---




UNITED STATES SECURITIES


AND EXCHANGE COMMISSION


Washington, DC 20549





---




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, 2002
| |  | --------------------------------------------




OR





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

| |  | for the transition period
from to  .
| |  | ------------------------------------




COMMISSION FILE NUMBER: 333-62916





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Nexstar Finance, L.L.C.





Nexstar Finance, Inc.


(Exact name of registrant
as specified in its charter)





DELAWARE (State of
incorporation)

23-3063155 23-3063152 (I.R.S. Employer Identification No.)200 Abington Executive Park, Suite 201 Clarks Summit, Pennsylvania 18411 (Address of Principal Executive Offices, including Zip Code)

(570) 586-5400 (Registrants Telephone Number, Including Area Code)





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 the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes x    No  ̈





As of June 30, 2002, Nexstar Finance, L.L.C. had one member, Nexstar Finance Holdings, L.L.C.,
and Nexstar Finance, Inc. had 1,000 shares of common stock outstanding.





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TABLE OF CONTENTS





PagePART I.    FINANCIAL INFORMATIONItem 1.    Financial Statements (Unaudited)

2Consolidated Balance Sheets  December 31, 2001 and June 30, 2002

2Consolidated Statements of Operations and Other Comprehensive Loss for the three months and six months ended June 30,
2001 and 2002

3Consolidated Statement of Changes in Members Interest for the year ended December 31, 2001 and for the six months
ended June 30, 2002

4Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2002

5Notes to Consolidated Financial Statements

6Item 2.    Managements Discussion and Analysis of Financial Condition and Results of
Operations

18Item 3.    Quantitative and Qualitative Disclosures about Market Risk

28PART II.    OTHER INFORMATIONItem 1.    Legal Proceedings

29Item 2.    Changes in Securities and Use of Proceeds

29Item 3.    Defaults Upon Senior Securities

29Item 4.    Submission of Matters to a Vote of Security Holders

29Item 5.    Other Information

29Item 6.    Exhibits and Reports on Form 8-K

29SIGNATURES

30







1




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PART I





ITEM 1.    FINANCIAL STATEMENTS


NEXSTAR FINANCE, L.L.C.





CONSOLIDATED BALANCE SHEETS





December 31, 2001


June 30, 2002(Unaudited)(dollars in thousands)AssetsCurrent assets:Cash and cash equivalents

$
5,802


$
4,111Accounts receivable, net of allowance for doubtful accounts of $490 and $594, respectively


25,442



26,083Current portion of broadcast rights


10,062



4,870Prepaid expenses and other current assets


993



1,216Deferred tax assets


276



692Taxes receivable


233



1,018Total current assets


42,808



37,990Property and equipment, net


57,383



54,966Broadcast rights


3,685



2,625Due from parent entities


2,782



3,303Other noncurrent assets


8,240



9,403Goodwill, net


87,464



87,464Intangible assets, net


224,782



217,139Total assets

$
427,144


$
412,890Liabilities and Members InterestCurrent liabilities:Current portion of debt

$
488


$
1,290Current portion of capital lease obligations


23



14Current portion of broadcast rights payable


10,242



4,850Accounts payable


3,732



3,436Accrued expenses


3,986



5,003Interest payable


6,041



5,018Deferred revenue


335



1,368Total current liabilities


24,847



20,979Debt


283,342



284,448Broadcast rights payable


3,770



2,760Deferred tax liabilities


6,892



6,892Other liabilities


4,022



3,806Total liabilities


322,873



318,885Commitments and contingencies (Note 8)Members interest:Contributed capital


171,479



170,066Accumulated deficit


(63,477
)


(74,250
)Accumulated other comprehensive loss on derivative instruments


(3,731
)


(1,811
)Total members interest


104,271



94,005Total liabilities and members interest

$
427,144


$
412,890


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




2




---

NEXSTAR FINANCE, L.L.C.





CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS





Three Months Ended June
30,


Six Months Ended June
30,2001


2002


2001


2002(Unaudited) (dollars in
thousands)


(Unaudited) (dollars in
thousands)Revenue (excluding trade and barter)

$
29,643


$
33,623


$
56,246


$
63,622Less: commissions


(4,064
)


(4,633
)


(7,587
)


(8,692
)Net broadcast revenue (excluding trade and barter)


25,579



28,990



48,659



54,930Trade and barter revenue


2,467



2,531



4,992



4,914Total net revenue


28,046



31,521



53,651



59,844Expenses:Operating


7,727



8,819



15,544



17,320Selling, general and administrative


6,740



8,467



13,865



17,001Amortization of broadcast rights


3,722



3,320



7,804



6,904Amortization of intangible assets


5,124



3,218



10,556



6,474Depreciation


3,256



3,252



6,182



6,403Total expenses


26,569



27,076



53,951



54,102Income (loss) from operations


1,477



4,445



(300
)


5,742Interest expense, including amortization of debt financing costs


(9,355
)


(8,715
)


(16,218
)


(17,390
)Interest income


109



25



156



58Other expense, net


(423
)


(1,263
)


(420
)


(262
)Loss before income taxes


(8,192
)


(5,508
)


(16,782
)


(11,852
)Income tax benefit


145



1,260



368



1,079Loss before extraordinary loss from refinancing of credit facilities


(8,047
)


(4,248
)


(16,414
)


(10,773
)Extraordinary loss from refinancing of credit facilities, net of income tax effect










(263
)


Net loss


(8,047
)


(4,248
)


(16,677
)


(10,773
)Other comprehensive loss:Cumulative effect of change in accounting principle










(241
)


Deferral of unrealized derivative gains (losses)


(92
)


955



(2,057
)


1,920Net loss and other comprehensive loss

$
(8,139
)

$
(3,293
)

$
(18,975
)

$
(8,853
)








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




3




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NEXSTAR FINANCE, L.L.C





CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS INTEREST





Contributed Capital


Accumulated Deficit


Other Comprehensive Loss


Total Members Interest(dollars in thousands)Balance at December 31, 2000

$
61,531


$
(30,007
)

$



$
31,524Contributions


140,005











140,005Distributions


(30,057
)










(30,057
)Net loss






(33,470
)






(33,470
)Cumulative effect of change in accounting principle










(241
)


(241
)Deferral of unrealized derivative losses










(3,490
)


(3,490
)Balance at December 31, 2001


171,479



(63,477
)


(3,731
)


104,271Contributions


3











3Distributions


(1,416
)










(1,416
)Net loss






(10,773
)






(10,773
)Deferral of unrealized derivative gains










1,920



1,920Balance at June 30, 2002 (Unaudited)

$
170,066


$
(74,250
)

$
(1,811
)

$
94,005











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




4




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NEXSTAR FINANCE, L.L.C.





CONSOLIDATED STATEMENTS OF CASH FLOWS





Six Months EndedJune 30,2001


2002(Unaudited)(dollars in thousands)Cash flows from operating activities:Net loss

$
(16,677
)

$
(10,773
)Adjustments to reconcile net loss to net cashprovided by operating activities:Deferred income taxes


(447
)


(416
)Depreciation of property and equipment


6,182



6,403Amortization of intangible assets


10,556



6,474Amortization of debt financing costs


928



1,330Amortization of broadcast rights, net of barter


3,899



3,787Payments for broadcast rights


(4,008
)


(3,936
)Loss (gain) on asset disposal, net


347



(14
)Loss from modification of credit facility, net of tax


263



Amortization of debt discount


171



319Effect of accounting for derivative instruments






1,704Changes in assets and liabilities:Increase in accounts receivable and due from parent entities


(965
)


(1,162
)Increase in prepaid expenses and other current assets


(213
)


(223
)Decrease in other noncurrent assets


10



587Increase (decrease) in accounts payable and accrued expenses


(826
)


721Increase in taxes receivable


(463
)


(785
)Increase (decrease) in interest payable


6,061



(1,023
)Increase in deferred revenue


186



1,033Decrease in due to Midwest Television, Inc.


(2,256
)


Net cash provided by operating activities


2,748



4,026Cash flows from investing activities:Additions to property and equipment


(3,951
)


(3,971
)Proceeds from sale of assets


7



Acquisition of broadcast properties


(107,956
)


Net cash used for investing activities


(111,900
)


(3,971
)Cash flows from financing activities:Proceeds from debt issuance


580,094



Repayment of loans


(532,341
)


(2,671
)Proceeds from revolver draws


12,500



2,500Payments for debt finance and transaction costs


(15,920
)


(162
)Cash escrowed for debt service


(10,500
)


Capital contributions


105,003



3Distributions


(30,054
)


(1,416
)Net cash provided by (used for) financing activities


108,782



(1,746
)Net decrease in cash and cash equivalents


(370
)


(1,691
)Cash and cash equivalents at beginning of period


2,750



5,802Cash and cash equivalents at end of period

$
2,380


$
4,111





The accompany notes are an integral part of these consolidated financial
statements







5




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NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





1.    Organization and Business Operations





Nexstar Finance, L.L.C.
(Nexstar) owns, operates and programs, through its subsidiaries, six NBC-affiliated television stations, three ABC-affiliated television stations, four CBS-affiliated television stations and one UPN-affiliated television station in the
United States of America. Nexstar has an outsourcing agreement to provide services for a FOX affiliate owned by a subsidiary of Sinclair Broadcast Group, Inc. Through various local service agreements, Nexstar (i) programs one FOX-affiliated
television station under a Time Brokerage Agreement (TBA), (ii) has a Shared Services Agreement (SSA) with a CBS-affiliated television station and (iii) has an SSA and a Joint Sales Agreement (JSA) with a
FOX-affiliated television station and a low-power UPN-affiliated television station. Additionally, Mission Broadcasting of Joplin, Inc. (Mission of Joplin) provides most of the programming to an ABC-affiliated television station under a
TBA and intends to purchase the underlying licenses and assets in September 2002. Nexstar entered into an SSA with Mission of Joplin on April 1, 2002. The television stations described above are located in New York, Pennsylvania, Illinois, Indiana,
Missouri, Texas and Louisiana.





2.    Summary of Significant Accounting Policies





Basis of presentation





The consolidated financial statements include the accounts of Nexstar, its wholly-owned subsidiaries, Bastet Broadcasting, Inc. (Bastet) and Mission Broadcasting of Wichita Falls, Inc.
(Mission) and their respective subsidiaries (collectively, the Company). Bastet and Mission (collectively, the Mission Group) are separate entities 100% owned by an independent third party. Collectively, the
Mission Group owns and operates the following television stations: WYOU, WFXP, KJTL and KJBO-LP. Additionally, through a TBA, Mission of Joplin, a subsidiary of Mission, provides most of the programming and administrative services for KODE pending
the purchase of the assets in September 2002. Nexstar does not own or control the Mission Group television stations; however, under U.S. generally accepted accounting principles (GAAP), it is deemed to have a controlling financial
interest in them due to the service and option agreements described below. Nexstar has entered into various management and service agreements with all of the Mission Group stations. Nexstar has a TBA with WFXP, which allows Nexstar to program most
of the stations broadcasting time, sell the stations advertising time and retain the advertising revenue generated by WFXP. Nexstar has an SSA with each of KJTL and KJBO-LP, which allows the sharing of services including news production,
technical maintenance and security, in exchange for the right to receive substantially all of the available cash flow generated by KJTL and KJBO-LP. Through a JSA, Nexstar has also acquired the right to sell and receive the revenues from the
advertising time on KJTL and KJBO-LP in return for monthly payments to the Mission Group. Nexstar has an SSA with each of WYOU and KODE, which SSA has terms substantially similar to the terms of the SSA with KJTL and KJBO-LP. Nexstars ability
to obtain cash from the Mission Group is governed by the agreements described above.





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





The owner of the Mission Group has granted to Nexstar a purchase option on each entity to acquire the
assets and liabilities of each entity for consideration equal to its indebtedness, as defined in the option agreement. These option agreements are freely exercisable or assignable by Nexstar without consent or approval by the owner of the Mission
Group.




6




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







As a result of the service arrangements, the debt guarantees and the
option agreements with the Mission Group, Nexstar is deemed to have a controlling financial interest in the Mission Group under U.S. GAAP while complying with the FCCs rules regarding ownership limits in television markets. As a result of
Nexstars controlling financial interest in the Mission Group, Nexstar consolidates the financial position, results of operations and cash flows of the Mission Group stations with Nexstar as if they were wholly-owned entities of Nexstar in
order to provide a more meaningful presentation of Nexstars performance. Because the Mission Group stations have a net asset deficit and there is no binding obligation on the owner of the Mission Group to make capital contributions to cover
the deficit, minority interest in the results of operations and share of net assets have not been recognized.





The
financial statements as of June 30, 2002 and for the three months and six months ended June 30, 2001 and 2002 are unaudited. However, in the opinion of management, such statements include all adjustments (consisting solely of normal recurring
adjustments) necessary for the fair statement of the financial information included herein in accordance with U.S. GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and reported amounts of revenues 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.





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





Goodwill and other intangible assets





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 June 30, 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.





SFAS No. 142 requires that goodwill be tested for impairment using a two-step process. The first
step is to identify a potential impairment by comparing the fair value of a station with its carrying amount and, in transition, this step must be measured as of the beginning of the fiscal year. However, a company has six months from the date of
adoption to complete the first step. The second step of the goodwill impairment test measures the amount of the impairment loss (measured as of the beginning of the year of adoption), if any, and must be completed by the end of the Companys
fiscal year. The Company completed the first step of the impairment test during the quarter ended June 30, 2002 using the discounted cash flow method to estimate the fair value of each of the Nexstar and Mission Group stations. The valuation
assumptions used in the discounted cash flow model reflected historical performance of each station and prevailing values in the markets for broadcasting properties. As a result of this test, the Company identified three stations that require
additional testing for impairment of goodwill. The net carrying amount of goodwill for these three stations at January 1, 2002 was $40.1 million. The second step measures the amount of the impairment loss and will be completed by December 31, 2002.




7




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)




FCC licenses have been tested for impairment using a one-step process, which compares the fair value to the carrying amount of the asset on a station by station basis as of January 1, 2002. The
fair value of each station was determined using the discounted cash flow valuation method that excludes network compensation payments, assuming a hypothetical startup whose only asset is the FCC license. The test resulted in no impairment being
identified. During the year ended December 31, 2001, the Company incurred goodwill amortization expense of $2.8 million.





The following table presents certain financial information assuming that amortization expense associated with goodwill and FCC licenses was excluded for all periods presented:





Three Months Ended June 30,


Six Months EndedJune 30,2001


2002


2001


2002(Unaudited)


(Unaudited)(dollars in thousands)Loss before extraordinary loss from refinancing of credit facilities

$
(8,047
)

$
(4,248
)

$
(16,414
)

$
(10,773
)Add:Goodwill amortization, net of tax


675







1,367



Indefinite-lived intangibles amortization, net of tax


1,255







2,593



Loss before extraordinary loss from refinancing of credit facilitiesas adjusted

$
(6,117
)

$
(4,248
)

$
(12,454
)

$
(10,773
)Net loss

$
(8,047
)

$
(4,248
)

$
(16,677
)

$
(10,773
)Add:Goodwill amortization, net of tax


675







1,367



Indefinite-lived intangibles amortization, net of tax


1,255







2,593



Net lossas adjusted

$
(6,117
)

$
(4,248
)

$
(12,717
)

$
(10,773
)





Long-lived assets





On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(SFAS No. 144). SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and the accounting and reporting provisions relating to the disposal of a segment of a
business described in Accounting Principles Board Opinion No. 30. The adoption did not have a material impact on the Companys financial statements.





Recently issued accounting standards





In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which is effective for fiscal years beginning after May 15, 2002. SFAS 145 rescinds SFAS No. 4 and SFAS No. 64, which
addressed the accounting for gains and losses from extinguishment of debt. SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same
manner as sale-leaseback transactions. SFAS No. 145 also makes technical corrections to certain existing pronouncements that are not substantive in nature. The adoption of SFAS No. 145 may require the reclassification of debt extinguishment costs
presented as an extraordinary item in periods prior to the adoption of the standard.




8




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







3.    Acquisitions





WCIA-TV/WCFN-TV and WMBD-TV





On January 12, 2001, Nexstar acquired substantially all of the assets of WCIA-TV/WCFN-TV and WMBD-TV from Midwest Television, Inc. (Midwest) for approximately $108.0 million, exclusive of
transaction costs. Included in the purchase price was $0.5 million, which was paid directly to the owner of Midwest for the building that houses WCIA-TV. The acquisition has 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. TBA fees in the amount of $2.25 million were paid to Midwest at the time of closing.





The selected unaudited pro forma consolidated information for the six months ended June 30, 2001 and 2002, determined as if the Midwest
acquisition, described above, had occurred on January 1 of each period is as follows:





Six Months EndedJune 30, 2001(1)


June 30, 2002As reported


Pro forma


As reported


Pro forma(Unaudited)


(Unaudited)(dollars in thousands)Net broadcast revenue (excluding trade and barter)

$
48,659


$
48,659


$
54,930


$
54,930Total net revenue


53,651



53,651



59,844



59,844Income (loss) from operations


(300
)


(300
)


5,742



5,742Net loss

$
(16,677
)

$
(16,677
)

$
(10,773
)

$
(10,773
)


---

|(1) |  | The June 30, 2001 pro forma amounts do not include the results of Midwest for the 12 days prior to acquisition on January 12, 2001. Amounts deemed de minimis.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

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 companies been combined during the specified periods.





4.    Related Party Transactions





GuarantyChief
Executive Officer





Pursuant to a continuing guaranty agreement dated January 5, 1998 with the
Companys primary lender, the Company has entered into an agreement to guarantee up to a $3.0 million non-revolving line of credit to its President and Chief Executive Officer to enable him, among other uses, to purchase equity units of
Nexstar. The line of credit is full-recourse to the officer and is available until December 31, 2004.




9




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NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







5.    Intangible Assets





Estimated useful life
(years)

December 31, 2001


June 30, 2002(Unaudited)Network affiliation agreement

15

$
171,957


$
171,957FCC license

indefinite


77,113



77,142Debt financing costs

term of debt


16,382



16,433Other intangibles

1-15


11,154



11,236276,606



276,768Less: accumulated amortization




(51,824
)


(59,629
)Intangible assets, net of accumulated amortization



$
224,782


$
217,139





Total amortization expense from definite-lived intangibles for the
year ended December 31, 2001 and six months ended June 30, 2002 was $15.4. million and $7.8 million, respectively. The carrying value of indefinite-lived intangibles, excluding goodwill, at December 31, 2001 and June 30, 2002 was $64.3 million. The
following table presents the Companys estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles recorded on our books as of December 31, 2001:





Year ending December 31,2002

15,6102003

15,6102004

15,6102005

15,6002006

15,584





6.    Debt





Long term debt consists of the following:





December 31, 2001


June 30, 2002(Unaudited)Term loan

$
82,000


$
81,838Revolving credit facility


46,143



46,14312% Senior subordinated notes due 2008, net of discount


154,097



154,416SFAS No. 133 hedge accounting adjustment


1,590



3,341283,830



285,738Less: current portion


(488
)


(1,290
)$
283,342


$
284,448




10




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)




Bank Debt





Bank Debt Facility Agreements





The Nexstar Senior Secured Credit
Facility





On January 12, 2001, Nexstar entered into a senior secured credit facility with a group of
commercial banks. The terms of the credit agreement provided for a revolving credit facility (the Nexstar revolver) in the amount of $122.0 million and a term loan facility (the Nexstar term loan) in the amount of $110.0
million. The revolving credit facility was subsequently reduced to $72.0 million after the issuance of the Senior Subordinated Notes discussed below. The credit facility was subsequently amended on June 14, 2001 to allow for a $50.0 million Term A
facility, a $75.0 million Term B facility and a $57.0 million revolving facility. On November 14, 2001, the credit facility was amended to adjust financial covenants effective for the period ended September 30, 2001 and future periods and to reduce
the revolving facility to $42.0 million. Prepayments have been made under Term A, which has effectively reduced the commitment to $32.0 million. Interest rates associated with the Nexstar revolver and term loans are based, at the option of Nexstar,
on the prevailing prime rate plus an applicable margin or the LIBOR rate plus an applicable margin, as defined (ranging from 5.41% to 6.14% at June 30, 2002). Interest is fixed for a period ranging from one month to 12 months, depending on
availability of the interest basis selected, except if Nexstar selects a prime-based loan, in which case the interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of interest
rate selected. In addition, Nexstar is required to pay quarterly commitment fees based on the Companys leverage ratio for that particular quarter on the unused portion of the Nexstar revolver loan commitment. The Nexstar term loans are subject
to scheduled mandatory repayments and the Nexstar revolver is subject to scheduled mandatory reductions commencing in 2003. The Nexstar revolving and Term A facilities mature on January 12, 2007. The Term B facility matures on July 12, 2007. Any
excess amount outstanding at the time of a mandatory reduction is payable at that time. The borrowings under the Nexstar senior secured credit facility are guaranteed, jointly and severally, by Nexstar, Bastet and Mission, and by each existing and
subsequently acquired or organized subsidiary of Nexstar.





The Bastet/Mission Senior Secured Credit Facility





On January 12, 2001, Bastet and Mission entered into a credit agreement (the Bastet/Mission credit
facility) with a group of commercial banks. The terms provided for the banks to make revolving loans to Bastet and Mission, 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. Bastet and Mission are jointly and severally liable for the outstanding amount of the loan. Nexstar has entered into a guarantor agreement, whereby Nexstar guarantees full payment of any obligations
outstanding in the event of Bastet and/or Missions default. Interest rates associated with the Bastet/Mission credit facility are based, at the option of Bastet and Mission, on the prevailing prime rate plus an applicable margin or the LIBOR
rate plus an applicable margin, as defined (ranging from 5.34% to 5.38% at June 30, 2002). Interest is fixed for a period ranging from one month to 12 months, depending on availability of the interest basis selected, except if Bastet or 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, Bastet and Mission are required to
pay quarterly commitment fees based on the Companys leverage ratio for that particular quarter on the unused portion of the Bastet/Mission credit facility loan commitment. The Bastet/Mission credit facility is due and payable on the maturity
date, January 12, 2007. Any excess amount outstanding at the time of a mandatory reduction is payable at that time.




11




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







Senior Subordinated Notes





On March 16, 2001, Nexstar issued $160.0 million of 12% Senior Subordinated Notes (the notes) at a price of 96.012%. The notes
mature on April 1, 2008. Interest is payable every six months in arrears on April 1 and October 1. The notes are guaranteed by all of the domestic existing and future restricted subsidiaries of the Company. They are general unsecured senior
subordinated obligations subordinated to all of the the Companys senior debt. The notes are redeemable on or after April 1, 2005, at declining premiums, and Nexstar may redeem, at a premium, up to 35.0% of the aggregate principal amount of the
notes before April 1, 2004 with the net cash proceeds from qualified equity offerings. The notes are not redeemable by either the issuer or the note holder between April 1, 2004 and March 31, 2005. The proceeds of the offering were used to partially
refinance existing indebtedness of Nexstar and fund working capital needs.





Debt Covenants





The bank debt agreements and the notes described above contain covenants, which require the Company to
comply with certain financial ratios, capital expenditures, film cash payments, and other limits. The Company was in compliance with all covenants at June 30, 2002.





Debt Financing Costs





In conjunction with the refinancing of the credit facility in January 2001, the Company expensed $263 related to certain debt financing costs. The amount, net of tax benefit, has been presented as an extraordinary item.





7.    Income Taxes





The Companys income tax benefit for the six months ended June 30, 2001 was $368, compared to the income tax benefit for the six months ended June 30, 2002 of $1,079. The Companys effective
tax rate benefit was 2% for the six months ended June 30, 2001 as compared to 9% for the six months ended June 30, 2002. The significant differences from the statutory tax rate and the effective tax rate for the six months ended June 30, 2002
include an increase in the valuation allowance, income earned by entities not subject to corporate income tax, and state taxes, net of the federal benefit.





8.    Commitments and Contingencies





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.





9.    Condensed Consolidating Financial Information





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





The notes and borrowings under amounts drawn against the senior secured credit facilities are guaranteed on a joint and several, full and unconditional basis, by Nexstar, its wholly-owned subsidiaries and the Mission Group (Note 6).





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




12




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







The following condensed consolidating financial information presents
the financial position, results of operations and cash flows of Nexstar, Bastet, Mission as well as the consolidating entries needed to arrive at the information for the Company on a consolidated basis.





BALANCE SHEET





JUNE 30, 2002


Nexstar

Bastet


Mission


Consolidating Entries


Consolidated CompanyASSETSCurrent assets

$
36,417

$
2,776


$
1,364


$
(2,567
)

$
37,990Property and equipment, net


51,481


1,959



1,526







54,966Other noncurrent assets


9,085


895



6,830



(1,479
)


15,331Intangible assets, net


280,615


12,743



11,245







304,603Total assets

$
377,598

$
18,373


$
20,965


$
(4,046
)

$
412,890LIABILITIES AND MEMBERS INTERESTCurrent liabilities

$
18,463

$
3,848


$
2,777


$
(4,109
)

$
20,979Debt


238,305


46,143



46,143



(46,143
)


284,448Other liabilities


12,834


514



110







13,458Members interest


107,996


(32,132
)


(28,065
)


46,206



94,005Total liabilities and members interest

$
377,598

$
18,373


$
20,965


$
(4,046
)

$
412,890




13




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







BALANCE SHEET





DECEMBER 31, 2001





Nexstar


Bastet


Mission


Consolidating Entries


Consolidated CompanyASSETSCurrent assets

$
41,245


$
3,333


$
483


$
(2,253
)

$
42,808Property and equipment, net


53,349



2,328



1,706







57,383Other noncurrent assets


7,696



937



6,935



(861
)


14,707Intangible assets, net


287,782



12,994



11,470







312,246Total assets

$
390,072


$
19,592


$
20,594


$
(3,114
)

$
427,144LIABILITIES AND MEMBERS INTERESTCurrent liabilities

$
22,032


$
3,855


$
2,335


$
(3,375
)

$
24,847Debt


237,199



46,143



46,143



(46,143
)


283,342Other liabilities


13,569



965



150







14,684Members interest


117,272



(31,371
)


(28,034
)


46,404



104,271Total liabilities and members interest

$
390,072


$
19,592


$
20,594


$
(3,114
)

$
427,144STATEMENT OF OPERATIONS  FOR THE THREE MONTHS ENDED JUNE 30, 2002Nexstar


Bastet


Mission


Consolidating Entries


Consolidated CompanyNet revenue

$
29,163


$
2,270


$
1,807


$
(1,719
)

$
31,521Operating expenses


25,274



2,005



1,516



(1,719
)


27,076Income from operations


3,889



265



291







4,445Interest expense


(7,971
)


(727
)


(714
)


697



(8,715
)Interest income and other income (expense), net


(1,240
)


2











(1,238
)Loss before income taxes


(5,322
)


(460
)


(423
)


697



(5,508
)Income tax benefit (expense)


1,317







(57
)






1,260Net loss

$
(4,005
)

$
(460
)

$
(480
)

$
697


$
(4,248
)




14




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







STATEMENT OF OPERATIONS





FOR THE THREE MONTHS ENDED JUNE 30, 2001





Nexstar


Bastet


Mission


Consolidating Entries


Consolidated CompanyNet revenue

$
26,628


$
2,078


$
717


$
(1,377
)

$
28,046Operating expenses


25,268



2,059



619



(1,377
)


26,569Income from operations


1,360



19



98







1,477Interest expense


(8,374
)


(957
)


(950
)


926



(9,355
)Interest income and other income (expense), net


(4
)


(326
)


16







(314
)Loss before income taxes


(7,018
)


(1,264
)


(836
)


926



(8,192
)Income tax benefit (expense)


148



(3
)










145Net loss

$
(6,870
)

$
(1,267
)

$
(836
)

$
926


$
(8,047
)STATEMENT OF OPERATIONS  FOR THE SIX MONTHS ENDED JUNE 30, 2002Nexstar


Bastet


Mission


Consolidating Entries


Consolidated CompanyNet revenue

$
55,377


$
3,986


$
3,449


$
(2,968
)

$
59,844Operating expenses


50,244



4,024



2,802



(2,968
)


54,102Income (loss) from operations


5,133



(38
)


647







5,742Interest expense


(15,931
)


(1,420
)


(1,400
)


1,361



(17,390
)Interest income and other income (expense), net


(210
)


5



1







(204
)Loss before income taxes


(11,008
)


(1,453
)


(752
)


1,361



(11,852
)Income tax benefit (expense)


1,225



(11
)


(135
)






1,079Net loss

$
(9,783
)

$
(1,464
)

$
(887
)

$
1,361


$
(10,773
)




15




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







STATEMENT OF OPERATIONS





FOR THE SIX MONTHS ENDED JUNE 30, 2001





Nexstar


Bastet


Mission


Consolidating Entries


Consolidated CompanyNet revenue

$
51,219


$
3,742


$
1,467


$
(2,777
)

$
53,651Operating expenses


51,253



4,218



1,257



(2,777
)


53,951Income (loss) from operations


(34
)


(476
)


210







(300
)Interest expense


(14,245
)


(1,941
)


(1,916
)


1,884



(16,218
)Interest income and other income (expense), net


42



(323
)


17







(264
)Loss before income taxes


(14,237
)


(2,740
)


(1,689
)


1,884



(16,782
)Income tax benefit (expense)


374



(6
)










368Loss before extraordinary loss from refinancing of credit facilities


(13,863
)


(2,746
)


(1,689
)


1,884



(16,414
)Extraordinary loss from refinancing of credit facilities, net of income tax effect


(185
)


(32
)


(46
)






(263
)Net loss

$
(14,048
)

$
(2,778
)

$
(1,735
)

$
1,884


$
(16,677
)





STATEMENT OF CASH FLOWS





FOR THE SIX MONTHS ENDED JUNE 30, 2002





Nexstar


Bastet


Mission


Consolidating Entries

Consolidated CompanyNet cash provided by (used for) operating activities

$
4,124


$
(252
)

$
154


$


$
4,026Cash flows from investing activities:Additions to property and equipment, net


(3,890
)


(21
)


(60
)





(3,971
)Acquisition of broadcast properties and transaction costs

















Net cash used for investing activities


(3,890
)


(21
)


(60
)





(3,971
)Cash flows from financing activities:Repayment of loans


(2,671
)













(2,671
)Proceeds from revolver draws


2,500














2,500Finance and transaction costs


(123
)


(4
)


(35
)





(162
)Capital contributions, net


(1,413
)













(1,413
)Net cash used for financing activities


(1,707
)


(4
)


(35
)





(1,746
)Net increase (decrease) in cash and cash equivalents


(1,473
)


(277
)


59






(1,691
)Cash and cash equivalents at beginning of period


5,218



544



40






5,802Cash and cash equivalents at end of period

$
3,745


$
267


$
99


$


$
4,111




16




---



NEXSTAR FINANCE, L.L.C.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







STATEMENT OF CASH FLOWS





FOR THE SIX MONTHS ENDED JUNE 30, 2001





Nexstar


Bastet


Mission


Consolidating Entries

Consolidated CompanyNet cash provided by operating activities

$
2,128


$
327


$
293


$


$
2,748Cash flows from investing activities:Additions to property and equipment, net


(3,611
)


(333
)









(3,944
)Acquisition of broadcast properties and transaction costs


(107,956
)













(107,956
)Net cash used for investing activities


(111,567
)


(333
)









(111,900
)Cash flows from financing activities:Proceeds from debt issuance


499,808



47,774



32,512






580,094Repayment of loans


(453,131
)


(47,134
)


(32,076
)





(532,341
)Proceeds from revolver draws


12,500














12,500Finance and transaction costs


(14,404
)


(715
)


(801
)





(15,920
)Cash escrowed for debt service


(10,500
)













(10,500
)Capital contributions, net


74,949














74,949Net cash provided by (used for) financing activities


109,222



(75
)


(365
)





108,782Net decrease in cash and cash equivalents


(217
)


(81
)


(72
)





(370
)Cash and cash equivalents at beginning of period


2,530



144



76






2,750Cash and cash equivalents at end of period

$
2,313


$
63


$
4


$


$
2,380





10.    Initial Public Offering





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





11.    Subsequent
Event





On August 13, 2002, Nexstar terminated the $60.0 million swap agreement for a payment of $5.25 million.




17




---

NEXSTAR FINANCE, L.L.C.





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




Forward-Looking and Cautionary Statements





The
following discussion and analysis should be read in conjunction with the Unaudited Consolidated Balance Sheet as of June 30, 2002, Unaudited Consolidated Statement of Operations and Other Comprehensive Loss and other unaudited financial statements
for the six months ended June 30, 2001 and 2002 and notes to related financial statements elsewhere in this document. The forward-looking statements in this discussion regarding the television broadcasting industry, our expectations
regarding our future performance, liquidity and capital resources and other non-historical statements in the discussion are subject to numerous risks and uncertainties, including those described in Nexstars Annual Report on Form 10-K for the
year ended December 31, 2001. Forward-looking statements may include the words may, will, estimate, intend, continue, believe, expect or anticipate and other
similar words. Our actual results may differ materially from those contained in any forward-looking statements.





We make references throughout our Managements Discussion and Analysis of Financial Condition and Results of Operations to comparisons on a same station basis. These comparisons refer to stations that we
have owned or provided services to at the beginning and end of a particular period. In particular, references to a comparison on a same station basis for the six months ended June 30, 2001 versus the six months ended June 30, 2002 include the
following stations: WYOU, KQTV, WTWO, WBRE, KFDX, KSNF, KBTV, WJET, WFXP, WROC, KJTL, KJBO, KTAB, KMID, KTAL, WCIA and WMBD. As used in the report, unless the context indicated otherwise, Nexstar refers to Nexstar Finance, L.L.C. and its
consolidated subsidiaries including Nexstar Finance, Inc., Mission Group refers to Bastet Broadcasting, Inc. and Mission Broadcasting of Wichita Falls, Inc., and all of their respective subsidiaries; and all references to we,
our, and us refer, collectively, to Nexstar and the Mission Group.





Introduction





Nexstar owns and operates, through our subsidiaries, 14 television stations. Through various local service agreements with the
Mission Group, we provide various management, sales or other services to additional television stations. The Mission Group entities are 100% owned by an independent third party. Collectively, these entities own and operate the following television
stations: WYOU, WFXP, KJTL and KJBO-LP. Additionally, through a time brokerage agreement, Mission of Joplin, a subsidiary of Mission, provides most of the programming and administrative services for KODE pending the purchase of KODEs assets in
September 2002. Nexstar does not own or control the Mission Group television stations; however, under U.S. generally accepted accounting principles (GAAP), Nexstar is deemed to have a controlling financial interest in them due to the
service and option agreements described below. Nexstar has entered into various management and service agreements with all of the Mission Group stations. Nexstar has a time brokerage agreement with WFXP, which allows us to program most of the
stations broadcasting time, sell the stations advertising time and retain the advertising revenue generated by WFXP. Nexstar has a shared services agreement with each of KJTL and KJBO-LP, which allows the sharing of services including
news production, technical maintenance and security, in exchange for the right to receive substantially all of the available cash flow generated by KJTL and KJBO-LP. Through a joint sales agreement, Nexstar has also acquired the rights to sell and
receive the revenues from the advertising time on KJTL and KJBO-LP in return for monthly payments to the Mission Group. Nexstar has a shared services agreement with each of WYOU and KODE, which shared services agreements have terms substantially
similar to the terms of the shared services agreements with KJTL and KJBO-LP. Nexstars ability to obtain cash from the Mission Group is governed by the agreements described above.





In addition to providing certain services to the television stations, Nexstar also guarantees the debt of the Mission Group. The Mission Group is a guarantor of the senior
credit facility entered into and the senior subordinated notes issued by Nexstar.




18




---



NEXSTAR FINANCE, L.L.C.







The owner of the Mission Group has granted to Nexstar a purchase
option on each Mission Group entity to acquire the assets and liabilities of each entity for consideration equal to its indebtedness, as defined in the option agreement. These option agreements are freely exercisable or assignable by Nexstar without
consent or approval by the owner of the Mission Group.





As a result of the service arrangements, the debt
guarantees and the option agreements with the Mission Group, Nexstar is deemed to have a controlling financial interest in the Mission Group under U.S. GAAP while complying with the FCCs rules regarding ownership limits in television markets.
The Mission Group retains ultimate control over each Mission Group station. Such control includes, but is not limited to, retaining control over policies, programming, advertisements and operations of the stations. As a result of our controlling
financial interest in the Mission Group under U.S. GAAP and in order to present fairly our financial position, results of operations and cash flows, we consolidate the financial position, results of operations and cash flows of the Mission Group
stations with Nexstars as if they were wholly-owned entities. We believe this presentation is meaningful for understanding our financial performance. Therefore, the following discussion of Nexstars financial condition and results of
operations includes the Mission Groups combined financial statements.





In addition, pursuant to an
outsourcing agreement with a subsidiary of Sinclair Broadcast Group, Inc. that became effective December 1, 2001, Nexstar provides engineering, production, sales and administrative services for WYZZ, the FOX affiliate in the Peoria-Bloomington, IL
market. The parties share the combined broadcast cash flow generated by WYZZ and Nexstar-owned, WMBD. The outsourcing agreement expires in December 2008. It is non-cancelable until May 2003, at which time it may be canceled by either party upon 180
days written notice.





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





Each of our stations has a network affiliation agreement pursuant to which the network provides programming to the station during specified time periods, including prime
time. Each of NBC, CBS and ABC compensates our affiliated stations for distributing the networks programming over the air and for allowing the network to keep a portion of advertising inventory during those time periods. Each station acquires
licenses to broadcast programming in non-news time periods during the remainder of the day. The licenses are either purchased from a program distributor for cash and/or the program distributor is allowed to retain 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




19




---



NEXSTAR FINANCE, L.L.C.




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, 62.2% and 65.6% of
our spot revenue for the six months ended June 30, 2001 and 2002, 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 revenue related to the advertising schedules placed by them. While the majority of local spot
revenue is placed by local agencies, some advertisers place their advertisements directly with our stations 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.





We define EBITDA as net income (loss) plus extraordinary loss, preferred dividends, income taxes, interest
expense, depreciation and amortization (including amortization of broadcast rights) and other expense (income). We define adjusted EBITDA as EBITDA plus non-cash trade and barter expenses, non-recurring expenses (including time brokerage agreement
fees) and network compensation payments received or receivable, less payments on broadcast rights, non-cash trade and barter revenue and network compensation revenue. We define broadcast cash flow as adjusted EBITDA plus corporate expenses. Neither
adjusted EBITDA nor broadcast cash flow: (1) is a measure of performance calculated in accordance with generally accepted accounting principles; (2) should be considered in isolation or as a substitute for net income, operating income or cash
flow as reflected in our consolidated financial statements; or (3) is intended to represent a measure of funds available for debt service, dividends, reinvestment or discretionary uses. In addition, our definition of adjusted EBITDA and/or broadcast
cash flow may not be comparable to similarly titled measures reported by other companies. We believe that the presentation of adjusted EBITDA and broadcast cash flow is relevant and useful because such data is used by industry analysts to determine
a market value of our television stations and it is a measurement used by industry analysts to evaluate our operating performance. Furthermore, our management uses adjusted EBITDA and broadcast cash flow, among other data, as internal measures for
setting budgets, determining financial performance, evaluating targeted stations for acquisition and as a measurement component of incentive bonuses.





On April 1, 2002, Nexstar entered into a shared services agreement with Mission Broadcasting of Joplin, Inc. to provide news production, technical maintenance and security, in exchange for monthly fees
paid to Nexstar. The services provided by Nexstar resulted in higher miscellaneous revenues and operating expenses for Nexstar-owned KSNF, the station providing the services.





The local service agreements which were entered into during the fiscal year ended December 31, 2001, affect the year-to-year comparability of the operating results
discussed below. Additionally, on April 1, 2002, we converted WCFN from a satellite station of WCIA to a UPN-affiliated station. At that time WCFN became a full-power station capable of generating revenues of its own. For discussion purposes on a
same station basis, we have excluded WCFNs revenues and expenses.




20




---



NEXSTAR FINANCE, L.L.C.







Recent Developments





On April 24, 2002, Nexstar Broadcasting Group, Inc., filed for an initial public offering with the SEC. Nextar Broadcasting Group, L.L.C., Nexstars indirect parent,
will undertake a reorganization in connection with the comsummation of the initial public offering whereby Nexstar Broadcasting Group, L.L.C. and certain of its direct and indirect subsidiaries will be merged with and into, Nexstar Broadcasting
Group, Inc., which will become the surviving corporation.





On August 13, 2002, we terminated the $60.0 million
swap agreement for a payment of $5.25 million.





Critical accounting policies and estimates





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 interest will have a material effect upon our financial condition, results of operations or cash flows for an interim
or annual period.





Historical Performance





Revenues





The following table sets forth the principal
types of revenues received by our stations for the periods indicated and the percentage contribution of each subcategory of our total revenues, as well as agency and national sales representative commissions:





Three Months Ended June 30,

Six Months Ended June 30,2001

2002

2001

2002Amount

%

Amount

%

Amount

%

Amount

%(dollars in thousands)

(dollars in thousands)Local

$
16,480

55.6

$
19,526

58.1

$
31,568

56.1

$
36,161

56.8National


10,298

34.7


10,335

30.8


19,163

34.1


18,992

29.9Political


532

1.8


1,627

4.8


637

1.2


4,231

6.7Network compensation


1,758

5.9


1,660

4.9


3,513

6.2


3,257

5.1Other


575

2.0


475

1.4


1,365

2.4


981

1.5Total gross revenue


29,643

100.0


33,623

100.0


56,246

100.0


63,622

100.0Less: Agency and national representative commissions


4,064

13.7


4,633

13.8


7,587

13.5


8,692

13.7Net broadcast revenue


25,579

86.3


28,990

86.2


48,659

86.5


54,930

86.3Trade and barter


2,467




2,531




4,992




4,914Total net revenue

$
28,046



$
31,521



$
53,651



$
59,844




21




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NEXSTAR FINANCE, L.L.C.







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 30,2001

2002

2001

2002Amount

%

Amount

%

Amount


%

Amount

%(dollars in thousands)

(dollars in thousands)Total net revenue

$
28,046

100.0

$
31,521

100.0

$
53,651


100.0

$
59,844

100.0Operating expenses:Corporate expense


571

2.0


939

3.0


1,358


2.5


1,861

3.1Station operating, net of trade


7,034

25.1


7,812

24.8


14,357


26.8


15,624

26.1Selling, general and administrative


6,169

22.0


7,528

23.9


12,507


23.3


15,140

25.3Trade and barter


2,528

9.0


2,466

7.8


5,092


9.5


4,813

8.0Depreciation and amortization


8,380

29.9


6,470

19.9


16,738


31.2


12,877

21.2Amortization of broadcast license rights, net of barter


1,887

6.7


1,861

5.9


3,899


7.3


3,787

6.3Operating income (loss)

$
1,477



$
4,445



$
(300
)



$
5,742





Adjusted EBITDA





The following table sets forth certain financial data for the periods indicated. This information should be reviewed together with our discussion of our historical
operating results, particularly our net loss.





Three Months Ended June 30,


Six Months Ended June
30,2001


2002


2001


2002Amount


Amount


Amount


Amount(dollars in thousands)


(dollars in thousands)Net loss

$
(8,047
)

$
(4,248
)

$
(16,677
)

$
(10,773
)Add:Extraordinary loss










263



Income tax benefit


(145
)


(1,260
)


(368
)


(1,079
)Interest expense, including amortization of debt financing costs


9,355



8,715



16,218



17,390Depreciation


3,256



3,252



6,182



6,403Amortization of intangibles


5,124



3,218



10,556



6,474Amortization of broadcast rights, net of barter


1,887



1,861



3,899



3,787Other expense


423



1,263



420



262Trade and barter expense


2,528



2,466



5,092



4,813Network compensation payments received or receivable (1)


1,758



2,203



3,513



4,343Non-recurring expenses






105



77



462Less:Trade and barter revenue


2,467



2,531



4,992



4,914Network compensation revenue


1,758



1,660



3,513



3,257Payments for broadcast license liabilities


1,997



1,916



4,009



3,936Adjusted EBITDA

$
9,917


$
11,468


$
16,661


$
19,975Adjusted EBITDA margin (2)


38.8
%


39.6
%


34.2
%


36.4
%


---

|(1) |  | Network compensation received or receivable may differ from network compensation revenue due to the recognition of revenue on a straight-line basis compared to
the negotiated timing of the receipt of cash payments in the first four years of a seven year network affiliation agreement.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Adjusted EBITDA margin is defined as adjusted EBITDA divided by net broadcast revenue.
|--- |  | --------------------------------------------------------------------------------------



22




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NEXSTAR FINANCE, L.L.C.




Broadcast Cash Flow





The following table sets forth certain financial data for the periods indicated. This information should be reviewed together with our discussion of our historical operating results.





Three Months Ended June 30,


Six Months Ended June 30,2001


2002


2001


2002Amount


Amount


Amount


Amount(dollars in thousands)


(dollars in thousands)Adjusted EBITDA

$
9,917


$
11,468


$
16,661


$
19,975Add:Corporate expenses (1)


571



939



1,358



1,861Broadcast cash flow

$
10,488


$
12,407


$
18,019


$
21,836Broadcast cash flow margin (2)


41.0
%


42.8
%


37.0
%


39.8
%


---

|(1) |  | Corporate expenses represent costs associated with the centralized management of our stations.
|--- |  | ----------------------------------------------------------------------------------------------

|(2) |  | Broadcast cash flow margin is defined as broadcast cash flow divided by net broadcast revenue.
|--- |  | ----------------------------------------------------------------------------------------------




Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001





Net broadcast revenue for the three months ended June 30, 2002 was $29.0 million, an increase of $3.4 million, compared to $25.6 million for the three months ended
June 30, 2001. An increase in net broadcast revenue of $2.1 million was attributed to stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, net broadcast revenue for the three months
ended June 30, 2002 was $26.9 million as compared to $25.6 million for June 30, 2001, an increase of 5.1%. Of this increase, $0.9 million was political revenue resulting from election campaigns in most of our markets, $1.3 million was attributed to
an increase in local demand, offset, in part, by a decline in national revenue of $0.4 million and the renewals of network affiliation agreements at five of our stations which resulted in a decrease in network compensation of $0.5 million, on a same
station basis.





Station operating expenses, including selling, general and administrative expenses, net of trade,
for the three months ended June 30, 2002 were $15.3 million, compared to $13.2 million for the three months ended June 30, 2001, an increase of $2.1 million. Of this increase, $1.9 million was attributed to stations for which a local service
arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, operating expenses for the three months ended June 30, 2002 were $13.4 million as compared to $13.2 million for the three months ended June 30, 2001, a 1.5% increase.
This increase was attributed to additional expense incurred by KSNF to accommodate the shared services agreement in Joplin that began on April 1, 2002.





Corporate expenses for the three months ended June 30, 2002 were $0.9 million, compared to $0.6 million for the three months ended June 30, 2001, an increase of $0.3 million. The increase was primarily
attributed to an increase in professional fees and the accrual of bonuses.





Amortization of program license
rights, net of barter, for the three months ended June 30, 2002 was $1.9 million, compared to $1.9 million for the three months ended June 30, 2001, flat with the prior year. The stations for which a local service arrangement was initiated
after January 1, 2001 and WCFN had no material affect on film amortization.





Depreciation of property and
equipment was $3.3 million for the three months ended June 30, 2002, compared to $3.3 million for the three months ended June 30, 2001, flat to the prior year. The stations for which a local service arrangement was initiated after January 1, 2001
and WCFN had no material effect on depreciation.




23




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NEXSTAR FINANCE, L.L.C.




The amortization of intangibles was $3.2 million for the three months ended June 30, 2002, compared to $5.1 million for the same period in 2001. The decrease in amortization was attributed to the
elimination of amortization of indefinite-lived intangible assets, including goodwill.





The operating income for
the three months ended June 30, 2002 was $4.4 million, compared to $1.5 million for the three months ended June 30, 2001, an increase of $2.9 million. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN
had no material affect on operating income.





Interest expense for the three months ended June 30, 2002 was $8.7
million, compared to $9.4 million for the same period in 2001. The decrease was primarily attributed to lower cost of funds attributed to the effect of a hedge instrument and lower prevailing interest rates.





As a result of the factors discussed above, our net loss was $4.2 million for the three months ended June 30, 2002, compared to $8.0
million for the same period in 2001, a decrease in net loss of $3.8 million.





Broadcast cash flow for the three
months ended June 30, 2002 was $12.4 million, compared to $10.5 million for the same period in 2001. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN accounted for a $0.2 million increase. On a same
station basis, broadcast cash flow for the three months ended June 30, 2002 was $12.2 million, compared to $10.5 million for the same period in 2001. Broadcast cash flow margins for the six months ended June 30, 2002 increased to 42.8% from 41.0%
for the same period in 2001. The increase in broadcast cash flow and the broadcast cash flow margin was primarily a result of an increase in net broadcast revenue and the effect of accelerated cash payments under the five renewed network affiliation
agreements. The margins are directly affected by the higher revenue due to the relatively fixed nature of operating costs at our television stations. We expect to continue having higher margins during the even-numbered years as a result of
advertising revenue associated with the Olympic Games and political campaigns and lower margins during the odd-numbered years without the Olympic Games and nominal political activity.





Adjusted EBITDA for the three months ended June 30, 2002 was $11.5 million, compared to $9.9 million for the three months ended June 30, 2001, an increase of $1.6 million.
Of the $1.6 million increase, approximately $0.2 million was attributed to stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, adjusted EBITDA for the three months ended June 30, 2002
was $11.3 million, compared to $9.9 million for the three months ended June 30, 2001. Adjusted EBITDA margins increased to 36.4% from 35.4% for the same period in 2001. The increase in Adjusted EBITDA and adjusted EBITDA margins was attributed to
higher broadcast cash flow partially offset by an increase in corporate expenses.





Six Months Ended June 30, 2002 Compared to Six
Months Ended June 30, 2001





Net broadcast revenue for the six months ended June 30, 2002 was $54.9 million, an
increase of $6.2 million, compared to $48.7 million for the six months ended June 30, 2001. An increase in net broadcast revenue of $3.9 million was attributed to stations for which a local service arrangement was initiated after January 1,
2001 and WCFN. On a same station basis, net broadcast revenue for the six months ended June 30, 2002 was $51.0 million as compared to $48.7 million for June 30, 2001, an increase of 4.7%. Of this increase, $2.8 million was political revenue
resulting from election campaigns in most of our markets, $1.4 million was attributed to an increase in local demand, offset, in part, by a decline in national revenue of $0.8 million and the renewals of network affiliation agreements at five of our
stations which resulted in a decrease in network compensation of $1.1 million, on a same station basis.




24




---



NEXSTAR FINANCE, L.L.C.







Station operating expenses and selling, general and administrative
expenses, net of trade, for the six months ended June 30, 2002 were $30.8 million, compared to $26.9 million for the six months ended June 30, 2001, an increase of $3.9 million. Of the $3.9 million increase in operating expenses, $3.6 million was
attributed to stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, operating expenses for the six months ended June 30, 2002 were $27.2 million as compared to $26.9 million for the six
months ended June 30, 2001, an increase of 1.1%.





Corporate expenses for the six months ended June 30, 2002 were
$1.9 million, compare to $1.4 million for the six months ended June 30, 2001, an increase of $0.5 million. The increase was primarily attributed to an increase in professional fees and the accrual of bonuses.





Amortization of broadcast license rights, net of barter, for the six months ended June 30, 2002 was $3.8 million, compared to $3.9
million for the six months ended June 30, 2001, relatively flat with the prior year. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN had no material effect on amortization of broadcast rights.





Depreciation of property and equipment was $6.4 million for the six months ended June 30, 2002, compared to $6.2
million for the six months ended June 30, 2001, an increase of $0.2 million. The increase in depreciation was attributed to the depreciation of ongoing capital expenditures at the stations. The stations for which a local service arrangement was
initiated after January 1, 2001 and WCFN had no material effect on depreciation. The amortization of intangibles was $6.3 million for the six months ended June 30, 2002, compared to $10.6 million for the same period in 2001. The decrease in
amortization was attributed to the elimination of amortization of indefinite-lived intangible assets, including goodwill.





The operating income for the six months ended June 30, 2002 was $5.7 million, compared to an operating loss of $0.3 million for the six months ended June 30, 2001. Of the $6.0 million improvement, approximately $0.3 million was
attributed to operating income from stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, the operating income for the six months ended June 30, 2002 was $5.6 million, as compared to
operating loss of $0.3 million for the six months ended June 30, 2001. The $5.7 million improvement in operating income is primarily a result of the elimination of approximately $4.0 million of amortization for indefinite-lived intangible
assets, including goodwill, and higher net revenues from political advertising.





Interest expense, including
amortization of debt financing cost, for the six months ended June 30, 2002 was $17.4 million, compared to $16.2 million for the same period in 2001. The increase was primarily attributed to the increase in the cost of funds as a result of the
issuance of the senior subordinated notes.





In January 2001, we wrote off $0.3 in debt financing costs, net of tax
effect, as a result of refinancing our senior credit facilities.





As a result of the factors discussed above, our
net loss was $10.8 million for the six months ended June 30, 2002, compared to $16.7 million for the same period in 2001, a decrease in net loss of $5.9 million.





Broadcast cash flow for the six months ended June 30, 2002 was $21.8 million, compared to $18.0 million for the same period in 2001. The stations for which a local service arrangement was initiated
after January 1, 2001 and WCFN accounted for a $0.5 million increase. On a same station basis, broadcast cash flow for the six months ended June 30, 2002 was $21.3 million, compared to $18.0 million for the same period in 2001. Broadcast cash
flow margins for the six months ended June 30, 2002 increased to 39.8% from 37.0% for the same period in 2001. The increase in broadcast cash flow and the broadcast cash flow margin was primarily a result of an increase in net broadcast revenue and
the effect of accelerated cash payments under the five renewed




25




---



NEXSTAR FINANCE, L.L.C.




network affiliation agreements. The margins are directly affected by the higher revenue due to the relatively fixed nature of
operating costs at our television stations. We expect to continue having higher margins during the even-numbered years as a result of advertising revenue associated with the Olympic Games and political campaigns and lower margins during the
odd-numbered years without the Olympic Games and nominal political activity.





Adjusted EBITDA for the six months
ended June 30, 2002 was $20.0 million, compared to $16.7 million for the six months ended June 30, 2001, an increase of $3.3 million. Of the $3.3 million increase, approximately $0.5 million was attributed to stations for which a local service
arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, adjusted EBITDA for the six months ended June 30, 2002 was $19.5 million, compared to $16.7 million for the six months ended June 30, 2001. Adjusted EBITDA margins
increased to 33.4% from 31.1% for the same period in 2001. The increase in Adjusted EBITDA and adjusted EBITDA margins was attributed to higher broadcast cash flow partially offset by an increase in corporate expenses.





Liquidity and Capital Resources





As of June 30, 2002, cash and cash equivalents were $4.1 million compared to $2.4 million as of June 30, 2001.





Our primary sources of liquidity are cash flows from operating activities, borrowings from our senior credit facilities and capital contributions. Cash flows provided by operating activities were $4.0 million for the six months ended
June 30, 2002, as compared to $2.7 million for the six months ended June 30, 2001. The comparative increase in cash flows provided by operations of $1.3 million is primarily due to the timing of payments made or received on operating assets and
liabilities along with improved operating results for the six months ended June 30, 2002 compared to the same period in 2001.





Cash used for investing activities was $4.0 million for the six months ended June 30, 2002, as compared to $111.9 million for the six months ended June 30, 2001. Investing activities for the six months ended June 30, 2002
was associated with ongoing equipment purchases. Investing activities for the same period in 2001 was associated with purchasing WCIA and WMBD for approximately $108.0 million and ongoing equipment purchases.





Cash flows used for financing activities were $1.7 million for the six months ended June 30, 2002, as compared to cash flows provided by
financing activities of $108.8 million for the six months ended June 30, 2001. The change in cash flows from financing activities for the six months ended June 30, 2002 was primarily the result of revolver borrowings of $2.5 million, less repayments
of loans of $2.7 million and a distribution to Nexstars direct parent company, Nexstar Finance Holdings, L.L.C. of $1.4 million. For the six months ended June 30, 2001, the change in cash flows from financing activities was the result of (1)
borrowings under the senior credit facilities of $278.8 million with a subsequent borrowing and repayment of $160.1 million as a result of the amendment on June 14, 2001 on the credit agreement governing our senior credit facilities, (2) borrowings
of $153.6 million under the senior subordinated notes issued in March 2001, (3) additional equity proceeds of $75.0 million (net of a $30.0 million distribution), which were used to assist in financing the January 2001 acquisition, less the
repayment of the existing senior credit facility. As of June 30, 2002, there were $68.9 million of unused commitments under the senior credit facilities, of which $15.0 million was available on the Term A facility. However, of the $68.9 million of
unused commitments, approximately $7.0 million 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 and indentures governing our
senior credit facilities and the senior subordinated notes at June 30, 2002.





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




26




---



NEXSTAR FINANCE, L.L.C.




other conditions, many of which are beyond our control. We believe that, taken together, our current cash balances, internally
generated cash flow and availability under our credit facilities should result in our having adequate cash resources to meet our future requirements for working capital, capital expenditures and debt service.





Digital Conversion





FCC regulations required us to commence digital operations by May 1, 2002, in addition to continuing our analog operations, unless an extension of time is granted. We requested and were granted an extension of time to begin digital
operations at all of our stations except WCIA and WCFN, which have met the deadline. We estimate the digital conversion will require an average initial capital expenditure of $175,000 per station for low-power transmission of a digital signal and an
average additional capital expenditure of $700,000 per station to modify the transmitter for full-power digital signal transmission. Digital conversion expenditures were $0.0 and $0.3 million for the year ended December 31, 2001 and six months ended
June 30, 2002, respectively. We anticipate that digital conversion expenditures will be funded through available cash on hand and cash generated from operations.





Recently Issued Accounting Standards





In July 2001, the FASB issued SFAS No. 141,
Business Combinations, and SFAS No. 142. Goodwill and Other Intangible Assets. SFAS No. 141 prospectively prohibits the pooling of interest method of accounting for business combinations initiated after June 30, 2001. 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 June 30, 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 also establishes 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. The adoption of SFAS No. 142 has resulted in the discontinuation of amortization of goodwill and FCC licenses; however, we will be
required to test goodwill and FCC licenses for impairment under the new standard during 2002, which could have an adverse effect on the future results of operations if an impairment occurs.





SFAS No. 142 requires that goodwill be tested for impairment using a two-step process. The first step is to identify a potential impairment by comparing the fair value of a
station with its carrying amount and, in transition, this step must be measured as of the beginning of the fiscal year. However, a company has six months from the date of adoption to complete the first step. The second step of the goodwill
impairment test measures the amount of the impairment loss (measured as of the beginning of the year of adoption), if any, and must be completed by the end of our fiscal year. We completed the first step of the impairment test during the quarter
ended June 30, 2002 using the discounted cash flow method to estimate the fair value of each station. The valuation assumptions used in the discounted cash flow model reflected historical performance of each station and prevailing values in the
markets for broadcasting properties. As a result of this test, we identified three stations that require additional testing for impairment of goodwill. The net carrying amount of goodwill for these three stations at January 1, 2002 was $40.1
million. We have begun, but not completed, the second step to measure the amount of the impairment loss, which will be completed by December 31, 2002. FCC licenses have been tested for impairment using a one-step process, which compares the fair
value to the carrying amount of the asset on a station by station basis as of January 1, 2002. The fair value of the station was determined using the discounted cash flow valuation method that excludes network compensation payments, assuming a
hypothetical startup whose only asset is the FCC license. The test resulted in no impairment being identified. During the year ended December 31, 2001, we incurred goodwill amortization expense of $2.8 million.




27




---



NEXSTAR FINANCE, L.L.C.







On January 1, 2002, we adopted Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144). SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of  and the accounting and reporting provisions relating to the disposal of a segment of a business described in Accounting Principles Board Opinion No. 30. The adoption did not have a material impact on our financial statements.





In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections, which is effective for fiscal years beginning after May 15, 2002. SFAS 14b rescinds SFAS No. 4 and SFAS No. 64, which addressed the accounting for gains and losses from extinguishment of debt.
SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. SFAS No. 145 also makes technical
corrections to certain existing pronouncements that are not substantive in nature. The adoption of SFAS No. 145 may require the reclassification of debt extinguishment costs presented as an extraordinary item in periods prior to the adoption of the
standard.





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.





At June 30, 2002, we had in effect three interest rate swap agreements, with commercial banks, with notional amounts of $93.3 million, $20.0 million and $60.0 million. Our $93.3 million and $20.0
million interest rate swap agreements require us to pay a fixed rate and receive a floating rate thereby creating fixed rate debt. The $60.0 million swap agreement required us to pay a floating rate and receive a fixed rate. The differential to be
paid or received on the swaps is accrued as an adjustment to interest expense. We are exposed to credit loss in the event of nonperformance by the counter-party. The net fair value of the interest rate swap agreements, which represent the cash that
we would pay to settle the agreements, was approximately $0.5 million and $2.4 million at June 30, 2002 and December 31, 2001, respectively. On August 13, 2002, we terminated the $60.0 million swap agreement for a payment of $5.25 million.





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





Interest Rate Decrease

No Change to Interest Rate

Interest Rate Increase100 bps

50 bps


50 bps

100 bps(dollars in thousands)Senior credit facilities(1)

$
6,580

$
6,653

$
6,727

$
6,800

$
6,87312% senior subordinated notes due 2008


19,200


19,200


19,200


19,200


19,200Total

$
25,780

$
25,853

$
25,927

$
26,000

$
26,073


| | 
| | 

(1) Excludes effect of applicable margin as defined in the senior credit agreements.




28




---




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





None




29




---

SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





NEXSTAR FINANCE, L.L.C.


NEXSTAR FINANCE, INC.





/S/    PERRY A. SOOK





By: Perry A. Sook


Its: President and Chief Executive Officer





/S/    G. ROBERT THOMPSON





By: G. Robert Thompson


Its: Chief Financial Officer





Dated:  August 14, 2002




30