)                                                                                             |  |                                     |         |                |  
|Minority interest in consolidated entity                                                                                            |  |                                     |        |                |  
|                                                                                                                                    |  |                                     |         |                |  
|Shareholders deficit:                                                                                                              |  |                                     |         |                |  
|Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding at December 31, 2002 and June 30, 2003, respectively |  |                                     | 1       |                |  
|Subscription receivable                                                                                                             |  |                                     | (1      | )              |  
|Accumulated deficit                                                                                                                 |  |                                     | (17,651 | )              |  
|                                                                                                                                    |  |                                     |         |                |  
|Total shareholders deficit                                                                                                         |  |                                     | (17,651 | )              |  
|                                                                                                                                    |  |                                     |         |                |  
|Total liabilities and shareholders deficit                                                                                         |  | $                                   | 48,920  |                | $
|                                                                                                                                    |  |                                     |         |                |  

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

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MISSION BROADCASTING, INC.

STATEMENTS OF OPERATIONS

|                                                                                                                  |  | Three Months Ended June 30,        |       | Six Months Ended June 30,          |  
|----------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ----- | ---------------------------------- | -
|                                                                                                                  |  |                                    |       |                                    |  
|                                                                                                                  |  | 2002                               |       | 2003                               |  
|                                                                                                                  |  |                                    |       |                                    |  
|                                                                                                                  |  | (Unaudited) (dollars in thousands) |       | (Unaudited) (dollars in thousands) |  
|Revenue (excluding trade and barter)                                                                              |  | $                                  | 3,805 |                                    | $
|Less: commissions                                                                                                 |  |                                    | (537  | )                                  |  
|                                                                                                                  |  |                                    |       |                                    |  
|Net broadcast revenue (excluding trade and barter)                                                                |  |                                    | 3,268 |                                    |  
|Trade and barter revenue                                                                                          |  |                                    | 318   |                                    |  
|Revenue from Nexstar Finance, L.L.C                                                                               |  |                                    | 490   |                                    |  
|                                                                                                                  |  |                                    |       |                                    |  
|Total net revenue                                                                                                 |  |                                    | 4,076 |                                    |  
|                                                                                                                  |  |                                    |       |                                    |  
|Operating expenses:                                                                                               |  |                                    |       |                                    |  
|Direct operating expenses (exclusive of depreciation and amortization shown separately below)                     |  |                                    | 419   |                                    |  
|Selling, general, and administrative expenses (exclusive of depreciation and amortization shown separately below) |  |                                    | 875   |                                    |  
|Selling, general and administrative expenses paid to Nexstar Finance, L.L.C                                       |  |                                    | 1,232 |                                    |  
|Amortization of broadcast rights                                                                                  |  |                                    | 469   |                                    |  
|Amortization of intangible assets                                                                                 |  |                                    | 212   |                                    |  
|Depreciation                                                                                                      |  |                                    | 313   |                                    |  
|                                                                                                                  |  |                                    |       |                                    |  
|Total operating expenses                                                                                          |  |                                    | 3,520 |                                    |  
|                                                                                                                  |  |                                    |       |                                    |  
|Income (loss) from operations                                                                                     |  |                                    | 556   |                                    |  
|Interest expense, including amortization of debt financing costs                                                  |  |                                    | (746  | )                                  |  
|Interest income                                                                                                   |  |                                    | 1     |                                    |  
|Other income (expenses), net                                                                                      |  |                                    | (1    | )                                  |  
|                                                                                                                  |  |                                    |       |                                    |  
|Loss before income taxes and minority interest                                                                    |  |                                    | (190  | )                                  |  
|Income tax expense                                                                                                |  |                                    | (57   | )                                  |  
|Minority interest in consolidated entity                                                                          |  |                                    |      |                                    |  
|                                                                                                                  |  |                                    |       |                                    |  
|Net loss                                                                                                          |  | $                                  | (247  | )                                  | $
|                                                                                                                  |  |                                    |       |                                    |  

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

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MISSION BROADCASTING, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS DEFICIT

|                                         |        | Common Stock |           | Subscription Receivable |   | Accumulated Deficit |  | Total Shareholders Deficit |   
|---------------------------------------- | ------ | ------------ | --------- | ----------------------- | - | ------------------- |  | --------------------------- | --
|                                         |        |              |           |                        
|                                         |        |              |           |                         |  
|                                         | Shares |              | Par Value |                         |   |                     | 
|                                         |        |              |           |                         |   |                     |  |                             |   
|                                         |        |              |           |                         |   |                     |  |                             |   
|Balance at January 1, 2002 (Unaudited)   |        |              | 1,000     |                         | $ | 1                   |  | $                           | (1
|Net loss                                 |        |              |          |                         |   |                    |  |                             |  
|                                         |        |              |           |                         |   |                     |  |                             |   
|Balance at June 30, 2002 (Unaudited)     |        |              | 1,000     |                         |   | 1                   |  |                             | (1
|Net loss                                 |        |              |          |                         |   |                    |  |                             |  
|                                         |        |              |           |                         |   |                     |  |                             |   
|Balance at December 31, 2002 (Unaudited) |        |              | 1,000     |                         |   | 1                   |  |                             | (1
|Net loss                                 |        |              |          |                         |   |                    |  |                             |  
|                                         |        |              |           |                         |   |                     |  |                             |   
|Balance at June 30, 2003  (Unaudited)    |        |              | 1,000     |                         | $ | 1                   |  | $                           | (1
|                                         |        |              |           |                         |   |                     |  |                             |   

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

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MISSION BROADCASTING, INC.

STATEMENTS OF CASH FLOWS

|                                                                                |  | Six Months Ended June 30,          |     
|------------------------------------------------------------------------------- |  | ---------------------------------- | ----
|                                                                                |  |                                    |     
|                                                                                |  | 2002                               |     
|                                                                                |  |                                    |     
|                                                                                |  | (Unaudited) (dollars in thousands) |     
|Cash flows from operating activities:                                           |  |                                    |     
|Net loss                                                                        |  | $                                  | (990
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                    |     
|Deferred income taxes                                                           |  |                                    |    
|Depreciation of property and equipment                                          |  |                                    | 626 
|Amortization of intangible assets                                               |  |                                    | 417 
|Amortization of debt financing costs                                            |  |                                    | 97  
|Amortization of broadcast rights, excluding barter                              |  |                                    | 478 
|Payments for broadcast rights                                                   |  |                                    | (458
|Loss (gain) on asset disposal, net                                              |  |                                    | 3   
|Minority interest in consolidated entity                                        |  |                                    |    
|Changes in assets and liabilities:                                              |  |                                    |     
|Decrease (increase) in accounts receivable                                      |  |                                    | (845
|Increase in prepaid expenses and other current assets                           |  |                                    | (71 
|Decrease in tax receivable                                                      |  |                                    |    
|Decrease in other noncurrent assets                                             |  |                                    |    
|Increase in taxes payable                                                       |  |                                    | 116 
|Increase in accounts payable and accrued expenses                               |  |                                    | 64  
|Increase (decrease) in interest payable                                         |  |                                    | (198
|Increase in deferred revenue                                                    |  |                                    | 10  
|Increase in due to Nexstar Finance, L.L.C                                       |  |                                    | 653 
|                                                                                |  |                                    |     
|Net cash provided by (used for) operating activities                            |  |                                    | (98 
|                                                                                |  |                                    |     
|Cash flows from investing activities:                                           |  |                                    |     
|Additions to property and equipment, net                                        |  |                                    | (81 
|Proceeds from sale of assets                                                    |  |                                    |    
|Acquisition of broadcast properties and related transaction costs               |  |                                    | (35 
|Down payment on acquisition of stations                                         |  |                                    |    
|                                                                                |  |                                    |     
|Net cash used for investing activities                                          |  |                                    | (116
|                                                                                |  |                                    |     
|Cash flows from financing activities:                                           |  |                                    |     
|Proceeds from debt issuance and revolver draws                                  |  |                                    |    
|Repayment of loans                                                              |  |                                    |    
|Payments for debt finance costs                                                 |  |                                    | (4  
|                                                                                |  |                                    |     
|Net cash provided by (used for) financing activities                            |  |                                    | (4  
|                                                                                |  |                                    |     
|Net increase (decrease) in cash and cash equivalents                            |  |                                    | (218
|Cash and cash equivalents at beginning of period                                |  |                                    | 584 
|                                                                                |  |                                    |     
|Cash and cash equivalents at end of period                                      |  | $                                  | 366 
|                                                                                |  |                                    |     

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

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MISSION BROADCASTING, INC.

NOTES TO FINANCIAL STATEMENTS

1.Organization and Business Operations

Mission Broadcasting, Inc. (Mission or the Company), formerly known as Mission Broadcasting of Wichita Falls, Inc. (Mission of Wichita
Falls), completed a merger with Bastet Broadcasting, Inc. (Bastet) and Mission Broadcasting of Joplin, Inc. (Mission of Joplin), a wholly owned subsidiary of Mission of Wichita Falls, on September 30, 2002.  Bastet
and Mission were separate entities, 100% owned by the same party at the beginning of fiscal year 2002.  Bastet was formed in 1997 to own and operate television stations in small- and medium-sized markets across the United States.  Bastet
completed its first acquisition in January 1998, with the purchase of WYOU, the CBS affiliate in Wilkes Barre-Scranton, Pennsylvania.  Bastet subsequently purchased WFXP, the Fox affiliate in Erie, Pennsylvania, in November 1998.  Mission
of Wichita Falls was incorporated in 1998, and commenced operations on June 1, 1999, with its acquisition of KJTL, a Fox affiliated station, and KJBO-LP, a UPN affiliated station, both in Wichita Falls, Texas.  In December 2001, Mission of
Joplin entered into a Time Brokerage Agreement (TBA) with GOCOM Broadcasting of Joplin, L.L.C. (GOCOM) to provide certain programming to and to sell the advertising time of KODE, the ABC affiliate in Joplin, Missouri, pending
the acquisition of the stations assets, which closed on September 30, 2002.

On December 13, 2002, Mission entered into a local marketing
agreement with LIN Television Corporation and two of its subsidiaries, the owners of KRBC, the NBC affiliate in Abilene-Sweetwater, Texas, and KACB, the NBC affiliate in San Angelo, Texas, pending the sale of the stations to Mission, and
simultaneously entered into a purchase agreement to acquire the stations. Operations under the local marketing agreement commenced on January 1, 2003 and terminated upon purchase of the stations. On June 13, 2003, Mission purchased substantially all
of the assets of the stations for $10.0 million. Pursuant to the terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price in December 2002, which has been included in noncurrent assets as of December
31, 2002, and paid the remaining $8.5 million upon the consummation of the acquisition on June 13, 2003, exclusive of transaction costs. On June 13, 2003, Mission entered into a shared services agreement (SSA) with a subsidiary of
Nexstar Finance, L.L.C. (Nexstar) whereby Nexstars station, KTAB, provides news production, technical maintenance and security to KRBC and KACB in exchange for monthly payments to Nexstar.

Mission has entered into various service agreements with subsidiaries of Nexstar (See Note 4).  WFXP has a TBA with Nexstar, which allows Nexstar to program most of the
stations broadcast time, sell the stations advertising time and retain the advertising revenue generated by WFXP in exchange for monthly payments to Mission.  KJTL and KJBO-LP have an SSA with Nexstar, which allows the sharing of
services including news production, technical maintenance and security, in exchange for Nexstars right to receive certain payments from Mission as described in the SSA.  These payments have the effect of Nexstar receiving substantially
all of the available cash, after payment of debt service costs, generated by KJTL and KJBO-LP.  We anticipate that the payments required by the SSA with KJTL and KJBO-LP will continue to have the effect of Nexstar receiving substantially all of
the available cash, after payment of debt service costs, generated by KJTL and KJBO-LP.  Through a Joint Sales Agreement (JSA), Mission has also granted Nexstar the right to sell and receive the revenue from the advertising time on
KJTL and KJBO-LP in return for monthly payments to Mission.  WYOU, KODE, KRBC, KACB and WBAK each have an SSA with Nexstar, and WBAK has a JSA with Nexstar, all of which have terms substantially similar to the terms of the SSA and JSA, as
applicable, that KJTL and KJBO-LP have with Nexstar, except that the payment terms for the WYOU, KRBC and KACB SSAs provide for payment of a flat monthly fee.  In order for both Nexstar and Mission to continue to comply with Federal
Communications Commission (FCC) regulations, Mission must maintain complete responsibility for and control over programming, finances, personnel and operations of its stations.

In addition to providing certain services to Missions television stations, Nexstar is also the guarantor of Missions debt (See Note 6).  Mission is a guarantor of the
senior credit facilities entered into and the senior subordinated notes issued by Nexstar (See Note 6 and Note 9).

As a result of the service
arrangements, the debt guarantees and the option agreements (described below), Nexstar is deemed to have a controlling financial interest in the Company under U.S. generally accepted accounting principles (U.S. GAAP) while complying with
the FCCs rules regarding ownership limits in television markets. The Company retains control over policies, programming, personnel, finances, advertisements and operations of its stations.

The shareholder of Mission has granted to Nexstar a purchase option on each Mission television station to acquire the assets and liabilities of each station for consideration equal to
the greater of (i) seven times the stations broadcast cash flow less the amount of its indebtedness, as defined in the option agreement or (ii) its indebtedness.  Broadcast cash flow is defined as income or loss from operations, plus
depreciation and amortization (including amortization of broadcast rights), interest income, noncash trade and barter expenses, nonrecurring expenses (including time brokerage agreement fees), network compensation payments received or receivable and
corporate management fees, less payments for broadcast rights, noncash trade and barter revenue and network compensation revenue.  These option agreements are freely exercisable or assignable by Nexstar without consent of or approval by
Missions shareholder.

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.

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MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

1.Organization and Business Operations(Continued)

The
Company is highly leveraged and dependent on its relationships with Nexstar.  This makes the Company highly vulnerable to changes in general economic conditions.  The Companys ability to repay or refinance its debt will depend on,
among other things, financial, business, market, competitive and other conditions, many of which are beyond the control of the Company.  The Company believes that, taken together, its current cash balances, internally generated cash flow,
availability under its credit facilities, and continuation of the various arrangements between Mission and Nexstar 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.

2.    Summary of Significant Accounting Policies

Basis of Presentation

The merger of Bastet and Mission of Joplin into Mission has been accounted for as a combination of entities under common control in a manner
similar to a pooling of interests.  Collectively, Mission owns and operates the following television stations:  WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC and KACB. In addition, Mission provides most of the programming for WBAK, pursuant to a
TBA.

The financial statements as of June 30, 2003 and for the three months and six months ended June 30, 2002 and 2003 are unaudited.  However, in
the opinion of management, such statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with U.S. GAAP and pursuant to the
rules and regulations of the Securities and Exchange Commission.  The preparation of 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.  The 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 year ended December 31, 2002. The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete
financial statements.

Certain prior year amounts have been reclassified to conform to the current year presentation, which have not impacted reported
results. Unless otherwise noted, all dollars are in thousands.

Trade Transactions

The Company trades certain advertising time for various goods and services.  These transactions are recorded at the estimated fair value of the goods or services received. 
Revenue from trade transactions is recognized when advertisements are broadcast and services or merchandise received are charged to expense or capitalized when received or used.  The Company recorded $0.2 million and $0.1 million of trade
revenue for the three months ended June 30, 2003 and 2002, respectively, and $0.2 million and $0.2 million of trade revenue for the six months ended June 30, 2003 and 2002, respectively.

Broadcast Rights and Broadcast Rights Payable, Cash and Barter

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

The Company barters advertising time for
certain program material.  These transactions, except those involving exchange of advertising time for network programming, are recorded at managements estimate of the value of the advertising time exchanged, which approximates the fair
value of the program material received.  The value of advertising time exchanged is estimated by applying average historical advertising rates for specific time periods.  The Company recorded $0.3 million and $0.2 million of barter revenue
for the three months ended June 30, 2003 and 2002, respectively, and $0.6 million and $0.5 million of barter revenue for the six months ended June 30, 2003 and 2002, respectively. The Company recorded $0.4 million and $0.3 million of trade and
barter expense for the three months ended June 30, 2003 and 2002, respectively, and $0.8 million and $0.6 million of trade and barter expense for the six months ended June 30, 2003 and 2002, respectively.

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MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

2.    Summary of Significant Accounting Policies(Continued)

Intangible Assets

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

As required by SFAS No. 142, the Company completed a
transitional impairment test for goodwill and FCC licenses as of January 1, 2002. No impairment of goodwill or FCC licenses resulted from this test. As of June 30, 2003, the Company did not identify any events that triggered any impairment
assessment.

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

Long-Lived Assets

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

3.Acquisitions

The Company made the acquisitions set forth below, which have been accounted for under the purchase method and, accordingly, the purchase price was
allocated to assets acquired and liabilities assumed based on their estimated fair value on the acquisition date. The financial statements include the operating results of the business from the date of acquisition.

KODE

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

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

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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

3.    Acquisitions(Continued)

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

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

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

KRBC and KACB

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

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

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

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

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

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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

3.    Acquisitions(Continued)

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

|                                                   |  | Three Months Ended June 30, 2002 |       | Three Months Ended June 30, 2003 |  
|-------------------------------------------------- |  | -------------------------------- | ----- | -------------------------------- | -
|                                                   |  |                                  |       |                                  |  
|                                                   |  | As Reported                      |       | Pro Forma                        |  
|                                                   |  |                                  |       |                                  |  
|                                                   |  | (Unaudited)                      |       | (Unaudited)                      |  
|Net broadcast revenue (excluding trade and barter) |  | $                                | 3,268 |                                  | $
|Total net revenue                                  |  |                                  | 4,076 |                                  |  
|Income (loss) from operations                      |  |                                  | 556   |                                  |  
|Net loss                                           |  | $                                | (247  | )                                | $



|                                                   |  | Six Months Ended June 30, 2002 |       | Six Months Ended June 30, 2003 |  
|-------------------------------------------------- |  | ------------------------------ | ----- | ------------------------------ | -
|                                                   |  |                                |       |                                |  
|                                                   |  | As Reported                    |       | Pro Forma                      |  
|                                                   |  |                                |       |                                |  
|                                                   |  | (Unaudited)                    |       | (Unaudited)                    |  
|Net broadcast revenue (excluding trade and barter) |  | $                              | 5,792 |                                | $
|Total net revenue                                  |  |                                | 7,435 |                                |  
|Income (loss) from operations                      |  |                                | 610   |                                |  
|Net loss                                           |  | $                              | (990  | )                              | $

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

4.    Related Party Transactions

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

Mission has agreements in place with subsidiaries of Nexstar in seven markets:  Erie, Pennsylvania; Wichita Falls, Texas-Lawton,
Oklahoma; Wilkes Barre-Scranton, Pennsylvania; Joplin, Missouri-Pittsburg, Kansas; Abilene-Sweetwater, Texas; San Angelo, Texas and Terre Haute, Indiana.

| |  | 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 certain services provided to KJTL and KJBO-LP by Nexstar personnel, Mission pays Nexstar a monthly service fee,
calculated based on the cash flow of KJTL and KJBO-LP.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | In Wichita Falls, Texas-Lawton, Oklahoma, Mission and Nexstar are also parties to an agreement for the sale of commercial time dated as of June 1, 1999, which has an initial term of ten
years.  Under this JSA, Nexstar sells the advertising time on KJTL and KJBO-LP and retains the advertising revenue, in return for payments to Mission of $0.1 million per month, subject to adjustment to assure that each payment equals
Missions actual operating costs plus $10.0 thousand per month.                                                                                                                                                                                                                                    



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

4.    Related Party Transactions(Continued)

| |  | 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 by Nexstar personnel,  Mission pays Nexstar a flat monthly fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | As described in Note 3, in Joplin, Missouri-Pittsburg, Kansas, Mission and GOCOM were parties to a TBA dated December 31, 2001, whereby Mission provided services for KODE.  This
agreement allowed Mission to program most of KODEs broadcast time, sell the stations advertising time and retain advertising revenue in return for a monthly fee paid to GOCOM.  The closing date of the acquisition was September 30,
2002.  The TBA was terminated upon the closing of the transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | 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 monthly service fee calculated based on the cash flows of KODE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | As described in Note 3, in Abilene-Sweetwater and San Angelo, Texas, Mission entered into a local marketing agreement dated December 13, 2002 with LIN Television Corporation and two of its
subsidiaries, the owners of KRBC and KACB. Operations under the local marketing agreement commenced on January 1, 2003 and terminated upon the closing of the acquisition on June 13, 2003 (Note 3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On June 13, 2003, Mission entered into an SSA with Nexstar, which has an initial term of ten years, whereby its station, KTAB, provides news production, technical maintenance and security
for KRBC and KACB. In consideration for the services provided by Nexstar personnel, Mission pays Nexstar a flat monthly fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On May 8, 2003, Mission entered into a time brokerage agreement with Bahakel Communications and certain of its subsidiaries relating to WBAK and simultaneously entered into a purchase
agreement to acquire substantially all of the assets of WBAK, the Fox affiliate in Terre Haute, Indiana, for $3.0 million. Operations under the time brokerage agreement commenced on May 9, 2003 and will terminate upon the purchase of the station.
Pursuant to the terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price, which was funded from Missions senior credit facilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Mission entered into a shared services agreement with Nexstar, effective May 9, 2003, whereby Nexstar-owned WTWO provides certain services to WBAK including production, technical
maintenance and security, among other services. Mission also entered into a joint sales agreement, effective May 9, 2003, whereby WTWO purchases all of the advertising time on WBAK and retains the advertising revenue in return for payments to
Mission of $0.1 million per month, subject to adjustment to assure that each payment equals Missions actual operating costs plus $10.0 thousand per month. The initial term of these agreements are ten years.  Mission has evaluated its
arrangement with Bahakel Communications under Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51 (FIN
No. 46) (See Note 11). Mission has determined it is the primary beneficiary of WBAK and has therefore consolidated the financial position and results of operations of WBAK. Bahakels ownership is currently reflected as minority interest
in these financial statements.

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

Management Agreement

Mission, David S. Smith and Nancie J. Smith, the wife of David S. Smith, are parties to a
management compensation agreement.  Under this agreement, Mission pays David S. Smith up to $0.2 million per year for certain management services and pays Nancie J. Smith by the hour for certain management services.

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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

5.    Intangible Assets and Goodwill

|                                                   |  | Estimated useful life (years) |              | December 31, 2002 |             | June 30, 2003 |            
|-------------------------------------------------- |  | ----------------------------- | ------------ | ----------------- | ----------- | ------------- | -----------
|                                                   |  |                               |              |                   |             |               |            
|                                                   |  |                               |              |                   | (Unaudited) |               | (Unaudited)
|Network affiliation agreements                     |  |                               | 15           |                   | $           | 16,396        |            
|FCC licenses                                       |  |                               | indefinite   |                   |             | 12,606        |            
|Debt financing costs                               |  |                               | term of debt |                   |             | 1,477         |            
|Other intangible assets                            |  |                               | 1-15         |                   |             | 2,542         |            
|                                                   |  |                               |              |                   |             |               |            
|                                                   |  |                               |              |                   |             | 33,021        |            
|Less: accumulated amortization                     |  |                               |              |                   |             | (6,257        | )          
|                                                   |  |                               |              |                   |             |               |            
|Intangible assets, net of accumulated amortization |  |                               |              |                   |             | 26,764        |            
|Goodwill                                           |  |                               | indefinite   |                   |             | 8,046         |            
|                                                   |  |                               |              |                   |             |               |            
|Intangible assets and goodwill, net                |  |                               |              |                   | $           | 34,810        |            
|                                                   |  |                               |              |                   |             |               |            

Total amortization expense from definite-lived intangibles
(excluding debt financing costs) for the year ended December 31, 2002 and six months ended June 30, 2003 was $1.3 million and $1.2 million, respectively.  The estimated useful life of network affiliations contemplates renewals of the underlying
agreements based on the Companys historical ability to renew such agreements without significant cost or modifications to the conditions from which the value of the affiliation was derived.  These renewals can result in estimated useful
lives of individual affiliations ranging from 12 to 20 years.  Management has determined that 15 years is a reasonable estimate within the range of such estimated useful lives.  The carrying value of indefinite-lived intangibles, excluding
goodwill, at December 31, 2002 and June 30, 2003 was $10.7 million and $14.5 million, respectively.  The use of an indefinite life for FCC licenses contemplates the Companys historical ability to renew their licenses, that such renewals
generally may be obtained indefinitely and at little cost, and that the technology used in broadcasting is not expected to be replaced in the foreseeable future.  Therefore, cash flows derived from the FCC licenses are expected to continue
indefinitely.

6.    Debt

Senior Secured Credit Facilities

On January 12, 2001, Mission entered into a credit agreement with a group of commercial banks.  The terms provided for the banks to provide revolving loans to Mission,
not to exceed the aggregate commitment of $43.0 million.  On November 14, 2001, the Mission credit facility was amended to increase the revolving facility to $58.0 million.  The Mission credit facility was amended again on September 30,
2002 in order to permit the merger of Bastet and Mission of Joplin into Mission.

On February 13, 2003, Mission obtained new senior secured credit
facilities (the Mission credit facilities). The Mission credit facilities consist of a $55.0 million term loan and a $30.0 million revolver. Mission used the proceeds from the loans to refinance its existing senior secured credit
facility, pay related debt financing costs and provide additional working capital. Financial covenants under the Mission credit facilities include a total consolidated leverage ratio of Mission and Nexstar of 7.25 times the last twelve months
operating cash flow (as defined in the credit agreement) through March 30, 2004 and a consolidated senior leverage ratio of 4.25 times the last twelve months operating cash through June 29, 2004. Covenants also include, without limitation, an
interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of 1.10 to 1.00 through September 29, 2004. The term loan amortizes at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010. The
outstanding principal amount on the revolving loans mature on December 31, 2009. As of June 30, 2003, Mission had drawn $55.0 million on its term loan and $12.2 million under its revolver. Interest rates associated with the Mission credit facilities
are based, at the option of Mission, on the prevailing prime rate plus an applicable margin or LIBOR plus an applicable margin, as defined in the credit agreement (ranging from 4.29% to 4.54% at June 30, 2003). Interest is fixed for a period ranging
from one month to 12 months, depending on availability of the interest basis selected, except if Mission selects a prime-based loan, in which case the interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable
periodically based on the type of interest rate selected. In addition, Mission is required to pay quarterly commitment fees on the unused portion of the Mission revolver loan commitment based on the consolidated leverage ratio of Mission and Nexstar
for that particular quarter. The Mission term loan is subject to scheduled mandatory repayments, and the Mission revolver is subject to scheduled mandatory commitment reductions commencing in 2004. Also, Nexstar has entered into a guarantor
agreement, whereby Nexstar guarantees full payment of any obligations outstanding in the event of Missions default.

The refinancing of the senior
credit facility for Mission resulted in the writeoff during the first quarter of 2003 of $1.1 million of certain debt financing costs capitalized at December 31, 2002. The amount is included in interest expense.

11



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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

6.    Debt(Continued)

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

Mission guarantees the senior credit facilities of Nexstar, which have a maximum commitment of $180.0 million. As of June 30, 2003, $130.0 million was outstanding under Nexstars
senior credit facilities.

Debt Covenants

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

7.    Common Stock

The Company is 100% owned by one shareholder, David S. Smith.  As of December
31, 2002 and June 30, 2003, the Company has authorized, issued and outstanding 1,000 shares of common stock with a $1.00 par value.  Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive
dividends when and if declared by the Board of Directors, subject to the preferential right of holders of then outstanding preferred stock.

8.    Income Taxes

The Companys income tax expense for the six months ended June 30, 2002 was $0.1 million compared to the income tax expense for the six months ended June 30,
2003 of $0.5 million.  The Companys effective tax rate was 17.3% for the six months ended June 30, 2002 as compared to the effective tax rate of 17.9% for the six months ended June 30, 2003.  The significant differences from the
statutory rate and the effective tax rate for the six months ended June 30, 2003 include an increase in the valuation allowance and state taxes, net of the federal benefit.

9.    Guarantee

On March 16, 2001, Nexstar issued $160.0 million of 12.0% senior subordinated notes
(the Notes).  The Notes mature on April 1, 2008.  The Notes are guaranteed by Nexstar, all of the domestic existing and future restricted subsidiaries of Nexstar and by Mission.  The maximum amount of potential liability
is $160.0 million at June 30, 2003.

10.    Commitments and Contingencies

Digital
Conversion

All of the Companys stations currently are operating low power digital facilities. The Company is currently working with Bahakel
Communications to initiate low power digital facilities for WBAK, which has until September 14, 2003 to begin digital operations. The Companys purchase of WBAK is due to close during the fourth quarter of 2003.  The Company estimates that
the digital conversion required an average initial capital investment of $0.2 million per station for low-power transmission of digital signal programming and will require an average additional capital expenditure of $0.7 million per station to
modify the transmitter for full-power digital signal transmission.  Expenditures for digital conversion were $0.2 million for the year ended December 31, 2002 and $0.7 million for the six months ended June 30, 2003.  The Company has
entered into a commitment of approximately $0.2 million payable in 2003 for the WBAK digital conversion. The Company anticipates that digital conversion expenditures will be funded through available cash on hand and cash generated from
operations.

Guarantor Arrangements

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

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##### Table of Contents

MISSION BROADCASTING, INC.

NOTES TO FINANCIAL
STATEMENTS(Continued)

10.    Commitments and Contingencies(Continued)

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

In connection with most of the Companys acquisitions, the Company enters into local service agreements for specified periods of time, usually six months or less, whereby the
Company indemnifies the owner and operator of the television station, their employees, agents and contractors from liability, claims, and damages arising from the Companys activities of operating the television station. The maximum potential
amount of future payments the Company could be required to make for such obligations is undeterminable at this time. The Company has not incurred any costs to defend lawsuits or settle claims related to these indemnification agreements.

Litigation

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

11.    Recently Issued Accounting Standards

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

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

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

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

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

We make references throughout our Managements Discussion and Analysis of Financial
Condition and Results of Operations to comparisons on a same station basis in order to provide a more meaningful comparison of annual growth from internal operations which may be masked by growth from acquisitions.  These
comparisons refer to stations that we have owned at the beginning and end of a particular period.  In particular, references to a comparison on a same station basis for the three months and six months ended June 30, 2003, versus the three
months and six months ended June 30, 2002 include the following stations: WYOU, WFXP, KJTL and KJBO-LP.  As used in the report, unless the context indicates otherwise, Mission refers to Mission Broadcasting, Inc., including Mission
Broadcasting of Joplin, Inc. and Bastet Broadcasting, Inc. as if the merger had taken place on January 1, 2002; and all references to we, our, and us refer to Mission.

Introduction

We own and operate the following television stations:  WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC and
KACB.  In addition, we program WBAK pursuant to a time brokerage agreement. We have various local service agreements with subsidiaries of Nexstar Finance, L.L.C. (Nexstar), through which Nexstar provides various management, sales or
other services to our television stations.  In order for both Nexstar and us to continue to comply with FCC regulations, we must maintain complete responsibility for and control over programming, finances, personnel and operations of our
stations.

We have the following local service agreements with Nexstar:

| |  | WFXP has a time brokerage agreement (TBA) with Nexstar, which allows Nexstar to program most of the stations broadcast time, sell the stations
advertising time and retain the advertising revenue generated by WFXP in exchange for monthly payments to us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | KJTL and KJBO-LP have a shared services agreement (SSA) with Nexstar, which 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 shared services agreement.  These payments have had the effect of Nexstar receiving substantially all of the available cash, after payment of debt service
costs, generated by KJTL and KJBO-LP.  We anticipate that the payments required by the SSA with Nexstar will continue to have the effect of Nexstar receiving substantially all of the available cash, after payment of debt service costs,
generated by KJTL and KJBO-LP.  Through a joint sales agreement (JSA), we have also granted Nexstar the rights to sell and receive the revenue from the advertising time on KJTL and KJBO-LP in return for monthly payments to
us.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Each of WYOU, KODE, KRBC, KACB and WBAK has an SSA with Nexstar, and WBAK has a JSA with Nexstar, which have terms substantially similar to the terms of the SSA and JSA with KJTL and
KJBO-LP, except that the payment terms for the WYOU, KRBC and KACB SSAs are a flat monthly fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

In addition to providing certain
services to our television stations, Nexstar also guarantees our bank debt.  Similarly, we are a guarantor of the senior credit facilities entered into and the senior subordinated notes issued by Nexstar.

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

The operating revenue of WYOU, KODE, KRBC and
KACB is derived primarily from advertising revenue, which in turn depends on the economic conditions of the markets in which we operate, the demographic makeup of those markets and the marketing strategy we employ in each market.  The revenues
of KJTL, KJBO-LP, WBAK and WFXP are derived primarily from Nexstars payments to us under the local service agreements. Our primary operating expenses consist of commissions on advertising revenue, employee compensation and related benefits and
programming costs.  A large percentage of the costs involved in the operation of our stations remain relatively fixed.

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

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

Most advertising contracts are short-term and
generally run for a few weeks.  Excluding political revenue, 65.8% and 68.0% of our spot revenue for the six months ended June 30, 2002 and 2003, respectively, was generated from local advertising.  The remainder of our advertising revenue
represents inventory sold for national or political advertising.  Each station has an agreement with a national representative firm that provides for representation outside the particular stations market.  National commission rates
vary within the industry and are governed by each stations agreement.  All national and political revenue derived from advertisements is placed by advertising agencies.  The agencies receive a commission rate of 15.0% for the gross
amount of advertising schedules placed by them.  While the majority of local spot revenue is placed by local agencies, some advertisers place their schedules directly with the local sales staff, thereby eliminating the agency
commission.

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

Acquisitions and Station Agreements

The
acquisitions and local service agreements described below, which were entered into by us during the fiscal year ended December 31, 2002 and the six months ended June 30, 2003 affect the year-to-year comparability of the operating results discussed
below:

| |  | On December 31, 2001, we entered into a TBA with GOCOM Broadcasting of Joplin, L.L.C. to provide certain programming to and to sell the advertising time of KODE, the ABC
affiliate in Joplin, Missouri.  As provided by the TBA, the revenue and operating expenses, excluding depreciation and amortization, are included in our results of operations effective December 31, 2001.  Simultaneously, we entered into a
purchase and sale agreement to purchase substantially all of the stations assets for $14.0 million.  The acquisition was closed on September 30, 2002.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | On April 1, 2002, we entered into an SSA with a subsidiary of Nexstar pursuant to which Nexstar provides news production, technical maintenance and security for KODE, in exchange for
monthly fees paid to Nexstar.                                                                                                                                                                                                                                                                                                                                                            

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| |  | On December 13, 2002, we entered into a purchase agreement and a local marketing agreement with LIN Television Corporation and two of its subsidiaries, the owners of KRBC, the
NBC affiliate in Abilene-Sweetwater, Texas and KACB, the NBC affiliate in San Angelo, Texas.  Operations under the local marketing agreement commenced on January 1, 2003 and terminated upon the purchase of the stations.  On June 13, 2003,
we purchased substantially all of the assets of the stations for $10.0 million.  Pursuant to the terms of the purchase agreement, we made a down payment of $1.5 million against the purchase price in December 2002 and paid the remaining $8.5
million upon the consummation of the acquisition on June 13, 2003, exclusive of transaction costs.  On June 13, 2003 we entered into an SSA with a subsidiary of Nexstar whereby Nexstar-owned KTAB provides news production, technical maintenance
and security for KRBC and KACB.                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | On May 8, 2003, we entered into a TBA and a purchase agreement with Bahakel Communications and certain of its subsidiaries, the current owner of WBAK, the Fox affiliate in Terre Haute,
Indiana. Operations under the TBA commenced on May 9, 2003 and will terminate upon the purchase of the station. Following FCC consent to the transaction, we will purchase substantially all of the assets of WBAK for $3.0 million. Pursuant to the
terms of the purchase agreement, we made a down payment of $1.5 million against the purchase price on May 9, 2003. On May 9, 2003, we entered into an SSA with a subsidiary of Nexstar whereby Nexstar-owned WTWO provides news production, technical
maintenance and security for WBAK. We also entered into a joint sales agreement, effective May 9, 2003, whereby Nexstar-owned WTWO purchases all of the advertising time on WBAK and retains the advertising revenue in return for payments to us of $0.1
million per month, subject to adjustment to assure that each payment equals our actual operating costs plus $10.0 thousand per month.

Recent Developments

On September 30, 2002, Bastet and Mission of Joplin merged into Mission, with Mission as the surviving corporation. The reorganization has been accounted for as a
combination of entities under common control in a manner similar to a pooling of interests and, accordingly, the financial statements for all periods have been restated to reflect the exchange of shareholders interest.

On February 13, 2003, we obtained new senior secured credit facilities.  The facilities consist of a $55.0 million term loan and a $30.0 million revolver. We used the
proceeds from the loans to refinance our existing senior secured credit facility, pay for related debt financing costs and provide additional working capital.  Financial covenants under the new senior secured credit facilities include a total
consolidated leverage ratio of Nexstar and us of 7.25 times the last twelve months operating cash flow (as defined in the credit agreement) through March 30, 2004 and a consolidated senior leverage ratio of 4.25 times the last twelve months
operating cash flow (as defined in the credit agreement) through June 29, 2004.  Covenants also include, without limitation, an interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of 1.10 to 1.00
through September 29, 2004.  The term loan amortizes at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010.  The outstanding principal amount on the revolving loans mature on December 31, 2009.

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Historical Performance

Revenue

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

|                                                     |  | Three Months Ended June 30, |       | Six Months Ended June 30, | 
|---------------------------------------------------- |  | --------------------------- | ----- | ------------------------- | 
|                                                     |  |                             |       |                           | 
|                                                     |  | 2002                        |       | 2003                      | 
|                                                     |  |                             |       |                           | 
|                                                     |  | Amount                      |       | %                         | 
|                                                     |  |                             |       |                           | 
|                                                     |  | (dollars in thousands)      |       | (dollars in thousands)    | 
|Local                                                |  | $                           | 2,107 |                           | 
|National                                             |  |                             | 1,086 |                           | 
|Political                                            |  |                             | 335   |                           | 
|Network compensation                                 |  |                             | 277   |                           | 
|Other                                                |  |                             |      |                           | 
|                                                     |  |                             |       |                           | 
|Total broadcast revenue                              |  |                             | 3,805 |                           | 
|Less: Agency and national representative commissions |  |                             | 537   |                           | 
|                                                     |  |                             |       |                           | 
|Net broadcast revenue                                |  |                             | 3,268 |                           | 
|Trade and barter revenue                             |  |                             | 318   |                           | 
|Revenue from Nexstar Finance, L.L.C.                 |  |                             | 490   |                           | 
|                                                     |  |                             |       |                           | 
|Total net revenue                                    |  | $                           | 4,076 |                           | 
|                                                     |  |                             |       |                           | 

Results of Operations

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

|                                                                             |  | Three Months Ended June 30, |       | Six Months Ended June 30, | 
|---------------------------------------------------------------------------- |  | --------------------------- | ----- | ------------------------- | 
|                                                                             |  |                             |       |                           | 
|                                                                             |  | 2002                        |       | 2003                      | 
|                                                                             |  |                             |       |                           | 
|                                                                             |  | Amount                      |       | %                         | 
|                                                                             |  |                             |       |                           | 
|                                                                             |  | (dollars in thousands)      |       | (dollars in thousands)    | 
|Total net revenue                                                            |  | $                           | 4,076 |                           | 
|Operating expenses:                                                          |  |                             |       |                           | 
|Direct operating expenses, net of trade                                      |  |                             | 351   |                           | 
|Selling, general and  administrative expenses                                |  |                             | 875   |                           | 
|Selling, general and administrative expenses paid to Nexstar Finance, L.L.C. |  |                             | 1,232 |                           | 
|Trade and barter expense                                                     |  |                             | 293   |                           | 
|Depreciation and amortization                                                |  |                             | 525   |                           | 
|Amortization of broadcast rights, excluding barter                           |  |                             | 244   |                           | 
|                                                                             |  |                             |       |                           | 
|Income (loss) from operations                                                |  | $                           | 556   |                           | 
|                                                                             |  |                             |       |                           | 

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

Net broadcast revenue for the three months ended June 30, 2003 was $4.1 million, an increase of $0.8 million, compared to $3.3 million for the three months ended June 30, 2002. 
Of this increase, $0.9 million increase was attributable to the stations acquired or for which a local service agreement was entered into after January 1, 2002.  On a same station basis, net broadcast revenue was $1.9 million for the three
months ended June 30, 2003 as compared to $2.0 million for the same period in 2002.

Direct operating expenses, consisting primarily of news, engineering
and programming, and selling, general and administrative expenses, net of trade, for the three months ended June 30, 2003 were $3.3 million, an increase of $0.8 million, compared to $2.5 million for the three months ended June 30, 2002. Of this
increase, $0.9 million was attributable to the stations acquired or for which a local service agreement was entered into after January 1, 2002.  On a same station basis, direct operating expenses and selling, general and administrative expenses
were $1.5 million for the three months ended June 30, 2003 as compared to $1.6 million for the same period in 2002, a decrease of $0.1 million, or 3.7%.

Amortization of broadcast rights, excluding barter, for the three months ended June 30, 2003 was $0.4 million, compared to $0.2 million for the three month period ended June 30,
2002.  The increase was attributable to the stations acquired after January 1, 2002.

Depreciation of property and equipment and amortization of
intangible assets for the three months ended June 30, 2003 was $0.9 million, an increase of $0.4 million, compared to $0.5 million for the three months ended June 30, 2002. The increase was attributable to the stations acquired after January 1,
2002.

Income from operations for the three months ended June 30, 2003 was $0.1 million as compared to income from operations of $0.5 million for the three
months ended June 30, 2002. Of the $0.4 million decline in income from operations, $0.5 million was attributable to stations acquired after January 1, 2002.  On a same station basis, income from operations was $0.3 million for the three months
ended June 30, 2003 as compared to $0.2 million for the same period in 2002.

Interest expense, including amortization of debt financing costs, for both
the three months ended June 30, 2003 and 2002 was $0.7 million.

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

As a result of the factors discussed above, our net loss was $0.5 million for the three months ended June 30, 2003, compared to a net loss of $0.2 million for the same period in 2002,
an increase in net loss of $0.3 million.

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

Net broadcast revenue for the six months ended June 30, 2003 was $7.3 million, an increase of $1.5 million, compared to $5.8 million for the six months ended June 30, 2002.  Of
this increase, $1.6 million was attributable to the stations acquired or for which a local service agreement was entered into after January 1, 2002.  On a same station basis, net broadcast revenue was $3.4 million for the six months ended June
30, 2003 as compared to $3.5 million for the same period in 2002.

Direct operating expenses, consisting primarily of news, engineering and programming,
and selling, general and administrative expenses, net of trade, for the six months ended June 30, 2003 were $6.3 million, an increase of $1.6 million, compared to $4.7 million for the six months ended June 30, 2002. Of this increase, $1.8 million
was attributable to the stations acquired or for which a local service agreement was entered into after January 1, 2002.  On a same station basis, direct operating expenses and selling, general and administrative expenses were $2.9 million for
the six months ended June 30, 2003 as compared to $3.1 million for the same period in 2002, a decrease of $0.2 million, or 6.4%.

Amortization of
broadcast rights, excluding barter, for the six months ended June 30, 2003 was $0.6 million, compared to $0.5 million for the six month period ended June 30, 2002.  The increase was attributable to the stations acquired after January 1,
2002.

Depreciation of property and equipment and amortization of intangible assets for the six months ended June 30, 2003 was $1.8 million, an increase of
$0.8 million, compared to $1.0 million for the six months ended June 30, 2002. The increase was attributable to the stations acquired after January 1, 2002.

Loss from operations for the six months ended June 30, 2003 was $0.3 million as compared to income from operations of $0.6 million for the six months ended June 30, 2002. Of the $0.9
million decline in income from operations, $1.4 million was attributable to stations acquired after January 1, 2002.  On a same station basis, income from operations was $0.2 million for the six months ended June 30, 2003 as compared to a loss
from operations of $0.2 million for the same period in 2002.

Interest expense, including amortization of debt financing costs, for the six months ended
June 30, 2003 was $2.5 million, compared to $1.5 million for the same period in 2002. The increase was due to the write-off during the first quarter of 2003 of $1.1

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million of debt financing costs that resulted from the refinancing of the existing senior credit facility and an increase in debt to fund the acquisitions of KODE, KRBC and
KACB, partially offset by lower cost of funds.

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

As a result of the factors discussed above, our net loss was $3.1 million for the six months ended June 30, 2003, compared to a net loss of $1.0 million for the same period in 2002, an
increase in net loss of $2.1 million.

Liquidity and Capital Resources

As of June 30, 2003,
cash and cash equivalents were $1.7 million compared to $0.4 million as of June 30, 2002. Our primary sources of liquidity are cash flows from operating activities, including the timing of our payments to Nexstar, and the senior credit
facilities.

Cash flows provided by operating activities were $1.5 million for the six months ended June 30, 2003, compared to cash flows used for
operating activities of $0.1 million for the six months ended June 30, 2002.  The comparative increase in cash flows provided by operations of $1.6 million is primarily due to the timing of payments made or received on operating assets and
liabilities.

Cash flows used for investing activities were $10.8 million for the six months ended June 30, 2003, compared to $0.1 million for the six
months ended June 30, 2002. Cash flows used for investing activities for the six months ended June 30, 2003 included the  remaining $8.5 million payment for the acquisition of KRBC and KACB, a down payment of $1.5 million against the purchase
price of WBAK, and ongoing capital expenditures. We expect to pay the remaining $1.5 million purchase price for WBAK during the fourth quarter of 2003. Cash flows used for investing activities for the six months ended June 30, 2002 were primarily
ongoing capital expenditures.

Cash flow provided by financing activities were $10.5 million for the six months ended June 30, 2003, compared to cash flows
used for financing activities of $4 thousand for the six months ended June 30, 2002. The change in cash flows from financing activities for the six months ended June 30, 2003 was primarily the result of (1) borrowings under the senior credit
facilities of $67.2 million, (2) the repayment of $55.1 million of previous borrowings as a result of the refinancing of the senior credit facility on February 13, 2003, and (3) the payment of financing costs of approximately $1.5 million. As of
June 30, 2003, there was approximately $17.9 million of unused commitments under the senior credit facilities, all of which could be drawn in compliance with the financial covenants under the senior credit facilities. We were in compliance with all
covenants contained in the credit agreements governing our senior credit facilities at June 30, 2003. Our credit agreement was refinanced in February 2003 as a result of our pending acquisitions. The terms of the amended credit facilities are
described below.

Senior Secured Credit Facilities

On January 12, 2001, we entered
into a credit agreement (the credit facility) with a group of commercial banks.  The terms provided for the banks to make revolving loans to us, not to exceed the aggregate commitment of $43.0 million.  On November 14, 2001,
the credit facility was amended to increase the revolving facility to $58.0 million.  The credit facility was amended again on September 30, 2002 in order to permit the merger of Bastet Broadcasting, Inc. and Mission Broadcasting of Joplin,
Inc. into Mission.

On February 13, 2003, we obtained new senior secured credit facilities (the new credit facilities). The new credit
facilities consist of a $55.0 million term loan and a $30.0 million revolver. We used the proceeds from the loans to refinance our existing senior secured credit facility, pay related debt financing costs and provide additional working capital.
Financial covenants under the new credit facilities include a total consolidated leverage ratio of Nexstar and us of 7.25 times the last twelve months operating cash flow (as defined in the credit agreement) through March 30, 2004 and a consolidated
senior leverage ratio of 4.25 times the last twelve months operating cash flow through June 29, 2004. Covenants also include, without limitation, an interest coverage ratio of 1.50 to 1.00 through June 29, 2004 and a fixed charge coverage ratio of
1.10 to 1.00 through September 29, 2004. The term loan amortizes at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010. The outstanding principal amount on the revolving loans mature on December 31, 2009. As of June 30, 2003,
we had drawn $55.0 million on our term loan and $12.2 million under our revolver. Interest rates associated with the new credit facilities are based, at our option, on the prevailing prime rate plus an applicable margin or LIBOR plus an applicable
margin, as defined in the credit agreement (ranging from 4.29% to 4.54% at June 30, 2003). Interest is fixed for a period ranging from one month to 12 months, depending on availability of the interest basis selected, except if we select a
prime-based loan, in which case the interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of interest rate selected. In addition, we are required to pay quarterly commitment
fees on the unused portion of the revolver loan commitment based on the consolidated leverage ratio of Nexstar and us for that particular quarter. The term loan is subject to scheduled mandatory repayments, and the revolver is subject to scheduled
mandatory commitment reductions commencing in 2004. Additionally, Nexstar has entered into a guarantor agreement, whereby Nexstar guarantees full payment of any obligations outstanding in the event of our default.

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The refinancing of our senior credit facility resulted in the write-off during the first quarter of 2003 of $1.1 million of certain
debt financing costs capitalized at December 31, 2002.

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

We guarantee the senior credit facilities of Nexstar, which have a
maximum commitment of $180.0 million. As of June 30, 2003, $130.0 million was outstanding under Nexstars senior credit facilities.

We are highly
leveraged, which makes us vulnerable to changes in general economic conditions. Our ability to repay or refinance our debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond
our control. Based on current operations and anticipated future growth, we believe that, taken together, our current cash balances, internally generated cash flow, availability under our credit facilities, and continuation of the various
arrangements between Mission and Nexstar should result in our having adequate cash resources to meet our debt service and other financial obligations for at least the next twelve months.

Debt Covenants

The bank debt agreement contains covenants which require us to comply with certain financial
ratios, capital expenditures, cash film payments and other limits. We and Nexstar were in compliance with all such covenants at June 30, 2003.

Guarantor of Senior Subordinated Notes

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

Digital Conversion

All of our stations currently are operating low power digital facilities. We are currently
working with Bahakel Communications to initiate low power digital facilities for WBAK, which has until September 14, 2003 to begin digital operations. Our purchase of WBAK is due to close during the fourth quarter of 2003.  We estimate that the
digital conversion required an average initial capital investment of $0.2 million per station for low-power transmission of digital signal programming and will require an average additional capital expenditure of $0.7 million per station to modify
the transmitter for full-power digital signal transmission.  Digital conversion expenditures were $0.2 million for the year ended December 31, 2002 and $0.7 million for the six months ended June 30, 2003. We have entered into a commitment of
approximately $0.2 million payable in 2003 for the WBAK digital conversion. We anticipate that digital conversion expenditures will be funded through available cash on hand and cash generated from operations.

Contractual Obligations

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

|                                           |  | Total |         | 2003 |   | 2004 - 2005 |  | 2006 - 2007 |        | Thereafter |  
|------------------------------------------ |  | ----- | ------- | ---- | - | ----------- |  | ----------- | ------ | ---------- | -
|                                           |  |       |         |      |   |             |  |             |        |            |  
|Senior credit facilities                   |  | $     | 67,150  |      | $ |            |  | $           | 1,100  |            | $
|Cash interest on debt                      |  |       | 24,318  |      |   | 1,450       |  |             | 7,474  |            |  
|Broadcast rights current obligations       |  |       | 3,331   |      |   | 1,284       |  |             | 2,047  |            |  
|Broadcast rights future commitments        |  |       | 3,658   |      |   | 1,723       |  |             | 1,742  |            |  
|Capital commitments for digital television |  |       | 150     |      |   | 150         |  |             |       |            |  
|WBAK purchase price obligation             |  |       | 1,500   |      |   | 1,500       |  |             |       |            |  
|Operating lease obligations                |  |       | 7,390   |      |   | 214         |  |             | 750    |            |  
|                                           |  |       |         |      |   |             |  |             |        |            |  
|Total contractual cash obligations         |  | $     | 107,497 |      | $ | 6,321       |  | $           | 13,113 |            | $
|                                           |  |       |         |      |   |             |  |             |        |            |  

We have a remaining commitment of $1.5 million relating to our
purchase of WBAK that we expect to pay at closing in November 2003.

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

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Critical Accounting Policies and Estimates

Claims and Legal Proceedings

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

Recently Issued Accounting Standards

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

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

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

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

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

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

The following table estimates the changes to cash flow from
operations if interests rates were to fluctuate by 100 or 50 basis points, or bps (where 100 basis points represents one percentage point), in a twelve-month period:

|                         |  | Interest rate decrease |         |  | No change to interest rate |        | Interest rate increase |  
|------------------------ |  | ---------------------- | ------- |  | -------------------------- | ------ | ---------------------- | -
|                         |  |                        |         |  |                            |        |                       
|                         |  |                        | 100 BPS |  |                            | 50 BPS |                        |  
|                         |  |                        |         |  |                            |        |                        |  
|                         |  | (dollars in thousands) |        
|Senior credit facilities |  | $                      | 2,226   |  | $                          | 2,562  |                        | $

Impact of Inflation

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

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ITEM 4.    CONTROLS AND PROCEDURES

(a) Mission carried out an
evaluation as of the end of the period covered by 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) under the Securities Exchange Act of 1934. Based upon that
evaluation, Missions president and treasurer concluded that Missions disclosure controls and procedures (1) were effective in alerting them timely 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) There have been no significant 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, the Companys internal control over financial reporting.

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PART II

ITEM 1.   LEGAL PROCEEDINGS

Not applicable.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5.   OTHER INFORMATION

Not applicable.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

|Exhibit |  |                                                                                                                                                            
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |  | Exhibit                                                                                                                                                    
|        |  |                                                                                                                                                            
|        |  |                                                                                                                                                            
|10.1    |  | Shared Services Agreement, dated as of May 9, 2003, by and between Mission Broadcasting, Inc. and Nexstar Broadcasting of the Midwest, Inc.                
|        |  |                                                                                                                                                            
|10.2    |  | Agreement for the Sale of Commercial time, dated as of May 9, 2003, by and between Mission Broadcasting, Inc. and Nexstar Broadcasting of the Midwest, Inc.
|        |  |                                                                                                                                                            
|10.3    |  | Option Agreement, dated as of May 9, 2003, among Mission Broadcasting, Inc., David Smith and Nexstar Broadcasting of the Midwest, Inc.                     
|        |  |                                                                                                                                                            
|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, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                      

b. Reports on Form 8-K.

(1)   Current Report of Form 8-K filed by Mission Broadcasting, Inc. on July 11, 2003,
disclosing the consummation of Missions acquisition of WBAK.

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SIGNATURES

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

|                       |      | MISSION BROADCASTING, INC.                                                                          
|---------------------- | ---- | ----------------------------------------------------------------------------------------------------
|                       |      |                                                                                                     
|                       |      | /s/    DAVID S. SMITH                                                                               
|                       |      |                                                                                                     
|                       | By:  | David S. Smith                                                                                      
|                       | Its: | President and Treasurer (Principal Executive Officer and Principal Financial and Accounting Officer)
|                       |      |                                                                                                     
|Dated: August 14, 2003 |      |                                                                                                     

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