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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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



for the quarterly period ended March 31, 2004



| ̈ | 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: 333-62916-01



NEXSTAR BROADCASTING, INC.

(Exact
name of registrant as specified in its charter)



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



Securities
Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act: None



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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that it was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule
12b-2).     Yes ̈No  x



As of May 6, 2004, Nexstar Broadcasting, Inc. had 1,000 shares of common
stock outstanding, all of which were owned by Nexstar Finance Holdings, Inc. Accordingly there is no public trading market for its common stock. Nexstar Broadcasting, Inc. meets the conditions set forth in General Instructions H(1)(a) and (b) to
Form 10-Q and is therefore filing this form with a reduced disclosure format.



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TABLE OF CONTENTS



|              |  |                                                                                                    |  |     
|------------- |  | -------------------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                                    |  | Page
|PART I        |  | FINANCIAL INFORMATION                                                                              |  |     
|              |  |                                                                                                   
|ITEM 1.       |  | Financial Statements (Unaudited)                                                                   |  | 1   
|              |  |                                                                                                   
|              |  | Condensed Consolidated Balance SheetsDecember 31, 2003 and March 31, 2004                         |  | 1   
|              |  |                                                                                                   
|              |  | Condensed Consolidated Statements of Operations for the three months ended March 31, 2003 and 2004 |  | 2   
|              |  |                                                                                                   
|              |  | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2004 |  | 3   
|              |  |                                                                                                   
|              |  | Notes to Condensed Consolidated Financial Statements                                               |  | 4   
|              |  |                                                                                                   
|ITEM 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations              |  | 14  
|              |  |                                                                                                   
|ITEM 3.       |  | Quantitative and Qualitative Disclosures about Market Risk                                         |  | 23  
|              |  |                                                                                                   
|ITEM 4.       |  | Controls and Procedures                                                                            |  | 24  
|              |  |                                                                                                   
|PART II       |  | OTHER INFORMATION                                                                                  |  |     
|              |  |                                                                                                   
|ITEM 1.       |  | Legal Proceedings                                                                                  |  | 25  
|              |  |                                                                                                   
|ITEM 2.       |  | Changes in Securities and Use of Proceeds                                                          |  | 25  
|              |  |                                                                                                   
|ITEM 3.       |  | Defaults Upon Senior Securities                                                                    |  | 25  
|              |  |                                                                                                   
|ITEM 4.       |  | Submission of Matters to a Vote of Security Holders                                                |  | 25  
|              |  |                                                                                                   
|ITEM 5.       |  | Other Information                                                                                  |  | 25  
|              |  |                                                                                                   
|ITEM 6.       |  | Exhibits and Reports on Form 8-K                                                                   |  | 25  
|              | 
|EXHIBIT INDEX |  | 25                                                                                                





ii



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PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



NEXSTAR BROADCASTING, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------- | -------- | - | ------------- | - | -------- | -
|                                                                                                                                                 |  | December 31,2003                   |          |   | March 31,2004 |  
|                                                                                                                                                 |  | (Unaudited) (dollars in thousands) |         
|ASSETS                                                                                                                                           |  |                                    |          |   |               |   |          |  
|Current assets:                                                                                                                                  |  |                                    |          |   |               |   |          |  
|Cash and cash equivalents                                                                                                                        |  | $                                  | 10,621   |   |               | $ | 17,065   |  
|Accounts receivable, net of allowance for doubtful accounts of $1,094 and $966, respectively                                                     |  |                                    | 44,852   |   |               |   | 41,827   |  
|Current portion of broadcast rights                                                                                                              |  |                                    | 19,026   |   |               |   | 12,948   |  
|Prepaid expenses and other current assets                                                                                                        |  |                                    | 1,917    |   |               |   | 1,932    |  
|Deferred tax assets                                                                                                                              |  |                                    | 43       |   |               |   | 43       |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Total current assets                                                                                                                             |  |                                    | 76,459   |   |               |   | 73,815   |  
|Property and equipment, net                                                                                                                      |  |                                    | 91,818   |   |               |   | 89,163   |  
|Restricted cash                                                                                                                                  |  |                                    | 800      |   |               |   | 800      |  
|Broadcast rights                                                                                                                                 |  |                                    | 7,446    |   |               |   | 6,709    |  
|Due from parent entities                                                                                                                         |  |                                    | 6,014    |   |               |   | 5,805    |  
|Other noncurrent assets                                                                                                                          |  |                                    | 12,160   |   |               |   | 12,317   |  
|Goodwill, net                                                                                                                                    |  |                                    | 135,899  |   |               |   | 136,005  |  
|Intangible assets, net                                                                                                                           |  |                                    | 398,352  |   |               |   | 390,862  |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Total assets                                                                                                                                     |  | $                                  | 728,948  |   |               | $ | 715,476  |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                             |  |                                    |          |   |               |   |          |  
|Current liabilities:                                                                                                                             |  |                                    |          |   |               |   |          |  
|Current portion of debt                                                                                                                          |  | $                                  | 1,950    |   |               | $ | 1,950    |  
|Current portion of broadcast rights payable                                                                                                      |  |                                    | 18,509   |   |               |   | 12,400   |  
|Accounts payable                                                                                                                                 |  |                                    | 9,942    |   |               |   | 6,544    |  
|Accrued expenses                                                                                                                                 |  |                                    | 18,627   |   |               |   | 17,101   |  
|Taxes payable                                                                                                                                    |  |                                    | 308      |   |               |   | 391      |  
|Interest payable                                                                                                                                 |  |                                    | 4,840    |   |               |   | 12,025   |  
|Deferred revenue                                                                                                                                 |  |                                    | 1,078    |   |               |   | 1,759    |  
|Deferred tax liabilities                                                                                                                         |  |                                    | 1,047    |   |               |   |         |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Total current liabilities                                                                                                                        |  |                                    | 56,301   |   |               |   | 52,170   |  
|Debt                                                                                                                                             |  |                                    | 486,871  |   |               |   | 519,386  |  
|Broadcast rights payable                                                                                                                         |  |                                    | 9,002    |   |               |   | 8,405    |  
|Deferred tax liabilities                                                                                                                         |  |                                    | 26,171   |   |               |   | 28,032   |  
|Deferred revenue                                                                                                                                 |  |                                    | 3,743    |   |               |   | 3,886    |  
|Deferred gain on sale of assets                                                                                                                  |  |                                    | 7,372    |   |               |   | 7,264    |  
|Other liabilities                                                                                                                                |  |                                    | 4,889    |   |               |   | 4,432    |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Total liabilities                                                                                                                                |  |                                    | 594,349  |   |               |   | 623,575  |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Commitments and contingencies (Note 8)                                                                                                           |  |                                    |          |   |               |   |          |  
|Minority interest in consolidated entity                                                                                                         |  |                                    | 19,486   |   |               |   | 19,134   |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Stockholders equity (deficit):                                                                                                                  |  |                                    |          |   |               |   |          |  
|Common stock$0.01 par value, authorized 1,000 shares; issued and outstanding 1,000 shares at December 31, 2003 and March 31, 2004,
respectively |  |                                    |         |   |               |   |         |  
|Additional paid-in capital                                                                                                                       |  |                                    | 453,266  |   |               |   | 418,469  |  
|Accumulated deficit                                                                                                                              |  |                                    | (338,153 | ) |               |   | (345,702 | )
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Total stockholders equity                                                                                                                       |  |                                    | 115,113  |   |               |   | 72,767   |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  
|Total liabilities and stockholders equity                                                                                                       |  | $                                  | 728,948  |   |               | $ | 715,476  |  
|                                                                                                                                                 |  |                                    |          |   |               |   |          |  



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



1



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NEXSTAR BROADCASTING, INC.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                                                  |  |                                    |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                  |  | Three Months Ended March 31,       |        
|                                                                                                                  |  | 2003                               |         |   | 2004 |  
|                                                                                                                  |  | (Unaudited) (dollars in thousands) |        
|Revenue (excluding trade and barter)                                                                              |  | $                                  | 48,301  |   |      | $ | 56,427  |  
|Less: commissions                                                                                                 |  |                                    | (6,207  | ) |      |   | (7,459  | )
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Net broadcast revenue (excluding trade and barter)                                                                |  |                                    | 42,094  |   |      |   | 48,968  |  
|Trade and barter revenue                                                                                          |  |                                    | 5,160   |   |      |   | 5,268   |  
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Total net revenue                                                                                                 |  |                                    | 47,254  |   |      |   | 54,236  |  
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Operating expenses:                                                                                               |  |                                    |         |   |      |   |         |  
|Direct operating expenses (exclusive of depreciation and amortization shown separately below)                     |  |                                    | 14,445  |   |      |   | 15,472  |  
|Selling, general, and administrative expenses (exclusive of depreciation and amortization shown separately below) |  |                                    | 15,176  |   |      |   | 16,717  |  
|Merger related expenses                                                                                           |  |                                    |        |   |      |   | 456     |  
|Amortization of broadcast rights                                                                                  |  |                                    | 6,301   |   |      |   | 6,887   |  
|Amortization of intangible assets                                                                                 |  |                                    | 5,643   |   |      |   | 6,920   |  
|Depreciation                                                                                                      |  |                                    | 5,113   |   |      |   | 5,123   |  
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Total operating expenses                                                                                          |  |                                    | 46,678  |   |      |   | 51,575  |  
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Income from operations                                                                                            |  |                                    | 576     |   |      |   | 2,661   |  
|Interest expense, including amortization of debt financing costs                                                  |  |                                    | (10,940 | ) |      |   | (10,520 | )
|Loss on extinguishment of debt                                                                                    |  |                                    | (5,814  | ) |      |   |        |  
|Interest income                                                                                                   |  |                                    | 69      |   |      |   | 16      |  
|Other income (expenses), net                                                                                      |  |                                    | 1,010   |   |      |   | 759     |  
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Loss before income taxes                                                                                          |  |                                    | (15,099 | ) |      |   | (7,084  | )
|Income tax expense                                                                                                |  |                                    | (307    | ) |      |   | (952    | )
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Loss before minority interest in consolidated entity                                                              |  |                                    | (15,406 | ) |      |   | (8,036  | )
|Minority interest in consolidated entity                                                                          |  |                                    |        |   |      |   | 487     |  
|                                                                                                                  |  |                                    |         |   |      |   |         |  
|Net loss                                                                                                          |  | $                                  | (15,406 | ) |      | $ | (7,549  | )
|                                                                                                                  |  |                                    |         |   |      |   |         |  



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



2



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NEXSTAR BROADCASTING, INC.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                  |  |                                    |          |   |      |   |         |  
|----------------------------------------------------------------- |  | ---------------------------------- | -------- | - | ---- | - | ------- | -
|                                                                  |  | Three Months Ended March 31,       |         
|                                                                  |  | 2003                               |          |   | 2004 |  
|                                                                  |  | (Unaudited) (dollars in thousands) |         
|Cash flows provided by operating activities                       |  | $                                  | 11,039   |   |      | $ | 11,178  |  
|                                                                  |  |                                    |          |   |      |   |         |  
|Cash flows from investing activities:                             |  |                                    |          |   |      |   |         |  
|Additions to property and equipment, net                          |  |                                    | (3,353   | ) |      |   | (2,418  | )
|Proceeds from sale of assets                                      |  |                                    |         |   |      |   | 1       |  
|Acquisition of broadcast properties and related transaction costs |  |                                    | (18      | ) |      |   |        |  
|Down payment on acquisition of stations                           |  |                                    | (39,950  | ) |      |   |        |  
|                                                                  |  |                                    |          |   |      |   |         |  
|Net cash used for investing activities                            |  |                                    | (43,321  | ) |      |   | (2,417  | )
|                                                                  |  |                                    |          |   |      |   |         |  
|Cash flows from financing activities:                             |  |                                    |          |   |      |   |         |  
|Proceeds from debt issuance                                       |  |                                    | 185,000  |   |      |   |        |  
|Repayment of long-term debt                                       |  |                                    | (165,956 | ) |      |   | (488    | )
|Proceeds from revolver draws                                      |  |                                    | 26,650   |   |      |   | 33,000  |  
|Payments for debt finance costs                                   |  |                                    | (4,901   | ) |      |   | (32     | )
|Capital contributions                                             |  |                                    | 71,371   |   |      |   |        |  
|Distributions                                                     |  |                                    | (1,520   | ) |      |   | (34,797 | )
|                                                                  |  |                                    |          |   |      |   |         |  
|Net cash provided by (used for) financing activities              |  |                                    | 110,644  |   |      |   | (2,317  | )
|                                                                  |  |                                    |          |   |      |   |         |  
|Net increase in cash and cash equivalents                         |  |                                    | 78,362   |   |      |   | 6,444   |  
|Cash and cash equivalents at beginning of period                  |  |                                    | 29,133   |   |      |   | 10,621  |  
|                                                                  |  |                                    |          |   |      |   |         |  
|Cash and cash equivalents at end of period                        |  | $                                  | 107,495  |   |      | $ | 17,065  |  
|                                                                  |  |                                    |          |   |      |   |         |  



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



3



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NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.    Organization and Business Operations



Nexstar Broadcasting, Inc. (Nexstar) owns, operates and programs, through its subsidiaries, 27 television stations in the United States of America, consisting of nine NBC-affiliated television stations,
five ABC-affiliated television stations, five CBS-affiliated television stations, six Fox-affiliated stations and two UPN-affiliated television stations. Nexstar has an outsourcing agreement to provide services for a Fox affiliate owned by a
subsidiary of Sinclair Broadcast Group, Inc. Through various other local service agreements, Nexstar (i) programs two Fox-affiliated television stations and two NBC-affiliated stations under Time Brokerage Agreements (TBA), (ii) has
Shared Services Agreements (SSA) with two NBC-affiliated television stations, a CBS-affiliated television station and an ABC-affiliated television station and (iii) has SSAs and Joint Sales Agreements (JSA) with three
Fox-affiliated television stations, one ABC-affiliated television station, one CBS-affiliated television station, one low-power UPN-affiliated television station and one low-power independent television station. The television stations described
above are located in New York, Pennsylvania, Illinois, Indiana, Missouri, Texas, Louisiana, Arkansas, Alabama, Montana and Maryland.



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



2.    Summary of Significant Accounting Policies



Basis of Presentation



The condensed consolidated financial statements include the accounts of
Nexstar and independently-owned Mission Broadcasting, Inc. (Mission) (collectively, the Company). Mission owns and operates the following television stations: WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC, KSAN (formerly KACB), KOLR,
KCIT, KCPN-LP, KAMC and KHMT. In addition, Mission provides most of the programming for WBAK, which was owned by Bahakel Communications until April 6, 2004, pursuant to a TBA. Nexstar has a TBA with each of WFXP and KHMT, which allows Nexstar to
program most of each stations broadcast time, sell each stations advertising time and retain the advertising revenue generated by WFXP and KHMT in exchange for monthly payments to Mission. Nexstar has SSAs with each of KJTL, KJBO-LP,
KOLR, KCIT, KCPN-LP, KAMC and WBAK 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 SSAs. Pursuant
to the JSAs, Nexstar has also acquired the right to sell and receive the revenue from the advertising time on KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK in return for monthly payments to Mission. The arrangements under these agreements have
had the effect of Nexstar receiving substantially all of the available cash, after payment of debt service costs, generated by KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK. Nexstar anticipates that it will continue to receive substantially all
of the available cash, after payment of debt service costs, generated by KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK under these agreements. Nexstar has SSAs with each of WYOU, KODE, KRBC and KSAN which have terms substantially similar to the
terms of the SSAs with KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK. Nexstars ability to receive cash from Mission is governed by these agreements.



Additionally, Missions shareholder has granted Nexstar purchase options to acquire the assets and liabilities of each Mission station. These
option agreements are freely exercisable or assignable by Nexstar without the consent or approval of Missions shareholder.



Nexstar does not own Mission or Missions television stations; however, as a result of the service arrangements, debt guarantees (see Note 6), and
option agreements with Mission, Nexstar is deemed to have a controlling financial interest in them under U.S. generally accepted accounting principles (U.S. GAAP) while complying with the Federal Communications Commissions
(FCC) rules regarding ownership limits in television markets. Additionally, Nexstar has evaluated the impact of accounting for Mission under Financial Accounting Standards Board (FASB) Interpretation No. 46,
Consolidation of Variable Interest Entities, an interpretation on Accounting Research Bulletin No. 51 (FIN No. 46) and has determined that Nexstar will be required to continue consolidating Missions financial position,
results of operations and cash flows under U.S. GAAP. In order for both Nexstar and Mission to continue to comply with FCC regulations, Mission must maintain complete responsibility for and control over programming, finances, personnel and
operations of its stations. Nexstar has entered into various service agreements with all of Missions stations.



On December 30, 2003, Nexstar Broadcasting Group, Inc., Nexstars ultimate parent, completed the acquisition of all
the direct and indirect subsidiaries of Quorum Broadcast Holdings, LLC (Quorum). The Quorum acquisition was structured as a merger of Quorums direct subsidiaries with and into Nexstar Broadcasting Group, Inc. and a contribution to
and subsequent merger of Quorums indirect subsidiaries with and into Nexstar. The merger constituted a tax-free reorganization and has been accounted for as a merger of entities under common control in a manner similar to the pooling of
interests. Accordingly, Nexstars financial statements herein have been restated to include the financial results of all of the Quorum subsidiaries for all periods presented. Common control exists because ABRY Partners, L.L.C., our ultimate
parents principal stockholder, through its various funds both before and after the merger holds more than 50% of the voting ownership of both Nexstar Broadcasting Group, Inc. and Quorum. This conclusion is based on the guidance in Financial
Accounting Standards Board (FASB) Statement No. 141 Business Combinations and EITF 02-05 Definition of Common Control in relation to FASB No. 141.



Additionally, on December 30, 2003, Mission completed the acquisition of VHR
Broadcasting, Inc. and its subsidiaries (VHR) and the acquisition of Mission Broadcasting of Amarillo, Inc. (Mission of Amarillo). Prior to December 30, 2003, Quorum provided



4



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NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



2.    Summary of Significant Accounting Policies(Continued)



management, sales or other services under local service agreements with VHR and Mission of
Amarillo that were substantially similar to Nexstars local service agreements with Mission. Upon completion of the Quorum acquisition and the Mission mergers, Nexstar became a party to these local service agreements as successor to the Quorum
subsidiaries and Mission became a party to such agreements as the successor to VHR and Mission of Amarillo.



The condensed consolidated financial statements as of March 31, 2004 and for the three months ended March 31, 2003 and 2004 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 condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of
operations for interim periods are not necessarily indicative of results for the full year. The financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Nexstars Annual
Report on Form 10-K for the year ended December 31, 2003. The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for
complete financial statements.



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



3.    Acquisitions



The stations listed below were acquired by Nexstar or Mission in 2003. Each
acquisition was accounted for under the purchase method, and accordingly the condensed consolidated financial statements include the operating results of each business from the date of acquisition.



|         |  |                     |  |                                  |  |                |  |            
|-------- |  | ------------------- |  | -------------------------------- |  | -------------- |  | -----------
|Station  |  | Network Affiliation |  | Location                         |  | Date Acquired  |  | Acquired By
|KRBC (1) |  | NBC                 |  | Abilene-Sweetwater, Texas        |  | June 13, 2003  |  | Mission    
|KSAN (1) |  | NBC                 |  | San Angelo, Texas                |  | June 13, 2003  |  | Mission    
|KARK (2) |  | NBC                 |  | Little Rock-Pine Bluff, Arkansas |  | August 1, 2003 |  | Nexstar    
|WDHN (2) |  | ABC                 |  | Dothan, Alabama                  |  | August 1, 2003 |  | Nexstar    

---

|(1) | Operations under a local marketing agreement commenced on January 1, 2003 and terminated on the date of acquisition.
|--- | --------------------------------------------------------------------------------------------------------------------

|(2) | Operations under a time brokerage agreement commenced on February 1, 2003 and terminated on the date of acquisition.
|--- | --------------------------------------------------------------------------------------------------------------------



The selected unaudited pro forma consolidated information for the three
months ended March 31, 2003 and 2004, determined as if the acquisitions had occurred on January 1, of each year as follows:



|                                                     |  |                                  |         |   |                                  |   |         |             |  |   |           |   |  |   |        |  
|---------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | ------- | ----------- |  | - | --------- | - |  | - | ------ | -
|                                                     |  | Three Months EndedMarch 31, 2003 |         |   | Three Months EndedMarch 31, 2004 |  
|                                                     |  | As Reported                      |         |   | Pro Forma                        |   |         | As Reported |  |   | Pro Forma |  
|Net broadcast revenue (excluding trade and barter)   |  | $                                | 42,094  |   |                                  | $ | 43,360  |             |  | $ | 48,968    |   |  | $ | 48,968 |  
|Total net revenue                                    |  |                                  | 47,254  |   |                                  |   | 48,520  |             |  |   | 54,236    |   |  |   | 54,236 |  
|Income (loss) from operations                        |  |                                  | 576     |   |                                  |   | (1,027  | )           |  |   | 2,661     |   |  |   | 2,661  |  
|Loss before minority interest in consolidated entity |  |                                  | (15,406 | ) |                                  |   | (17,259 | )           |  |   | (8,036    | ) |  |   | (8,036 | )
|Net loss                                             |  |                                  | (15,406 | ) |                                  |   | (17,259 | )           |  |   | (7,549    | ) |  |   | (7,549 | )



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.



5



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NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



4.    Operating and Management Agreements



WYZZ



Effective December 1, 2001, Nexstar entered into an outsourcing agreement
with a subsidiary of Sinclair Broadcast Group, Inc. (Sinclair) to provide certain engineering, production, sales and administrative services for WYZZ, the Fox affiliate in Peoria, Illinois. Nexstar has evaluated its arrangement with
Sinclair under FIN No. 46 and has determined that it is not the primary beneficiary of WYZZ. The net revenue of WYZZ was $0.8 million for the three months ended March 31, 2004.



WBAK



Effective May 9, 2003, Mission entered into a time brokerage agreement with Bahakel Communications and certain of its subsidiaries relating to WBAK, the
Fox affiliate in Terre Haute, Indiana. Operations under the time brokerage agreement terminated upon purchase of the station on April 6, 2004. Mission has evaluated its arrangement with Bahakel Communication under FIN No. 46 and has determined that
it is the primary beneficiary of WBAK. Mission has therefore consolidated the financial position and results of operations of WBAK since May 9, 2003, and pursuant to FIN No. 46, Bahakels ownership is currently reflected as minority interest in
these condensed consolidated financial statements. As of March 31, 2004, total assets of $3.5 million related to WBAK are included in the condensed consolidated balance sheet herein due to the provisions of FIN No. 46. The net revenue of WBAK was
$0.6 million for the three months ended March 31, 2004.



KPOM/KFAA



On October 13, 2003, Nexstar entered into a purchase
agreement to acquire substantially all of the assets of KPOM/KFAA, the NBC affiliate in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, from J.D.G. Television, Inc. Operations under a time brokerage agreement between Nexstar and J.D.G.
Television, Inc. began on October 16, 2003. The acquisition is expected to close in the third quarter of 2004, subject to FCC consent. Nexstar has evaluated its arrangement with J.D.G. Television, Inc. under FIN No. 46 and has determined that it is
the primary beneficiary of KPOM/KFAA. The Company has therefore consolidated the financial position and results of operations of KPOM/KFAA since October 16, 2003, and pursuant to FIN No. 46, J.D.G. Television, Inc.s ownership is currently
reflected as minority interest in these condensed consolidated financial statements. As of March 31, 2004, total assets of $16.6 million related to KPOM/KFAA are included in the condensed consolidated balance sheet herein due to the provisions of
FIN No. 46. The net revenue of KPOM/KFAA was $1.3 million for the three months ended March 31, 2004.



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



5.    Intangible Assets and Goodwill



|                                                   |  |                               |  |                  |          |   |               |   |          |  
|-------------------------------------------------- |  | ----------------------------- |  | ---------------- | -------- | - | ------------- | - | -------- | -
|                                                   |  | Estimated useful life (years) |  | December 31,2003 |          |   | March 31,2004 |  
|                                                   |  |                               |  | (Unaudited)      |         
|Network affiliation agreements                     |  | 15                            |  | $                | 327,170  |   |               | $ | 327,111  |  
|FCC licenses                                       |  | indefinite                    |  |                  | 158,098  |   |               |   | 158,098  |  
|Debt financing costs                               |  | term of debt                  |  |                  | 14,817   |   |               |   | 14,278   |  
|Other intangible assets                            |  | 1-15                          |  |                  | 44,394   |   |               |   | 40,162   |  
|                                                   |  |                               |  |                  |          |   |               |   |          |  
|                                                   |  |                               |  |                  | 544,479  |   |               |   | 539,649  |  
|Less: accumulated amortization                     |  |                               |  |                  | (146,127 | ) |               |   | (148,787 | )
|                                                   |  |                               |  |                  |          |   |               |   |          |  
|Intangible assets, net of accumulated amortization |  |                               |  |                  | 398,352  |   |               |   | 390,862  |  
|Goodwill                                           |  | indefinite                    |  |                  | 135,899  |   |               |   | 136,005  |  
|                                                   |  |                               |  |                  |          |   |               |   |          |  
|Intangible assets and goodwill, net                |  |                               |  | $                | 534,251  |   |               | $ | 526,867  |  
|                                                   |  |                               |  |                  |          |   |               |   |          |  



Total amortization
expense from definite-lived intangibles (excluding debt financing costs) for the year ended December 31, 2003 and three months ended March 31, 2004 was $24.9 million and $6.9 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



6



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NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



5.    Intangible Assets and Goodwill(Continued)



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 both December 31, 2003 and March 31, 2004 was $135.9 million. 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.



The Company completed the
annual tests of impairment for goodwill and FCC licenses as of December 31, 2003. These tests resulted in no impairment being recognized. As of March 31, 2004, the Company did not identify any events that triggered any impairment assessment.



6.    Debt



Long-term debt consists of the following:



|                                                                             |  |                   |         |   |               |   |         |  
|---------------------------------------------------------------------------- |  | ----------------- | ------- | - | ------------- | - | ------- | -
|                                                                             |  | December 31, 2003 |         |   | March 31,2004 |  
|Term loans                                                                   |  | $                 | 195,000 |   |               | $ | 194,513 |  
|Revolving credit facilities                                                  |  |                   | 10,000  |   |               |   | 43,000  |  
|12% senior subordinated notes due 2008, net of discount of $4,486 and $4,287 |  |                   | 155,514 |   |               |   | 155,713 |  
|7% senior subordinated notes due 2014                                        |  |                   | 125,000 |   |               |   | 125,000 |  
|SFAS No. 133 hedge accounting adjustment                                     |  |                   | 3,307   |   |               |   | 3,110   |  
|                                                                             |  |                   |         |   |               |   |         |  
|                                                                             |  |                   | 488,821 |   |               |   | 521,336 |  
|Less: current portion                                                        |  |                   | (1,950  | ) |               |   | (1,950  | )
|                                                                             |  |                   |         |   |               |   |         |  
|                                                                             |  | $                 | 486,871 |   |               | $ | 519,386 |  
|                                                                             |  |                   |         |   |               |   |         |  



The Nexstar
Senior Secured Credit Facilities



Nexstars
senior secured credit facilities (the Nexstar Facilities) consist of a $55.0 million term loan and a $50.0 million revolver. The term loans amortize at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010. The
outstanding principal amount on the revolving loans mature on December 31, 2009. As of March 31, 2004, Nexstar had outstanding $54.8 million on its term loan and $40.0 million under its revolver. Interest rates associated with the Nexstar Facilities
are based, at the option of Nexstar, on (i) the higher of the prevailing prime rate or the Federal Funds Rate plus 0.50% plus an applicable margin or (ii) LIBOR plus an applicable margin, as defined in the credit agreement (ranging from 3.36% to
4.15% at March 31, 2004). Based on borrowing rates currently available to Nexstar for bank loans with similar terms and average maturities, the fair value of Nexstars credit facilities approximates its carrying value.



The Mission Senior Secured Credit Facilities



Missions senior secured credit facilities (the Mission
Facilities) consist of a $140.0 million term loan and a $30.0 million revolver. 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 March 31, 2004, Mission had outstanding $139.7 million on its term loan and $3.0 million under its revolver. Interest rates associated with the Mission Facilities are based, at the option of Mission, on (i) the
higher of the prevailing prime rate or the Federal Funds Rate plus 0.50% plus an applicable margin or (ii) LIBOR plus an applicable margin, as defined in the credit agreement (ranging from 3.36% to 4.15% at March 31, 2004). Based on borrowing rates
currently available to Mission for bank loans with similar terms and average maturities, the fair value of Missions credit facilities approximates its carrying value.



Cross Guarantees of Debt



Nexstar guarantees full payment of any obligations under Missions senior secured credit facilities in the event of
Missions default. Similarly, Mission is a guarantor of Nexstars senior secured credit facilities entered into and the senior subordinated notes issued by Nexstar.



7



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NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



6.    Debt(Continued)



Registration



On May 13, 2004, the $125.0 million of 7% senior subordinated notes issued by the Company on December 30, 2003 were registered under the Securities Act of
1933 pursuant to a registration rights agreement.



Debt
Covenants



The bank debt agreements and the notes
described above contain covenants which require the Company to comply with certain financial ratios, capital expenditure limits, cash payments for broadcast rights limits and other restrictions. The covenants are formally calculated on a quarterly
basis. The Company was in compliance with such covenants at March 31, 2004.



Debt Financing Costs



The refinancing of the senior secured credit facilities for Nexstar and Mission resulted in the write off of $5.8 million during the first quarter of 2003 of certain debt financing costs previously capitalized. The redemption of the 16%
notes resulted in the write off of $0.9 million during the first quarter of 2004 of certain debt financing costs previously capitalized. These amounts are included in loss on extinguishment of debt.



Interest Rate Swap Agreements



At March 31, 2004, Nexstar had in effect an interest rate swap agreement to
pay a fixed interest rate and receive a variable interest rate as required by its credit facility agreements, with a notional amount of $93.3 million. The $93.3 million notional swap, while economically being used to hedge the variability of cash
flows on a portion of Nexstars variable rate debt, does not qualify for SFAS No. 133 hedge accounting and, thus, is being recorded on the balance sheet at fair value with changes in fair value each period reported in other income and expense.
The marking-to-market of this derivative instrument resulted in a recognition of $0.7 million and $0.2 million, respectively, in other income for the three months ended March 31, 2004 and 2003. The differential to be paid or received on the swap is
accrued as an adjustment to interest expense. The net fair value of the interest rate swap agreement representing the cash Nexstar would pay to settle the agreement was approximately $2.6 million and $3.3 million at March 31, 2004 and December 31,
2003, respectively.



On June 13, 2003, the Company terminated
the notional interest rate swap contract in the amount of $80.0 million. The notional interest rate swap agreement, while being used to mitigate the impact of the variability of interest rates on the credit facilities, did not qualify for SFAS No.
133 hedge accounting and, thus, was recorded on the balance sheet at fair value with changes in fair value each period reported in other income and expense. For the three months ended March 31, 2003, other income and expense includes a gain of $0.7
million from marking-to-market this derivative instrument.



On
June 13, 2003, Quorum entered into an interest rate collar agreement for a notional amount of $60.0 million through September 13, 2003 and $40.0 million from September 13, 2003 through December 13, 2004. Under the agreement the ceiling and floor
interest rates are 2.5% and 0.88%, respectively. The net fair value of the agreement as of March 31, 2004 is not material. This agreement was terminated on April 5, 2004.



7.    Income Taxes



Prior to January 1, 2002, the Company recorded deferred tax liabilities relating to the difference in the book basis and tax basis of goodwill and
intangibles. The reversals of those deferred tax liabilities were utilized to support the recognition of deferred tax assets (primarily consisting of net operating loss carryforwards) recorded by the Company. As a result of the adoption of Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142), those deferred tax liabilities will no longer reverse on a scheduled basis. Accordingly, the Companys provision for income
taxes is primarily created by an increase in the valuation allowance against the increase in the net deferred tax assets position during the year. This expense has no impact on the Companys cash flows.



8.    Commitments and Contingencies



Digital Conversion



FCC regulations required television stations to commence digital operations
by May 1, 2002, in addition to continuing their analog operations, unless an extension of time was granted. The Company received extensions of time to begin digital operations at all



8



---

NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



8.    Commitments and Contingencies(Continued)



of the stations it owns except WCIA and WCFN, which met the May 1, 2002 deadline, Nexstar
owned WQRF and WFXV and Mission owned WFXP, which were not required to seek an extension of time because the FCC has not yet issued a DTV construction permit to these stations. As of July 1, 2003, all of our and Missions stations are
broadcasting a low-power DTV signal, except WFXV and WQRF, which are not required to do so. WYZZ, which is owned by Sinclair Broadcast Group, Inc., also is broadcasting a low-power digital television signal. WBAK, which Mission acquired from Bahakel
Communications on April 6, 2004, had an extension of time until March 24, 2004 and timely requested a further extension to construct digital facilities from the FCC, which request remains pending. KPOM, which Nexstar is expected to acquire from
J.D.G. Television, Inc. in the third quarter of 2004, pending FCC consent, is broadcasting a low-power digital signal. KFAA, which Nexstar also is expected to acquire from J.D.G. Television, Inc. in the third quarter of 2004, pending FCC consent,
has not yet initiated digital broadcasting. KFAA had until March 4, 2004 to construct DTV facilities. KFAA has applied for an extension of time to construct digital facilities and will have at least six months from the date the FCC acts on its
application to construct its digital facilities. If the FCC denies these requests for extension the licensee will have six months to complete construction of DTV facilities and will be required to report to the FCC on construction during this
period. If the station is not broadcasting a digital signal by the end of this six-month period, the licensee could be subject to further sanctions, including, eventually, loss of its DTV construction permit. WUTR, which Mission acquired from a
subsidiary of Clear Channel Communications on April 1, 2004, is broadcasting a full-power DTV signal as of February 17, 2004. The digital conversion required an average initial capital expenditure of $0.2 million per station for low-power
transmission of a digital signal, and we estimate that it will require an average additional capital expenditure of $0.7 million per station to modify the transmitter for full-power digital signal transmission. Digital conversion expenditures were
$1.3 million and $11 thousand, respectively, for the three months ended March 31, 2003 and 2004. We anticipate that digital conversion expenditures will be funded through available cash on hand and cash generated from operations.



Guarantor Arrangements



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



In connection with most of the Companys acquisitions, the Company enters into local service agreements for specified periods of time, usually six months, 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 activities of operating the television station under such agreements. The maximum potential amount of future payments the Company could be required
to make for such obligations is undeterminable at this time. The Company has not incurred significant costs to defend lawsuits or settle claims related to these indemnification agreements.



Litigation



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



9.    Condensed Consolidating Financial Information



As a result of the service agreements, options and debt guarantees between
Nexstar and Mission, as described in Note 2, Note 4 and Note 6, the financial position, results of operations and cash flows of Nexstar and Mission are consolidated.



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



The following 2004 and 2003 condensed consolidating financial information presents the financial position, results of operations and cash flows of Nexstar
and Mission, as well as the consolidating entries needed to arrive at the information for the Company on a consolidated basis. The consolidating entries consist of fees and reimbursable expenses charged between Nexstar and Mission as a result of the
local service arrangements or the unpaid balances of these charges.



9



---

NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



9.    Condensed Consolidating Financial Information(Continued)



Balance Sheet

March 31, 2004



|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|-------------------------------------------------------------- |  | ------- | ------- | ------- | - | ------- | --------------------- |  | - | -------------------- | - |  | - | -------
|                                                               |  | Nexstar |         | Mission |   |         | Consolidating Entries |  |   | Consolidated Company
|ASSETS                                                         |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Current assets                                                 |  | $       | 97,997  |         | $ | 7,003   |                       |  | $ | (31,185              | ) |  | $ | 73,815 
|Property and equipment, net                                    |  |         | 75,766  |         |   | 13,397  |                       |  |   |                     |   |  |   | 89,163 
|Other noncurrent assets                                        |  |         | 21,173  |         |   | 4,458   |                       |  |   |                     |   |  |   | 25,631 
|Intangible assets and goodwill, net                            |  |         | 438,051 |         |   | 88,816  |                       |  |   |                     |   |  |   | 526,867
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Total assets                                                   |  | $       | 632,987 |         | $ | 113,674 |                       |  | $ | (31,185              | ) |  | $ | 715,476
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                           |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Current liabilities                                            |  | $       | 46,853  |         | $ | 36,502  |                       |  | $ | (31,185              | ) |  | $ | 52,170 
|Debt                                                           |  |         | 378,136 |         |   | 141,250 |                       |  |   |                     |   |  |   | 519,386
|Other liabilities and minority interest in consolidated entity |  |         | 58,759  |         |   | 12,394  |                       |  |   |                     |   |  |   | 71,153 
|Shareholders equity                                           |  |         | 149,239 |         |   | (76,472 | )                     |  |   |                     |   |  |   | 72,767 
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Total liabilities and shareholders equity                     |  | $       | 632,987 |         | $ | 113,674 |                       |  | $ | (31,185              | ) |  | $ | 715,476
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        



Balance Sheet

December 31, 2003



|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|-------------------------------------------------------------- |  | ------- | ------- | ------- | - | ------- | --------------------- |  | - | -------------------- | - |  | - | -------
|                                                               |  | Nexstar |         | Mission |   |         | Consolidating Entries |  |   | Consolidated Company
|ASSETS                                                         |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Current assets                                                 |  | $       | 99,967  |         | $ | 8,466   |                       |  | $ | (31,974              | ) |  | $ | 76,459 
|Property and equipment, net                                    |  |         | 77,735  |         |   | 14,158  |                       |  |   | (75                  | ) |  |   | 91,818 
|Other noncurrent assets                                        |  |         | 21,143  |         |   | 5,277   |                       |  |   |                     |   |  |   | 26,420 
|Intangible assets and goodwill, net                            |  |         | 444,108 |         |   | 90,143  |                       |  |   |                     |   |  |   | 534,251
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Total assets                                                   |  | $       | 642,953 |         | $ | 118,044 |                       |  | $ | (32,049              | ) |  | $ | 728,948
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                           |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Current liabilities                                            |  | $       | 50,195  |         | $ | 38,080  |                       |  | $ | (31,974              | ) |  | $ | 56,301 
|Debt                                                           |  |         | 345,271 |         |   | 141,600 |                       |  |   |                     |   |  |   | 486,871
|Other liabilities and minority interest in consolidated entity |  |         | 58,030  |         |   | 12,633  |                       |  |   |                     |   |  |   | 70,663 
|Shareholders equity                                           |  |         | 189,457 |         |   | (74,269 | )                     |  |   | (75                  | ) |  |   | 115,113
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        
|Total liabilities and shareholders equity                     |  | $       | 642,953 |         | $ | 118,044 |                       |  | $ | (32,049              | ) |  | $ | 728,948
|                                                               |  |         |         |         |   |         |                       |  |   |                      |   |  |   |        



Statement of
Operations

For the Three Months Ended March 31, 2004



|                                                     |  |         |        |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|---------------------------------------------------- |  | ------- | ------ | - | ------- | - | ------ | --------------------- |  | - | -------------------- | - |  | - | ------- | -
|                                                     |  | Nexstar |        |   | Mission |   |        | Consolidating Entries |  |   | Consolidated Company |  
|Net revenue                                          |  | $       | 52,869 |   |         | $ | 7,886  |                       |  | $ | (6,519               | ) |  | $ | 54,236  |  
|Operating expenses                                   |  |         | 49,432 |   |         |   | 8,662  |                       |  |   | (6,519               | ) |  |   | 51,575  |  
|                                                     |  |         |        |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Income (loss) from operations                        |  |         | 3,437  |   |         |   | (776   | )                     |  |   |                     |   |  |   | 2,661   |  
|Interest expense                                     |  |         | (9,170 | ) |         |   | (1,350 | )                     |  |   |                     |   |  |   | (10,520 | )
|Interest income and other income, net                |  |         | 738    |   |         |   | 37     |                       |  |   |                     |   |  |   | 775     |  
|                                                     |  |         |        |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Loss before income taxes                             |  |         | (4,995 | ) |         |   | (2,089 | )                     |  |   |                     |   |  |   | (7,084  | )
|Income tax benefit (expense)                         |  |         | (680   | ) |         |   | (272   | )                     |  |   |                     |   |  |   | (952    | )
|                                                     |  |         |        |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Loss before minority interest in consolidated entity |  |         | (5,675 | ) |         |   | (2,361 | )                     |  |   |                     |   |  |   | (8,036  | )
|Minority interest in consolidated entity             |  |         | 329    |   |         |   | 158    |                       |  |   |                     |   |  |   | 487     |  
|                                                     |  |         |        |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Net loss                                             |  | $       | (5,346 | ) |         | $ | (2,203 | )                     |  | $ |                     |   |  | $ | (7,549  | )
|                                                     |  |         |        |   |         |   |        |                       |  |   |                      |   |  |   |         |  



10



---

NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



9.    Condensed Consolidating Financial Information(Continued)



Statement of Operations

For the Three Months Ended March 31, 2003



|                                      |  |         |         |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|------------------------------------- |  | ------- | ------- | - | ------- | - | ------ | --------------------- |  | - | -------------------- | - |  | - | ------- | -
|                                      |  | Nexstar |         |   | Mission |   |        | Consolidating Entries |  |   | Consolidated Company |  
|Net revenue                           |  | $       | 47,445  |   |         | $ | 6,620  |                       |  | $ | (6,811               | ) |  | $ | 47,254  |  
|Operating expenses                    |  |         | 46,347  |   |         |   | 7,142  |                       |  |   | (6,811               | ) |  |   | 46,678  |  
|                                      |  |         |         |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Income (loss) from operations         |  |         | 1,098   |   |         |   | (522   | )                     |  |   |                     |   |  |   | 576     |  
|Interest expense                      |  |         | (8,874  | ) |         |   | (2,066 | )                     |  |   |                     |   |  |   | (10,940 | )
|Loss on extinguishment of debt        |  |         | (4,783  | ) |         |   | (1,031 | )                     |  |   |                     |   |  |   | (5,814  | )
|Interest income and other income, net |  |         | 599     |   |         |   | 480    |                       |  |   |                     |   |  |   | 1,079   |  
|                                      |  |         |         |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Loss before income taxes              |  |         | (11,960 | ) |         |   | (3,139 | )                     |  |   |                     |   |  |   | (15,099 | )
|Income tax benefit (expense)          |  |         | 39      |   |         |   | (346   | )                     |  |   |                     |   |  |   | (307    | )
|                                      |  |         |         |   |         |   |        |                       |  |   |                      |   |  |   |         |  
|Net loss                              |  | $       | (11,921 | ) |         | $ | (3,485 | )                     |  | $ |                     |   |  | $ | (15,406 | )
|                                      |  |         |         |   |         |   |        |                       |  |   |                      |   |  |   |         |  



Statement of Cash
Flows

For the Three Months Ended March 31, 2004



|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|---------------------------------------------------- |  | ------- | ------- | - | ------- | - | ----- | --------------------- |  | -------------------- | - |  | - | ------- | -
|                                                     |  | Nexstar |         |   | Mission |   |       | Consolidating Entries |  | Consolidated Company |  
|Net cash provided by (used for) operating activities |  | $       | 11,557  |   |         | $ | (379  | )                     |  | $                    |  |  | $ | 11,178  |  
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Cash flows from investing activities:                |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Additions to property and equipment, net             |  |         | (2,407  | ) |         |   | (10   | )                     |  |                      |  |  |   | (2,417  | )
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Net cash used for investing activities               |  |         | (2,407  | ) |         |   | (10   | )                     |  |                      |  |  |   | (2,417  | )
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Cash flows from financing activities:                |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Proceeds from revolver draws                         |  |         | 33,000  |   |         |   |      |                       |  |                      |  |  |   | 33,000  |  
|Repayment of long-term debt                          |  |         | (138    | ) |         |   | (350  | )                     |  |                      |  |  |   | (488    | )
|Payments for debt finance costs                      |  |         | (24     | ) |         |   | (8    | )                     |  |                      |  |  |   | (32     | )
|Dividends paid to parent                             |  |         | (34,797 | ) |         |   |      |                       |  |                      |  |  |   | (34,797 | )
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Net cash used for financing activities               |  |         | (1,959  | ) |         |   | (358  | )                     |  |                      |  |  |   | (2,317  | )
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents |  |         | 7,191   |   |         |   | (747  | )                     |  |                      |  |  |   | 6,444   |  
|Cash and cash equivalents at beginning of period     |  |         | 8,764   |   |         |   | 1,857 |                       |  |                      |  |  |   | 10,621  |  
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  
|Cash and cash equivalents at end of period           |  | $       | 15,955  |   |         | $ | 1,110 |                       |  | $                    |  |  | $ | 17,065  |  
|                                                     |  |         |         |   |         |   |       |                       |  |                      |   |  |   |         |  



11



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NEXSTAR BROADCASTING, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



9.    Condensed Consolidating Financial Information(Continued)



Statement of Cash Flows

For the Three Months Ended March 31, 2003



|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|------------------------------------------------------------------ |  | ------- | -------- | - | ------- | - | ------- | --------------------- |  | -------------------- | - |  | - | -------- | -
|                                                                   |  | Nexstar |          |   | Mission |   |         | Consolidating Entries |  | Consolidated Company |  
|Net cash provided by operating activities                          |  | $       | 7,171    |   |         | $ | 3,868   |                       |  | $                    |  |  | $ | 11,039   |  
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Cash flows from investing activities:                              |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Additions to property and equipment, net                           |  |         | (3,042   | ) |         |   | (311    | )                     |  |                      |  |  |   | (3,353   | )
|Acquisitions of broadcast properties and related transaction costs |  |         | (39,950  | ) |         |   | (18     | )                     |  |                      |  |  |   | (39,968  | )
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Net cash used for investing activities                             |  |         | (42,992  | ) |         |   | (329    | )                     |  |                      |  |  |   | (43,321  | )
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Cash flows from financing activities:                              |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Proceeds from debt issuance                                        |  |         | 130,000  |   |         |   | 55,000  |                       |  |                      |  |  |   | 185,000  |  
|Repayment of long-term debt                                        |  |         | (108,056 | ) |         |   | (57,900 | )                     |  |                      |  |  |   | (165,956 | )
|Proceeds from revolver draws                                       |  |         | 25,000   |   |         |   | 1,650   |                       |  |                      |  |  |   | 26,650   |  
|Payment for debt finance costs                                     |  |         | (3,418   | ) |         |   | (1,483  | )                     |  |                      |  |  |   | (4,901   | )
|Distributions, net                                                 |  |         | (1,520   | ) |         |   |        |                       |  |                      |  |  |   | (1,520   | )
|Capital contributions                                              |  |         | 71,371   |   |         |   |        |                       |  |                      |  |  |   | 71,371   |  
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Net cash provided by (used for) financing activities               |  |         | 113,377  |   |         |   | (2,733  | )                     |  |                      |  |  |   | 110,644  |  
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Net increase in cash and cash equivalents                          |  |         | 77,556   |   |         |   | 806     |                       |  |                      |  |  |   | 78,362   |  
|Cash and cash equivalents at beginning of period                   |  |         | 28,607   |   |         |   | 526     |                       |  |                      |  |  |   | 29,133   |  
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  
|Cash and cash equivalents at end of period                         |  | $       | 106,163  |   |         | $ | 1,332   |                       |  | $                    |  |  | $ | 107,495  |  
|                                                                   |  |         |          |   |         |   |         |                       |  |                      |   |  |   |          |  



10.    Employee
Benefits



Retirement Savings Plans



Nexstar, Mission, Quorum and VHR have established retirement savings plans
under Section 401(k) of the Internal Revenue Code (the Plans). The Plans cover substantially all employees of Nexstar and Mission and former employees of Quorum and VHR who meet minimum age and service requirements, and allow
participants to defer a portion of their annual compensation on a pre-tax basis. Contributions to the Plans may be made at the discretion of Nexstar and Mission. Quorum and VHR made contributions amounting to $37 thousand and $0.1 million,
respectively, for the three months ended March 31, 2003 and 2004. The Quorum 401(k) plan was merged into the Nexstar 401(k) plan on March 15, 2004. The VHR plan merged into the Mission 401(k) plan on March 29, 2004.



11.    Related Party Transactions



Quorum paid ABRY a management fee for financial and other advisory services.
Management fees paid to ABRY approximated $0.1 million for the three months ended March 31, 2003, and are included in selling, general and administrative expenses in the Companys condensed consolidated statement of operations.



VHR paid compensation to the former principal stockholder and officer of VHR
approximately $25 thousand for the three months ended March 31, 2003, which is included in selling, general and administrative expenses in the Companys condensed consolidated statement of operations.



Mission paid compensation to the principal stockholder of Mission, in the
amount of $57 thousand and $64 thousand, respectively, for the three months ended March 31, 2003 and 2004, which is included in selling, general and administrative expenses.



12



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NEXSTAR BROADCASTING, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



12.    Subsequent Events



WUTR Acquisition



On April 1, 2004, Mission purchased substantially all of the assets of WUTR, the ABC affiliate in Utica, New York, from a subsidiary of Clear Channel
Communications for $3.7 million, exclusive of transaction costs. Pursuant to the terms of the purchase agreement, Mission set aside $0.8 million against the purchase price in a restricted cash account, which was funded with borrowings under its
senior credit facilities. Mission paid the $3.7 million purchase price upon consummation of the acquisition on April 1, 2004, exclusive of transaction costs, including the incremental borrowings of $2.9 million under its senior credit facilities.
Mission entered into an SSA with Nexstar, effective April 1, 2004, whereby Nexstar-owned WFXV provides certain services to WUTR including news production, technical maintenance and security in exchange for a flat monthly fee of $10,000 per month.
Mission also entered into a JSA, effective April 1, 2004, whereby Nexstar-owned WFXV purchases all of the advertising revenue in return for payments to Mission equal to 70% of the WUTR revenue collected each month.



WBAK Acquisition



On April 6, 2004, Mission purchased substantially all of the assets of WBAK, the Fox affiliate in Terre Haute, Indiana, from
Bahakel Communications for $3.0 million, exclusive of transaction costs. Pursuant to the terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price on May 9, 2003, which was funded with borrowings under
its senior credit facilities. Mission paid the remaining $1.5 million upon consummation of the acquisition on April 6, 2004, exclusive of transaction costs, which was funded with borrowings under its senior credit facilities.



13



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



Forward-Looking and Cautionary Statements



The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated balance sheet as of March 31, 2004,
unaudited condensed consolidated statements of operations and other unaudited condensed financial statements for the three months ended March 31, 2003 and 2004 and related notes included elsewhere in this Quarterly Report on Form 10-Q. This
Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical
fact are forward-looking statements for purposes of federal and state securities laws, including: any projections or expectations of earnings, revenue, financial performance, liquidity and capital resources or other financial items; any
assumptions or projections about the television broadcasting industry; any statements of our plans, strategies and objectives for our future operations, performance, liquidity and capital resources or other financial items; any statements concerning
proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include
the words may, will, should, could, would, predicts, potential, continue, expects, anticipates, future,
intends, plans, believes, estimates and other similar words.



Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ from this
projection or assumption in any of our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties, including those
described in Nexstars Annual Report on Form 10-K for the year ended December 31, 2003. The forward-looking statements are made only as of the date hereof, and we do not have or undertake any obligation to update any forward-looking statements
to reflect subsequent events or circumstances unless otherwise required by law.



We make references throughout our Managements Discussion and Analysis of Financial Condition and Results of Operations to comparisons on a same station basis in order to provide a more
meaningful comparison of annual growth from internal operations which may be masked by growth from acquisitions. These comparisons refer to stations that we have owned or provided services to at the beginning and end of a particular period. In
particular, references to a comparison on a same station basis for the three months ended March 31, 2004 versus the three months ended March 31, 2003 include the following stations: WYOU, KQTV, WTWO, WBRE, KFDX, KSNF, KBTV, WJET, WFXP, WROC, KJTL,
KJBO-LP, KTAB, KMID, KTAL, WCIA, WMBD, WYZZ, KODE, WCFN, KRBC, KSAN (formerly KRBC), WHAG, KDEB, WFFT, KAMR, WQRF, KARD, KLBK, WFXV, WPNY-LP, KSVI, WTVW, KOLR, KCIT, KCPN-LP, KAMC and KHMT. As used in the report, unless the context indicates
otherwise, Nexstar refers to Nexstar Broadcasting, Inc., and Mission refers to Mission Broadcasting, Inc. All references to we, our, and us refer to Nexstar.



Introduction



We own and operate 27 television stations. Through various local service agreements with Mission Broadcasting, Inc.
(Mission), we currently provide various management, sales or other services to additional television stations. Mission is 100% owned by an independent third party. Mission currently owns and operates the following television stations:
WYOU, WFXP, KODE, KJTL, KJBO-LP, KRBC, KSAN, KOLR, KCIT, KCPN-LP, KAMC and KHMT. Mission completed the acquisition of substantially all of the assets of television stations WUTR and WBAK on April 1, 2004 and April 6, 2004, respectively. We do not
own or control Mission or its television stations. In order for both us and Mission to continue to comply with FCC regulations, Mission must maintain complete responsibility for and control over programming, finances, personnel and operations of its
stations. However, as a result of our guarantee of Missions debt and our arrangements under the local service agreements and purchase option agreements with Mission described below, we are deemed under U.S. generally accepted accounting
principles (U.S. GAAP) to have a controlling financial interest in Mission.



Nexstars ability to receive cash from Mission is governed by the following local service agreements:



| |  | We have a time brokerage agreement (TBA) with each of WFXP and KHMT, which allows us to program most of each stations broadcast time, sell each stations
advertising time and retain the advertising revenue generated by WFXP and KHMT in exchange for monthly payments to Mission.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We have shared services agreements (SSA) with each of KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK, which allows the sharing of services, including news production,
technical maintenance and security, in exchange for our right to receive certain payments from Mission as described in the SSAs. Through joint sales agreements (JSA), we have also acquired the rights to sell and receive the revenue from
the advertising time on KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK in return for monthly payments to Mission. The arrangements under these agreements have had the effect of us receiving substantially all of the available cash, after payment
of debt service costs, generated by KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK. We anticipate that we will continue to receive substantially all of the available cash, after payment of debt service costs, generated by KJTL, KJBO-LP, KOLR,
KCIT, KCPN-LP, KAMC and WBAK under these agreements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We have SSAs with each of WYOU, KODE, KRBC and KSAN, which have terms substantially similar to the terms of the SSAs with KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We have JSAs with each of WYOU, KODE, KRBC and KSAN, the terms of which will begin only at the later of (a) the 10th
| | - | --------------------------------------------------------------------------------------------------------------------



14



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day after our written notice to Mission and (b) the satisfaction of requirements, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The
terms of these JSAs are substantially similar to the terms of our JSAs with KJTL, KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC and WBAK.



In addition to the above local service agreements, we also guarantee Missions senior secured credit facilities. Similarly, Mission is a guarantor of
the senior secured credit facilities entered into and the senior subordinated notes issued by us.



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



In addition to Nexstars agreements with Mission, pursuant to an outsourcing agreement with a subsidiary of Sinclair Broadcast Group, Inc.
(Sinclair) that became effective December 1, 2001, Nexstar provides engineering, production, sales and administrative services for WYZZ, the Fox affiliate in the Peoria-Bloomington, Illinois market. The parties share the combined
broadcast cash flow (as defined in the outsourcing agreement) generated by WYZZ and Nexstar-owned, WMBD. The outsourcing agreement expires in December 2008, but at any time it may be canceled by either party upon 180 days written notice. Nexstar
evaluated the arrangement under FIN No. 46 and determined that it is not the primary beneficiary of WYZZ.



The operating revenue of our stations is derived primarily from advertising revenue, which in turn depends on the economic conditions of the markets in
which we operate, the demographic makeup of those markets and the marketing strategy we employ in each market. 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 and the stations we provide services to, except for KCPN-LP, has a network affiliation agreement pursuant to which the network
provides programming to the station during specified time periods, including prime time. Each of NBC, CBS and ABC compensates the affiliated stations for distributing the networks programming over the air and for allowing the network to keep a
portion of advertising inventory during those time periods. The affiliation agreements with Fox and UPN do not provide for compensation. Each station acquires licenses to broadcast programming in non-news and non-network time periods. The licenses
are either purchased from a program distributor for cash and/or the program distributor is allowed to sell some of the advertising inventory as compensation to eliminate or reduce the cash cost for the license. The latter practice is referred to as
barter broadcast rights. The station records the estimated fair market value of the licenses, including any advertising inventory given to the program distributor, as a broadcast right asset and liability. The assets are amortized as a component of
amortization of broadcast rights. Amortization is computed using the straight-line method based on the license period or usage, whichever is greater. The cash broadcast rights liabilities are reduced by monthly payments while the barter liability is
amortized over the life of the contract as a component of trade and barter revenue.



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



Most advertising contracts are short-term and generally run for a few weeks. Excluding political revenue, 67.5% and 67.8% of Nexstars consolidated
spot revenue (including Mission) for the three months ended March 31, 2003 and March 31, 2004, respectively, was generated from local advertising. The remainder of Nexstar and Missions 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 is derived from advertisements placed by advertising agencies. The agencies receive a commission rate of 15.0% of 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 stations local sales staff, thereby eliminating the agency commission.



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



15



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Industry Trends



Two significant industry-wide factors influenced our performance during 2003. Although historical market trends would have dictated a slight increase
in revenue for 2003, the U.S. advertising market experienced a significant slowdown during 2003 as evidenced by a 2.3% decrease in market time sales for television as reported by the Television Bureau of Advertising (TVB). This was
primarily the result of the war in Iraq, which began in the first quarter of 2003. The market began to stabilize and showed signs of recovery towards the end of the year and we believe that the recovery will continue in 2004. Our net broadcast
revenue on a same station basis increased 10.1% from $39.4 million in the first quarter of 2003 to $43.4 million in the first quarter of 2004. These results are consistent with the overall market as evidenced by the 9.3% increase in the market time
sales for the first quarter of 2004 as reported by the TVB.



Also, political revenue is a factor when comparing our period to period results. During an election year (even numbered years), political revenue makes up a significant portion of the increase in revenue in that year. Since 2004 is a
presidential election year and political revenue during a presidential election year is generally higher than during a non-presidential election year, we expect a large percentage of our revenue growth in 2004 to be attributable to political
revenue. Political revenue was $3.4 million in the first quarter of 2004, a significant increase over the $0.3 million in the first quarter of 2003. We expect the majority of political revenue to be earned over the remainder of 2004.



Acquisitions and Station Agreements



The acquisitions and local service agreements described below, which were
entered into by Nexstar and Mission during the fiscal year ended December 31, 2003 and for the three months ended March 31, 2004 affect the year-to-year comparability of the operating results discussed below:



| |  | On May 9, 2003, Mission entered into a purchase agreement and a TBA with Bahakel Communications and certain of its subsidiaries, which owned WBAK, the Fox affiliate in Terre Haute,
Indiana. Operations under the TBA commenced on May 9, 2003 and terminated upon the purchase of the station. On April 6, 2004, Mission purchased substantially all of the assets of WBAK for $3.0 million. Additionally, Mission entered into an SSA with
Nexstar, effective May 9, 2003, as amended, whereby Nexstar-owned WTWO may provide certain services to WBAK, including news production, technical maintenance and security in exchange for monthly payments from Mission. Mission also entered into a
JSA, effective May 9, 2003, as amended, whereby Nexstar-owned WTWO purchases all of the advertising time on WBAK and retains the advertising revenue in return for payments to Mission. Mission has evaluated its arrangement with Bahakel Communications
under FIN No. 46 and has determined that it is the primary beneficiary of WBAK. Mission has therefore consolidated the financial position and results of operations of WBAK since May 9, 2003.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On October 13, 2003, Nexstar entered into an agreement to acquire substantially all of the assets of KPOM/KFAA, the NBC affiliate in Fort Smith-Fayetteville-Springdale-Rogers,
Arkansas, from J.D.G. Television, Inc. for $17.0 million. Operations under a TBA between us and J.D.G. Television, Inc. began on October 16, 2003. The acquisition is expected to close in the third quarter of 2004, subject to FCC consent. Nexstar has
evaluated its arrangement with J.D.G. Television, Inc. under FIN No. 46 and has determined that it is the primary beneficiary of KPOM/KFAA. Nexstar has therefore consolidated the financial position and results of operations of KPOM/KFAA since
October 13, 2003.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On December 17, 2003, Mission entered into an agreement to acquire substantially all of the assets of WUTR, the ABC affiliate in Utica, New York, from a subsidiary of Clear Channel
Communications for $3.7 million. The acquisition closed on April 1, 2004 and we subsequently entered into local service agreements with Mission to provide services to WUTR.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Recent Developments



WUTR Acquisition



On April 1, 2004, Mission purchased substantially all of the assets of WUTR, the ABC affiliate in Utica, New York, from a subsidiary of Clear Channel
Communications for $3.7 million, exclusive of transaction costs. Pursuant to the terms of the purchase agreement, Mission set aside $0.8 million against the purchase price in a restricted cash account, which was funded with borrowings under its
senior credit facilities. Mission paid the $3.7 million purchase price upon consummation of the acquisition on April 1, 2004, exclusive of transaction costs, including the incremental borrowings of $2.9 million under its senior credit facilities.
Mission entered into an SSA with Nexstar, effective April 1, 2004, whereby Nexstar-owned WFXV provides certain services to WUTR including news production, technical maintenance and security in exchange for a flat monthly fee of $10 thousand per
month. Mission also entered into a JSA, effective April 1, 2004, whereby Nexstar-owned WFXV purchases all of the advertising revenue in return for payments to Mission equal to 70% of the WUTR revenue collected each month.



16



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WBAK Acquisition



On April 6, 2004, Mission purchased substantially all of the assets of WBAK, the Fox affiliate in Terre Haute, Indiana, from Bahakel Communications for
$3.0 million, exclusive of transaction costs. Pursuant to the terms of the purchase agreement, Mission made a down payment of $1.5 million against the purchase price on May 9, 2003, which was funded with borrowings under its senior credit
facilities. Mission paid the remaining $1.5 million upon consummation of the acquisition on April 6, 2004, exclusive of transaction costs, which was funded with borrowings under its senior credit facilities.



WTVW



Quorum entered into a purchase and sale agreement on April 1, 2003 to sell WTVW, the Fox affiliate in Evansville, Indiana,
to GNS Media Evansville, Inc. (GNS Media) pending FCC approval. The FCC approval process was completed prior to December 31, 2003 and the closing date was set in January 2004. In January 2004, prior to the closing of the sale, GNS Media
attempted to terminate the agreement and refused to acquire the station. Nexstar does not believe that GNS Media was entitled to terminate the agreement and is continuing to discuss a settlement of its claim against GNS Media and its proposed LSA
partner Liberty Corporation.



Historical Performance



Results of Operations



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



|                                                   |  |                              |        |      |       |        |   |        |  |      
|-------------------------------------------------- |  | ---------------------------- | ------ | ---- | ----- | ------ | - | ------ |  | -----
|                                                   |  | Three Months Ended March 31,
|                                                   |  | 2003                         |        | 2004
|                                                   |  | Amount                       |        | %    |       | Amount |   | %     
|                                                   |  | (dollars in thousands)      
|Total net revenue                                  |  | $                            | 47,254 |      | 100.0 |        | $ | 54,236 |  | 100.0
|Operating expenses:                                |  |                              |        |      |       |        |   |        |  |      
|Corporate expenses                                 |  |                              | 2,255  |      | 4.8   |        |   | 2,036  |  | 3.8  
|Station direct operating expenses, net of trade    |  |                              | 12,840 |      | 27.2  |        |   | 14,307 |  | 26.4 
|Selling, general and administrative expenses       |  |                              | 12,921 |      | 27.3  |        |   | 14,681 |  | 27.1 
|Merger related expenses                            |  |                              |       |      |      |        |   | 456    |  | 0.8  
|Trade and barter expense                           |  |                              | 5,200  |      | 11.0  |        |   | 5,049  |  | 9.3  
|Depreciation and amortization                      |  |                              | 10,756 |      | 22.8  |        |   | 12,043 |  | 22.2 
|Amortization of broadcast rights, excluding barter |  |                              | 2,706  |      | 5.7   |        |   | 3,003  |  | 5.5  
|                                                   |  |                              |        |      |       |        |   |        |  |      
|Income from operations                             |  | $                            | 576    |      |       |        | $ | 2,661  |  |      
|                                                   |  |                              |        |      |       |        |   |        |  |      



Three Months
Ended March 31, 2004 Compared to Three Months Ended March 31, 2003.



Revenue



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



|                                                     |  |                              |        |      |       |        |   |        |  |      
|---------------------------------------------------- |  | ---------------------------- | ------ | ---- | ----- | ------ | - | ------ |  | -----
|                                                     |  | Three Months Ended March 31,
|                                                     |  | 2003                         |        | 2004
|                                                     |  | Amount                       |        | %    |       | Amount |   | %     
|                                                     |  | (dollars in thousands)      
|Local                                                |  | $                            | 30,041 |      | 62.2  |        | $ | 33,849 |  | 60.0 
|National                                             |  |                              | 14,435 |      | 29.9  |        |   | 16,075 |  | 28.5 
|Political                                            |  |                              | 257    |      | 0.5   |        |   | 3,383  |  | 6.0  
|Network compensation                                 |  |                              | 2,088  |      | 4.3   |        |   | 2,078  |  | 3.7  
|Other                                                |  |                              | 1,480  |      | 3.1   |        |   | 1,042  |  | 1.8  
|                                                     |  |                              |        |      |       |        |   |        |  |      
|Total gross revenue                                  |  |                              | 48,301 |      | 100.0 |        |   | 56,427 |  | 100.0
|Less: Agency and national representative commissions |  |                              | 6,207  |      | 12.9  |        |   | 7,459  |  | 13.2 
|                                                     |  |                              |        |      |       |        |   |        |  |      
|Net broadcast revenue                                |  |                              | 42,094 |      | 87.1  |        |   | 48,968 |  | 86.8 
|Trade and barter revenue                             |  |                              | 5,160  |      |       |        |   | 5,268  |  |      
|                                                     |  |                              |        |      |       |        |   |        |  |      
|Total net revenue                                    |  | $                            | 47,254 |      |       |        | $ | 54,236 |  |      
|                                                     |  |                              |        |      |       |        |   |        |  |      



17



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Local revenue was $33.8 million for the three months ended March 31, 2004 compared to $30.0 million for the same period
in 2003, an increase of $3.8 million or 12.7%. An increase of $2.1 million was attributed to acquisitions. On a same station basis, local revenue increased $1.7 million or 6.0%. The increase in local revenue was attributed to stronger emphasis on
sales initiatives from the former Quorum stations and to lower revenue in 2003 as a result of the war.



National revenue was $16.1 million for the three months ended March 31, 2004 compared to $14.4 million for the same period in 2003, an increase of $1.7
million or 11.8%. An increase of $1.1 million was attributed to acquisitions. On a same station basis, national revenue increased $0.6 million or 4.5%. The increase in national revenue was attributed to consistent growth in the automotive
advertising and lower revenue in 2003 as a result of the war.



Political revenue was $3.4 million for the three months ended March 31, 2004 compared to $0.3 million for the same period in 2003, an increase of $3.1 million. An increase of $0.3 million was attributed to acquisitions. On a same station
basis, Political revenue increased $3.1 million. The increase in Political revenue was attributed to presidential and/or statewide races in Pennsylvania, Illinois, Arkansas and Texas.



Operating Expenses



Station direct operating expenses, consisting primarily of news, engineering and programming, net of trade, and selling, general and administrative
expenses were $29.0 million for the three months ended March 31, 2004 compared to $25.8 million for the same period in 2003, an increase of $3.2 million or 12.5%. An increase of $2.3 million was attributed to acquisitions. On a same station basis,
direct operating, net of trade, and selling, general and administrative expenses increased $0.7 million. The increase was attributed to local commissions related to same station local revenue growth, higher LSA fees paid due to increased performance
at WMBD/WYZZ and increased health insurance costs.



Merger
related expenses of $0.5 million for the three months ended March 31, 2004, include costs to acquire the Quorum stations (accounted for as a merger under common control in a manner similar to pooling of interests). Merger related expenses consist of
severance costs, termination of contracts, among others, for Quorums traffic systems, Nielsen rating services, website management, and professional fees relating primarily to the television station WTVW.



Corporate expenses, related to costs associated with the centralized
management of Nexstars and Missions stations, decreased $0.2 million, or 9.7%, for the three months ended March 31, 2004, compared to the same period in 2003. The decrease was primarily attributed to the elimination of certain costs
associated with Quorums and VHRs separate corporate overhead in 2003.



Depreciation of property and equipment was $5.1 million for both the three months ended March 31, 2004 and 2003.



The amortization of intangibles increased by $1.3 million, or 22.6%, for the three months ended March 31, 2004, compared to the same period in 2003. The
increase was attributed to the amortization of intangible assets acquired from television stations KARK, WDHN, KRBC and KSAN.



Amortization of broadcast rights, excluding barter, was $3.0 million for the three months ended March 31, 2003 as compared to $2.7 million for the same
period in 2003, an increase of $0.3 million. The increase is mostly attributed to amortization recognized in accordance with FIN No. 46 for the pending acquisitions of WBAK and KPOM.



Income from Operations



Income from operations increased by $2.1 million for the three months ended March 31, 2004, compared to the same period in 2003. On a same station basis,
income from operations for the three months ended March 31, 2004, was $3.2 million as compared to a loss from operations of $0.8 million for the three months ended March 31, 2003. The increase in income from operations in 2004 is primarily
attributable to the increase in net revenue as described above.



Interest
Expense



Interest expense decreased by $0.4 million,
or 3.8%, for the three months ended March 31, 2004, compared to the same period in 2003. The decrease is due to lower interest rates on our senior credit facilities.



18



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Loss on Extinguishment of Debt



Loss on extinguishment of debt of $5.8 million for the three months ended March 31, 2003 represented the write off of
certain debt financing costs related to the refinancing of ours and Missions senior secured credit facilities.



Other Income



The change in market values of our derivative instruments and the marking-to-market of the interest rate swap agreement resulted in recognition of $0.7
million and $0.9 million, respectively, in other income for the three months ended March 31, 2004 and 2003. The change was due to a fluctuation in market interest rates.



Income Taxes



The provision for income taxes was $1.0 million for the three months ended March 31, 2004 as compared to $0.3 million for the same period in 2003. The
provision for income taxes is primarily related to an increase in the valuation allowance against an increase in our net deferred tax liability during the period.



In assessing our ability to realize deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will be realized. Prior to January 1, 2002, we recorded deferred tax liabilities relating to the difference in the book and tax basis of goodwill and intangibles. The reversals of those deferred tax
liabilities were utilized to support the recognition of the deferred tax assets recorded by us. As a result of the adoption of SFAS No. 142, those deferred tax liabilities will no longer reverse on a scheduled basis.



Minority Interest in Consolidated Entity



The minority interest charge for the three months ended March 31, 2004
relates to the minority interests in the stations WBAK and KPOM prior to the consummation of the acquisition as a result of the application of FIN No. 46.



Liquidity and Capital Resources



Cash Flows



Cash and cash equivalents increased by $6.4 million and $78.3 million for three months ended March 31, 2004 and 2003, respectively. The major components
of these changes are discussed below.



Cash
FlowsOperating Activities



Cash provided by
operating activities were $11.2 million and $11.0 million during the three months ended March 31, 2004 and 2003, respectively.



Cash flows from operating activities include net loss adjusted for non-cash items and the effects of changes in working capital, including changes in
accounts receivable and payable, broadcast rights asset and liability and other accrued assets and liabilities. The comparative increase in cash flows provided by operations of $0.2 million was primarily due to the timing of payments made or
received on operating assets and liabilities.



Cash FlowsInvesting Activities



Cash flows from investing activities were $2.4 million and $43.3 million during the three months ended March 31, 2004 and 2003, respectively.



Cash flows from investing activities consist primarily of cash used for capital additions and funding of activity from acquisitions. Capital expenditures
were $2.4 million and $3.4 million during the three months ended March 31, 2004 and 2003, respectively. We project that 2004 full-year capital expenditures will be approximately $9.5 million to $10.0 million, excluding acquisition-related spending.



Cash used in acquisitions was $40.0 million for the three
months ended March 31, 2003, which consisted entirely of a down payment against the purchase price for KARK and WDHN. The remaining purchase price for KARK and WDHN was paid upon closing the acquisition on August 1, 2003.



Cash FlowsFinancing Activities



Cash used for financing activities was $2.3 million for the three months
ended March 31, 2004, as compared to $110.6 million for the three months ended March 31, 2003. The change in cash flows from financing activities for the three months ended March 31, 2004 was primarily the result of (1) borrowings of $33.0
million under the senior secured credit facilities, (2) a $34.8 million distribution to our parent, Nexstar Finance Holdings, Inc., and (3) the repayment of $0.5 million of the term loans under the senior credit facilities. The change in cash flows
from financing activities for the three months ended March 31, 2003 was primarily the result of (1) borrowings of $211.6 million under the senior credit facilities, (2) the repayment of $166.0 million of previous borrowings under the senior credit
facilities, (3) the payment of transaction and financing costs of approximately $4.9 million, and (4) a $1.5 million distribution to our



19



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parent, Nexstar Finance Holdings, Inc. As of March 31, 2004, there was approximately $37 million of unused commitments under Nexstars and
Missions senior credit facilities. We and Mission were in compliance with all covenants contained in the credit agreements governing the senior secured credit facilities and the indentures governing the publicly-held notes at March 31, 2004.



Liquidity



We believe that our funds generated through future operations and
availability of borrowings under our credit facilities will be sufficient to fund our debt service and working capital requirements for the foreseeable future. We intend to finance capital expenditures, acquisitions through cash flow and borrowings
on our credit facilities. We do not foresee any difficulty in continuing to comply with covenants of our credit facilities. We will continue to optimize our capital structure.



We will continue to evaluate the best use of our operating cash flow among capital expenditures, acquisitions and debt
reduction. We have not declared or paid a cash dividend. We do not anticipate paying cash dividends in the foreseeable future. Our credit facilities do not allow us to declare cash dividends.



The Nexstar Senior Secured Credit Facilities



Our senior secured credit facilities, (the Nexstar Facilities)
consist of a $55.0 million term loan and a $50.0 million revolver. We used the proceeds to refinance our existing senior secured credit facilities, pay for related debt financing costs and finance the Quorum acquisition, including the refinancing of
all debt of Quorums subsidiaries. Financial covenants under the Nexstar Facilities include a total combined leverage ratio of us and Mission of 7.00 times the last twelve months operating cash flow (as defined in the credit agreement) through
December 30, 2004 and a senior combined leverage ratio of us and Mission of 4.00 times the last twelve months operating cash through December 30, 2004. Covenants also include, among others, an interest coverage ratio of 1.50 to 1.00 through June 29,
2004 and a fixed charge coverage ratio of 1.15 to 1.00. The term loans amortize at 1% annually in years 2004 through 2009, with the remaining 94% due in 2010. The outstanding principal amount on the revolving loans mature on December 31, 2009. As of
March 31, 2004, we had outstanding $54.8 million on its term loan and $40.0 million under its revolver. Interest rates associated with the Nexstar Facilities are based, at our option on (i) the higher of the prevailing prime rate or the Federal
Funds Rate plus 0.50% plus an applicable margin or (ii) LIBOR plus an applicable margin, as defined in the credit agreement (ranging from 3.36% to 4.15% at March 31, 2004). 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 its revolver loan commitment based on the combined leverage ratio for that particular quarter. Our term loan is subject to scheduled
mandatory repayments that commenced on March 31, 2004. The borrowings under our credit facilities are guaranteed by each existing and subsequently acquired or organized subsidiary of us and Mission. Based on borrowing rates currently available to us
for bank loans with similar terms and average maturities, the fair value of our credit facilities approximates its carrying value.



Missions senior secured credit facilities (the Mission Facilities) consist of a $140.0 million term loan and a $30.0 million revolver.
Mission used the proceeds to refinance their existing senior secured credit facilities, pay for related debt financing costs and finance the VHR Broadcasting, Inc. and its subsidiaries (VHR) acquisition. 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 March 31, 2004, Mission had outstanding $139.7 million on its term loan and $3.0
million under its revolver. Interest rates associated with the Mission Facilities are based, at the option of Mission, on (i) the higher of the prevailing prime rate or the Federal Funds Rate plus 0.50% plus an applicable margin or (ii) LIBOR plus
an applicable margin, as defined in the credit agreement (ranging from 3.36% to 4.15% at March 31, 2004). 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 combined leverage ratio of Nexstar and Mission for that particular quarter. The Mission term loan is subject to scheduled mandatory repayments that
commenced on March 31, 2004. Nexstar guarantees full payment of any obligations outstanding in the event of Missions default. Based on borrowing rates currently available to Mission for bank loans with similar terms and average maturities, the
fair value of Missions credit facilities approximates its carrying value.



Senior Subordinated Notes



On March 16, 2001, we issued $160.0 million of 12% senior subordinated notes (the 12% notes) at a price of 96.012%. The 12% notes mature on April 1, 2008. Interest is payable every six months in arrears on
April 1 and October 1. The 12% notes are guaranteed by all of the domestic existing and future restricted subsidiaries of Nexstar Broadcasting and by Mission. They are general unsecured senior subordinated obligations subordinated to all of the
Companys senior secured credit facilities. The 12% notes are redeemable on or after April 1, 2005, at declining premiums. The proceeds of the offering were used to partially refinance existing indebtedness of Nexstar and fund working capital
needs.



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On December 30, 2003, we issued $125.0 million of 7% senior subordinated notes (the 7% notes)
at par. The 7% notes mature on January 15, 2014. Interest is payable every six months in arrears on January 15 and July 15, commencing on July 15, 2004. The 7% notes are guaranteed by all of the domestic existing and future restricted subsidiaries
of us and Mission. They are general unsecured senior subordinated obligations subordinated to all of our senior secured credit facilities. The 7% notes are redeemable on or after January 15, 2009, at declining premiums, and we may redeem, at a
premium, up to 35.0% of the aggregate principal amount of the notes before January 15, 2007 with the net cash proceeds from qualified equity offerings. The proceeds of the offering were used to finance the Quorum acquisition.



Registration



On May 13, 2004, the $125.0 million of 7% senior subordinated notes issued
by us on December 30, 2003 were registered under the Securities Act of 1933 pursuant to a registration rights agreement.



Debt Covenants



The bank debt agreements and the notes described above contain covenants which require the Company to comply with certain financial ratios, capital
expenditure limits, cash payments for broadcast rights limits and other restrictions. The covenants are formally calculated on a quarterly basis. The Company was in compliance with such covenants at March 31, 2004.



Debt Financing Costs



The refinancing of the senior secured credit facilities for us and Mission
resulted in the write off of $5.8 million during the first quarter of 2003 of certain debt financing costs previously capitalized. This amount is included in loss on extinguishment of debt.



Interest Rate Swap Agreements



At March 31, 2004, Nexstar had in effect an interest rate swap agreement to
pay a fixed interest rate and receive a variable interest rate as required by its credit facility agreements, with a notional amount of $93.3 million. The $93.3 million notional swap, while economically being used to hedge the variability of cash
flows on a portion of the Companys variable rate debt, does not qualify for SFAS No. 133 hedge accounting and, thus, is being recorded on the balance sheet at fair value with changes in fair value each period reported in other income and
expense. The marking-to-market of this derivative instrument resulted in a recognition of $0.7 million and $0.2 million, respectively, in other income for the three months ended March 31, 2004 and 2003. The differential to be paid or received on the
swap is accrued as an adjustment to interest expense. The net fair value of the interest rate swap agreement representing the cash the Company would pay to settle the agreement was approximately $2.6 million and $3.3 million at March 31, 2004 and
December 31, 2003, respectively.



On June 13, 2003, Quorum
terminated the notional interest rate swap contract in the amount of $80.0 million. The notional interest rate swap agreement, while being used to mitigate the impact of the variability of interest rates on the credit facilities, did not qualify for
SFAS No. 133 hedge accounting and, thus, was recorded on the balance sheet at fair value with changes in fair value each period reported in other income and expense. For the three months ended March 31, 2003, other income and expense includes a gain
of $0.7 million from marking-to-market this derivative instrument.



On June 13, 2003, Quorum entered into an interest rate collar agreement for a notional amount of $60.0 million through September 13, 2003 and $40.0 million from September 13, 2003 through December 13, 2004. Under the agreement the ceiling
and floor interest rates are 2.5% and 0.88%, respectively. The net fair value of the agreement as of March 31, 2004 is not material. The agreement was terminated on April 5, 2004.



Digital Conversion



FCC regulations required television stations to commence digital operations by May 1, 2002, in addition to continuing
their analog operations, unless an extension of time was granted. We received extensions of time to begin digital operations at all of the stations we own except WCIA and WCFN, which met the May 1, 2002 deadline, and Nexstar owned WQRF and WFXV and
Mission owned WFXP, which were not required to seek an extension of time because the FCC has not yet issued a DTV construction permit to these stations. As of July 1, 2003, all of our and Missions stations are broadcasting a low-power DTV
signal, except WFXV and WQRF, which are not required to do so. WYZZ, which is owned by Sinclair Broadcast Group, Inc., also is broadcasting a low-power digital television signal. WBAK, which Mission acquired from Bahakel Communications on April 6,
2004, had an extension of time until March 24, 2004 and timely requested a further extension to construct digital facilities from the FCC, which request remains pending. KPOM, which Nexstar is expected to acquire from J.D.G. Television, Inc. in the
third quarter of 2004, pending FCC consent, is broadcasting a low-power digital signal. KFAA, which Nexstar also is expected to acquire from J.D.G. Television, Inc. in the third quarter of 2004, pending FCC consent, has not yet initiated digital
broadcasting. KFAA had until March 4, 2004 to construct DTV facilities. KFAA has applied for an extension of time to construct digital facilities and will have at least six months from the date the FCC acts on its application to construct its
digital facilities. If the FCC denies these requests for extension the licensee will have six months to complete construction of DTV facilities and will be required to report to the FCC on construction during this period. If the station is not
broadcasting a digital signal by the end of this six-month period, the licensee could be subject to further sanctions, including, eventually, loss of its DTV construction permit. WUTR, which Mission acquired from a subsidiary of Clear Channel
Communications on April 1, 2004, is broadcasting a full-power DTV signal as of February 17, 2004. The digital conversion required an



21



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average initial capital expenditure of $0.2 million per station for low-power transmission of a digital signal, and we estimate that it will require an
average additional capital expenditure of $0.7 million per station to modify the transmitter for full-power digital signal transmission. Digital conversion expenditures were $1.3 million and $11 thousand, respectively, for the three months ended
March 31, 2003 and 2004. We anticipate that digital conversion expenditures will be funded through available cash on hand and cash generated from operations.



No Off-Balance Sheet Arrangements



At March 31, 2004, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. All of our arrangements with Mission and KPOM/KFAA
are on-balance sheet arrangements. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.



Contractual Obligations



The following summarizes Nexstar and Missions contractual obligations at March 31, 2004, and the effect such
obligations are expected to have on Nexstar and Missions liquidity and cash flow in future periods.



|                                           |  |                        |         |                   |   |           |  |           |        |            |   |         |  |   |        
|------------------------------------------ |  | ---------------------- | ------- | ----------------- | - | --------- |  | --------- | ------ | ---------- | - | ------- |  | - | -------
|                                           |  | Total                  |         | Remainder of 2004 |   | 2005-2006 |  | 2007-2008 |        | Thereafter
|                                           |  | (dollars in thousands)
|Nexstar senior credit facilities           |  | $                      | 94,863  |                   | $ | 413       |  | $         | 1,100  |            | $ | 1,100   |  | $ | 92,250 
|Mission senior credit facilities           |  |                        | 142,650 |                   |   | 1,050     |  |           | 2,800  |            |   | 2,800   |  |   | 136,000
|7% senior subordinated notes due 2014      |  |                        | 125,000 |                   |   |          |  |           |       |            |   |        |  |   | 125,000
|12% senior subordinated notes due 2008     |  |                        | 160,000 |                   |   |          |  |           |       |            |   | 160,000 |  |   |       
|Cash interest on debt                      |  |                        | 231,414 |                   |   | 28,385    |  |           | 73,386 |            |   | 66,712  |  |   | 62,931 
|Broadcast rights current commitments       |  |                        | 9,359   |                   |   | 5,027     |  |           | 3,710  |            |   | 609     |  |   | 13     
|Broadcast rights future commitments        |  |                        | 11,901  |                   |   | 2,473     |  |           | 7,676  |            |   | 1,666   |  |   | 86     
|Executive employee contracts               |  |                        | 11,354  |                   |   | 1,676     |  |           | 4,708  |            |   | 4,970   |  |   |       
|Capital commitments for digital television |  |                        | 289     |                   |   | 289       |  |           |       |            |   |        |  |   |       
|WBAK purchase price obligation             |  |                        | 1,500   |                   |   | 1,500     |  |           |       |            |   |        |  |   |       
|KPOM/KFAA purchase price obligation        |  |                        | 7,000   |                   |   | 7,000     |  |           |       |            |   |        |  |   |       
|WUTR purchase price obligation             |  |                        | 3,700   |                   |   | 3,700     |  |           |       |            |   |        |  |   |       
|Time brokerage fees                        |  |                        | 225     |                   |   | 225       |  |           |       |            |   |        |  |   |       
|Operating lease obligations                |  |                        | 33,015  |                   |   | 2,359     |  |           | 5,948  |            |   | 5,458   |  |   | 19,250 
|                                           |  |                        |         |                   |   |           |  |           |        |            |   |         |  |   |        
|Total contractual cash obligations         |  | $                      | 832,270 |                   | $ | 54,097    |  | $         | 99,328 |            | $ | 243,315 |  | $ | 435,530
|                                           |  |                        |         |                   |   |           |  |           |        |            |   |         |  |   |        



On May 9, 2003,
Mission 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, of which Mission paid $1.5 million on that date.



On October 13, 2003, we entered into a purchase agreement to acquire
substantially all of the assets of KPOM/KFAA, the NBC affiliate in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, from J.D.G. Television, Inc. for $17.0 million. We made a down payment of $10.0 million against the purchase price on October 16,
2003, which was funded from available cash.



On December 17,
2003, Mission entered into a purchase agreement to acquire substantially all of the assets of WUTR, the ABC affiliate in Utica, New York, from a subsidiary of Clear Communications for $3.7 million.



As of March 31, 2004, Nexstar and Mission have remaining commitments on their
announced acquisitions of $12.2 million. Mission has a remaining commitment of $1.5 million relating to its purchase of WBAK that was paid at closing on April 6, 2004. For KPOM/KFAA, Nexstar expects to pay the remaining commitment of $7.0 million at
closing in the third quarter of 2004, pending FCC consent. Mission has a commitment of $3.7 million relating to its purchase of WUTR that was paid at closing on April 1, 2004.



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



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



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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.



ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Omitted pursuant to General Instructions H(2) to Form 10-Q.



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ITEM 4.    CONTROLS AND PROCEDURES



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



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



24



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PART II



ITEM 1.    LEGAL PROCEEDINGS



None.



ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS



Omitted pursuant to General Instructions H(2) to Form 10-Q.



ITEM 3.    DEFAULTS UPON SENIOR SECURITIES



Omitted pursuant to General Instructions H(2) to Form 10-Q.



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



Omitted pursuant to General Instructions H(2) to Form 10-Q.



ITEM 5.    OTHER INFORMATION



None.



ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K



a. Exhibits



|           |  |                                                                                                                                                                                                                                                                                                                                   
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  | Exhibit                                                                                                                                                                                                                                                                                                                           
|           | 
|10.01      |  | Amendment to Agreement for Sale of Commercial Time, dated December 30, 2003, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (KAMC-KLBK). (Incorporated by reference
to Exhibit 10.91 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))
|           | 
|10.02      |  | Amendment to Shared Services Agreement, dated December 30, 2003, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (KAMC-KLBK). (Incorporated by reference to Exhibit
10.92 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))            
|           | 
|10.03      |  | Amendment to Agreement for Sale of Commercial Time, dated December 30, 2003, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (KOLR-KDEB). (Incorporated by reference
to Exhibit 10.93 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))
|           | 
|10.04      |  | Amendment to Shared Services Agreement, dated December 30, 2003, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (KOLR-KDEB). (Incorporated by reference to Exhibit
10.94 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))            
|           | 
|10.05      |  | Amendment to Agreement for Sale of Commercial Time, dated January 1, 2004, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (KCIT-KAMR). (Incorporated by reference to
Exhibit 10.95 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))  
|           | 
|10.06      |  | Amendment to Shared Services Agreement, dated January 1, 2004, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (KCIT-KAMR). (Incorporated by reference to Exhibit
10.96 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))              
|           | 
|10.07      |  | Amendment to Agreement for Sale of Commercial Time, dated January 13, 2004, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (WBAK-WTWO). (Incorporated by reference to
Exhibit 10.97 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963)) 
|           | 
|10.08      |  | Amendment to Shared Services Agreement, dated January 13, 2004, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (WBAK-WTWO). (Incorporated by reference to Exhibit
10.98 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))             
|           | 
|10.09      |  | Agreement for Sale of Commercial Time, dated April 1, 2004, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (WUTR-WFXV). (Incorporated by reference to Exhibit 10.99
to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))                 



25



---

|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  | Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                            
|           | 
|10.10      |  | Shared Services Agreement, dated April 1, 2004, by and between Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. (WUTR-WFXV). (Incorporated by reference to Exhibit 10.100 to Amendment
No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No. 333-114963))                                                                                                                                             
|           | 
|10.11      |  | Amendment to Agreement for Sale of Commercial Time, dated January 1, 2004, by and between Nexstar Broadcasting, Inc. (as successor to Nexstar Broadcasting of Wichita Falls, L.P.) and Mission
Broadcasting, Inc. (f/k/a Mission Broadcasting of Wichita Falls, Inc.) (KJBO-KFDX). (Incorporated by reference to Exhibit 10.101 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No.
333-114963))
|           | 
|10.12      |  | Amendment to Shared Services Agreement, dated January 1, 2004, by and between Nexstar Broadcasting, Inc. (as successor to Nexstar Broadcasting of Wichita Falls, L.P.) and Mission
Broadcasting, Inc. (f/k/a Mission Broadcasting of Wichita Falls, Inc.) (KJBO-KFDX). (Incorporated by reference to Exhibit 10.102 to Amendment No. 1 to Registration Statement on Form S-4 filed by Nexstar Broadcasting, Inc. (File No.
333-114963))            
|           | 
|31.1       |  | Certification of Perry A. Sook pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                          
|           | 
|31.2       |  | Certification of G. Robert Thompson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                     
|           | 
|32.1       |  | Certification of Perry A. Sook pursuant to 18 U.S.C. ss. 1350.                                                                                                                                                                                                                                                                                                                                                                                     
|           | 
|32.2       |  | Certification of G. Robert Thompson pursuant to 18 U.S.C. ss. 1350.                                                                                                                                                                                                                                                                                                                                                                                



b. Reports on Form 8-K.



| | (1) | Current Report on Form 8-K filed by Nexstar Broadcasting, Inc. on January 14, 2004, disclosing the consummation of Nexstar Broadcasting Group, Inc.s acquisition of Quorum
Broadcast Holdings, LLC and two press releases announcing the Quorum acquisition and the private placement of the 7% senior subordinated notes due 2014.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Current Report on Form 8-K/A filed by Nexstar Broadcasting, Inc. on March 12, 2004, amending the Current Report on Form 8-K filed by Nexstar Broadcasting, Inc., disclosing the
consummation of Nexstar Broadcasting Group, Inc.s acquisition of Quorum Broadcast Holdings, LLC, to include financial statements for the business acquired and pro forma financial information.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Current Report of Form 8-K filed by Nexstar Broadcasting, Inc., on March 25, 2004 disclosing the issuance of a press release announcing its financial results of Nexstar Broadcasting
Group, Inc. for the quarter and fiscal year ended December 31, 2003.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26



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SIGNATURES



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



NEXSTAR BROADCASTING, INC./S/    PERRY A. SOOKBy:

Perry A. SookIts:

President and Chief Executive Officer (Principal Executive Officer)


/S/    G. ROBERT THOMPSONBy:

G. Robert ThompsonIts:

Chief Financial Officer (Principal
Accounting and Financial Officer)




Dated: May 14, 2004



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